What Is ADU Design-Build?

Key takeaways

• Design-build means one firm both designs and builds your ADU.
• The other route, design-bid-build, uses a separate designer, then bids from builders.
• Design-build gives you one point of contact and an early price target.
• You give up head-to-head bids on the same drawings.
• In California, the firm needs a contractor license to build, usually Class B ⁴.
• Read who owns the drawings before you sign the design agreement.

What design-build means, in plain English

An ADU is a small second home on your lot. To get one built, someone must design it and someone must build it.

With design-build, one company does both. You sign with that company. It draws the plans, gets the permit and builds the unit.

With the older route, called design-bid-build, you hire a designer first. When the drawings are done, you ask several builders to bid. Then you hire one of them.

Why the delivery method matters to you

The route you pick decides who answers when something goes wrong. With design-build, a drawing error is the firm’s problem. With separate firms, the designer and builder may blame each other.

It also decides when you see a price. Design-build firms often give a target early. With design-bid-build, you only see real prices once the drawings are done.

And it decides how easy it is to leave. That depends mostly on who owns the drawings.

Design-build vs design-bid-build for an ADU

How a design-build ADU contract usually runs

Most design-build ADU projects start with a separate, smaller agreement for feasibility and design. The firm visits the lot, draws the unit, prices it as it goes, and submits for permits.

Once the city approves the plans, a construction contract sets the final price. Some firms sell a fixed package (a prefab or a standard plan) and fold design into one price.

The diagram shows the two agreements and the decision point between them, where you can still take the drawings elsewhere.

The two-step structure is what to read closely. If you stop after design, ask whether you can take the drawings to another builder, and at what cost. If the construction price rises between the design agreement and the construction contract, ask what you can do about it.

California rules that shape a design-build ADU

Licensing and contract rules vary by state; check your state’s contractor board. In California, two Business and Professions Code sections matter most.

Who may draw the plans. Section 5537 lets a person who is not a licensed architect prepare plans for a single-family dwelling of wood-frame construction up to two stories and basement, and for garages or other structures appurtenant to it.

Many design-build firms therefore draw ADU plans in house without an architect, though structural engineering may still be required by the city.

How the contract must read. For home improvement contracts, § 7159.5 requires a written contract stating the amount in dollars and cents, including profit, labor and materials.

The down payment may not exceed $1,000 or 10% of the contract amount, whichever is less, and progress payments must follow a schedule tied to work and may not run ahead of the work performed or materials delivered.

The Code’s definition of home improvement includes “adding to” residential property ³; ask the Contractors State License Board or a lawyer how it applies to your project.

Sources: [1] [2]

Benefits and limits of design-build

What to check in a design-build ADU agreement

• Who owns the drawings, and whether you can use them with another builder.
• Whether design fees are credited against the construction contract.
• How the price is set: a fixed price, a target with allowances, or cost plus a fee.
• Allowances and exclusions, especially site work, utility runs and permit fees.
• The payment schedule against the § 7159.5 limits in California.
• The firm’s contractor license, checked yourself with the state board. See how we vet professionals.

A decision rule

• Choose design-build if you want one accountable party, have a standard lot, and are comfortable comparing firms on reputation, past projects and a target price rather than identical bids.
• Choose design-bid-build if your lot is unusual, you want an independent designer on your side, or you want several builders pricing the same drawings. Then use the bid comparison tool.
• Either way, separate design from construction on paper so you can see the soft costs and hard costs.

Related guides and data

• ADU construction guideThe build sequence
• California ADU buildersWho builds ADUs, from permit data
• ADU builder attritionWhy builder track record matters
• Pre-approved ADU plansA third route that skips most custom design
• Find a professionalLicensed builders and designers

How a design-build ADU project runs, step by step

1. Meet and visit. The firm sees the lot and hears your goals and budget.
2. Feasibility. It checks zoning, size and utilities. See ADU feasibility.
3. Design agreement. You sign a smaller contract for design and permits.
4. Design and pricing. The firm draws the unit and updates the price target as it goes.
5. Permit. It submits the plans and answers city corrections.
6. Construction contract. Once plans are approved, you sign for the build at a set price.
7. Build and close-out. The firm builds, passes inspections and fixes punch-list items.

