Development

Design/Build Decisions

Understand a Company`s Structure and Philosophy Before Selecting a Builder.

Asking 20 people to define the term design/build likely will solicit 20 different answers. Some will suggest architecture and construction. Others will describe consulting and brokered services.

Each individual definition struggles to describe an industry that has grown far beyond its origin. While design/build remains a catchall phrase, in reality it is an antiquated, limited description for today's vast realm of integrated services. The design/build industry has expanded and diversified to meet today's market demands with innovation and efficiency.

Few clients have the time or resources to direct their own commercial development, so they turn to external providers. Which service providers they select depends not only on their needs, but also on their awareness of what the design/build industry has to offer. Unfortunately, many clients don't know what they want or need, because they don't know what options are available.

To help clients choose the best design/build companies, or to match a company to a development project of their own, commercial real estate professionals must cultivate an awareness of the diversified offerings of this industry.

To this end, some analysis and description of the various types of design/build companies is provided. While many of the offered terms are descriptive, non-industry-standard phrases, they help provide an understanding of the unique nature and culture of design/build service providers and a method of evaluation that will assure reliable, successful relationships.

Match Size and Scope to Project
Selecting the service provider for a commercial construction project begins not with the project itself, but with the nature of the provider. The first and most obvious characteristics to consider are size and scope.

The general categories for size and scope are global vs. local and generalist vs. specialist. The global design/build company has established operations or associations throughout the world, but is not necessarily a large organization. On the other hand, the local company may be a sizeable corporate entity but have only one operation center.

A global provider generally will have diverse experience and a broad perspective on development. The largest global firms bring unprecedented financial and personal resources to the table. But they often lack contact with local trades or the ability to foster goodwill on a local political level. Often they are seen as “strong-arm developers” who are insensitive to localized concerns.

Conversely, local providers may be more in tune to political and cultural landscapes and possess strong ties to local trade resources. However, this correlates to limited influence and resources in expansion markets.

In regard to scope, both generalists and specialists exist. Specialists have chosen to focus on a tightly defined industry or solution type such as retail or medical. Generalists have broad experience with many industries and solutions. Each fills very specific client needs.

For instance, a client who needs a 100,000-square-foot, no-frills warehouse may find the perfect match in a local firm that specializes in turn-key, tilt-wall facilitities. But a large corporate client expanding into several markets nationwide would realize greater overall efficiencies and cost savings by selecting a global generalist.

Consider Organizational Structure
Once a client has defined the size and scope of providers to consider, the next step is to evaluate the individual personality and organizational structure of each candidate. On the whole, most design/build companies fall into three main categories: broker, strategic partner, or integrator.

Brokers (which does not refer to real estate brokers) characteristically outsource most of the design/build service components and function as overall project coordinators. In this role, brokers assemble a team of service providers through a typical evaluation and selection process, just as if a client were coordinating its own design/build project.

However, brokers often have broader experience and deeper vendor relationships than clients have. Brokers also have the freedom to assemble diverse teams to suit the particular needs of any given project.

Strategic partners are strong in one or more specific services and have established alliances with complementary service companies. For example, an architectural company may regularly partner with a particular engineering company.

This chain of providers can work well, but the weak link can be the individual arrangements between the providers. Most companies have multiple strategic relationships, with varying levels of influence and control. But individual providers always will act in their own best interests, which means prioritizing their services according to all of their clients' needs. Even with strong personal relationships, conflicts can and often do occur. Clients must understand these relationships to ensure that a strategic partner has adequate influence over the associated providers.

Integrators are full-service organizations offering all design/build services in-house, including architecture, engineering, space planning, interior design, and general contracting. Design/build integrators also may provide associated services such as real estate brokerage and management, financial services, master and urban planning, and communication technologies.

In regard to overall costs, brokerage is usually the highest, due to a lack of synergistic services and almost no fee discounting. Strategic partners can offer some fee discounts and synergistic service. Integrators often are the least expensive due to their ability to combine and discount services.

Understand Corporate Culture
Another key factor in selecting the best provider is understanding a design/build company's origin and culture. Again, companies usually fall into one of three general areas of origin: architectural, general contracting, or solutions-based.

