Chapter 1 – Edited Excerpt

Transformation of an Industry

If you look up the word “transformation” in the dictionary you will find a definition that reads something like this: Transformation – a noticeable change in character, appearance, function or condition. There is no doubt that the design and construction industry has evolved throughout its history. We have come a long way from building huts with mud and straw, using rocks and timber as our tools. Today advanced materials, methods, and technologies, such as Global Positioning Systems (GPS), computer-aided earth moving systems, robotics, and four- and five-dimensional visualization techniques, as well as high performance steel, super-strength concrete and advanced polymers, can be used on any given project. But these types of industry advances, although remarkable, still represent independent, isolated improvements—in other words, nothing that fundamentally changes the traditional process and approach associated with designing and constructing buildings and structures.

Today, however, we stand on the verge of a revolutionary transformation—and at the heart of this transformation is a progressive merging of minds unlike anything we have seen before. Contractors, architects, engineers, and owners are closer than ever to collaborating across all functions of the design and construction process, with design-build, combined with other integration strategies, at the forefront. Combine this merging of minds with new integration technologies, such as Building Information Modeling (BIM), and the “most collaborative” generation of young, tech savvy design and construction professionals in history, and it seems that we may be very close to a tipping point that could alter the way we do business forever—a revolutionary breakthrough. In his book Leading the Revolution, Gary Hamel calls this kind of innovation non-linear innovation, because it goes beyond incremental improvement into the development of a whole new business concept. According to Hamel, “the gap between what can be imagined and what can be accomplished has never been smaller.”^[1]

We have just scratched the surface of the potential capabilities of the design-build approach for delivering highly successful projects. The fact is, traditional roles, thinking, and contracting methods have kept us from taking advantage of the efficiencies, creativity, innovations, and extraordinary results that an integrated design-build process can deliver. In other words, “the way we have always done things” is getting in the way of “getting things done.” Design-build, when it is executed and managed correctly, can simultaneously reduce costs, shorten schedules, and improve performance, thereby adding the kinds of value that project owners are clamoring for today.

Many factors have kept the architecture, engineering, and construction (AEC) industry from reaching its collaborative potential, but probably the biggest hindrance is the industry’s history itself. So, before we take a look at what makes design-build unique and effective, let us take a look back and see how we got off track in the first place.

 

         From Master Builder to Segregated Services

When people discuss the design-build approach, they often refer to the old Master Builder concept. The term Master Builder has been used to describe the individual responsible for both designing and constructing historic marvels such as the Dome of Santa Maria del Fiore in Florence, Italy, designed and built by the quintessential Master Builder, Filippo Brunelleschi in 1420. (It was the first octagonal dome in history to be built without a wooden supporting frame, and was the largest dome built at the time. It still stands today as the largest masonry dome in the world.)

The Master Builder was responsible for coordinating and integrating all aspects of a project’s design and construction, including aesthetics, proportion, quality, and function, along with manpower, materials, costs, and schedules. The Master Builder of ancient times was not an architect, engineer, or general contractor, but was instead a distillation of all three. As he made many decisions required throughout the course of a construction project, his every interaction with artisans, laborers, merchants, and project sponsors filtered through his mind. In other words, all the pieces of the design and construction puzzle were stored in a single location—in the Master Builder’s brain, providing a single-source accountability without the complications of conflicting agendas and independent, special interests.

The Master Builder approach held sway from the Middle Ages through the early years of the Renaissance. However, as the Renaissance progressed, the functions of design and construction began to diverge, becoming separate tasks. The Master Builder concept eventually evolved into a segregated services model, with separate individuals performing design and construction as specialized functions without the benefit of a single-minded perspective.

Severing the Ties That Bind

Leon Battista Alberti (born 1404–died 1472) is often referred to as the first modern-day architect. He is credited with initiating the movement to separate the art of design from the craft of building. According to Jeffrey Beard, Michael Loulakis, and Edward Wundram in Design-Build-Planning through Development, in the mid-1400s Alberti convinced Pope Eugene IV that he could direct the construction of a new façade on Florence’s Gothic church, Santa Maria Novella by way of drawings and models, without directly supervising the work.^[2] For the first time in history, these plans and diagrams enabled the “designer” to instruct the “builder,” thus overseeing the project from a distance. This division of responsibilities set the stage for the segregated services model that forms the basis for the traditional design-bid-build approach used today.

The Industrial Revolution encouraged further separation between the design and construction functions. Specialized design and construction expertise was needed to address unique production and facility needs. Cities expanded, drawing people from their rural homes. This created the need for new urban housing, as well as infrastructure, buildings of commerce, government facilities, transportation lines, etc. New tools, equipment, and building materials gave rise to even more specialized expertise among the various divisions of the design and construction functions.

As design and construction expertise grew more sophisticated in the mid 1800s, architects and engineers formed separate professional societies in an effort to elevate the status of their professions. The American Society of Civil Engineers (ASCE) was organized in 1852. The American Institute of Architects (AIA) formed in 1857. Contractors eventually followed suit, creating the Associated General Contractors (AGC) in 1918. The establishment of professional identity through independent organizations continued throughout the nineteenth and twentieth centuries to include the Associated Builders and Contractors (ABC), the American Subcontractors Association (ASA), the Mechanical Contractors Association of America (MCAA), and many others.

By the end of the nineteenth century, the notion of the Master Builder was long gone. New facilities and buildings were being designed and constructed by specialists, each of whom focused on an ever-narrowing set of concerns. The first “legal” requirement that effectively separated design from construction occurred in1935, when the Miller Act went into effect. This important law required contractors to post two surety bonds (one for performance and one for labor and material payment) on federal projects exceeding $100,000. Because designers generally are not in a financial position to reimburse a surety in the event of a default, this law pretty much took designers out of the construction business. Thus, the Miller Act effected a legal separation between design and construction.

