At no time in history have there been as many choices in construction project-delivery systems as there are today. Owners can select design-bid-build, general contracting, construction management, design-build and turn-key development. Each system is, in its own way, a productive means of accomplishing a project,
but with little exception, each method conveys to owners how the work will be done rather than what work will be done.
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| IGEL |
Easy access to lines of credit over the past 15 years led to a building boom along with a rapid increase in the costs and demands of construction across all markets. Contractors have been quick to respond to the needs and wants of owners. In so doing, they have attempted to find a clear answer to the question: “What do owners look for in a delivery system?”
Typically the answer has been “It depends.” Given the range of project types, schedules and budgets, many contractors believe this an appropriate response. It also has proven adequate to base a business strategy for supplying services for almost anything an owner wants.
Many owners today want an arrangement where a single source is responsible and accountable for all phases of work. Yet single-entity control of production from the design phase to finished project is not a particularly new idea. It is how the architectural masterworks of antiquity were built, beginning at least with the pyramids at Giza circa 3,200 B.C.
Related Links: Despite the vast industrialization and technological advancement since then, the services provided by today’s architects and contractors have not changed dramatically, but the the economic functions are entirely new and different.
One basic industry economic assumption is that price must be the most relevant part of a designer’s and contractor’s business strategy. Many believe the price of products and services is what ultimately matters to owners. Yet this is usually wrong. Unless a firm or professional is price-gouging, the owner’s greatest need is purpose-driven.
Know the Customer
Price hinges on the willingness of a buyer to pay a certain amount for a desired product or service, not on what the company or professional aims to supply. This is basic economics and marketing, but how many people truly know what owners want in a delivery system?
Sophisticated owners have always demanded precision, predictability and quality in every phase and aspect of construction from conception to completion. More importantly, they have demanded accountability and performance. Now, almost every owner—including a new band of inexperienced ones—assumes these demands are implicit in any relationship with architects, contractors and engineers.
What the owner increasingly values in a delivery system is an interdependent, expedient, trouble-free project managed by someone else. In this equation, the cost and time of designing, permitting and constructing are standard objectives. They are not results. This may help explain why there has been a resurgence in the use of design-build during the last 15 years.
Whether design-build is the best means of project delivery or simply a fad is a serious point of industry debate. What is certain, however, is that the construction industry now offers owners an infinite number of choices, which is not likely to diminish any time soon because of associated, acute competition between companies.
Going forward, firms and professionals will have to learn how to integrate the broad needs and wants of owners into their business strategy. This often requires a change in the habits of the business, which more than ever means having to make consistent checks on the underlying concept of the business. As management expert Peter Drucker often taught, to do so means asking: “If we weren’t doing what we now do, would we want to start doing it?” The danger is in always answering, “Yes.” Or, worse, “It depends.”
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