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AN INTRODUCTION TO WORKING
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IF YOU’VE NEVER WORKED WITH ARCHITECTS OR CONTRACTORS BEFORE… you can take some comfort from the realization that you are not alone. Others have been in your situation with assignments to complete and projects to build, and have not only managed to understand the construction industry but have also learned to engage construction professionals and direct their work with significant success. The construction industry often seems confusing, intimidating, and impossible to fully understand. And it can be all of those things, and more. It is not only the design or construction process itself that is difficult but even those first beginning steps of deciding who to hire, when, and why. How do you begin to deal with an industry as complex as the construction industry with its myriad numbers of independent contractors and specialized trades? The following summary of some basic building strategies should be useful to anyone who finds himself asking that most basic of all questions: "Now what do I do…? |
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A PROCESS FOR ADDRESSING BOTH DESIGN AND CONSTRUCTION MUST BE SELECTED… early in the project timeline. The process, called Project Delivery Strategy, will have consequences that affect both the project schedule and price and may also influence the choice of members of the project team, the type of project financing sought, and the eventual resulting project quality. Most often the process selection will be made by accident or default, often when an owner creates a team prior to considering alternative approaches. Sometimes the process will be determined by policy, either corporate or governmental. But whatever process is selected, there are two important things to keep in mind: first, every project delivery method has a flaw and second, all of them can be made to work. The best choice is the one that best answers the unique circumstances of your project. THERE ARE FOUR GENERAL PHASES TO EVERY PROJECT… although not every Project Delivery Strategy will encompass all four phases. These phases are 1) project definition, 2) design, 3) construction, and 4) occupancy. These phases (along with numerous sub-phases) may be overlapped, subdivided, or re-grouped into various combinations. They may be contracted for in a multitude of different ways but none of them can be eliminated. If one phase is done poorly, subsequent phases will ultimately suffer in cost, quality, or schedule.THE FIRST PHASE, PROJECT DEFINITION, IS THE PHASE MOST LIKELY TO BE OVERLOOKED…by first-time owners in the rush "to get something going". This phase includes both discovery, the identification and analysis of project requirements and constraints, and integration, the formal description of the project and the plan (including a cost and delivery-time estimate). Sometimes this phase is referred to as "programming". It may often be overlooked or minimized simply because it is not listed as a Basic Service by most architects/contractors standard contract documents. Generally it comes to be seen as contract "extra" and you may feel that you don’t have time or budget for "extras". However, failure to give adequate attention to this phase of the project can have consequences impacting any and all of the three following phases. If you don’t know where it is you’re headed with this project, or if you don’t want to spend time or money to clarify it during the project definition phase, you can be assured of spending both time and money to define it later during design and construction, sometimes through an uncomfortable process called Change Orders. THE NEXT PHASE, DESIGN, IS DIVIDED INTO THREE STAGES…of successive idea development. The first stage, called Schematic Design, is the stage that establishes the most direct response to the work done during Project Definition. It first develops the building plan and its physical, three-dimensional appearance. If the Project Definition phase was done poorly (or skipped) it sometimes becomes apparent during this stage and may be corrected. The next stage, referred to as Design Development, integrates building systems (such as HVAC, elevators, etc.) into the scheme, and develops further the functional and aesthetic elements of the project. Finally the third stage, called Construction Documents, is when the details of construction technology and assembly are clearly defined and specified. The Construction Documents then become the basis for establishing the scope of the construction contracts and subcontracts. |