But as long as these projects remained fairly simple, and the parties charged with designing and building them remained cooperative with aligned goals and objectives, the new segregated model seemed to work. However, as buildings and structures became more complex, and the associated risks became more contentious, the segregated services model began to break down. Aspects of projects began to fall through the cracks and “finger pointing” became the primary response to accountability issues. Everyone began to look for ways to shield themselves from liability. Architects, in particular, generally risk adverse, began to withdraw from their traditional responsibilities and abdicate authority for the project as a whole.

The Slippery Slope

As the design and construction industry became increasingly disjointed, the collaborative spirit that once characterized the industry began to deteriorate as well. The gap between the Master Builder concept and the segregated services concept further widened. Various economic pressures and outside influences, such as foreign competition and escalating prices, would eventually bring the dysfunctional relationship to a climax, and many industry participants and clients alike began to push back and demand that designers and builders find a way to work together for the mutual benefit of all involved.

As you will learn in the next few pages, the disconnect between design and construction became more pronounced over the years, to the detriment of the overall project goals and objectives. The design and construction industry became one of the most fragmented and litigious industries in the nation. As a result, many attempts have been made in the last twenty years or so to “right our course” as an industry and return it to the collaborative nature embodied by the Master Builder. But before we can examine these corrective attempts, we need to understand one of the primary causes of our inability to align our underlying interests and motivations: the low-bid mentality.

         Low-Bid Mentality

Most people would agree that cheaper is not always better, and there are many factors that determine the suitability of a product or service. Yet, during the mid-twentieth century, it became law in virtually every state in the United States that construction contracts would be awarded on the basis of lowest price, at least in the public sector. Furthermore, the legislation required that public agencies provide “complete” plans and specifications before soliciting bids from contractors. Private sector owners soon followed suit. Competitive bidding for construction contracts became the norm and a powerful low-bid mentality among owners and clients took hold.

On the other hand, when it came to selecting designers, the Brooks Act, established in 1972, mandated the use of Qualifications Based Selection (QBS) for federal procurement of architecture and engineering services. It became unlawful to select architects or engineers based upon price. Many states adopted the same requirements. This distinction between procurement approaches drove the wedge between design and construction even deeper.

As price became the driving factor for contractor selection, the construction industry responded by working hard to eliminate every extra service or product that might add an extra dollar to the project. If an item or detail was not shown on the presumably complete drawings or in the specifications, then contractors could no longer afford to add cost to their estimates to cover the inevitable minor errors or omissions by the designers—not if they expected to stay in business, that is. Instead, they were forced to point out the errors and submit change orders, hoping to pick up the profits they had left on the table in order to get the job in the first place. This “you only get what you pay for” attitude set the stage for a progressive deterioration of the designer-contractor-owner relationship. Change orders, claims, and litigation became the standard methodology for managing risks and protecting profits.

On the other side of the table, owners were getting tired of paying for all the “extras” left off the drawings and started pressing the designers to deliver close-to-perfect plans and specifications, while at the same time decreasing the fees they were willing to pay them, in an effort to compensate for the added contract costs caused by change orders. Designers began to look for ways to shed risks and liabilities while still protecting their fees. Now that they had to focus so much attention on ensuring that every little detail on the drawings was correct, instead of relying on the cooperative gestures of contractors to help “pick up” what they may have missed, something else had to give. In response to the lower fees they were receiving from owners, designers soon eliminated jobsite visits and other construction administration services and the chasm between design and construction appeared to be growing even wider.

As a result, contractors, designers, and owners fell into a relationship characterized by skepticism, suspicion, and insecurity. The low-bid mentality initiated through public procurement laws and spilling over into the private sector had created an environment of little or no trust among the parties. Collaborative problem solving was forced to take a back seat to risk mitigation. Both contractors and designers learned quickly how to position and protect themselves by shifting risks to other parties. Contractors shifted from self-performing the construction work with their own forces to subcontracting the work to specialty contractors. They shifted from the role of “builder” of the project to “manager” of the contracts. Architects outsourced as much of the design liability as they could to consulting engineers and other design professionals.

         Economic Conditions & Outside Influences

Although they could control costs and shift risk, one thing neither the contractors nor the designers could keep at bay was the effects of the overall business culture and economic climate of the 1980s. Industry practitioners identify the 1980s as the most tumultuous and challenging decade for the design and construction business in modern times.

Decade of Decadence

Some of you reading this book will remember the album by the heavy metal band Mötley Crüe entitled “Decade of Decadence.” (Mötley Crüe is one of the most successful American heavy metal bands, in the United States.) They sang about the decade 1981–1991, which saw rapid advancements in technology that impacted every sector of our economy—including the design and construction industry. Apple introduced the Macintosh^® computer, the first desktop computer to use a graphical user interface. This point-and-click technology would forever change the way we do business, personally and professionally. Computing became something that anyone could learn to do without learning a new “language.” Cell phones, the size of a large tennis shoe, were slowly appearing on construction jobsites. Fax machines helped speed up the transmission of written communications and handheld video recorders helped document jobsite progress. The industrial age had given way to the information age.

As if the strains of the low-bid mentality of the 1960s and 1970s had not already caused enough havoc for the designer-contractor relationship, the 1980s actually brought a new set of challenges into the mix. The “decade of decadence” was characterized by an extreme consumer appetite for goods and services of all types, and United States companies were experiencing fierce competition—especially from foreign rivals—to produce and deliver these products to the American public. This foreign competition was at the forefront of corporate concerns. Japanese manufacturers, in particular, were not only giving the United States technology companies a run for their money, but they were also having a grave effect on many other industries as well, such as the automobile industry. The ability to produce high-quality products—and to produce them very quickly—became a primary goal of American manufacturers that wanted to stay competitive in the 1980s.

