I am thankful to have another collaboration post to offer. My pal Bryan Stange of Mashburn Construction has agreed to help on a post about working with contractors. In a recent conversation, I asked Bryan to answer two questions:
What are some challenges or 'pain points' you guys are having?
And what are some tips you have for owners, contractors and architects for delivering more successful projects?
From those 2 questions Bryan was able to craft a very helpful article for owners, contractors and architects. You will learn:
A whole bunch of acronyms, DB, DBB, ROM, VE
A valuable comparison of Design/Build vs Design/Bid/Build
How to reduce construction costs while speeding up the delivery time.
How to develop a preconstruction agreement.
And how to best approach a contractor
And without further adieu...Bryan Stange from Mashburn Construction:
"I bet if we put the project out to bid, the construction will be cheaper." - John Q. Client
Myths about Bidding
We often suggest that owners consider a collaborative approach to their project that involves preconstruction services with a General Contractor. I fear that they misinterpret this suggestion as me saying, “I don’t want to compete for this project by having to bid it.”
There is also a misconception that bringing a contractor on board in the beginning rather than bidding the job at the end will cost the owner more money.
My hope in writing this article is that I’ll be able to explain that both of those assumptions really aren’t the case, and that working a project through preconstruction with coordination between builder, designer, subcontractors and owner is the best way to set a project up for success. What’s more is that this approach is most likely to result in savings for the project on both cost and schedule.
A comparison conducted by the Department of Architectural Engineering at Penn State University compared the results of Design/Bid/Build (DBB) and Design/Build (DB) projects from the perspective of cost, schedule, and quality attributes. The data from the study showed that when the DB delivery method was employed over DBB, projects resulted in an average of:
12% improvement in construction speed
30% improvement in project delivery speed
13% reduction in unit cost
More certainty in finishing on time
A greater chance of finishing within 5% of budget.
A higher possibility of achieving specified quality.
We continually see these types of results in the markets that Mashburn serves.
As general contractors, our goal is to build great buildings that are well-thought out, that perform well for their owners, and that are delivered on time and on budget.
While a design/build approach isn’t the best approach for all commercial buildings, I think it is ideal for most, mainly because it sets a construction project up to be as predictable as a construction project can possibly be. Predictable being the keyword.
There are several different types of project delivery methods, but for the purpose of this blog post, I’ll discuss two of the most common: Design/Bid/Build (DBB) and Design/Build (DB). I’ll discuss both contracting methods, and will explain some of the benefits of each.
Design/Bid/Build (DBB) represents a non-collaborative approach where the owner first hires an architect to design the project. Once design is complete, the owner sends the bid documents to contractors to bid the project.
DBB can be the best method when:
The project is particularly simple, and/or small.
The owner possesses both the technical expertise and the time to devote to being really, integrally involved in the management of the project.
The owner is comfortable bearing the bulk of the project risk.
The owner has hired an architect to create an extremely comprehensive set of drawings and specifications.
Or when the owner plans to also contract a 3rd party construction manager.
DBB may also be useful in a down economy when competition for work is fierce.
From an architect's perspective, a Bid set is much more comprehensive than a Design/Build set. There is a knowledge that is developed by a contractor during Design/Build that does not exist for DBB which requires a more thorough set of documents.
This one should have been DB.......
Generally, when a project should have gone DB, but was delivered under DBB, that fact becomes clear at the point that the contractor attempts to price the job. If the owner didn’t provide sufficient constructability analysis, the Requests for Information (RFIs) start rolling in from our subcontractors. The result is delay in pricing the project, and difficulty for the owner in assessing the bids that he or she receives.
Design/Build (DB) is characterized by heavy collaboration in the front end of the project between architect, contractor and owner. The contractor is seen as more of a partner in the project (and also generally assumes more of the risk than with DBB).
The following are some of the advantages of a DB approach to construction:
Contractor, designer, and owner are working together as a team in the best interest of the project.
A high level of collaboration is involved. Subcontractors are also consulted and provide input to designer and builder.
Changes to design and controllable construction delays are much less likely to occur due to front-end collaboration and planning.
The contractor develops a higher level of knowledge of the project design and is able to fill in gaps and avoid future change orders.
A team of subcontractors are selected based on price, qualification, and financial stability, instead of on price alone.
Scheduling can be expedited, as certain aspects of construction can be performed prior to completion of design.
The Preconstruction Agreement
At Mashburn, we put a lot of emphasis on preconstruction. As I’ve described above, working through preconstruction with the owner allows the contractor to develop a relationship with the owner, and it results in successful, well-planned projects.
What is a preconstruction agreement?
As a developer or owner is looking at a possible project, they have already figured out what they can put into the project in order for it to work. A lot of times they already have an architect on board, who is helping the developer or owner think through their options for the building. Once the owner/developer determines that they like the potential of the building, they will call on someone like Mashburn and say, “Tell me about what it will cost to build/renovate this building.”
Rough Order of Magnitude (ROM)
The estimate we provide at this juncture is called a Rough Order of Magnitude (ROM). The ROM is like a very educated guess. This number is based on recent projects of similar scope, and also just on our experience with building stuff. We typically do this for free in order to help the owner/developer with their due diligence on the building.
But at some point the project gets real.
