Sounds good. What could possibly go wrong? 5/6/2014. Potential Benefits of Design Build. Potential Downsides of Design Build

Transcription

1 When Design Build Goes Wrong: Worst Practices to Avoid DBIA Edition for the O.N.E. Conference Blue Springs MO May 8, 2014 Dale Munhall, AIA Sounds good. What could possibly go wrong? Potential Benefits of Design Build FASTER DELIVERY Start construction before design completed BETTER QUALITY of design and construction Better collaboration and more innovation between designer and builder DECREASED COSTS Fewer change orders One Contractor is responsible for everything Potential Downsides of Design Build SLOWER DELIVERY Extended selection time, long reviews, conflicts Bridging can go too far/not far enough, cause disputes and delays LOW QUALITY of design & construction, Substitutions low fees induce cost cutting Time pressure can trump teamwork HIGHER COSTS Due to disputes, duplication, litigation Vague requirements, closed books Profit motive may induce disputes and change order claims 1

2 What Worst Practices cause D B to fall short? More importantly, how can they be avoided? First and Foremost Understand D B Roles Design Builder GC: Liable for cost and schedule Controls design and all trade subs on site A/E of Record: Hired by GC Has all design liability Serves GC s interests First and Foremost Understand D B Roles Owner: Pays all costs, selects participants, issues RFP Bridging A/E: Defines performance criteria, scope stops before or at schematic design/specs (no design liability) Peer A/E: Reviews bridging and D B sub s design (sometimes construction) serves Owner s interests Worst vs. Best Practices For: Teaming getting designer and builder together The RFP what to ask for, what not to Proposals/Selection getting good information Contracts Owner/D B, GC/A/E, trade subs Schedules fast track, delays Change Orders follow the money Closeout finishing strong 2

3 Teaming Risks Worst Practices GC and A/E join up after RFP is issued GC and A/E have unequal D B experience D B team has little or no pre proposal interaction with the Owner or each other A/Es are at risk for costs of proposal design effort (little or no stipends) Design contract and/or fee arrangements are not defined until award The RFP Worst Practices Bridging documents too little detail Bridging documents too much detail Peer reviews limited to checklist Specifications are too prescriptive Open invitation to submit (too many D B teams) Answers from Owner are slow or conflicting Teaming Successes Best Practices GCs and A/Es seek out for compatible strengths prior to any RFP Determine firms compatibility Use DBIA, AIA, or AGC teaming checklists Focus on partner strengths, collaboration methods, and on why value is created for the Owner GC and A/E agree on fees and conditions before proposal begins The RFP Best Practices Successesoccur when 2 Part Negotiated D B (per DBIA 204) Qualifications Based Selection (Brooks Act) Performance specifications, clear standards Bridging documents stop at schematics Peer reviews analysis approach as coach Stipend(s) reflect the real level of effort 3

4 Proposal Submission Worst Practices Owner has no proposal format Open invitation too many D B teams (i.e., sets up exploitative, unpaid design competition) Short deadlines A/E designs solution separately GC waits for design before quoting D B Team Selection Worst Practices Too many on selection committee No interviews, or separate interview days, or interviewing more than three teams Complex points scoring system Low price is the sole criterion Subcontract terms set after selection Proposal Submission Best Practices Frequent GC A/E team meetings during design and proposal prep Shared scope of effort, shared expectations Equitable stipend sharing D B Team Selection Best Practices Successesoccur when Small, knowledgeable selection committee Interview requires key members of D B teams Key team members have relevant qualifications based experience Owner knows D B team s contractual relationship Joint venture vs. single party control 4

5 The Master Contract Worst Practices Contract language is proprietary, not industry standard General Conditions vague (non standard) No independent inspection or testing No Contingency or Allowance provisions for unforeseen conditions, change process or dispute resolution Design Subcontracts Worst Practices DBIA 540 troublesome terms exceed A/E Standard of Care, errors and omissions Excessive use of all and every Unlimited redesigns and substitutions to meet budget Certification of results beyond A/E control Liability for delays, liquidated damages The Master Contract Best Practices Successesoccur when Cost plus fixed fee, early GMP, open book General Conditions DBIA 535 or AIA A201 Incentives, not penalties Owner retains bridging or Peer A/E for design review & CA phase services Owner directly hires independent inspection/testing and enclosure + mechanical commissioning services Design Subcontracts Best Practices Successesoccur when Industry Standard of Care is not exceeded (get consensus on project specific meaning) Real collaboration for design tobudget Redesign, revisions and substitutions are limited Subcontract contingency for Additional Services, improvements & changes 5

6 Trade Subcontracts Worst Practices Risksincrease when Liquidated damages, delay penalties Vague or short scheduling Lack of submittal schedule GC avoids review/approval role Schedules Worst Practices Completion date is unrealistic or beyond D B control Project involves poorly defined fasttrack, multi phases, early occupancy CMP scheduling is static or done by absentee consultant Liquidated damages penalties fall on subs; more disputes, less teamwork, lower quality Trade Subcontracts Best Practices Incentives for quality and early completion (vs. penalties for late) Opportunities for sub input on details, savings Early submittal schedule, timely GC reviews, approvals Full access to a project web site Schedules Best Practices Input on schedule by major subcontractors Update realistic CPM schedule monthly, enact prompt remedies for any delays Contingency fund for inevitable fasttrack glitches, unforeseen conditions Incentives for early completion, quality priority defined 6

7 Change Orders Worst Practices Funny, but too often true Change Orders Worst Practices Bridging documents treated as 100% CDs Final plans & specs not definitive enough Books are not open, incentive to mark up No Contingency fund or defined change process D B can change design details and make substitutions during construction Change Orders Worst Practices Funny, but too often true Change Orders Best Practices Change process is defined in contract Fixed fee eliminates hidden profit incentive Set Contingency fund with defined process for uses, records, and Owner approvals Independent reviews (actually audit if not open book) 7

8 Project Close out Worst Practices Substantial Completion or beneficial occupancy is not well defined Multi page punchlist by Owner s reps Repeat punchlists require re inspections Key D B personnel reassigned prior to Final Completion Warranties short, vague or premature Summary Worst Practices Four most important Worst Practices to avoid: 1. Vague or gone too far Bridging/RFP (limits creativity, exposes Owner/to change orders) 2. Inviting many D B teams to design for free if stipends are inadequate (exploits designers) 3. Low price only selection, closed books ( low ball bids limit quality, induce change order claims and reduce design to minimal drafting) 4. No Contingency Allowances, GC has sole control of testing, design & substitutions (cuts quality, creates conflicts) Project Close out Best Practices D B team does the primary punchlist before applying for Owner s Substantial Completion Inspection Owner reps inspect after all safety and HVAC systems pass tests (and commissioning if applicable) Training of Owner s staff is based on O&M manuals, recorded for future staff use Summary Best Practices Four most important Best Practices to adopt: 1. Select D B team on QBS: fixed fee, openbook, early GMP=budget contract (pay actual cost stipends if multiple designs solicited in RFP) 2. Owner retains bridging or peer A/E as review consultant during design and for CA 3. Owner hires independent inspections, testing and commissioning services (paid from D B construction funds as Allowance) 4. Set a Contingency/Allowance fund, define control of the change process 8

9 QUESTIONS? Dale L. Munhall, AIA DIRECTOR OF CONSTRUCTION PHASE SERVICES Office Cell