Change on the Horizon

Indeed, drastic changes were taking place in American businesses. Industries and corporations that once managed their own construction projects began to rethink that strategy as “faster, better, cheaper” foreign producers began to eat away at their market share. Many manufacturers, such as Boeing, once had their own construction management departments and construction management professionals on the payroll. Not only did the company design and build airplanes but they also managed the design and construction of the facilities in which they built them. Construction project managers were charged with managing the contracts for multiple corporate projects. In some cases hundreds of these managers swelled corporate payrolls.

As pressure from shareholders and global competition increased, companies had to consider more efficient methodologies for delivering projects. American corporations soon realized that if they were going to be able to compete in the new global marketplace, they had to refocus their attention on their primary business function, increase their own efficiencies and productivity, and get out of the facility-building business. They looked to the expertise available in the design and construction industry for help. However, as they began to fine-tune and “lean up” their own operations to gain a competitive edge, they began to wonder why the construction business was not doing the same. Practically every other industry was finding ways to eliminate waste, streamline processes, improve quality, and add value for their customers. Yet the design and construction business seemed more fragmented than ever.

Owners once again began to express their dissatisfaction with the AEC industry. It became increasingly apparent that the traditional design-bid-build delivery method was insufficient. The biggest complaint was that the process was simply too slow. “Speed to market” was the rallying cry of corporate America in the 1980s. Time, not cost, was the number one priority during these fiercely competitive times, and design-bid-build was not delivering fast enough. Owners needed their design and construction service providers to:

• Deliver projects faster without sacrificing quality.
• Provide earlier guaranteed pricing prior to completion of design.
• Respond quickly to economic fluctuations.
• Provide a single source of responsibility for project performance.
• Deliver both design and construction services under a single contract.

Although it had been a long time coming, the economic conditions of the 1980s and the demand for more efficient processes for delivering facilities set the stage for the impending surge in the popularity and use of design-build project delivery in the United States in the 1990s.

More Bad News

Another event occurred in the early 1980s that altered the very nature and personality of the design and construction industry. On July 17, 1981, two of the four interior walkways inside the Hyatt Regency hotel in Kansas City, Missouri collapsed onto the lobby floor during a dance competition, killing 114 people and injuring more than 200 others. At the time, it was the deadliest structural collapse in U.S. history. At least $140 million was awarded to victims and their families in both judgments and settlements in subsequent civil lawsuits. In the opinion of many contractors, architects, and engineers, this single event had a devastating impact on the industry. At the time, insurance companies were already reeling from losses suffered in the real estate market in the 1970s. Overnight, industry insurance premiums skyrocketed. Errors and omissions insurance premiums and contractor general liability costs went through the roof. Many contractors, architects, and engineers went out of business because they simply could not afford their insurance premiums. In response, industry attorneys were on the lookout for any discrepancies between plans and specifications and constructed details in hopes of mitigating exposures and hedging liabilities. Risk advisors swarmed the industry, advising designers and builders alike to protect themselves by withdrawing from the front lines. The industry’s innovation, creativity and problem-solving capabilities were being smothered by the fear of litigation and lawsuits. Contractors started shifting risks to the subcontractor community and designers stopped visiting jobsites. Traditional architectural accountabilities, such as shop drawing approvals, were deemed “too risky” by insurance companies. As a result, fabricators, vendors, and subcontractors were left holding the bag. The architects’ and engineers’ “APPROVAL” stamp was replaced with a “COMMENTS” or “NO-COMMENTS” stamp, or similar verbiage intended to shed the risk and liability onto someone else. Instead of moving toward collaboration and integration, the AEC industry was continuing to go in the opposite direction and just about everyone involved was unhappy with the situation.

The industry was forced once again to react to these outside pressures with a survival mentality. Conducting business at arm’s length, with limited interaction and engagement, seemed like the safest way to respond. Pointing fingers and blaming others seemed like a logical way to shift risk to the other side. This protection mechanism became so ingrained, that when more collaborative methodologies began to emerge, many contractors, designers, and owners failed to behave any differently. Over a three-decade period, an industry once characterized by collaboration and cooperation was gaining a new reputation as one of the most fragmented, inefficient, and litigious business environments in the United States.

         In Search of a Better Way

Design-bid-build project delivery was not delivering—at least not at the “faster, better, cheaper” levels the marketplace demanded. Projects were getting larger and more complex and owners were looking for ways to better control project costs, schedules, and quality. They had begun to look for alternative project delivery methods as far back as the mid-1960s. One of the first new approaches coming out of these efforts was professional construction management (CM). Construction management as a professional service takes the project management functions from both the contractor and the designer and places it in the hands of an independent entity—the construction manager. Under a related approach, the agency CM model, the construction manager acts as an agent or advisor to the owner. When first initiated, it was often coupled with the multiple prime project delivery method, in which separate contracts are issued to the various trade or specialty contractors. The construction manager, working for the owner, is responsible for coordinating, scheduling, and managing the various contracts on the owner’s behalf, in essence taking the place of the general contractor under the traditional design-bid-build method. Furthermore, the construction manager could provide preconstruction services to the owner as well. If employed, the construction manager can offer up-front planning services such as constructability reviews, conceptual estimating, and value engineering by working directly with the designer without jeopardizing the competitive low-bid process. (The various project delivery methods will be discussed in detail in Chapter 2.)

Throughout the 1970s the construction management approach was used successfully on a number of projects. The continued pressure applied by owners to the AEC industry was bearing some fruit. An article appearing in the Harvard Business Review in 1973 stated it this way:

The construction management concept has been touted by some of its more evangelical proponents as a major breakthrough in the history of building, but it is really not a single new discovery. Instead, it is a mixed bag of techniques and procedures, dating back to antiquity, which have been fused together under the pressure of the present building crisis. The catalyst for this fusion has been the owner’s determination to force the construction industry to regard a highly fragmented series of discrete decisions and events as a single process. In other words, the owners have argued that the building process can be effectively managed.^[3]

In 1972 the AGC adopted guidelines for the use of construction management and developed some standard construction management contract forms. In 1976 the American Institute of Architects (AIA) followed suit and embraced construction management as an alternative to traditional design-bid-build project delivery. They too developed a set of standard construction management contract documents. In 1982, the Construction Management Association of America (CMAA) was formed.