The developer says, “I think this just….might…work!” So they come back to Mashburn and say, “Okay, so now I need to know exactly what this is going to cost.”
Up until this point we have assigned various components of the building approximate costs based on square footage, etc. But it’s now time to really dig in, and develop a real cost for the building by getting subcontractor input.
We also need to talk about how the execution of the build is going to work. In some cases, we are given a specific project cost that we need to hit in order for the project to be viable, in which case we may need to work with the architect and subcontractors to value engineer the building to make it hit that number.
Value engineering = taking stuff out of the design to make the building come into budget. Commonly joked as de-value engineering.
The owner may also want the contractor to help to develop a design-build team of consultants and designers who work well together.
It’s at this point that we generally look to enter into a preconstruction agreement—where the owner agrees to compensate the contractor for time spent pricing and helping to develop the project.
The preconstruction agreement isn’t going to be a huge sum of money (after all, contractors make money by building buildings, not on preconstruction fees), and the agreement really doesn’t bind the owner to the contractor. If at any point the owner determines that they want to pick up and leave they can do so—and can take the documents produced under the preconstruction agreement with them.
Approaching a Contractor: Best Practices
Whether a project is done through a collaborative approach, or whether it is bid, the way in which an owner or owner’s representative approaches a contractor is important in garnering the contractor’s participation.
At Mashburn, each time an opportunity comes through our door, we qualify that opportunity, and very quickly determine whether we should devote preconstruction time and money toward it. We choose to put resources toward the projects that excite us the most, and that we feel like we have the best chance of ultimately winning.
Here are a few things you (as an owner, designer or owners rep) can provide your contractor that will help get them excited about being involved in your project:
- Tell us why you want us involved. This is really the most important thing. Your contractor wants to understand that you see more in them than a license, an insurance policy, and a pulse. Have we built something similar? Is the project size or type a good fit for our company? Is the designer someone with whom we generally work well?
- Is the owner interested in getting our input on this project in the front end? If not, and the project is further along, how many other contractors are going to be invited to look at this job?
- How far along is the project with respect to design and bid documents (help us understand when we will be able to price this job). Also, approximately when is this project expected to start construction?
All these things help the contractor make the decision as to whether they will pursue or pass on an opportunity.
Here are two real-life scenarios to compare:
An owner’s rep calls me and says, “Bryan, we have a space that needs to be built out for a new retail user. I don’t have any plans, drawings or specs, but I do have a bulleted list of things that need to be done. I need a bid within a week.”
Who else is bidding? Two other contractors or eight?
Did another contractor provide preconstruction support for this project prior to the owner’s rep calling me?
When will the project be awarded (or has the prospective tenant even committed to this space yet)?
I don’t know the answers to any of those things, and I really don’t have a very good idea of the scope of this project either.
This puts the contractor in a tough spot. It is likely that with this limited information the GC will either decline the opportunity (which will be taken as being too busy), or the GC will turn in a number that will protect their company from unknowns due to lacking bid documents (which may be perceived as being too expensive).
A developer from out of town calls to say they have a project coming up downtown. They tell me that they are reaching out to Mashburn because they want a contractor who is local to Charleston, and who is experienced working downtown. The developer tells me he has done his due diligence on suitable local contractors by talking to his local consultants as well as other developers who work in Charleston, and he is interested in talking to Mashburn as well as two other GCs.
The developer then tells me the plan: they have preliminary drawings available, and would like to go through a Rough Order of Magnitude exercise with all three contractors for the next 1-2 months. They will then select a contractor from the three with whom they will enter into a preconstruction agreement. The selected contractor will then work with the design team over the next several months, with an expected construction start of 8 months out.
Boom! I’ve got everything I need to know to make a decision on this one: Why we were included, who our competition will be, how long we can expect to provide support before we know if we are in or out, and (for scheduling purposes) I have an idea of about when the project would break ground if we were awarded the job.
Having a strong preconstruction group is essential for a commercial contractor, and is a tremendous asset to owners and developers. Particularly when considering projects of any size, or with some level of complexity to them, the savings to the schedule and construction costs for the project which result from coordination and planning between owner, architect, builder and subcontractors in the front end of a project can be significant.
Be discriminating in the contractor that you chose for your project. Select a contractor who is a good fit for your project size and type, and who works well with your architect. Be intentional in the way that you approach your prospective contractor, and communicate to them why you’d like their involvement.
Creating a team, which works together in the best interest of the project, is most often the best method for achieving the goals of: a great building that performs well for the owner, delivered on time, and on budget.
Bryan Stange is the Business Development Manager for the Mount Pleasant, SC office of Mashburn Construction, a commercial general contractor with offices in Columbia, Mount Pleasant, and Greenville. Mashburn Construction has been in operation since 1976, and builds primarily in the Carolinas. Bryan can be reached at 843.737.3049 or firstname.lastname@example.org
Steve's Wrap Up
As always, I appreciate you taking some time to read this article. There are a lot of things you could be doing and I am grateful for your time.
Collaborating with contractors is a very important task for an architect. Although we are often the first ones in, and the creators of the 'big idea,' it is the contractor that will ultimately deliver the project.
And thanks again to Bryan Stange!
If you have found this article useful, I hope that you will share.