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
| Dec 5, 2011
Summit Design+Build begins renovation of Chicago’s Esquire Theatre
The 33,000 square foot building will undergo an extensive structural remodel and core & shell build-out changing the building’s use from a movie theater to a high-end retail center.
| Dec 2, 2011
What are you waiting for? BD+C's 2012 40 Under 40 nominations are due Friday, Jan. 20
Nominate a colleague, peer, or even yourself. Applications available here.
| Dec 1, 2011
VLK Architects’ office receives LEED certification
The West 7th development, which houses the firm’s office, was designed to be LEED for Core & Shell, which gave VLK the head start on finishing out the area for LEED Silver Certification CI.
| Nov 16, 2011
CRSI recommends return to inch-pound markings
The intention of this resolution is for all new rollings of reinforcing steel products to be marked with inch-pound bar markings no later than January 1st, 2014.
| Nov 11, 2011
Streamline Design-build with BIM
How construction manager Barton Malow utilized BIM and design-build to deliver a quick turnaround for Georgia Tech’s new practice facility.
| Nov 2, 2011
Alexandria Real Estate Equities, Inc. breaks ground on Alexandria Center in Cambridge, Mass.
307,000-sf building to be house to executive offices of Biogen Idec.
| Oct 25, 2011
Commitment to green building practices pays off
The study, conducted by the Pacific Northwest National Laboratory, built on a good indication of the potential for increased productivity and performance pilot research completed two years ago, with similarly impressive results.
| Oct 24, 2011
FMI releases Adjust, Adapt, Act Study
The paper explores several case studies, including Sun Country Builders, Huen, BakerTriangle, Consigli, Skender Construction and Flatiron, and distills the key factors that make these companies unique and successful.
| Oct 20, 2011
UNT receives nation’s first LEED Platinum designation for collegiate stadium
Apogee Stadium will achieve another first in December with the completion of three wind turbines that will feed the electrical grid that powers the stadium.
| Oct 19, 2011
THOUGHT LEADER: Samuel S. Unger, RA, MCR, SLCR, MBA, is the Americas Real Estate Leader for Ernst & Young, LLP
Samuel S. Unger, RA, MCR, SLCR, MBA, is the Americas Real Estate Leader for Ernst & Young, LLP, Atlanta. He also serves as president of the CoreNet Global Atlanta chapter. In addition to managing 6.8 million square feet of real estate in North and South America, his responsibilities include real estate strategy for area practices, management of external professional alliances, requirements definition, business case development and approval, real estate negotiation and lease development, and oversight of construction projects for the portfolio. He holds a bachelor’s degree from Harvard College, an MLA and MArch from the University of Pennsylvania, and an MBA from Temple University.