Although construction management provided some needed improvements, it still did not address three important owner concerns:

1   Agency CM is not actually a project delivery method; it does not deliver either the design or the construction. It is simply a service tacked onto a project delivery method, such as multiple prime or design-bid-build, and purchased for a fee. The construction manager does not hold any financial liability for either the design or the construction.

2   Unless the owner takes advantage of the preconstruction services component and uses the multiple prime project delivery method, the construction manager is doing the same job that the general contractor would be doing under design-bid-build. Many owners see this as adding an unnecessary extra layer of overhead expense to the project.

3   Instead of having two contracts to manage, one for the design and one for the construction, the owner now has three contracts to manage. Furthermore, the owner is still in the middle, between the designers and the contractors, and is still left to deal with the consequences when something goes wrong.

Today general contractors provide preconstruction services for a fee, even when they are not involved in the construction contract. Ultimately, a construction management hybrid emerged, combining the preconstruction services and the construction management services under the general contractor’s contract. Known as CM-at-risk, this is considered an alternative project delivery method and is often seen as a stepping stone to design-build. Although CM-at-risk adds the preconstruction component, it still does not provide the single source responsibility that many owners seek.

         Constructor as a Professional

In 1971, about the same time that Construction Management emerged on the scene, a group of about thirty contractors from across the country gathered to create an organization that would promote, recognize, and define the “constructor as a professional.” The group formed the American Institute of Constructors (AIC) and attracted a network of contractor members. In the early 1990s the AIC established an independent Constructor Certification Commission that developed a certification program to distinguish the “Certified Professional Constructor” (CPC) as a recognizable entity nationwide. According to the AIC website:

The Professional Constructor is an individual who commits to serve the construction industry in a professional and ethical manner and engages in the continued development of his/her skills and education to meet increasing industry challenges and changes.^[4]

The concept of regarding contractors as professionals (with or without the certification) makes a huge difference in how they are perceived on a design-build team. The contractor of old and the contractor of today are very different roles. In the past, contractors were the primary builders of projects. They wore tool bags and performed physical work in the field. Today the contractor’s primary role is that of a project manager, overseeing multiple trade contracts and coordinating every aspect of the construction process. They must have a keen sense of both business and the building process, and understand all types of project risks and how best to mitigate them—not only for themselves, but also for their clients. That is why their input is so valuable to the design-build team. This evolution represents one of the most significant changes in the AEC industry over the past thirty to forty years and often goes unnoticed, which keeps old perceptions and prejudices in place that only hinder the effectiveness of the design-build process.

There was a time when being a contractor meant being a builder—an actual skilled craft worker who performed the physical work in the field with the aid of a few laborers. Today’s general contractor, although aware of how all the parts and pieces of a building or structure go together, is typically not a tradesperson, but rather a business person and project manager who performs numerous preconstruction and planning services such as constructability reviews, feasibility studies, conceptual estimating, site analysis, and due diligence. He also manages the budgets, purchases, schedules, labor, materials, equipment, safety, and contracts of multiple specialty contractors and all construction-related risks on a project. Today’s commercial contractor typically has at least a four-year degree in construction management, construction engineering, construction science, building science, civil engineering, or a similar discipline and is a true professional. Many also hold advanced degrees in business, engineering, or law. The contractor’s project management functions are typically two-fold—management of field operations (actual construction by subcontracted forces) and the management of the overall project performance. Although some general contractors may still have their own production crews to “self-perform” portions of the physical work in the field, many have opted to shift the risks to specialty contractors who actually perform the work.

Generally, design only constitutes 5–10% of the project’s cost, and the contractor is typically responsible for managing and overseeing approximately 90–95% of the cost of every project they are involved in. The contractor is an extremely valuable team member in design-build, so it is critically important that he be brought on board at the very onset of a project. His expertise and knowledge is invaluable to the design team and highly beneficial to the owner in their decision-making process.

         Re-Emergence of Design-Build

Throughout the 1960s and 1970s, a few owners and several contractors and engineers were experimenting with another alternative project delivery approach—design-build. Although the concept was nothing new, it was not commonly used on public projects because public procurement laws would not allow it. Furthermore, back then, the American Institute of Architects (AIA) Code of Ethics prohibited their members from having any financial affiliation with contractors, so to participate with contractors under a design-build contract was seen as unethical by the AIA.

However, according to Beard, Loulakis, and Wundram (Design-Build: Planning through Development), it is believed that the first use of public funds involving the design-build process occurred in Indiana in 1968.^[5] A small community in the southern part of the state had a school project designed and constructed by the design-build method. Several other school districts in the state followed suit and used competitive design-build procurement for their new educational facilities. Beard, Loulakis, and Wundram go on to report that in 1980, the Portland, Oregon city council made a bold decision to accept a design-build proposal from a team of designers and builders to design and construct “the first postmodern public building of any consequence.”^[6] The controversial project received an Honor Award from the AIA at its annual design awards program in 1983.

Design-Build Gains Prominence

One of the earliest practitioners of design-build in the United States, the Austin Company, first offered the one-stop shop, integrated approach way back in 1907 in Cleveland, Ohio. However, the individual most often credited with advocating for the widespread acceptance of design-build as the preferred project delivery method is Preston Haskell. After witnessing firsthand how ineffective the design and construction process was in his own career as a young engineer, he set out to create a company that would place contractors and engineers, and eventually architects, under the same roof, thus allowing the company to deliver both design and construction as integrated services. He had experienced the problem-solving capabilities of contractors and engineers when they worked as a team, with the same goals and objectives, focused on delivering a project in a timely fashion, within budget, and with superior quality. Doing that consistently, he figured, would give his company a competitive edge, and the best way to do it was by putting the entire team under the same roof. In 1965 he founded the Haskell Company, a full service, integrated design-build firm dedicated to delivering comprehensive facility solutions.

