A WHITE PAPER FROM PACIULLI, SIMMONS & ASSOCIATES, LTD.
AUTHOR: PETER J. RIGBY, JR., PE
Is design-build the greatest thing since sliced bread or a civil engineer’s nightmare? A spin-off the old “master builder” approach, design-build has been touted especially by the military and other entities in recent years as a better approach to the construction process. This system is used to minimize the project risk for an owner and to reduce the delivery schedule by overlapping the design phase and construction phase of a project. The contracting entity with the owner is more often than not the general contractor. In this case, the design professionals are retained by the contractor as opposed to the design-bid-build process where the owner hires the design professionals directly. A civil engineering firm may be contracted directly with the contractor in the design-build process or have a contract with the architect depending on the desires of the contractor.
In this paper, we intend to explore the civil engineer’s process of:
1. Marketing for Work
2. Responding to RFQs and RFPs
3. Contracting the Work
4. Design Issues
5. Coordination Challenges
6. Allegiances and Alliances
7. Business Planning
8. Pros and Cons
9. The Future of Design Build for the Civil Engineer
MARKETING FOR WORK
In the design-build arena, as a civil engineer looking for work you may need to become an owl and turn your head around and get a different perspective because it’s a whole new process. Previously you have been contacting the agencies, local, state and federal to see what’s coming up in the capital improvement plans when seeking public sector work because these were the people that hired you directly. Alas, in the design-build era you need to change your focus to general contractors as these are the companies that hire design professionals and put together a team and they will typically contract with the owner. So, if you plan to play in the design-build arena, civil engineering firms will need to re-strategize with their marketing colleagues if they expect to get on winning design-build teams. This is not an easy or inexpensive transition — it takes time and effort to establish relationships with the decision makers within the construction industry.
RESPONDING TO RFQ’S AND RFP’S
Opportunities for direct contracts with owners and/or operators by civil engineers have exponentially declined in the recent years as a result of the design-build process. It’s harder to find a solicitation these days that reads design-bid-build. It was not uncommon, although not always desirable, that civil engineers worked for architects on design-bid-build projects, but now the civil engineer is forced to be on a team either still under the architect or now under a general contractor. So what happens now when RFQs and RFPs hit the street for design-build projects? The civil engineer must solidify teaming arrangements. Often he is forced to create relationships that convince a new set of players, contractors, that his firm has the savvy to perform the work. It was one thing to convince the architect for projects, but now the contractor has a say in the process and this can be both a challenge and a nightmare for a civil engineer to get on teams. Good relationships with contractors can help a civil be part of the team for a RFQ despite reluctance of an architect. Equally, a contractor can easily squash a civil engineer despite a high recommendation from an architect.
There is a new decision to be made by the civil engineers in the design-build process. They are now confronted on the viability of being on more than one team. Previously, being on several architect teams meant a little more effort, perhaps a little more practice time for interviews, a couple of more coordination meetings, and some additional interviews to attend. Now, near complete designs must be finished by civil engineers in responding to the RFPs of design-build projects. This is a huge time-consuming effort, unlikely to be compensated for and takes tremendous staff resources, not to mention ethical issues that arise. More often or not, civil engineering firms whose contracts were sealed based on qualification based standards have been removed from that selection process and now have diminished win-ratios as they realize in the design-build arena it’s often best to team up with one team.
CONTRACTING THE WORK
From a civil engineer’s perspective on design-build projects, there are generally two contracting entities: the general contractor or the architect. One would think that contracting with the architect is just the same on a design-bid-build project. There are similarities but the civil engineering firm needs to recognize how the differences affect his operations. First of all, the architect is not directly engaged by the owner and the flow of payment for civil engineering services is now one step longer down the food chain. Payment must go from the owner to the contractor to the architect then to the civil engineer. This can be a huge cash flow problem for the civil engineering firm as it may take up to 120 days or longer to get paid and if there are questions and/or issues on invoices this payment cycle just compounds the problem. It is especially important in contracting for services to get change orders signed ahead of time as the pace of the design-build process can become frantic and it becomes difficult to track who said to do what 120 days later when reviewing invoices. A savvy contractor will often want to contract professional services directly with the civil engineer. This will help reduce the bid and overall cost of the project as the architect will typically tack on 10 to 15 % of administrative services for coordinating with the civil engineer. This contracting arrangement improves the cash flow position for the civil engineer, but also subjects the firm to a whole different contracting document. The firm may also loose out when an architect can act as an advocate for the civil engineer in cases of additional services or construction issues. When the architect is not contracted with the civil engineer in a design-build project he may feel that coordination is now the responsibility of the contractor and this can be a foreign process to contractor that has not been in this role before. Payment histories, contractor experience, and contract language need to be closely examined by the civil engineering firm before choosing the best contracting option.
