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Rethinking Design-Build

 

As IT design experts, we’re seeing more and more projects operated as a design-build, where one entity coordinates all design and construction services. Yet despite its growing popularity there are several misconceptions about what it is, who it works for, and who is not an ideal candidate for a design-build.

 

What is a Design-Build?

This question is best answered by an example.

 

My IT firm, Business Technology Partners, recently completed a design-build project of an IT infrastructure upgrade for the NY State Public Employees Federation (PEF) New York City office located at 100 William Street. We initially handled all aspects of infrastructure design for a low voltage technology infrastructure project for PEF. The scope of work encompassed IT cabling, audio-visual system upgrade, installation of an enterprise wireless network, and implementation of a physical security program.

 

Taking the relationship a step further, PEF retained us to execute a build out of the plans we had initially designed. We were responsible for directly hiring all the subcontracted construction labor to complete the physical install. We then oversaw the construction process to completion.

 

If this project had been a traditional design-bid-build, then PEF would have needed to get bids from all the tradespeople in order to execute the plan that we created.

 

Shorter Project Lifecycle

While many IT design firms are hired to create the blueprint for the project and call it a day, in a design-build project the “design-builder” executes the entire project from start to finish.

Acting as a single point of contact for the client, this method offers centralized coordination between all parties involved, from architects to construction firms as well as ancillary vendors such as audiovisual firms. This increases the efficiency of communication and prevents trades from conflicting within the space during construction, thus shortening the project lifecycle.

 

One Throat to Choke

In a typical construction project, there are many fingers in the pot.

The tenant usually hires a general contractor and architect, and together they work as a team to oversee the design and construction process. But to get all the work done correctly (and to do so in a timely fashion), they must rely upon tradespeople in specialties such as audio/visual, cabling, physical security, telephony, and IT networking. In addition, equipment must be physically moved from one site to another while minimizing disruption to the client’s workflow.

 

The advantages of a design-build are that the tenant only has one company to liaise with instead of having to coordinate with all the trade vendors separately. This company is held accountable for progress, which saves the tenant from having to check in with multiple tradespeople and address any issues that arise one by one, which can often lead to time consuming finger pointing and miscommunications. This makes the contract easier to administer and saves time for the tenant.

 

Predictable Cash Outlay

In a design-build scenario, the tenant is clearly presented with one defined price for all the work. The design-builder then subcontracts with all the trade vendors. This works well for the tenant because the price is established and known ahead of time. In a typical construction scenario (design-bid-build), tenants are challenged by pricing that is hard to predict.

 

For example, in a design-build the design-builder may quote a 15% project and materials fee and a 5% project management fee. The cash outlay is straightforward in that scenario. However, let’s say that the tenant contracted with each vendor separately.  He or she may become “changed-ordered to death” if the tradespeople are unable to complete their tasks on time due to space or timing conflicts with other vendors.

 

For example, the cabling company may have scheduled a time to set up an IT server room, only to arrive and find that the security company is using part of the room to install their camera system. As a result, both vendors are unable to work in the space at the same time. This wouldn’t be likely to happen in a design-build type of situation because the lead point of contact would have coordinated the schedule ahead of time between the cabling company and the security company.

There’s no way to know, in the latter situation, how much the project is going to end up costing. However if this were a design-build project then the tenant’s cash outlay is defined from the outset, allowing them to control their budget more easily.

 

Typically, design-build services come with a 15-20% premium. Some tenants may take issue with having to pay a slightly higher price for a design-build. Let’s take into account the value per hour of time that is consumed by vendor disagreements and stalls. Generally, when all is said and done, tenants find that they tend to save money and have a significant reduction in the number of headaches during construction. This produces a better overall finished product.

 

All of this assumes that you get the right person to run the project. Tenants should conduct thorough due diligence when selecting the design-builder to run the project, because essentially you are putting all your eggs in one basket. If the tenant and project manager do not see eye-to-eye, then the efficiency of the design-build goes out the window.

 

Architects Love Design-Build

The architect who is called in to work on the project usually stands to benefit a great deal from a design-build set up. They like that the coordination between all parties is a lot more streamlined which can make it easier for them to generate the drawing updates and specifications. For example, architects are spared the burden of having to make several phone calls to get a question answered.

In a design-build project we recently worked on for Social Service Employees Union Local 371, our team was able to get through the design process working with the architect and engineers in one week, two weeks shorter than the typical amount of time required.

 

Not for Everybody

Design-build has a slew of positive characteristics, but it’s not for every tenant or owner.

This delivery method tends to work well for mid-sized projects, fit outs, and built in renovation projects of 7500 to 50k square feet.  Once the project exceeds this size, there are very few IT firms who can handle a design build of that financial magnitude. The contracts are too large to be bound and insured properly, and tenants are reluctant to place that much faith in one vendor’s capital.

There are political factors to take into account as well. Often architects and construction managers have referral relationships in place and are expected to doll out subcontracts to their strategic partners. This may ruffle some feathers.

 

Also, some tenants are accustomed to doing it all themselves and will never feel comfortable trusting a design build IT firm. For these individuals, it is desirable for them to oversee the process themselves and maintain a direct relationship with every tradesperson.

 

The Future of Design-Build

Design-build is growing in popularity for the middle market, and gaining wider acceptance than ever before.

 

Said Jay Cohen of Environetics, a provider of architectural, interior, engineering and planning services, “These days, our firm is seeing big advantages to working with vendors who can handle design-build of IT, audiovisual and security systems for office spaces. Working together with BTP, we can execute a project in record time, ordering IT, audiovisual and security equipment in coordination with furniture and finishes.”

 

 

 

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