The Haskell Company was not the only firm trying to market design-build services in the 1960s. There were several companies offering design-build services, including Gray Construction in Lexington, KY, Pankow Builders in San Francisco, CA, the Opus Group, in Minneapolis, MN, Suitt Construction in Greenville, SC, Korte Construction of Highland, IL, and Ryan Companies, in Minneapolis, MN, to name just a few.

But Preston Haskell launched a movement that would open opportunities in the marketplace, both public and private, that would move the AEC industry closer to achieving the level of collaboration and integration of which it is capable.

The Design-Build Institute of America

In 1992, Preston Haskell read an article written by Jeffrey Beard entitled Design-Build in the Public Sector. The article was published by the American Society of Civil Engineers (ASCE). Beard worked for the ASCE organization at the time; Haskell called Beard to request reprints of the article. Haskell asked for, and funded, 1,000 copies of that article to be reprinted. He kept 500 and asked Beard to distribute the rest as he saw fit. He began wondering what it would take to create an organization that was solely dedicated to promoting the design-build industry and profession. He recognized that there were strong, well-established organizations such as AGC for contractors and the AIA for architects. There were also a variety of engineering societies for each of the branches of engineering. Around this same time the CMAA had been established to advance the interests of construction management. But none of these organizations had a singular focus on design-build, even though some of them were beginning to show interest in it. The AIA reluctantly began creating guidelines for architects who wanted to participate in development, finance, and construction; and the AGC was beginning to recognize the fact that a lot of its members were interested in delivering design-build as well. So Haskell met with the AGC and the AIA leadership to discuss the idea of creating a special “practice community” within their organizations to support practitioners who wanted to pursue design-build. However, these attempts were unsuccessful. Instead, he started to investigate starting an organization from scratch. He met with Jeff Beard in Washington, D.C. to discuss the idea further. His next step was to contact his friend and professional associate, Jim Gray with Gray Construction in Lexington, Kentucky, who had also been an early proponent of the design-build approach.

Gray Construction was also an integrated design-build firm. He invited Gray and some of his colleagues to the Haskell office in Jacksonville for an all-day meeting. The two exchanged their design-build concepts and best practices. They opened their books to one another to share some of the statistics and financial metrics used to measure design-build success and determine if there were any foundational concepts and procedures about how they did business that was worth promoting. They found that they shared similar philosophies, processes, and techniques and discussed the possibility of creating an association of like-minded practitioners. The two men made a list of about a dozen others who they thought might share their vision and began calling them one by one with an invitation to join them in Washington, D.C. for a two-day exploratory meeting.

In February 1993, approximately 10 of the invited list arrived at the Ritz Carlton in Pentagon City near Ronald Reagan Washington National Airport. Haskell had invited Jeffrey Beard to sit in on the meeting as well. The first day was an open exploratory session to see if there was any merit to the idea. The second day was an all-day working session to establish an initial steering committee and assign various organizational tasks. At that meeting the founding members pooled their money and established a budget. After considering several options, they decided upon the organization’s name—the Design-Build Institute of America (DBIA). In the spring of 1993, Jeff Beard, along with an administrative assistant, was hired as the first President of DBIA. The organization chose Washington, D.C. as the location for its headquarters.

The steering committee met roughly monthly for the next four or five months and recruited additional members to expand their membership base. They were successful in selling DBIA and these initial corporate members, paying $5,000 per year each, were the founding members of the new organization. Throughout 1993 and 1994, they focused on broadening the membership to include practitioners from around the country. The invitation to join was no longer limited to strictly integrated design-build firms, but was extended to large single-discipline contracting and design companies who had made design-build a part of their overall business plans. Haskell credits Al McNeil of Turner Construction and Charlie Davidson of J.A. Jones Construction as early supporters of the DBIA.

In late 1993, the first official meeting of the DBIA was held in Chicago in a hotel near the O’Hare Airport. Jeff Beard presided as president and the twenty-five inaugural members adopted bylaws, created a charter, and established a board of directors. Haskell was elected the first chairman of the board. He served as chairman throughout the remainder of 1993 and all of 1994.

In the fall of 1994, the first DBIA Annual Conference was held in San Francisco and Rik Kunnath of Pankow Builders was elected the second chairman of the organization. During 1995 and 1996, two significant documents were published; the DBIA Manual of Practice and the DBIA Code of Ethics. Several members contributed best practices and procedures to the Manual of Practice and Ed Wundram of the Design-Build Consulting Group in Beaverton, Oregon was retained as a consultant to assist with that effort. Around the same time, the DBIA published its own family of Design-Build Contracts with the help of Michael Loulakis, an attorney with Wickwire Gavin, PC at the time, and Bennett Greenberg with Seyfarth Shaw LLP. Within the same time frame, DBIA entered into an alliance with McGraw-Hill to produce the first design-build magazine which McGraw-Hill published for several years. That magazine then became an in-house publication that is now the official publication of the DBIA—the Design-Build Dateline magazine.

At the urging of many public and private owner groups, the DBIA created a Certified Design-Build Professional™ program in 2002. The Certification Program is an opportunity for design-build professionals to distinguish themselves as having both educational mastery and documented experience in the practice and execution of design-build project delivery and design-build project management. You will learn more about the DBIA Designation Program in Chapter 9.

         Increased Collaboration and Integration

Part of the evolution of design-build has entailed an increased emphasis on collaboration and integration, particularly among contractors and designers. Many have recognized that the real power of the process is the ability to leverage the various perspectives and collective intelligence of the primary design-build players. By working together in a collaborative fashion, the owner has the greatest opportunity to achieve superior results, the project team will optimize efforts, and risks are reduced for all concerned.

