All too often in the process of taking a commercial or institutional building from design to engineering and construction, we repeat the same mistakes and place the same stressors on our valuable resources. Despite knowing that estimating time is precious and estimating teams are understaffed, we continue to impose our antiquated bid methods onto critical building systems that represent the greatest risk, largest contributors to cost, and most complex areas of design.
Price vs. cost
If you were to poll professionals in the industry and ask why we subject high-cost, high-risk, complex building systems to the same processes that cause so much pain, the answer would inevitably be to keep prices low and margins high and to deliver a building on time and on budget to ownership. That said, are we meeting those goals? When questions and discrepancies arise (and they often do), what is the associated cost?
Budget process and the dangers of value engineering
Lately and with more frequency, one such discrepancy seems to present itself very early in the bid process, and that is that the specified product is over budget. In speaking with some estimating teams, it appears that budgets being submitted to building owners are using not only older base numbers, but base numbers that may not reflect the design intent or do not fully incorporate the costs necessary to meet more stringent building codes. It’s as if the design team has designed a BMW i8 and the budget is geared toward creating a Chevy Cruze.
Sure, there are plenty of times where the design specifications are a little overzealous and there is an opportunity to deliver alternatives that will perform just as well at a reduced cost. However, in some cases the task is to value engineer simply to help the bottom line. Though we are all in the business to make money, there is a fine line between cutting costs, mitigating risk, and delivering to ownership the building they thought they were getting.
Low bid process
The low bid process looks something like this: the architect meets with the owner to develop a vision for the building and establish a budget. The architect works with multiple design professional to create construction documents. Those documents are provided to multiple general contractors who bid the project, working with their subcontractors. The owner selects a general contractor using low price as the primary selection criteria. It is quite common in this scenario to have discrepancies, errors, or omissions in the construction documents which results in RFIs, delays, and additional costs.
One potential solution to overcoming these drawbacks is the design assist (DA) delivery method. DA is defined as a procurement method by which one or more subcontractors are retained, prior to completion of design, to assist the architect, engineer, and GC in the development of the design and construction documents.
By bringing the parties together early in the process, a true collaboration occurs. The team approach maximizes efficiency, provides true budgets, shares goals and priorities, and ultimately delivers the building that the owner expects – on time and on budget. DA reduces unnecessary delays and overcomes many of the strains being placed on overworked and understaffed estimating teams.
True north – considering building systems in terms of total cost
When it comes to sophisticated systems (such as HVAC, facades, fire protection, etc.), a shift in thinking needs to happen. We should be thinking in terms of total cost, not price. Building systems are interlocked and interrelated. Spending a little more on a high-performance façade can reduce HVAC, lighting and electrical system costs. Something as simple as a high-performance window can allow the designer to reduce costs in the remainder of the wall assembly and reduce the overall costs of the envelope. What is the cost of delaying the speed to market of these buildings. How much money does an owner lose per month when a job is not delivered on time? How much time and money do GCs and subcontractors waste on change orders and delays in procurement?
Design assist reduces the ambiguity and the missed opportunities, and points everyone in a much better direction. If you’d like to discuss design assist opportunities as they relate to your construction projects, email me at [email protected].