More owners and developers are latching onto design-build as a preferred delivery method for projects large and small. And a new paper from FMI, the construction management consultant and investment banking firm, outlines how AEC firms and their clients that enter into such contracts are avoiding stress points that often bog down construction.
Drawing on FMI’s “2018 Design-Build Utilization” report, “the paper, “The Growing World of Design-Build,” written by FMI senior consultant Paul Trombitas, estimates that design-build project delivery will increase by 18% between 2018 and 2021, and comprise 44% of total construction spending, or the equivalent of $1.19 trillion over that four-year span.
A sustained emphasis toward educating owners and project stakeholders on the process and benefits associated with design-build has facilitated continued adoption and greater utilization industrywide. On the public side, increased design-build legislation has helped push the adoption of such projects. On the private side, owners tend to select design-build for unique and challenging projects that require lots of collaboration.
Design-build is projected to account for 44% of all construction spending for the years 2018 through 2021. Image: FMI
Of the various customer segments that use design-build, manufacturing, road infrastructure, and education will represent the greatest percentage of design-build construction spending over the next three years, states FMI.
In addition to larger and more complex projects, design-build continues to expand into project sizes of less than $25 million, as owners continue to gain exposure to the benefits of the delivery method.
However, design-build has its own set of challenges that, according to FMI principal Bill Spragins, revolve around the differing roles assumed by the parties, the number of decisions that must be made simultaneously, and the increased speed of decision-making associated with compression of the design and construction cycle.
For example, a project is potentially set up fail when owners confine their use of this delivery method to procurement without aligning the decision-making and approval processes within the organization to meet scheduling needs. A project can also be derailed by misaligned expectations between the owner and design-builder regarding the level of control that the owner’s team retains over design decisions.
Consequently, for a design-build delivery method to work, specific parameters need to be established about project scope, scheduling, and who’s responsible for what.
FMI states that AEC firms looking to win design-build projects need to think strategically: What slices of the market are they targeting, who are the right customers, what services do they need, and how do these offerings set a firm apart from its competition?
FMI recommends that AEC firms take a customer-focused approach when trying to win design-build contracts. Image: FMI
FMI uses a “4C model” to illustrate the context of profitable growth. Its starts with defining the business “climate” that the AEC firm is operating in—from demographics to regulations—and then digging deeper into possible changes, expectations, and needs of customers
AEC firms need to find out what criteria owners use to select contractors. They also need to weigh their own strengths and weaknesses against competitors’ for a given project.
FMI singles out a number of steps for winning design-build projects:
•Build a compelling story about why your firm is right for the project
•Build a go-to-market strategy that defines customers before an RFP hits the street
•Think like a customer
•Find out what the customer wants and why it’s important.
•Put your time where your strategy is. Build in organizational capacity that’s centered on a key focus, such as spending time with customers in advance.
The paper provides some avenues for minimizing stress points that can arise during a design-build contract. Having early and continued alignment among all project owners and stakeholders can help remove or limit these issues.
Make sure you completely understand requirements or other bidding assumptions, particularly on design-build projects. Of the projects FMI studied, 25% fell victim to this. At times, even the owner won’t understand the true impact of some of the requirements that are written into the contract.
Make sure there are formal internal hand-off meeting(s) between estimating/preconstruction and project management/field operations. This should include subcontractor involvement in planning the work.
Within the design-build arena, public-private partnerships (P3s) have emerged as a way for public and private sector entities to align on the provision of assets and the delivery of services and then effectively manage that partnership. To assemble the most successful P3 project teams, contractors should:
•Build your expertise through strategic joint ventures. Pick your partners carefully.
•Plan comprehensively for project complexities. Be smart about your business decisions.
•Understand the cost and risk barriers to entry. You need deep pockets and a thick skin.
•Have a deep understanding of an owner’s “ecosystem.”
•Start building relationships with public officials and finance representatives now.
•Collaborate and innovate.
Related Stories
Sponsored | Building Team | Feb 24, 2015
What your employees really want
Here are key aspects of a job that keep employees happy
Building Team | Feb 24, 2015
Call for entries: 2015 Giants 300 survey
The annual Giants 300 Report ranks the top AEC firms in commercial construction, by revenue.
| Feb 23, 2015
Where are the iconic green buildings?
What does a green building look like? How would you know one if you saw one? Maybe a trivial question to some, but of great interest to architects, designers, and other members of the Building Team as the rapid evolution of sustainable buildings continues apace.
Engineers | Feb 20, 2015
PwC reports record year for M&A activity in engineering and construction
Worldwide engineering and construction industries closed 218 M&A deals in 2014 worth more than $172 billion, according to a PwC report.
Building Materials | Feb 19, 2015
Prices for construction materials fall in January, following plummet of oil prices
The decline in oil and petroleum prices finally showed up in the produce price index data, according to ABC Chief Economist Anirban Basu.
Sponsored | Building Team | Feb 17, 2015
Why diversity matters
Companies in the top quartile for gender or racial and ethnic diversity are more likely to have financial returns above their national industry medians.
Sponsored | Modular Building | Feb 17, 2015
When lava flow in Hawaii threatens a public school district, officials turn to modular
Hawaii Modular Space, a Williams Scotsman company, designed temporary classroom space for the Pahoa and Keeau schools that would become displaced due to ongoing lava flow in Pahoa, Hawaii.
Mixed-Use | Feb 13, 2015
First Look: Sacramento Planning Commission approves mixed-use tower by the new Kings arena
The project, named Downtown Plaza Tower, will have 16 stories and will include a public lobby, retail and office space, 250 hotel rooms, and residences at the top of the tower.
Architects | Feb 13, 2015
OMA commissioned to design newest New York High Line addition
Rem Koolhaas is the latest addition to the list of starchitects working on projects near the High Line elevated park.
Transit Facilities | Feb 12, 2015
Gensler proposes network of cycle highways in London’s unused underground
Unused tube lines would host pedestrian paths, cycle routes, cultural spaces, and retail outlets.