         The Role of Technology

As much as collaboration and integration are now gaining acceptance in the industry, another primary driver for this trend has actually been technology. The Computer Aided Design (CAD) systems of the past have evolved into sophisticated modeling systems that are already contributing to increased industry integration. And the technology is gaining acceptance with key players, particularly architects.

Building Information Modeling

In its most basic form, Building Information Modeling (BIM) is 3-D modeling software that can be with a design and construction database, allowing integration of the estimating and scheduling tasks into the model as it is built, thereby creating a 5-D information model. The model acts as a single repository for all the bits and pieces of information across all the disciplines and functions necessary to construct the project. According to the National Building Information Model Standard committee:

A Building Information Model (BIM) is a digital representation of physical and functional characteristics of a facility. As such it serves as a shared knowledge resource for information about a facility forming a reliable basis for decisions during its life cycle from inception onward. A basic premise of BIM is collaboration by different stakeholders at different phases of the life cycle of a facility to insert, extract, update or modify information in the BIM process to support and reflect the roles of that stakeholder. The BIM is a shared digital representation founded on open standards for interoperability.^[7]

There is a great deal of excitement around BIM and its application potential in the design and building business. The AEC industry is buzzing with anticipation. Many firms, which only a few years ago were “waiting to see” where this technology was headed, already have BIM systems up and running or have implementation plans in place. Although the industry has used various 3-D modeling programs for years, many people believe that the integration capabilities of the BIM technologies will revolutionize the way we design and construct buildings and structures.

Architects Getting on Board

Owners have not been the only ones dragging their feet when it comes to the notion of integrated project delivery and collaboration. As a group, architects have been the most hesitant to embrace the notion of design-build and an integrated design and construction process, particularly as it is implemented in BIM. They cite a high initial cost of BIM systems, and also legal concerns. Some architects fear that sharing BIM information with a contractor may expose them to liability. In addition, they are concerned about possible file compatibility concerns when working with contractors and others involved in the process. Yet BIM has also been the catalyst that has prompted significant activity within the architecture community. In recent years some real progress has been made. In March 2007 the Design-Build Knowledge Community of the national organization of the American Institute of Architects (AIA) convened its first AIA Design-Build Summit in Kansas City. This two-day event was a breakthrough, as architects, contractors, and engineers discussed best practices in design-build, including the use of BIM. The event acknowledged that design-build was becoming a preferred project delivery method for owners, and that architects, by resisting making the transition, were missing out on opportunities to provide leadership. The two-day event focused on how architects could more fully participate in the design-build process and why they should.

         New Initiatives, New Strategies

Over the last twenty-five years, a number of other initiatives have emerged that clearly signal the move toward more collaborative approaches to the design and construction business. Different factors have spurred these developments, but they all point in the same direction—toward more efficient and effective ways to deliver design and construction services to the marketplace. Four initiatives, in particular, complement the design-build approach and philosophy:

1. Integrated Project Delivery

There is a great deal of buzz around the concept of Integrated Project Delivery (IPD) today, and for good reason. According to the AIA California Council’s (AIACC) working definition document:

Integrated Project Delivery (IPD) is a project delivery approach that integrates people, systems, business structures, and practices into a process that collaboratively harnesses the talents and insights of all participants to reduce waste and optimize efficiency through all phases of design, fabrication and construction. Integrated Project Delivery principles can be applied to a variety of contractual arrangements and Integrated Project Delivery teams will usually include members well beyond the basic triad of owner, architect, and contractor. At a minimum, though, an Integrated Project includes tight collaboration between the owner, the architect, and the general contractor ultimately responsible for construction of the project, from early design through project handover.^[8]

The AIACC’s Integrated Project Delivery model, although not specifically identified as design-build in the definition document, is similar in character and principle to the philosophy represented by the design-build model. It recommends early contractor involvement, expanded project teams to include specialty contractors and vendors, and high levels of collaboration, communication, and integration. The clear difference is that the design-build model requires a single source responsibility—one contract with the owner. The AIACC definition document identifies design-build, design-bid-build, and CM-at-Risk as contracting methods only, and suggests that you can apply the Integrated Project Delivery principles to any one of these contracting methods. However, it doesn’t appear that design-bid-build can meet the requirements identified in the definition; the contractor ultimately responsible for building the project is not involved with the architect at the early stages of design.

2. Lean Construction

One of the most hopeful initiatives within the design and construction industry is the development of Lean Construction techniques and strategies for eliminating waste in the design and construction process and increasing efficiencies. It is a systems approach to project delivery and considers the work of the team to be more process-management-oriented then project-management-oriented, which is also the case with design-build project management. According to the Lean Construction Institute (LCI) website:

Lean Construction is a production management based delivery system emphasizing the reliable and speedy delivery of value. It challenges the generally accepted belief that there is always a trade between time, cost and quality.^[9]

Much of the work associated with the Lean Construction movement has been the result of efforts by the LCI’s Greg Howell (cofounder and managing director) and Glenn Ballard (cofounder and research director). As consultants, they began to study productivity in the construction industry and began to recognize just how inefficient and unreliable traditional methods and management processes were. They started looking at construction management from a manufacturing perspective, specifically at the principles applied by the automobile manufacturer, Toyota. Certain they were onto something, they organized the LCI in August of 1997. According to Howell, “although the effort started as more of a consulting enterprise, it then morphed into a not-for profit research entity, and today is probably best described as a think tank.”

The fundamental idea behind Lean Construction is that a project should be managed as a whole process instead of a collection of independent elements and activities. Instead of viewing project management as a procedure for managing contracts, Lean Construction considers project management to be a procedure for managing production. One of the techniques developed by the LCI is a scheduling process, or more appropriately referred to as a production control process, called the Last Planner™. The Last Planner concept addresses work flow reliability and the concept of a pull schedule versus a push schedule.^[10]A pull schedule releases work assignments and materials onto a project based upon the readiness of the project to receive it. Onsite personnel determine when the project is ready for the scheduled work. Whereas the traditional push schedule releases work assignments and materials onto a project based upon pre-assigned due dates from a master schedule, typically prepared by project managers at the macro level without the benefit of frontline knowledge regarding readiness.