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THE OCCUPANCY PHASE OF A PROJECT WILL BEGIN…when you, the building owner, take beneficial use of the space. This point in the schedule may be identified in the contract as Substantial Completion. The Occupancy Phase does not necessarily signal the cessation of Construction Phase activities as both the design team and contractors will likely have continuing work, including "punch list" completion, creation of record drawings (sometimes called "as-builts"), and various legal and contractual certifications. However it may signal important changes in the insurance protections placed upon the building. Risk of loss to the completed structure may, for example, transfer from a contractor to an owner upon commencement of occupancy. Occupancy ends only when you vacate the building, therefore the Occupancy Phase is likely the longest and most important phase to consider. It is the phase for which the other three phases exist. PROJECT DELIVERY STRATEGY IS A PHRASE THAT DESCRIBES HOW THE FOUR PHASES OF EVERY PROJECT…interrelate, with particular attention given to how the phases are placed under contract. How many contracts will you be dealing with and how are these contracts related? Will your relationship with your project team members be one of seeking professional advice, called agency, or will it be one of seeking goods and services, referred to as a vendor relationship? Of special interest is the timing of the commencement of each Project Phase. This issue is important because it may also define the time in the schedule when either you or team members must make a commitment about the price and the completion timing. The following list of Project Delivery Strategies addresses only the most common methods. Understanding these basic approaches will prepare you to talk intelligently about most of the alternatives available. THE TRADITIONAL PROCESS, DESIGN/BID/BUILD, IS A TERM… that is used to describe projects that are bid or negotiated, then constructed after an Architect and/or Engineer has completed the Construction Document stage of the Design Phase. Shop Drawings are still prepared by the contractor(s) however, so it may be correct to say that in all Project Delivery Strategies the contractor completes some design.DESIGN-BUILD IS A PROCESS USED TO PROVIDE SINGLE-POINT RESPONSIBILITY…for the project in its entirety. Design-Build contracts are typically negotiated prior to the Project Definition Phase. Often the design-builder assists the owner in executing the Project Definition Phase. Using this method the design-build contractor does all the design and engineering work, as well as provide construction services. BRIDGING IS A HYBRID OF THE TRADITIONAL PROCESS AND DESIGN-BUILD…where the owner still hires an AE directly to develop the projects functional and aesthetic requirements, but places the burden of creating Construction Documents upon a design-build contractor. The AE hired by the owner provides project quality guidance through the development of performance specifications. Construction contracts are often awarded part way through the design. Under this method, the Architect of Record, a legal distinction, is generally the design-builder. FAST-TRACKING IS SIMPLY CONSTRUCTION JARGON FOR OVERLAPPING…portions of the Design and Construction Phases of any project to accelerate the scheduled completion. It may be applied to the Traditional Process, Bridging, Design-Build or any other method. There is no technical reason not to overlap design and construction activities. There may be, however, a problem with cost control since construction begins before the Design Phase is complete. The final scope and the final price, therefore, may be disputed. There are two ways to fast-track a project. A single contract may be awarded to a General Contractor who will build the project under a cost-plus contract, perhaps with a guaranteed maximum price. Or the owner may retain a Construction Manager who will bid the project in stages with complete contract documents for each stage. The contracts for each stage are then typically bid to trade contractors and no General Contractor is required. AND NOW YOU MIGHT ASK, "WHICH PROJECT DELIVERY STRATEGY IS BEST FOR MY PROJECT?" CAREFUL SELECTION OF A PROJECT DELIVERY STRATEGY… suggests that you consider at least four key factors. These factors (and you may think of others) are: ·
Number of Contracts These key factors don’t necessarily have any correct decision associated with them. What is correct for your project may not be correct for another. Nor are these decision factors either / or decisions, rather they are likely to emerge as shades of gray. The important issue here is that you consider the various options associated with them, evaluate them in conjunction with your project, and make an informed selection based upon your needs. |
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YOUR OPTIONS AS AN OWNER INCREASE WITH THE NUMBER OF CONTRACTS…you are willing to manage yourself. With multiple contracts you can easily fast-track a project by overlapping elements of design and construction. You may also be able to save money by eliminating the markup on purchases of materials and labor. Unbundling the design allows you a greater freedom to select specialists in every area, while unbundling the construction contracts allows careful selection of specific manufacturers products and use of hand-picked trade contractors. As the number of contracts increases, the opportunity to save time, money and to improve quality also increase. BUT AS THE NUMBER OF CONTRACTS YOU CHOOSE TO MANAGE INCREASES… so does your risk. If you choose to manage multiple contracts, you must manage them well or take the responsibility for any subsequent management failures. Because of this, and because most owners have limited time available to manage these contracts, it is most common to see projects managed by design professionals, professional construction managers, and/or general contractors.SELECTION CRITERIA IS ANOTHER KEY FACTOR…affecting your decision to pick one Project