The Change to Design-Build

This year, we are celebrating a decade as a company. A lot has changed over the last ten years. A lot has changed in how an engineering firm does business as well as how the construction industry does business as a whole.

When I started my career nearly thirty-five years ago, the construction of projects was accomplished primarily by using the Design/Bid/Build (D/B/B) process. Clients would approach engineering firms to design a project and then allow contractors to bid on them. Today, we are seeing a real push toward a Design/Build (D/B) model. We are seeing a real understanding of how a team approach is more favorable in terms of client satisfaction and the overall risks associated with construction. In the last several years, PSE Designs, Inc. (PSE) has been involved in multiple D/B projects. From this consulting engineer's perspective, they are a better way to do projects.

?In the D/B/B model, contractors and engineers always seemed to be at odds. Time was wasted blaming each other. The engineer was tasked with protecting the client from project changes and construction change orders. In this system, the engineers and contractors were adversaries. This always led to he-said/she-said and finger-pointing. I am sure we all remember those days and I am sure many of us still live in that world. In some cases, the?archaic rules of open bidding are still unavoidable. As someone who has lived in both worlds, I will tell you that my opinion is that this is no way of doing business!

?Open bidding is fraught with problems. The sad part is that these problems cost the owner more than they should. The first problem is that the lowest bidder is not always the most competent available. Let's say you solicit bids and get five bids submitted. When all of the bids, or at least a majority of them, are reasonably close to each other in cost and construction time, then possibly taking the lowest bid (when they are not an outlier) is probably not a bad thing.

Now, let's be honest. Every bidder has their own reason for submitting the price they submit. If they come in significantly lower than the group, then maybe they have an innovative method of construction or maybe they have openings in their schedules and need to keep their core people employed or maybe they missed some key components of the project and have not included them in their price. None of these things lead to anything good, especially the last two reasons. These two reasons put the contractor in a hole financially before the project has even started. From the beginning, the contractor is looking for ways to add costs to the project. This usually means that the engineer is constantly reviewing change-order requests that may or may not be warranted. Because this level of work was never anticipated, the engineer has to ask for additional engineering fees. Now the owner is being hit with extra charges from both sides.

The advantage of using the D/B model is that it reduces the owner's risk for change orders. We have all heard that two heads are better than one. It is the truth. The knowledge that engineering brings to the table is considerably different from the knowledge that the contractor brings. Neither is better or worse than the other. Neither is more valuable than the other. They are equally valuable to the owner. Contractors bring knowledge of previous problems created by the engineer's lack of construction methods or just field issues that always seem to arise unless specifically considered. Engineers bring knowledge of previous issues created by the contractor's lack of engineering design constraints and code requirements. If a team can be assembled to bring these things together, then the owner will benefit.

?Why doesn't the industry do this more often??The main reason, in my opinion, is trust or the lack thereof. We have been conditioned and told for years that contractors are only in it for the money and will take advantage of the owner in any way possible. We have been told and conditioned to think that engineers always over-design everything without regard for what it costs the owner. If we add these two things together, it means that the owner is being severely taken advantage of. Let's face it, the contractor's price is based on the actual constructed cost plus a percentage of that cost added for profit and overhead. The engineer's fee is usually based on a percentage of the constructed cost. All of this adds up to additional costs for the owner. For this reason alone, the owner is probably wise in not trusting anyone. Who could blame them? The reality is probably different from this. Don’t get me wrong. There are contractors and engineers who live by this model. Fortunately, in my experience, these people are few and far between. Maybe I have been sheltered, but most of the contractors and engineers that I have worked with are not this way. They are simply companies trying to pay their bills and make a reasonable profit. They want the project to be a success. It is not in their best interest to take advantage of the owner. If they do take advantage, two things can and probably will happen. First, the owner will never use them again. Second, they will tell all of their friends and constituents how badly they were taken advantage of and these contractors and engineers will develop a bad reputation and will have trouble finding work in the future.

?The goal of D/B is to get the contractor and engineer on the same page working toward the ultimate success of the project. If the contractor trusts the engineer to produce an efficient and economical design and the engineer trusts the contractor not to take shortcuts in materials and construction quality then they can team up to produce the most cost-effective design possible. If done right, these savings are then passed along to the owner. However, for this to truly work, the owner has to trust his D/B team. He has to trust that the team is working toward the best possible project outcome. The owner has to realize that the contractor is at-risk if the engineer over-designs the project because the contractor provides a fixed-cost price. The owner must also realize that by locking the contractor to a fixed-cost price, he cannot make drastic scope changes and expect the price not to be impacted. By doing D/B, the owner must become a crucial part of the team. The team consists of the owner, the engineer, and the contractor. As with any other team, they win or lose together.

?D/B requires a lot of trust. It is a true paradigm shift. In some cases, owners can't get past their lack of trust in contractors and engineers. In some cases, engineers can't get past their lack of trust in contractors to use the proper material or commitment to quality. In some cases, contractors can't get past their belief that the owner wants it as cheap as possible and doesn't care if anyone makes money or not. D/B requires all aspects of teamwork. The owner must realize that they cannot have the Taj Mahal for the cost of a dirt hovel. The contractor must realize that he cannot submit a price for a dirt hovel when the drawings clearly call for the Taj Mahal. The engineer must realize that they can't design systems applicable to a dirt hovel for use in the Taj Mahal. There is a saying: Form follows function.

?In the last several years, PSE Designs has become involved in many D/B projects. We understand the risks involved for the owner and the contractor. We assign individuals to projects that have specific experience. Our teams are assembled to complement the type of project whether it is an office building, a shopping center, a hotel, or a multi-family project. We review our designs from a constructability position as well as an engineering position. What's more, we understand that the contractor is more familiar with newer construction techniques and the owner knows their business model better than anyone else. We listen to input from all other members of the team. It has to be that way or the entire team and project suffers.

?If you would like to discuss the inclusion of our team with you on a Design/Build project, please contact us through our website?www.psedesigns.com.