3. Relational Contracting

LCI, and several other groups around the world, such as Alliance Contracting IQ and the Serco Institute in the UK, also promote the concept of relational contracting, a contracting methodology that focuses on the relationship between the parties to the contract, as well as the transactional aspects of the contract, such as products and services. It is similar to alliance contracting, a cooperative contracting model that is characterized by a collaborative process that aligns values, goals, and objectives among the project owners, designers, and contractors. Recently Will Lichtig, an attorney with Sutter Health and an associate of the LCI, developed a new relational contract instrument called the Integrated Form of Agreement (IFOA). Sutter Health has implemented this new agreement on a few of its hospital projects in California. This agreement is based on the concept of a “core team” organizing itself to function as a single entity with unified goals and objectives. The core team members, usually the owner, the contractor, and the architect, sign a single contract document together and jointly agree to common terms and aligned interests. The IFOA not only addresses the traditional business transactions associated with the project, but also addresses the relationship imperatives as well. In essence, everyone on board agrees to look after one another and support the interests of the “whole.” It will be interesting to see how this contracting approach works out. Although the contract has a long way to go before it is considered mainstream, it is another indicator that the industry transformation is an ongoing process.

4. Leadership in Energy and Environmental Design—LEED

In 1993, the United States Green Building Council (USGBC) was formed as a nonprofit, nongovernmental organization with a diverse membership of architects, contractors, owners, product manufacturers, environmentalists, and others who are interested in the promotion of green building in the U.S.

In 1998, the organization launched a nationally-recognized rating system for benchmarking the design, construction, and operation of “green buildings.” The system, referred to as Leadership in Energy and Environmental Design (LEED), is a voluntary rating system that identifies a definitive standard for what constitutes “green building.” The goal of LEED is to evaluate the environmental performance of a building from a holistic perspective, and measure that performance over the building’s life cycle.^[11]

Although the rating system is voluntary, the LEED evaluation system has become popular across the country. For example, in the state of California, all new state buildings and major renovations over 10,000 square feet and subject to Title 24 Energy Code will be designed, constructed, and certified at a rating of LEED-Silver or higher.^[12]

Achieving LEED certification is not easy. LEED promotes a whole building approach to sustainability. According to several LEED-accredited professionals, it is almost impossible to achieve LEED certification using a project delivery system other than design-build. The entire team—owner reps, architects, contractors, engineers, product vendors, subcontractors, everybody needs to be in sync right from the very beginning of the design to properly monitor and document the various “green” attributes of the project. It takes a tremendous amount of collaboration and integration to get it right. Otherwise, the effort is at great risk for failing at some level.

The design-build methodology and mentality is well-suited to the intent and spirit of each of these initiatives. They are not competing strategies, but rather highly complementary. The best way to serve the industry is to encourage dialogue among the various groups to find ways to integrate approaches and share techniques in order to better serve the industry and the built environment as a whole. The goal is to find the attributes within each of them that will benefit the design and construction process and deliver the best value for the client. While companies are still exploring the practical applications of these approaches and techniques, the future will tell how the relationships among them will eventually play out.

         Back to the Future

A common thread runs through all of the advances of the past forty years—a search for better, more efficient ways to deliver design and construction services to the public. It has been a bumpy road at times. But we have come full circle and almost everyone involved in the design and construction process, contractors, architects, engineers, and owners, are recognizing that the industry’s dysfunction can no longer be tolerated. Many of our traditional policies, procedures, and prejudices are hindering the integration process. The major forces that can influence how we do business in the future are finally beginning to align.

It has been a long time since the days of the Master Builder and the idea that a single person could anticipate all of the needs and challenges associated with a complex project and plan, design, manage, and construct a building or facility single-handedly. Today’s Master Builder is the Integrated Design-Build Team. Although that team needs the skills, knowledge, and experience to deal with the technical aspects of a project, more importantly, they need to accompany them with the more difficult soft skills of communication, facilitation, and collaboration in order to fully integrate the project solution. This part of the transformation process has not been easy to achieve. For too long, the complex role that people play in project delivery has been ignored or misunderstood. But in the end, it’s the “people portion” of the equation that will make the biggest difference.

The New Master Builder

These are exciting times in the AEC industry. For many, they are also unsettling times. The old foundations underlying our traditional ways of doing business, our traditional roles, our traditional ways of interacting with one another, are crumbling under the weight of necessity, change and opportunity. The demands and challenges of the marketplace coupled with technological advances are causing barriers to fall and lines to be blurred.

Those who have not grasped the magnitude of this industry transformation will be unprepared to keep up with the pace of change that is sure to occur over the next decade. In the book The Next Architect: A New Twist on the Future of Design (2007) by James P. Cramer, founding editor of DesignIntelligence, and Scott Simpson, president and CEO of Stubbins Associates, the authors conclude:

As owners seek more streamlined delivery of their projects, they will increasingly turn to design-build, contracting with a single entity to provide integrated design and construction services. This will encourage the traditionally factional and fractional design and construction industry to find new ways of collaborating. The shift to design-build will also substantially affect issues of risk management, since so many formally competitive entities will be linked by a common contractual bond. Essentially, design-build is a return to the traditional role of the Master Builder.^[13]

Whether you are a seasoned practitioner or a young student about to graduate from the university, everyone will be affected by this transformation; everyone will have a role to play and a contribution to make as we redefine how we do business together as design and construction professionals. Design-build is a model that provides an opportunity to bring out the best in each of us, but only when all key players understand and execute it correctly. The purpose of this book is to provide an understanding of the fundamental concepts that are unique to design-build and that allow this approach to work at its highest potential.