Ways design-build firms price an ADU

Worked example: leaving after the design phase

A hypothetical owner, for illustration only. She signs a design agreement, gets the permit, then the construction price comes in above her budget.

Contract 2 looks cheaper if all goes well, because the fee is credited. Contract 1 gives her a way out. Decide which matters more before you sign.

Where design-build shows up on paper

• Design agreement: scope, fee, drawing ownership, credit to the build.
• Permit set: the firm’s designer, plus any engineer’s stamp.
• Construction contract: price, payment schedule and change orders ².
• Permit application: the firm’s contractor license number.
• Loan papers: lenders may review the contract and budget. See ADU financing.

Which licenses a design-build firm needs in California

To build, the firm needs a contractor license. A new ADU uses several unrelated trades, so it is usually a Class B general building job ⁴. A licensed contractor must also keep a $25,000 bond on file ⁶.

For the design, a license is often not needed for a wood-frame unit up to two stories and basement ¹.

If a licensed architect on the team takes on the design, California requires the architect to use a written contract.

It must name the services, the fee, how changes and ending the contract work, and who owns the drawings ⁵.

Ask the firm whose license covers each part of the work. Then check each license yourself.

Sources: [4] [5] [6]

What drives the cost of design-build

We do not claim design-build is cheaper or dearer. We found no primary data comparing the two for ADUs.

What moves the price: the lot and site work, the size and plan, finish level, and how risk is split. A fixed price carries the firm’s risk margin. A cost-plus deal leaves more risk with you.

Design fees and build costs should be shown apart, so you can see soft costs next to construction. Model the whole budget with the ADU cost calculator.

Common misreadings

Myth Design-build always saves money.

Reality There is no primary ADU data showing that. It can cut redesign, but you lose bids on the same drawings.

Myth A design-build firm does not need a contractor license because it also designs.

Reality Building still needs a contractor license, usually Class B for a new ADU ⁴.

Myth Once I sign for design, I must build with the firm.

Reality Only if the contract says so. Drawing ownership and buy-out terms decide it.

What to ask a design-build firm

• Who on your team draws the plans, and do they hold a license?
• What is your contractor license number?
• Is the design fee credited against the build?
• Who owns the drawings if I stop after the permit?
• Is the price fixed, a target, or cost plus a fee?
• What are the allowances and exclusions?
• Can I see finished ADUs you designed and built?

Checklist: choosing design-build for your ADU

1. Run a basic lot check first with the feasibility checker.
2. Talk to at least two design-build firms and one independent designer.
3. Compare price types and what each includes.
4. Check every license on the state board site.
5. Read the drawing-ownership and buy-out terms.
6. Check the deposit and payment schedule against California limits ².
7. Keep design and construction costs in separate lines.

Related terms

ADU Cost Estimate

An ADU cost estimate is a written, itemized prediction of what it will cost to build a specific accessory dwelling unit on a specific lot, listing the work, materials, allowances, exclusions and assumptions behind the total.

ADU Soft Costs

ADU soft costs are the parts of an accessory dwelling unit budget that pay for paperwork, professional services and money rather than for physical construction: design, engineering, surveys, permits and government fees, utility charges, insurance and financing costs.

ADU Hard Costs

ADU hard costs are the money spent physically building an accessory dwelling unit: site preparation, foundation, framing, roofing, windows, mechanical, electrical and plumbing systems, finishes, and the trenching that brings utilities to the unit, together with the contractor’s labor, overhead and profit.

ADU Construction Process

The sequence of building an ADU: feasibility, design, permits, site work, foundation, framing, rough-in inspections, finishes and final inspection.

ADU Engineer

An ADU engineer is a licensed engineer who designs the parts of an accessory dwelling unit that carry loads or deal with the ground, such as the foundation, beams and earthquake bracing, and signs the calculations the city reviews.

ADU Construction Timeline

How long an ADU takes from first design to move-in, split into design, permitting and construction stages.

ADU Permit Fees

ADU permit fees are the charges a city, county or utility district collects before and during the building of an accessory dwelling unit: plan review, the building permit, inspections, and in many places impact fees, school fees and utility connection charges.

Also referenced from: ADU Cost Estimate, ADU Soft Costs, Permit Expediting, ADU Contractor, ADU Architect