Looking through design build

Weigh the subcontractors’ pros and cons
By Heather West and Bob Hicks
November 1, 2006
COMMERCIAL : TRENDS & ANALYSIS

Viewed from the street or the interior, design-build projects remain indistinguishable from their design-bid-build siblings: they have the same range of shapes, sizes, complexities and applications. They pose the same challenges of structural integrity, performance and appearance. Many argue that, managed effectively, design-build projects shorten schedules, improve accountability, increase owner value, and strengthen relations.

Challenges and advantages aside, the definitive difference between design-build and design-bid-build has become whether one organization or two holds the contract for designing and constructing the project. What does design-build mean for the owner, the architect, the general contractor and, especially, the glazing contractor?

Defining differences
Design-bid-build typically begins with one contract awarded by the property owner or developer to an architectural firm. The architects prepare documents used for bidding. They select the contractor and make cost commitments. The owner awards another contract to the general contractor. Ideally, both collaborate from the early stages of design, with contributions from glaziers and other subcontractors, consultants and manufacturers. With architectural drawings complete and approved by the owner, the general contractor begins requesting bids.

In comparison, design-build contracts get assigned to a single company responsible for overseeing design and construction. Kevin Cole, director of design for glazing contractor Enclos Corp. in Eagan, Minn., says company executives prefer to get involved in design-build at the schematic stage, essentially working as a consultant.

“Then, if we are chosen as the curtain-wall contractor, our services are secured prior to the other trades,” Cole says. “Being an early participant allows us to identify and provide cost savings in regard to curtain-wall engineering, materials, structural aspects and labor.

“The culture of constructing a curtain wall under design-build isn’t much different from a traditional design-bid-build. Once the project gets to the job site, the look and feel is much the same. Design-build demands creative, talented designers, engineers and field personnel familiar with the best tools to bring the project to the field.”

While contractors frequently head design-build teams, this does not omit architects from the process. According to the Washington, D.C.-based American Institute of Architects’ 8,000-plus member Design-Build Knowledge Community, design-build “can enhance the quality of the work, as long as the qualifications of the firm and not the price are used as the dominant means of choosing the design firm.”

“This is our opportunity,” says Barry E. Bannett, chief executive officer of Bannett Group in Cherry Hill, N.J. “Statistics indicate that 54 percent of design-build contracts are contractor-led as opposed to architect-led.” He is a frequent contributor to AIA and Design Build summer 2006 magazine’s Master Builder newsletter. In his article, “Design-Build: Threat or Opportunity for Architects?” Bannett writes: “Our clients want to know sooner rather than later whether the budget meets their needs. … Design-build as a project delivery system is a proven benefit to our clients. … Studies show that this method will surpass construction management and design-bid-build as the preferred method of project delivery by 2010.”

A study by the Construction Industry Institute  of Alexandria, Va., recently compared design-bid-build and design-build, and found the design-build projects were 33 percent faster, 6 percent less costly and had fewer call-backs for design errors and warranty repairs.

Taking the onus off the owner
Frank Restifo, director of business development for design-build contractor Star Inc. of Amherst, Ohio, highlights “value to the owner” as one of design-build’s greatest advantages, “because project managers, the people most familiar with the costs, can have input from the beginning. We can make sure the owner’s vision is designed with costs in mind.”

Serving northern Ohio, Restifo says that Star Inc. has found design-build to benefit every commercial and institutional application. “Twenty-five years ago, we established our in-house Star Architectural Group,” Restifo says. “And because there is no separation between architect and the builder, there are no conflicts. There is nobody else to blame. There is one point of accountability.

“With design-build, the mass bidding is eliminated and the whole timeline can be shortened,” Restifo says. “We seek competitive pricing from our subs and suppliers. While we are still doing drawings, we can phase the project so construction on the foundation can get started long before the interior details have been completed. It also takes the burden off the owners. No longer do they have to be a watchdog. We try to provide the owner as much value as possible. In the last several years, two-thirds of our work has come from repeat business.”

Introducing the subcontractors
Elyria Memorial Hospital in Elyria, Ohio, was a new customer for Star Inc. EMH had started down a traditional, architect-driven path for a central orthopedic center. “They thought the costs excessive for the designs they were seeing, so we had the chance to show them what design-build could do,” Restifo says.

Joining the effort, Lorain Glass Co. in Lorain, Ohio, was selected as the 50,000-square-foot project’s glazing contractor and installed a three-story curtain wall on a pre-cast concrete exterior. The expanse of glass provides the medical office building with sunlit entrances and corridors. The facility opened this summer.

