Design-Build: Why not Engineers at the Helm?

Who should lead a construction project? For many centuries, the answer was a simple one: the Master Builder, i.e., the architect. Then, for much of the 20th century, the answer became "the general contractor." For the past decade or so, however, that question has become a bit more difficult to answer, as the master builder concept resurfaced in the form of multiple design-build schemes.

05/01/2004


Who should lead a construction project? For many centuries, the answer was a simple one: the Master Builder, i.e., the architect.

Then, for much of the 20th century, the answer became "the general contractor."

For the past decade or so, however, that question has become a bit more difficult to answer, as the master builder concept resurfaced in the form of multiple design-build schemes. But just as everyone has an opinion on last night's ball game, no two parties see exactly eye-to-eye as to who should lead construction projects. Many are GC-led; some combine design and construction under one roof in an "integrated services" model. But some intrepid designers are looking to go even further by using design-build as an opportunity to put the M/E/P engineer in the driver's seat.

Dan McNary, the Los Angeles-based managing director of the Commercial and Institutional Construction Services Group for Syska Hennessy Group, New York, explains the approach his firm uses for its engineering and construction solutions, which is called E2C (engineer-to-construct). This scheme places equal weight on both engineering and contracting, both of which are in Syska's house. "What we're looking to do is to have an engineering-led team that gets rid of the uncertainty of the project as early as possible," he says. By having a built-in construction component, he continues, "you get the good pricing and you reduce the RFIs—all the benefits of having a constructor on board early."

McNary points out that an important aspect of E2C is that it prevents the "dilution" of the technology solution, which he says is much more likely to occur under a GC-led approach. "What you see in [traditional] design-build is a handoff of the engineering and the technical solution from the engineer to the contractor, and the contractor then owns the engineering product," he explains. "We think [in such cases] that the engineering product is absolutely in the wrong hands. And so E2C keeps engineering and construction under one leadership team, which is the engineering leadership team."

McNary says that his group has been using the E2C approach for almost a decade, and those customers most receptive to the model are ones that have been burned in the past. As an example, he cites pharmaceutical companies that have experienced problems with lab projects where the constructor-led approach resulted in "dumbing down" the building systems. Other customers that appreciate the method are those who consider quality engineering a key to their business model and wish to attract and retain a high level of talent—for example, businesses that rely on data centers that potentially conduct millions of dollars of business every minute.

Anil Ahuja, P.E., senior vice president with CCJM Engineers, Ltd., Chicago, notes another type of engineer-led design-build involves a scenario where the engineering firm doesn't hire a GC at all. Instead, he says, the engineer hires all of the subcontractors directly (even non-engineering trades) and leads as the prime. The late 1990s was a particularly busy period for this type of work, according to Ahuja, when electronic trading floors and data centers were in particularly high demand. Things have since slowed down. "After the dot-com bubble busted, though, the demand for intensive, schedule-driven projects went away," says Ahuja. He believes, however, that demand will pick up again with the next wave of technology.

While engineers are certainly appropriate leaders for highly technical projects, Ahuja notes that a flaw of the engineer-led scheme is that there are potential conflicts of interest. "As an engineer, you are a watchdog for a construction project for workmanship," he says. "As the engineer, you oversee the contractor's work, for the client, on a project that is designed by you. The conflict, if you are also the prime, is that you are not able to watch yourself." Extended guarantees and warranties on equipment, as well as monitoring the space's performance for an extended period of time, can help offset this issue.

When considering taking on more of a project leadership role, Ahuja says, one of the things that engineering firms can do to prepare themselves is to engage in project management training. A particular deficiency of engineering firms, Ahuja notes, is that when it comes to managing a project properly, including owning up to the risks, most engineers shy away from the added stress. "But if you want to lead as an engineer, you need to develop the associated management and administrative skills," he says.

Martin Sell, AIA, MBA, COO of Horizon Construction Group, a design-build construction firm based in Verona, Wis., notes that another consideration for the designer-led design-build scheme is bonding. While construction firms are generally attractive to bonding companies, due to their hard assets, design firms generally do not possess assets like heavy construction equipment. But, convincing bonding companies that you are not a risk is crucial. As such, Sell suggests that design firms can work to overcome this obstacle by keeping strong financial statements that are audited annually; maintaining and documenting strong internal processes that can demonstrate to the bonding company that you know what you are doing; and building a strong track record of design-build projects over time.

Sell also offers a list of methods by which to make the jump to project leadership:

  • Start over as a design-build company (he notes that this is probably the most unrealistic path).

  • Add a design-build division.

  • Become a "sometimes" design-build firm.

  • Develop partnerships with general contractors.

  • Buy and integrate a construction firm.

  • Make a steady transition from one to the other (the route Horizon took).

Whatever the path, Sell touts several benefits of making the switch:

  • Better project and design control.

  • Quicker project delivery.

  • A decrease in system-related lawsuits.

  • Creation of market differentiation.

  • Additional revenue sources.

  • Increased bottom-line profits.

"Owners are similar in all market types," Sell says. "They want a single source—in this case, the engineer—to be responsible for all aspects of both design and construction."

In other words, the owner will spend the money no matter who's in charge. While the issue of who should lead a project is clearly important, perhaps the next question the design community should ask is, "How can I get a bigger piece of the pie?" The answer is clear: Where it's appropriate, lead the project.



Four Questions for the Design Firm

In the premiere issue of The Zweig A/E Marketing Letter from A/E industry consultant ZweigWhite, Natick, Mass., president and CEO Mark Zweig poses four questions (and his answers) that firms should ask each time they submit a proposal:

Do you really know what the client wants on this project?

You'd better understand what the client wants, or you are wasting your time. That's why I am a big believer in giving clients a free or low-cost sample of what it would be like to work with my firm so we can learn more about each other.

Is this a client who could give you other work beyond this project?

I would have to be fairly desperate to work for a client that is not going to be a repeater. You simply cannot do what it takes to make the relationship successful on one project.

Do you really want this project?

Some firm principals pursue everything, whether they really want the job or not. I find that the problem with doing this is that eventually you win jobs you don't really want. If you take on work you don't really want, eventually you will have to turn away work that you would want because you don't have the capacity.

Will doing this project enhance your reputation or harm it?

Why do any job where the firm may end up looking worse by doing it than by not doing it? There are political problems, problems with clients' reputations, problems with cities, towns, and regulatory authorities. Some projects are just going to be trouble. Conversely, if the job is going to help your reputation, there may be reasons for doing it that go beyond the immediate profit you will earn on this one fee.



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