Even if you feel you already know how to do design-build, this book can still provide you with valuable information about the practices and techniques to help you maximize the process. If you think design-build is not much different than design-bid-build, this book will demonstrate design-build’s unique requirements and character. If you think design-build simply means that now the contractor gets to “control” the architect, you will find the approach is much more complex than that. As you will learn in Chapter 3, there’s very little about the design-build process that is like design-bid-build. But before we discuss that, we will first examine the basic project delivery and procurement options available, and why design-build has become so popular.

 

 

[1] Gary Hamel, Leading the Revolution (Boston: Harvard Business School Press, 2000), 13–15.

[2] Jeffrey L. Beard, Michael C. Loulakis, and Edward C. Wundram, Design-Build: Planning through Development (New York: McGraw Hill Professional, 2001).

[3] Davis and White, “How to Avoid Construction Headaches,” Harvard Business Review, March–April, 1973.

[4] American Institute of Constructors. http://www.aicnet.org.

[5] Beard, et al.

[6] Ibid.

[7] National Building Information Model Standard Committee (NBIMS), http://www.buildingsmartalliance.org/nbims/about.php.

[8] McGraw-Hill Construction, A Working Definition, Integrated Project Delivery (AIA California, 2007).

[9] Lean Construction Institute, http://www.leanconstruction.org/.

[10] Ibid.

[11] United States Green Building Council, http://www.usgbc.org/.

[12] Green California, “Governor’s Green Building Action Plan,” http://www.green.ca.gov/GreenBuildings/leed.htm.

[13] James P. Cramer and Scott Simpson, The Next Architect: A New Twist on the Future of Design (Osberg: Greenway Communications, 2007).

Chapter 1 Excerpt

“It’s just construction.”

In my experience, the average observer of construction regards the process as rather insignificant and inconsequential—nothing special, nothing unique, not an industry of any major importance—mostly filled with noninfluential blue-collar macho types. After all, when compared to medicine or law or even architecture, the common notion is “it’s just construction.” This is why our great buildings and structures are typically identified only with the designer, and not with who built them. The contractor is incidental. Let me give you a few recent examples to drive home my point.

The distinctive architectural designs of Frank Gehry are known all over the world. One of his newest creations, the Walt Disney Concert Hall in Los Angeles, is “the most challenging of all Frank’s buildings … an enormously complicated structure because of the curved shapes and intricate joinery,” according to Terry Bell, project architect for Gehry Partners, LLP, as quoted on the Walt Disney Concert Hall website. The website mentions that “extraordinary state-of-the-art construction techniques” were needed for the Concert Hall—“[o]ne of the most technically advanced structures in the world, [with] its lack of right angles and the overall sculptural quality.” At any one time as many as 550 construction workers were on-site to transform the concrete and steel into one of the most acoustically sophisticated concert halls in the world. However, you would be hard-pressed to find one mention of the building contractor of this magnificent construction feat in the popular press or on the Concert Hall’s website. Not one single mention! This incredible construction challenge was accomplished by the M.A. Mortenson Company.

Let’s consider another example. In 2002, the third-largest cathedral in the world and the first cathedral to be built in the United States in more than a quarter of a century was constructed in downtown Los Angeles. Designed by the world-renowned Spanish architect Professor Jose Rafael Moneo, the Cathedral of Our Lady of the Angels stands 11 stories tall and weighs a whopping 151 million pounds. The cathedral rests on 198 base isolators so that it will float up to 27 inches in any direction during an 8-point magnitude earthquake. It has been stated that the design is so geometrically complex that none of the concrete forms could vary by more than ¹⁄₁₆th of an inch. Having visited the cathedral several times during its construction and been witness to the extraordinary efforts made by the construction team to ensure the quality of the design along with the requirements for the budget and schedule, I was very disappointed, again, not to find one mention of the contractor, Morley Builders, on the cathedral’s website.

Consider any of our architectural jewels: the Willis Tower (formerly known as the Sears Tower) in Chicago, the Space Needle in Seattle, the Transamerica Pyramid in San Francisco, and the Empire State Building in New York. With a little research, you would find that each of these buildings is easily identified with their designers. However, it would be a real challenge for you to discover that Morse Diesel International, Inc., was the builder of the Sears Tower, that Howard S. Wright Construction built the Space Needle, that the general contractor for the Transamerica Pyramid was Dinwiddie Construction (now Hatheway-Dinwiddie), and finally that Starrett Brothers & Eken, Inc., was the builder of the Empire State Building.

To me, not recognizing and acknowledging the contractor along with the designers of these buildings is a grave injustice—but, unfortunately, indicative of how our society views the construction industry. Apparently, to some people it is not very important. Well, let me explain why it is very important. Drawing a pretty picture on paper or calculating a complex engineering formula does not make a building real—construction does, and that takes tremendous creativity, ingenuity, tenacity, skill, blood, sweat, and tears. So remember, no matter how outstanding the design, it is not architecture until somebody builds it! “Just” construction? I don’t think so!

Construction’s Contribution

Our society does not take the contributions of the construction industry very seriously. But it should, because without these contributions, this world would be a very bleak place. When you walk out of your office, home, or classroom today, just take a good look at the world around you. I want you to notice the houses, the churches, the hospitals, the shopping malls, the theaters, the baseball stadiums, the bridges, the streets, and even the cars driving around. None of these would exist without construction. There would be no cars or any other manufactured products because there would be no manufacturing plants—no Nike shoes, no McDonald’s restaurants, and no iPhones. There would be no commerce, no transportation, and no manufacturing. Progress and construction go hand in hand—we can’t have one without the other. Our society, our economy, and our culture are all dependent upon the construction industry. So, the next time you hear someone complaining about construction workers stirring up dust at the intersection or delaying their trip to work in the morning, I hope that you will take the time to point out what our world would be like without construction.