Thirty-eight percent of medical facilities employ design-build, according to a 2005 Zweig-White study as reported in Architectural Record. Topping the list, 48 percent of industrial plants, refineries and warehouses; 46 percent of commercial facilities; 44 percent of parking garages, and 39 percent of recreational centers rely on design-build. Twenty-six percent of schools, libraries and museums use design-build, 34 percent of other public buildings, and 34 percent of hotels and multifamily residential properties.

Managers at Florida contractor and developer Central Coast Investments of Tierra Verde count on design-build for the Boca Sands Condominiums in St. Petersburg Beach, Fla. The recently opened seven-story, luxury waterfront residential complex features hundreds of windows and sliding doors. “We are involved throughout,” says Craig Wadsworth, general contractor at Central Coast Investments. He always uses design-build for his projects, relying heavily on subcontractors and manufacturers. To frame the Gulf Coast scenery and protect Boca Sands’ 64 units from up to 130 mile per hour winds, Wadsworth called on NuAir Manufacturing of Tampa to install and fabricate hurricane impact-resistant products with Solutia’s KeepSafe Maximum interlayer.

Changing preferences for public projects
Not all states have legally recognized design-build for public construction projects. A state-by-state report by AIA indicates that 14 states allow for widespread use, seven states have not specifically authorized design-build for use by public agencies, and the remainder often leaves it to the discretion of the agencies, educational institutions and local governments. At the federal level, officials with the Navy, Federal Bureau of Prisons, Army Corps of Engineers and General Services Administration all have been outspoken proponents.

Design-build also has been a key method in rebuilding and instituting security improvements following Sept. 11, 2001. After the Pentagon’s design-build reconstruction, the Detroit branch for the Federal Reserve Bank of Chicago was one of the first design-build projects to incorporate stiff security requirements.

Opened in spring 2006, the 240,000-square-foot, modern, high-tech structure has replaced a 1926 facility. Guided by SmithGroup and Skanska/W3, both of Detroit, Harmon Inc. of Eden Prairie, Minn., provided a bomb-blast and bullet-resistant curtain wall and other custom glass and metal cladding on the façade.

“The construction schedule called for the majority of our $10 million worth of product to be squeezed into an installation schedule of around six months,” says Danny Bostic Jr., Harmon’s project manager.

“Design-build procurement primarily has been used on complex, fast-track or budget-conscious projects where the team looks to us as the interface who will assist with design details and ‘constructionability,’ ” says Bill Kruger, Harmon general manager. “For the past fiscal year, well over half of our work could be classified as design-build, and most were sizable jobs.”

Kruger shares credit for meeting the Federal Reserve’s criteria. “We threw resources at it, drawing from the expertise of a multitude of people in several markets. Our Atlanta and Cleveland offices helped us make sure we understood the complex security considerations. They reviewed our shop drawings. We also used project management from Minneapolis to help us with shop drawing review and coordination. The support was instrumental in keeping us on schedule.”

Earlier this year, Harmon’s senior project manager Roger Putz, and co-workers in Livonia, Mich., also completed the Owens Illinois global headquarters in Perrysburg, Ohio, as a design-build project.

Becoming a design-build specialist
David Meinzer, vice president of Husker Glass in Omaha, says approximately 40 percent of the company’s work is design-build and “the trend is higher [for] next year.” Compared to design-bid-build work, he finds design-build to be more profitable and cites as examples the Omaha Performing Arts Center and the Hilton Hotel. He also says these recent projects require double the hours of work in the pre-construction phase. “We budget and re-budget and value engineer several times,” he says. Among design-build’s challenges, he mentions, “the amount of wasted time spent developing items that get deleted,” and that “the flow of communication doesn’t necessarily follow the contractual order of parties involved. The process is more team-oriented than the traditional, vertical, up-and-down communication.”

In spite of the extra time associated with design-build’s team-oriented communication, Meinzer emphasizes that extra hours are not added into the bid, “We know our overhead costs and communications are part of those costs,” he says.

Considering the resources
Are contract glaziers with relatively smaller staffs automatically discounted when principals put together design-build teams?

Meinzer admits, “It tends to be more difficult [for smaller glaziers] to compete [on design-build] as resources limit smaller companies from larger design work.”

As president of a contract-glazing company in a smaller market, Rod Van Buskirk of Bacon & Van Buskirk Glass Co. in Champaign, Ill., disagrees. “It’s easier [for smaller glaziers to compete] by offering product suggestions during the design phase,” he says. “We build closer relationships with our clients. Our clients know we’re concerned about giving them quality products and service within their budgets.”

