TEAM ASSEMBLY (Selecting the Right Team)

Selecting and assembling the team is paramount. Teams can be put together in many ways. Most owners use Requests for Proposals (RFPs), Requests for Qualifications (RFQs), interviews, competitions, and other forms. With collaboration as an objective, the bias is not to award design and construction based on price alone. Rather, select teammates who will work closely to provide professional services – as designers and contractors do, based on experience, skills, culture, chemistry and collaboration to deliver value. Do not underestimate the importance of selecting professionals who share your objectives, culture and values.

CONTRACTS (Project Delivery Forms)

New guard leaders of the legal, financial and project delivery movements argue that project delivery mechanisms, contracts, and incentives hold the key to industry change. Data and momentum show they are right. Without reason or requirement to change, most of us carry on as we always have. A few innovators and change agents try to effect new processes, but without contract leverage, they face an uphill climb. This condition is understandable; it is backed up by data from projects across the country. While this book's focus is not on project delivery or contracts, it offers the uninitiated a brief overview of common methods. Borrowing heavily from the work of M. Kenig's Project Delivery Systems (AGC of America, 2011) and H. Ashcraft's Integrating Project Delivery, Wiley, 2017), four prevalent common project delivery methods and their features are offered in simplified form to support this book's theses. Depending on the method selected, owners and teams contracting using these methods must articulate:

• Parties, services, deliverables
• Performance period
• Compensation
• Conditions
• Project delivery

PARTIES, SERVICES, AND DELIVERABLES

Design managers must ensure all necessary disciplines are included in contracts. In the pressure to execute agreements quickly, players can be forgotten. Use checklists as reminders of the many participants and responsibilities. In team arrangements, tasks can be done by various parties. Be clear on who is doing what.

PERFORMANCE PERIOD

Projects that continue beyond anticipated schedules can deplete design fees and exhaust teams. The impacts of working with teammates who have lost their profit margin, potentially due to no fault of their own may be felt across the entire owner, architect, contractor (OAC) team. In contracting, allow time and fee contingencies or incentives to compensate.

COMPENSATION

Design fees have historically been based on percent of construction costs, lump sum or hourly bases. Based on the current state of practice all seem inadequate. Teams contracting for design should derive new value-based compensation models that reward providers for service and value. (See Bernstein, Marble, and Bryson interviews.) Compensation that rewards performance that achieves team metrics or other goals is overdue. To understand AE fees as a relative percentage of life cycle cost over a thirty- to fifty-year facility life, consider Table 17.1

Since their work represents only 1.1% of a building's life-cycle cost, design teams should demonstrate that their value contributes to leveraging these other factors. If they could offer such value, even as much as doubling current AE fee levels would be cost effective for OAC teams and offer immense payback, in view of design's potential to pay dividends on the other 98.9 percent of a project's total ownership cost or building life cycle cost.

In managing design, reach an understanding of appropriate value-and-service-based scope and fees that pay for what the team needs, rather than basing contracts on current commodity fee levels.

Conditions

Contracts must include clauses for breach, termination, assignment, errors and omissions, key personnel, and other key legal aspects. Where IPD or team arrangements are used, clarify all responsibilities. They will be blurred and harder to distinguish when the team collaborates on what have historically been clear, singular responsibilities.

Project Delivery

Table 17.2 compares the abilities of various project delivery methods to enable design management. It explores differences under each delivery method to show how design management's “when” and “how” changes. While most tools and processes are the same, how and when they're used, and their effectiveness varies.

Design-Bid-Build

In Design-Bid-Build delivery there is no ability to select and form the team until design is complete and budget and schedule are developed. Opportunities for contractor-and-team-based budget, schedule, and constructability input are lost. No ability to form team-based Level 0, 1, 2, 3 or 4 PDCs exists.

CM-at-Risk

In CM-at-Risk delivery, Level 0 PDCs can be formed the moment all parties have joined the team. Levels 1–4 PDCs can be established early to set the stage for teamwork while design is in progress.

Design-Build

An alternative contracting approach to D-B-B or CMAR is Design-Build. In this method, the owner relies on a single entity to design and build their project. Whether performed within a single integrated firm or via subcontracted designer under the builder, (or builder under designer) is of secondary owner concern. In this approach, the owner relies on a single responsible party but faces other unintended consequences. Contractors accustomed to complaining about designers under contract to the owner must change their attitude: contractually, they are the designer! Let design management and understanding begin. Design-Build Institute of America research shows a rapid rise in this delivery method. By 2020, forty-four percent of construction work is anticipated to be delivered under Design-Build delivery.¹

As in CM-at Risk delivery, in Design-Build, all PDC Levels can be set when the design-builder is brought on board. The difference is that the owner holds a single contract. PDCs can be established early and managed to set the stage for teamwork as design begins.

IPD (Integrated Project Delivery, Integrated Practice, and Team Integration)

In response to issues of dysfunction and contradictory incentives, leaders have developed new contracting forms to solve these problems. Approaches such as Integrated Project Delivery (IPD) have seen success in forming tri-party agreements in which owners, designers and contractors share project responsibility. In contrast to the siloed Design-Bid-Build approach, IPD not only offers – but dictates – a “painshare/gainshare” mentality. At a time when IPD is used more often, this approach, and its “IPD-ish” and “IPD lite” variations are worth exploring for those who wish to manage design collaboratively. IPD offers the advantage shared incentives, from the outset. In this arrangement, the highest potential exists for Project Design Control, incentivized by all PDC Levels including the contract.