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Wednesday, Jul 24, 2024

Good for Owners Who Are on a Tight Budget

Everybody knows that design-build has its pros and cons. While design-bid-build, or traditional project delivery, is still the most popular way of managing a project, design-build is catching up.

Design-build is a project delivery method in which a property owner contracts a contractor or designer to take sole responsibility for a construction project.

For example: The owner hires the contractor, who in turn hires the architect and engineers to design the project. In this case, the contractor is the sole reporting party to the owner, as well as the sole point of responsibility for design and construction of the project.

This differs from traditional project delivery, in which case an owner hires a designer to develop a set of drawings, then hires a contractor under a separate contract. Both report directly to the owner.

It is especially common with the growing necessity for fast-track projects, where the developer wants to complete the project in one-half to three-quarters of the time it would normally take. While fast-track design-build projects may cost five to 10 percent more up front, the return on investment can make up for that in the higher lease income.

o Pros

In addition to reducing the amount of time it takes to complete a project, design-build focuses the responsibility of the project on a cohesive team. Sometimes with traditional project delivery, a lot of time is spent with the architect and the general contractor passing blame back and forth.

Design-build mitigates this in that each team member has specific responsibilities, with a team goal of on-schedule/on-budget delivery.

Design-build is also good for owners who are on a tight budget. The process has historically been more cost-effective due to the shorter amount of time it takes to construct the building. Also, with traditional project delivery, sometimes architects design the project beyond the owner’s budget. Contractors know the cost of materials, as well as adequate alternatives to costly materials, and can help the architect adhere to budget during the design phase.

It is much cheaper to alter the design early on in the project than to wait until the construction phase.

Design-build ensures owners the best value for their dollar by combining the designer’s expertise with the day-to-day, hands-on knowledge of the contractor and subcontracting trades. Contractors are generally the ones who get called in to fix various problems upon completion of a construction project, so we get to see what works and what doesn’t.

By working with the architect and engineers during the design phase, the contractor is in a better position to value engineer a project, thus minimizing costs and potential problems.

& #711; Under

One Roof

Some firms take design-build to a whole new level by providing a range of services in house such as space planning, architecture and general contracting services. These companies are usually able to give the developer even bigger savings , both in time and money. Not only are they able to price out the project as they’re designing it so they know where the project stands at all times, but they can change the design as they go along without the usual hassle.

If the building department tells them there is a problem, they can make the necessary changes, stamp the drawing, and be on their way , without time-consuming paperwork and hassles.

Some owners like working with companies that provide all of these services, because they tend to become more intimately involved with the project. This usually means less loose ends, which in turn means less money.

o Cons

With all of its advantages, however, design-build is not appropriate for everyone. As an owner, you would have to do a thorough job of prequalifying the contractor. Some just are not set up to properly manage a design-build project.

You better have confidence in the contractor, because your design team does not have as much authority to enforce the quality of construction as with design-bid-build projects.

The designers just aren’t as active during the construction phase as they may need to be. Even though design-build is cheaper up front, you may end up with higher maintenance and operating costs in the end.

Also starting to gain popularity, however, is bridging, a variation of design-build in which the owner hires a consultant to come up with initial design specifications for the design-build entity. So far, this has seemed to alleviate some of the quality problems with design-build, as long as there isn’t an ego clash between the consultant and the designer.

The other major drawback of design-build is that the owner tends to have less control over the project, as one entity is only reporting to the owner. There are also some situations/jurisdictions in which design-build is not allowed by law.

Take the city of San Diego, for instance. Just last year, the City Charter was amended, allowing the City to award design-build contracts, when they were not able to before.

& #711; A Long Way

To Go

To date, no such contracts have been awarded; however, the city is in the process of setting the new procedures into place. (Qualcomm Stadium and the Convention Center did not fall under the city’s design-build law, as they have their own source of revenue and are considered independent departments.)

We have got a long way to go in finding the perfect delivery method for construction. Could it be design-build? Probably. It seems to work better than design-bid-build for most projects. But even though it has been around a long time, it still has some bugs that need to be worked out.

Sutphin is managing partner of RPG Commercial Construction Services, a division of La Jolla-based Retail Properties Group, Inc. Founded in 1988, Retail Properties Group, Inc. is a full-service commercial real estate firm specializing in shopping center brokerage, design/build and tenant improvement construction, and property management for properties located throughout the West Coast.


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