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
| Nov 29, 2010
Data Centers: Keeping Energy, Security in Check
Power consumption for data centers doubled from 2000 and 2006, and it is anticipated to double again by 2011, making these mission-critical facilities the nation’s largest commercial user of electric power. Major technology companies, notably Hewlett-Packard, Cisco Systems, and International Business Machines, are investing heavily in new data centers. HP, which acquired technology services provider EDS in 2008, announced in June that it would be closing many of its older data centers and would be building new, more highly optimized centers around the world.
| Nov 29, 2010
Renovating for Sustainability
Motivated by the prospect of increased property values, reduced utility bills, and an interest in jumping on the sustainability bandwagon, a noted upturn in green building upgrades is helping designers and real estate developers stay busy while waiting for the economy to recover. In fact, many of the larger property management outfits have set up teams to undertake projects seeking LEED for Existing Buildings: Operations & Maintenance (LEED-EBOM, also referred to as LEED-EB), a certification by the U.S. Green Building Council.
| Nov 23, 2010
Honeywell's School Energy and Environment Survey: 68% of districts delayed or eliminated improvements because of economy
Results of Honeywell's second annual “School Energy and Environment Survey” reveal that almost 90% of school leaders see a direct link between the quality and performance of school facilities, and student achievement. However, districts face several obstacles when it comes to keeping their buildings up to date and well maintained. For example, 68% of school districts have either delayed or eliminated building improvements in response to the economic downturn.
| Nov 16, 2010
Brazil Olympics spurring green construction
Brazil's green building industry will expand in the coming years, spurred by construction of low-impact venues being built for the 2016 Olympics. The International Olympic Committee requires arenas built for the 2016 games in Rio de Janeiro meet international standards for low-carbon emissions and energy efficiency. This has boosted local interest in developing real estate with lower environmental impact than existing buildings. The timing couldn’t be better: the Brazilian government is just beginning its long-term infrastructure expansion program.
| Nov 16, 2010
Green building market grows 50% in two years; Green Outlook 2011 report
The U.S. green building market is up 50% from 2008 to 2010—from $42 billion to $55 billion-$71 billion, according to McGraw-Hill Construction's Green Outlook 2011: Green Trends Driving Growth report. Today, a third of all new nonresidential construction is green; in five years, nonresidential green building activity is expected to triple, representing $120 billion to $145 billion in new construction.
| Nov 16, 2010
Calculating office building performance? Yep, there’s an app for that
123 Zero build is a free tool for calculating the performance of a market-ready carbon-neutral office building design. The app estimates the discounted payback for constructing a zero emissions office building in any U.S. location, including the investment needed for photovoltaics to offset annual carbon emissions, payback calculations, estimated first costs for a highly energy efficient building, photovoltaic costs, discount rates, and user-specified fuel escalation rates.
| Nov 16, 2010
Where can your firm beat the recession? Try any of these 10 places
Wondering where condos and rental apartments will be needed? Where companies are looking to rent office space? Where people will need hotel rooms, retail stores, and restaurants? Newsweek compiled a list of the 10 American cities best situated for economic recovery. The cities fall into three basic groups: Texas, the New Silicon Valleys, and the Heartland Honeys. Welcome to the recovery.
| Nov 16, 2010
Landscape architecture challenges Andrés Duany’s Congress for New Urbanism
Andrés Duany, founder of the Congress for the New Urbanism, adopted the ideas, vision, and values of the early 20th Century landscape architects/planners John Nolen and Frederick Law Olmsted, Jr., to launch a movement that led to more than 300 new towns, regional plans, and community revitalization project commissions for his firm. However, now that there’s a societal buyer’s remorse about New Urbanism, Duany is coming up against a movement that sees landscape architecture—not architecture—as the design medium more capable of organizing the city and enhancing the urban experience.