Unlike the normal project process, civil engineering and surveying begins before the award of a contract. Civil engineers are under the constant self-examination of how much design is appropriate before the award of the contract. It is often the case that there will be a certain level of design required by the Design-Build RFP; sometimes design must be completed thru just the schematic stage, but often the case is the need to provide preliminary level drawings. While preparing drawings to this stage may satisfy the strict RFP requirements, the contractor and architect and other team members often demand more. This makes sense to the team members, the greater the detail of civil engineering drawings and surveying engineers provide, the better and more focused is the pricing of the project by both the general contractor and the subcontractors. The dilemma is how much information to provide. Should you provide just enough information to meet the requirements of the RFP? But in this case do you risk losing the project if your engineering firm provided just a higher level of design for a potentially nominal increase in sunk costs? Not only is the civil engineer trying to satisfy his team members he is concerned with what his civil engineering competitors might be doing that will give another team a leg up.
A bigger design issue than how much to design is where to start from. What data do I have? Has the owner provided me with some sketch plan, existing conditions, a footprint perhaps if the project involves a building?
Other costs and time constraints to consider in the design-build process is the level of detail of the existing conditions of the site. The engineer and his team may need to consider whether additional topography, test pits, utility locations, soils analysis, etc. are important attributes to obtain prior to beginning the design. The civil engineer is often not compensated for these costs upfront and must be careful to include this upfront cost in his contract if he/she is fortunate enough to win the project. Cash flow concerns, opportunity costs all blend together as these decisions are made by the civil engineer.
Nothing affects the design more than the time-compressed schedule of the design-build process. Design-Evaluate-Price. This cycle repeats over and over even sometimes up to minutes before the bid is due. The architect needs information from the civil engineer before he can complete his design; the civil engineer needs information from the plumbing engineer before he can give his design to the architect. The contractor needs drawings from the architect so he can get prices from the subcontractors. The prices are too high and redesign is needed and all kinds of variations of the redesign cycle can have influence on timing and costs.
Unfortunately the design does not stop once the bid has been submitted. Refinement, rework and redesign are a continuing process during design-build projects. As soon as the contractor is notified of the award, they typically want to start the construction of the project. This puts the onus on the civil engineer who typically needs to prepare demolition plans and erosion and siltation control plans as the first step in the construction process. More often than not too little is known about the existing conditions, the building size, final footprint and location on the site so the civil engineer is in the position of making educated guesses about designs to meet the new pressures from the contractor. The lack of sufficient vetting time with other consultants, review agencies and other stakeholders make the design process for the civil engineer extremely challenging. Often the contractor is installing civil engineered structures before the ink is even dry on the design drawings!
If completing a project in a design-bid-build world wasn’t hard enough it is intensely magnified in the design-build arena. The coordination question comes right at the onset of the solicitation of the project — should the civil engineer be coordinating with the architect or the contractor? Who is the contract going to be with if the job is awarded? Coordinating among team members is critical especially during the frenzied time in responding to the RFP as the need to submit drawings to the contractor is time sensitive. Personalities of team members play a role on how control is going to be maintained to be sure all documents and designs are coordinated. Often the civil engineer is working directly for the contractor yet all the decisions of design are controlled and
coordinated by the architect. The challenge is to be sure your voice is heard and the best interests in the overall team are followed. Luckily the use of technology and computer models and electronic methods of communication have helped in advancing the speed of communication and improved the ability to interact especially when consultants are geographically separated. Make no mistake however, that these are just tools of communication and that team members not only need to be on the same systems or compatible systems but need the knowledge, the spirit and an effective and organized way to communicate with all the players including the civil engineer.
ALLEGIANCES AND ALLIANCES
I’s the old adage — you can satisfy some of the people some of the time but not all the people all the time. The civil engineer before the design-build process had allegiances to the owner or the architect depending on the project or type of contract. It isn’t uncommon for a civil engineer to have an open-end contract while also working on a specific project under an architect for the same owner. The open-end dictates allegiance to the owner. The specific project dictates allegiance to the architect and/or contractor. The design-build process wrecks havoc to these previous established allegiances as the civil engineer is now not working directly for the owner. Unfortunately the owner often forgets this fact and the civil engineer gets caught up in disputes between the owner and the contractor. In the design-build case the allegiance has now shifted to the contractor.
New alliances are formed by the civil engineer in the design-build process. In order to establish himself as a star team member the civil engineer must communicate all the expertise he knows to the contractor. At the same time he wants to make sure the contractor and architect “play nice” as there are certainly future projects with the old established relationship the civil engineer has cultivated with the architect whether the future project is design-bid-build or not. Good alliances with successful contractors can potentially mean future design-build projects for a civil engineer.
Successful design-build civil engineers often run into the new problem of exclusivity. How does the civil engineer respond to being asked to be exclusive when being asked by several contractors on a design-build project? It wasn’t uncommon for a civil engineer to be on several teams with architects in the old days of design-bid-build. But contractors are concerned with the design ideas being shared with other competitors. The civil engineer needs to instill trust by having very, very separate teams if they choose to participate with multiple contractors. The questions arises however, can the firm afford to be on multiple teams considering resources, costs and potential alienation of future relationships?
