Driven by the desire for lower costs and earlier completion dates, many owners are abandoning the traditional design-bid-build project delivery method in favor of variations that emphasize teamwork at the very earliest stages of planning and design. They rely on specialty contractors to act as designers or consultants to the design. “Thirty years ago, you'd get a complete set of drawings,” says Leo Correll, executive vice president, Delta Diversified Enterprises, Inc., Tempe, Ariz. “You could make an estimate and go out and build the job. In today's industry, whether it's driven by finance, costs, or the owners not knowing exactly what they want, the engineering is far less complete than what it used to be.”
The main objective of total player involvement in the conceptual and planning phase is to limit expensive change orders or rework resulting from breakdowns in communication, as well as the cost of the actual communication — what economists refer to as “transaction costs” — among players. By bringing the mechanical, electrical, and plumbing (MEP) firms into the process earlier, owners are able to condense building schedules by using practical strategies, such as pulling partial permits to start the underground work before the design starts.
“A lot of owners recognize they've had problems with the plan and spec delivery,” says Steve Juan, vice president of pre-construction services, Guarantee Electrical Co., St. Louis. “They want contractors that are installing the system to be more involved in the design process, making the job constructible and helping get the job in on budget earlier.”
Unity International Group, Flushing, N.Y., uses a sports metaphor to describe its early coordination efforts for the program management method of project delivery, which focuses on a facility's life cycle costs as early as during the construction phase.
“We have kick-off meetings,” says Peter Striano, owner and CEO. After a project is awarded to the firm — based on the estimate — the engineer, project manager, estimator who took off the job, chief estimator, field superintendent, and chief operating officer get in a “huddle” to review the profile of the job. The profile includes variables such as work to be done on overtime, work to be done on straight time, the schedule of deliveries, major purchases, and equipment to be delivered to the job site and how that all fits into the owner or general contractor's schedule.
“These are some of the interlocking phases of the job that have to be carefully measured before you release a job to full flow,” Striano says. “It's a major coordination effort at the outset of the job. It's much more emotional than it is in the written word, so to speak. It's like watching football coaches work.”
Far from being rattled by the pressure to acquire new project management skills, most firms have risen to the challenge. “We love being involved in design-build projects,” Juan says. “When owners and contractors have a job that's getting ready to go into the design process and we have some influence, we try to push it toward design-build or design-assist at a minimum. It lets us understand their needs so we can help guide them on what things cost and the most efficient ways to do certain things.”
In some cases, electrical contractors not only work as a specialty contractor consultant but also as the prime. “Helix is probably a little unusual in the specialty contractor arena — especially electrical — in that a lot of the work we do is as a prime,” says Brian Jordan, executive vice president, Helix Electric, Inc., San Diego. Recently, the company completed a project performing telecommunications upgrades as a prime for California State University. “We're comfortable either as a prime or a specialty.”
More work at the front end can also bring about a smoother building process at the back end. “We bring a constructibility to our design-build process,” says Juan. “It makes our field people more productive, and, in turn, makes the delivery on the job site more economical.”
This year Guarantee's design-build work (Design Build) is approaching 40% to 50% of the work the firm performs. When the company uses the design-build delivery method, it is the engineer of record. “Our constructibility group interfaces with our design-build process and even helps with our plan and spec work to take those drawings from an engineer and provide the next level of detail that allows our field crews to be productive,” Juan says. “We give them detailed drawings and blow-ups of complicated sections so they know exactly what to install and how to install it.”
Many firms are still wary of providing the actual designs so they opt for delivery methods in which they act as a guide or consultant, such as design assist (Design-Assist) or program management. “Even though we have engineers on staff, we do not do the design,” Correll says. “The engineers on staff assist and coordinate with the design firm we would contract to do the design.”
Unity is another firm that keeps a strict boundary between design and construction. “We merely respond to the design that the owner and client have put together,” says Striano. “We look for changes in the design or areas in the design that we could get to the same place that the engineer wants to but much more of an expeditious route.”
Firms are finding that more supervision and communication does not necessarily increase the cost of the project or bring additional headaches. “You're able to control your destiny a little bit better,” Correll says. “Even though you have more risk, you can have passion about what you're doing and really be a part of what's being created. Then your meetings go better, your control goes better, your schedule goes better, and that's where our company and others throughout the country that do this have really strengthened the industry.”