Companies with architectural origins began with design services and have added the general contracting element. Such companies typically are strongest in design quality, innovation, and presentation and may tend to drive projects accordingly

Companies with general contracting foundations often have added design and architecture to expand their service offerings. These companies typically stress construction, with a secondary emphasis on aesthetics.

Finally, solutions-based companies often begin outside the typical design/build service model, with origins in real estate or perhaps finance, and build their organizations around specific projects or industries. Their approach to growth is very systematic. As they identify opportunities, they add enterprises to match those needs.

Most companies approach the design/ build process according to their particular origins and evolutions. Understanding the origin of a company can offer insight to its potential priorities, motives, and expertise.

Considering a client's proclivities in these areas also may provide insight. For example, a client who possesses a strong sense of design may be happier with a company with a design bias, whereas a client with building or development experience may value construction fundamentals over design.

Evaluate Process Methodology
Another key question in selecting a design/build company is: What process will the design/build company take to complete the facility? Linear and parallel are the two major types of methodology and delivery processes.

The linear process is dominant with brokers and strategic partners and some integrators. This process follows the industry-accepted design and construction process in which each phase of a project is handled in sequential order. A program is developed with a schedule and budget, service providers are selected, land is acquired, designs are modified, estimates are produced, designs are re-evaluated according to budget and time restraints, and finally, a facility is built.

The parallel process is associated most with integrator companies. Here, every aspect of the project — site selection, design, procurement, and construction — runs nearly parallel with the others. Sites are evaluated and acquired based on a design. At the same time, designs are being developed based on site and construction factors. Long-lead building materials are ordered before the design is finalized. The integrator company needs broad qualifications, core competencies, accurate communications, and experience to effectively deliver design/build solutions via the parallel process.

Generally, the linear process works well for large organizations with multiple committees or extensive approval processes that require extended periods of consideration. The parallel process can be beneficial for companies with focused requirements and the ability to make quick decisions. It also is particularly flexible, allowing clients to evaluate and prioritize multiple design/construction scenarios throughout the project life cycle.

Another critical component of modern design/build processes is value engineering, or evaluating a design for the specific purpose of reducing costs. In the linear process, value engineering is performed at specific stages but often affects previous decisions, as well as influencing future ones. In the parallel process, value engineering is integrated and incorporated into all development facets.

In both systems, communication is paramount. Companies should offer a standard set of communication tools such as scheduling, budgeting, documenting, and reporting. More advanced companies may have online and/or Web-based access and delivery.

Determine Communication Philosophy
A design/build company's communication philosophy usually is a reflection of the firm's organizational structure and generally will fall into one of two categories: static or dynamic.

The static philosophy is related closely to the linear process of many broker and strategic partner design/build companies. Static communication is the traditional point-to-point communication method. Information is routed sequentially to each person in the chain for comment and approval.

Conversely, dynamic communication is characterized by direct, real-time delivery of information between those parties most capable of making decisions and taking action. It is an empowering philosophy that takes full advantage of modern technology to deliver critical information, directly and instantly, to those who need it most.

Establish Solid Relationships
Many design/build companies have a business developer to create proposals and win business. Once awarded, the business developer hands the project to a project manager.

The client/project manager relationship is perhaps the single most-critical relationship in the entire design/build process. As such, the project manager must be identified in the earliest stages of the process and equipped with a clear understanding of all expectations.

Clients should ask to meet project managers and consider their priorities, drive, communication, and personalities. The more comfortable the relationship with the proposed project manager, the more likely the design/build project will be developed and completed as expected.

Selecting the right design/build company requires much more than standard due diligence processes. Successful clients will begin the evaluation and selection process even during their internal phases of needs assessment. They will consider the size and scope of the companies in question, in relation to their needs. They will evaluate the organizational structure and corporate culture of the candidate companies, and they will weigh the various process methodologies and communication philosophies. Finally, they will assess the personal and professional qualifications of the designated project manager. With resolution on these key criteria, clients can enter design/build relationships with confidence.

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