Delivery Strategy instead of another. Typically design professionals such as architects and engineers are selected with an emphasis on qualifications while contractors are selected with an emphasis on the basis of price. However, sometimes AE’s are selected on price and sometimes contractors are selected on the basis of qualifications. Some owners consider both and require a proposal that may include both a price and a design or management plan for the project. Selection Criteria may be evaluated by consideration of what is to be purchased. If it’s a common product, easily described, defined, and evaluated then there is little reason not to select based on the issue of price. But if it’s a product or service that is unusual, unique, or proprietary, or if intellectual qualities such as talent, creativity or wisdom are required, then selection should likely be based upon qualifications. THE RELATIONSHIP BETWEEN THE OWNER AND THE CONTRACTOR…becomes legally binding based upon the choices you make about Project Delivery. Contractors may be viewed in either of two ways: in one role they may function as a vendor, delivering a specified product for a specified price. In another situation, the contractor may function as an agent of the owner, representing the owner’s interest and bearing a fiduciary responsibility. AE’s and other design professionals are usually viewed at the agency end of the spectrum because they are asked to give professional advice based upon their experience and learning. They are paid directly for the advice and make no profit from the subsequent buying or selling of materials, equipment, or labor. Contractors are typically seen at the vendor end of the spectrum because, while they may give some advice to the owner, their remuneration comes most often in the form of a markup on the sale of goods or services. WHEN YOU NEED ADVICE OR GUIDANCE YOU SHOULD GENERALLY CHOOSE AN AGENT… or the agency form of relationship to provide assistance. If, however, you feel you know exactly what you need in a project you may be able to benefit from a vendor relationship. Be aware of the risks developing from a conflict of interest if a contractor is both an agent and a vendor or if he changes from agent to vendor over the course of a project. An AE, for example, who designs a building for a fee would usually be precluded from bidding on the construction as a vendor (different from a design-build scenario where a single entity contracts for both design and construction as a vendor). Some owners don’t worry about conflict of interest, however, and instead look for good reputations and strive for project continuity. There is no overall correct answer to this factor except that you understand the importance of being aware of the nature of the relationships into which you enter. |
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MULTIPLE PAYMENT TERMS CAN EASILY BE COMBINED… into a single contract. It is not uncommon to see Unit Price contracts utilized for a period of time until the project scope becomes clear, at which time the contract automatically adjusts to Fixed Price. Some contracts may be Fixed Price with Unit Price provisions applying to specific elements such as demolition or excavation. Generally Payment Terms are the subject of mutual negotiation and should be agreed to in good faith by all parties. Contractors working under oppressive or unfair terms will not provide their best work, or may look for other ways to maintain their own profitability at the expense of your project.NOW THAT YOU ARE FAMILIAR WITH THE BASIC PROJECT DELIVERY STRATEGIES…and some of the reasons behind selecting one strategy over another you have enough information to begin preliminary discussions with construction professionals about the services you need for your project. Keep in mind that there are endless variations to the basic strategies. You may wish to utilize the Traditional Process, for example, but fast-track the project to save time. Or you may wish to hire a Construction Manager instead of a General Contractor, who will then manage multiple subcontracts that you enter into directly. That strategy may allow you to save most of the General Contractor mark-up, but should you still consider fast-tracking? Or perhaps you want the advantages of single-source accountability and therefore opt for the services of a Design-Build contractor, but are not sure that you can define the project without having the design complete. Can you hire an AE for a fee and at some later point role the contract over into a design-build agreement? The answer is that you can enter into any agreement you can negotiate, and should, as long as you understand the associated benefits and risks. THE BEST WAY TO EXECUTE A GOOD PROJECT IS TO GET GOOD PEOPLE TO DO IT…by creating a team environment that encourages collaboration between all parties and by making sure that everyone’s responsibilities are clear. Bring your questions, concerns, and dreams to the table early in the building process in order to lay the foundation necessary for later project success. We encourage you to contact us at ENTELEN Design-Build for help in solving your construction related problems and in realizing your project dreams. |
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Copyright 2000 ENTELEN Design-Build, LLC |
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