The design assist method of procurement is one of the fastest-growing trends in the world of construction contracts today — involving your trade contractors very early on to create efficiencies by working with the owner, architect, primary contractor and engineer.
The premise for efficiencies claimed by construction management, design build, integrated project delivery and other contract delivery methods lies in the idea that early involvement of the entire project team will develop more ideas, better solutions, a more buildable plan and early buy-in. And if delivered properly, it’s all true.
While this idea has been around for at least a century (we have the old marketing material laying around to prove it), it’s popularity continues to increase and drive the selection process of those who view construction as a professional service, rather than a commodity purchase. Most clients have recognized that there are large sums of money to be saved through a few additional good ideas garnered early in the design process, and that one party doesn’t hold all of the answers to complicated solutions.
Oftentimes, the involvement of key trades on complicated projects (i.e., electrical, mechanical, food services, technology or even structural steel and concrete) happens at the very end of the design process, forcing the team to take a step back as we bring on trade contractors late in the process and then incorporate their experience and valuable insights into our projects. I believe the main reason we add key trade contractors differently than we as construction managers and design builders want to be selected, is the perceived lack of ability to garner competitive pricing for their services. How can we make the process more transparent and protect all parties? There is a better way.
Trade contractors that participate during the pre-construction process can be procured using the same competitive pricing structure a construction manager or design builder uses. With some basic design and project criteria in place, a qualification document and a single page fee disclosure, we can create a value-based proposition when selecting trade contractors for complicated construction projects.
Let’s break the work down into definable categories to see how this can be achieved:
1. Pre-construction fee
With clear assumptions of scope and duration of involvement, a trade contractor should be able to quote a lump sum or percentage-based fee for their participation in the pre-construction budgeting, scheduling, planning and constructability reviews. There’s a definable fee for this work, and most contracts can be structured with a definable endpoint, after which you could choose to part ways and bid a fully designed project out in the old-fashioned tradition if for some reason you so choose.
2. Cost-of-work variables
These are the quantifiable material and labor markups the trade contractor will eventually supply to the jobsite. Cost of work can be priced in an open book accounting system using upfront hourly rate quotations for labor, and if necessary, a markup on material purchases. In this system you pay for what you use, in an open and auditable accounting format, and contractors can compete based on the cost of their materials and labor.
3. Construction fee
This component can be priced as a lump sum or percentage of the eventual cost of work and can be competitively compared among contractors based on some basic assumptions (size and duration of the project).
The inclusion of all three components should sufficiently protect contractors and owners and allow for early involvement of your entire project team. In fact, owners who are already employing the construction management or design-build project approaches have been using these techniques for years.
There must still be an element of trust established to protect the rest of the project team from potential abuses in pricing, but when working with proven and trusted partners, the benefits include: generating efficiencies and cost-saving ideas at an early stage from experts who will likely build your project; obtaining a commitment from qualified trade contractors long before your project starts (important as contractors build backlogs and get busier); and securing competitive proposals from a combination of qualification and price-driven selection processes. In the case of trade contractor selection for a sophisticated construction manager or design-build delivery method, what’s good for the goose, is good for the gander.