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
Market Data | May 18, 2022
Architecture Billings Index moderates slightly, remains strong
For the fifteenth consecutive month architecture firms reported increasing demand for design services in April, according to a new report today from The American Institute of Architects (AIA).
Building Team | May 18, 2022
Bjarke Ingels-designed KING Toronto releases its final set of luxury penthouses
In April 2020, a penthouse at KING Toronto sold for $16 million, the highest condo sale in Toronto that year or the year after.
Building Team | May 17, 2022
MKA’s Embodied Carbon Action Plan will include reporting on carbon reductions for selected projects
Magnusson Klemencic Associates (MKA) recently released its SE 2050 Embodied Carbon Action Plan (ECAP) for 2022.
University Buildings | May 16, 2022
Yale’s newly renovated Schwarzman Center enriches student campus social life
Robert A.M. Stern Architects (RAMSA) recently unveiled the design of their restoration of the Schwarzman Center at Yale University, which includes dining spaces, a bar, and a food shop.
K-12 Schools | May 16, 2022
Private faculty offices are becoming a thing of the past at all levels of education
Perkins & Will’s recent design projects are using the area to encourage collaboration.
Codes and Standards | May 16, 2022
AIA releases Justice in the Built Environment guide
The American Institute of Architects (AIA) recently published a new supplementary edition of the Guides for Equitable Practice, titled “Justice in the Built Environment.”
K-12 Schools | May 16, 2022
A Quaker high school in Maryland is the first in the U.S. to get WELL Gold certification
Designed by Stantec, a Quaker high school is the first in the US to receive WELL Gold certification, which recognizes a commitment to occupants’ health and well-being.
Building Team | May 13, 2022
Glass penthouses rise above Toronto’s tree line
In midtown Toronto, the nine-story midrise building Leaside Common has released its Penthouse Collection: two-floor penthouses that take inspiration from Philip Johnson’s Glass House in Connecticut.
Market Data | May 12, 2022
Monthly construction input prices increase in April
Construction input prices increased 0.8% in April compared to the previous month, according to an Associated Builders and Contractors analysis of U.S. Bureau of Labor Statistics’ Producer Price Index data released today.
Codes and Standards | May 12, 2022
Solar industry creates non-profit to remove barriers to clean energy deployment
The Solar Energy Industries Association (SEIA) is launching a 501(c)3 non-profit organization to accelerate the transition to carbon-free electricity.