The decision to be in the market for design-build projects for civil engineering firms is not for the faint-hearted. As we have discussed, issues of cash flow depending on the contractual components of the project, have a tremendous impact on the financial operation of the business. The condensed design process implores civil engineers not only to have adequate and nimble staff to adjust to the mood swings but also to have adequate design and communication software and hardware to integrate with more typical state-of-the-art tools large contractors and large architectural firms have at their disposal. Proposal pricing is quite the challenge as there are uncertainties in the initial documents provided and there always unforeseen scope that must be covered in the fixed fee of a design-build project. Post project financial analysis is paramount so the civil engineering firm can effectively evaluate the project’s profitability. Keeping track of all costs prior to project award is essential if the firm is to have a clear understanding of the true costs of the design-build project. The business plan must be integrated with the marketing plan to insure that the firm obtains its market share of design-build work otherwise the efforts are fruitless. Experienced personnel with the design-build process are a necessity if the civil engineering firm intends to establish its presence in the design-build world.
PROS AND CONS
Working in the design-build arena can be the downfall of a civil engineering firm. The transformation of the marketing focus to contractors can be a new and painful endeavor. A firm needs to assess its ability to foster existing relationships with contractors and assess it commitment to build new ones. Working on projects with no guaranteed fee can be a significant blow to a firm, especially a small firm with limited man-power and expertise to design quickly and at a high level of quality. Despite winning a design-build project a firm must recognize its potential delay in compensation but also the high level of effort involved by the civil engineer during the entire duration of the project. An evaluation of the proportion of the business devoted to design-build projects is essential if the business is to remain broad based and stable. Too much may lead to more and more project losses without compensation, bad alliances and burned out employees. Too little may mean on missing out of the trend of the future and the ability to obtain a significant portion of the civil engineering business.
Done well the design-build market for the civil engineering firm can be both educational, and profitable. It’s not often that the civil engineer has such a close interaction with a contractor. Learning preferred construction methods, gaining an understanding of sequencing, and getting feedback on pricing for design options are much more prevalent in the design-build process. By watching what you spend and establishing internal controls as to what is included in the design, profitable design-build projects are still attainable as high-profile contractors and owners are willing to pay reasonable prices for top-notch civil designers. For those civil engineers that love the fast paced, high intensity life style of design-build, nothing could be more rewarding. The process can be much more collaborative with a qualified contractor assisting the design team on the best approaches to design challenges of a design-build project.
FUTURE OF DESIGN-BUILD FOR THE CIVIL ENGINEER
Certainly the design-build process will expand to new markets in the future. The increasing demand for water over the next decades will inspire civil engineers and contractors to work collaboratively to speed up the project process. Civil engineers will shine their best when design-build further expands in the area of transportation. While the economy has stalled and stimulus money from the government is temporarily available, those civil engineers positioned as design-build experts can stand to benefit as shovel ready projects still get pushed forward. However, as the global economy has changed and everyone has asked to do more with less, the repair/renovation markets for civil engineers presents excellent opportunities for design-build. As technology continues to move forward and BIM and other advances play an important role in developing sustainable development the collaborative efforts forced by design-build will help integrate the use of the likes of Civil 3D, Revit, GPS into to a more user-friendly, powerful tool to even further the design speeds. It’s likely that the increase use of robotic machinery both in the office and the field will effect both surveying and engineering disciplines as contractors reap the benefits of design-build process and become computer savvy in the application of construction methods. Look out for a temporary pause by owners, however, on pushing the design-build process too far. Complex projects that have been let out by design-build contracts have owners assessing whether they really lost control and ended up not getting a finished project that they really intended. Lastly, financing will play a big role in the direction of design-build. Will contractors become the financing arm of owners in this difficult banking environment and how will both state and federal governments react both from a regulatory perspective and the use of capital funds? Stay tuned it is going to be an exciting ride.
About the Author
Mr. Peter J. Rigby, PE is Partner and Vice President of Paciulli, Simmons & Associates, and Principal-in- Charge of the firm’s Fairfax, Virginia office. Since joining the firm in 1988, Pete has worked closely with clients in the design and construction of public and private sector projects including design/build, mixed-use, residential, commercial, educational, state and local government, federal/military, parks and recreation, redevelopment/urban planning, and sustainable and green design facilities. His depth of his experience covers all aspects of the firm’s engineering services from preliminary site layouts, to final construction design and permitting, and project management and coordination. Pete’s technical expertise includes rezonings, feasibilities, planned development communities, site plans, subdivision layouts, road/street designs, flood plain and drainage studies, stormwater management, siltation and erosion control, storm, sanitary, and waterline design.
Mr. Rigby is currently serving as project manager on two design-build projects for George Mason University, Housing VII and Housing VII-C.
Contact Pete at 703.934.0900 or at email@example.com