Correll isn't exaggerating when he mentions risk. “You have tremendously more at risk if you're putting together a budget for a job — and have a contract that makes you live with it — even before the design is complete,” he says. “You really have to have the personnel to allow that to happen, all the way down to the superintendent in the field and the area foreman. ”
Not only does an early estimate pose a risk for contractors, but it may also create more work. At Guarantee Electrical, sometimes the estimators are required to complete an estimate more than once on a job. They must also use their expertise in estimating using incomplete plans. “Our estimators have to be able to fill in the gaps that aren't on the drawings,” says Juan. “Sometimes the basics are there but not all the detail that are on a final set of documents. They have to be thinking about the big picture and how to fill the gaps in those early stages.”
In addition, estimates are only one part of the work with which the pre-construction group at the firm is tasked. “Our pre-construction group is more than just putting estimates together,” Juan says. “We're actually helping manage the design and budget process through design to make sure that when it goes into construction the design's complete, it's constructible, and it's within budget.”
For most electrical contractors, being more involved in the design process means developing a repertoire of new skills to become more proficient in the design collaboration process, expertise traditionally not required by the work specialty contractors perform. Not every electrical contractor is equipped to deliver projects using methods that call for a command of design and planning. “You can't just go to the Yellow Pages and get a number for a contractor that can do this,” Correll says.
To stay competitive, many firms have either developed business units or hired additional staff versed in design, engineering, and project management. “You used to be able to do a million-dollar job with one supervisor,” Correll says. “You can't do that anymore.
“Owners are finding that the project delivery time almost across the board is quicker when you're dealing with design-build because you're not going through another step,” says Brian Jordan, executive vice president, Helix Electric, Inc., San Diego. “You've got the person that's actually installing the work designing it. Time is money, and if owners have six months less carrying charges for their loans because they're getting the project built faster, then that keeps their costs down.”
In 1993, only one state authorized design-build on public-sector work, according to the Design Build Institute of America (DBIA), Washington, D.C. Currently, Alabama, Michigan, and Rhode Island are the only states that don't authorize its use on public-sector work, although that may soon change in both Michigan and Rhode Island where there are bills that would authorize it being considered by the state legislature. In addition, the private sector's use of design-build has increased steadily in frequency and application in the last 30 years. It has become more common in the United States on commercial and institutional projects, as well as in the industrial and power sectors.
“More public agencies are moving toward the best-value- or performance-based types of procurement, especially the federal government,” Jordan says.
Design-assist is considered a hybrid between design-bid-build and design-build. The design-assist method is when a general contractor procures the services of an electrical contractor early in the design process to provide value engineering and field detailing services.“The designs are further along,” says Brian Jordan, executive vice president, Helix Electric, Inc., San Diego. “Then the contractor steps in to develop them to a greater extent, past the conceptual stage.”
In the past 10 years, the popularity of the design-assist method has grown, in part due to the countrywide reach of many engineering companies. “When out-of-state architects wants to have control of the MEP design under their contract, they need help locally to complete their design,” says Leo Correll, executive VP, Delta Diversified Enterprises, Inc., Tempe, Ariz. “Local contractors know the local requirements. That's where a local contractor becomes very helpful in the design — to bridge that gap between what's required locally, what the owner wants, and what's going to be put on paper.”
Many electrical contractors prefer design-build over design-assist. “In design-assist there have already been certain decisions made and certain directions taken,” Jordan says. “Input can be more limited, and we may not be able to have the cost impact for an owner that we could if we get in earlier.”
Sidebar: Construction Management (At Risk and Multi-Prime)
“This method is becoming an industry standard across the board,” says Leo Correll, executive vice president, Delta Diversified Enterprises, Inc., Tempe, Ariz. “There used to be a difference in public and private projects. Private was ahead of that process more than public, but a lot of the universities and a lot of municipalities are also using that delivery method. They hire the general contractor to put together the team, the MEP, and the designer. Then the manager develops a budget for the project and completes the design. If for some reason the project couldn't be built from the budget that was developed, then the municipality would put a bid out on the street for quoting.”
Very rarely do electrical contractors act as the construction manager. However, they are sometimes hired by the construction manager who is appointed by the owner. Many of the larger general contractor firms are switching to a construction management at-risk role. “More and more, general contractors are doing less and less of the actual work and are becoming more like construction managers at risk,” says Brian Jordan, executive vice president, Helix Electric, Inc., San Diego. “They're basically the owner's agent, but guaranteeing a set price for the project.”