Van Buskirk agrees that design-build renders more profit. He sees 40 percent or more of his work serving design-build projects and expects that to increase. He acknowledges that design-build takes more time in the pre-construction phase, “but usually it means less time and effort during the submittal phase.”

Van Buskirk also warns, “If you don’t build a mutually-committed relationship with the client, your suggestions and budgets will be shopped out.”

“We find payment on design-build to flow much quicker and on time,” says Jan Kusy, vice president of La Mesa Glass in Lemon Grove, Calif., which has about 44 employees. “As part of the design-build team, we negotiate terms inclusive of such items as payment for shop drawings and engineering, off-site stored materials, retention requirements, release of retention and dates of final payments.”

He shares the majority opinion that design-build yields more profit and attributes this to having “more control of product selection and use. “You have the opportunity to bring on material suppliers early as a part of the design-build team and set the time frame, Kusy says. “The whole idea of design-build is to streamline the process of selecting applicable products, performance levels and applications for a specific sum, thus allowing for smooth construction, on time, and within budget. More challenging, yes, but also more rewarding.”

Design-building cultural institutions
In comparison to the FRB’s abbreviated time line, Harmon’s work on the Grand Rapids Art Museum in Michigan, spans more than 10 months. “Our South Bend location is working closely with Baker Metal Products Inc. of Dallas to hold to the design-build team’s modern creation,” Kruger says. The glazing budget was valued at approximately $6 million, and the contract will be substantially completed in mid-2007.

Supporting the Michigan team, Harmon’s staff members in South Bend, Ind., also gain experience with design-build, says Larry Schulz, senior project manager. The building features Baker’s structurally glazed, custom pre-glazed curtain wall. Additionally, Novum Structures in Menomonee Falls, Wis., fabricated three, knocked-down rooftop “lanterns.” The glass boxes with big pieces of glass, 19⁄16 inches thick, will be backlit to look like lanterns.

“We have to meet tight construction tolerances,” Schulz says. “The main part of the building is poured-in-place concrete. It meets different tolerances than products built in the shop. We have minimum clearance between substrates and it takes coordination to get this right. 

“Strict performance criteria [will] protect the artwork,” Schulz says. “The building’s envelope plays a huge role in filtering out the environment. We have an in-board lite of laminated glass on the curtain wall to protect against ultraviolet rays. We have addressed potential condensation on the framing members. The building has high humidity, so we have carefully considered the air-and-vapor barrier and how it transfers from the curtain wall to the substrate. We’ve gone through the grungy details of preventing water infiltration.”

Driving the design
“Design-build requires curtain-wall contractors to face definitions of scope at the inception of the project’s design; that requires us to be more active in the engineering process,” Cole says. “We try to come up with a clear understanding of what the general appearance of the curtain wall is going to be, which requires us to be involved with 3D design modeling. We help the architect understand the implications of the curtain-wall design.”

As examples of Enclos’ recent design-build projects, Cole points to the Howard Hughes Janelia Farm Research Campus in Ashburn, Va., opened in September. Rafael Viñoly Architects of New York conceptualized the research campus’ design for “openness and unobstructed vision” and “buried” the facility in the ground so it’s not visible from a historic farmhouse. Welcoming light and natural views are seven all-glass corridors, sloped glass roofs, glass-clad office pods, glass-enclosed stairwells, canopied tree courtyards, interior glass walls and more.

Jeff Haber, managing partner, W&W Glass Systems Inc., Nanuet, N.Y., agrees, but prefers the term “design-assist” to “design-build.” For him, “the construction details are not there.” Design-assist permits “the people with expertise at determining appropriate materials to be used, costing them, and determining construction aspects [to be] involved in deciding the shape and content of the project.

“Our expertise is in demand, and we have great design-assist projects to choose from,” Haber says. W&W staff members are working with New York City’s prestigious Juilliard School of Music and the Cooper Union for the Advancement of Science and Art.

“Architects understandably don’t know certain things that subcontractors do, like what given materials will cost, or what the logistics are of installing them, and how many people will need to be on the job,” Haber says. “Design-assist puts subcontractors ‘at the table,’ meaning that finishes, quantities, materials and testing criteria can all be put together. Design-assist is a great inflation hedge.”

Listing the pros and cons
The downside of various project delivery processes has been the topic of countless conferences and papers. For instance, summarizing the strengths and weakness of various project-delivery methods, an AIA advisory group listed disadvantages for design-bid-build projects in a 2004 document available at www.aia.org/SiteObjects/files/methods.pdf. It includes comments such as:
• A “relatively lengthy process [that] restricts optimal communication”
• “Change orders and delay claims are more likely”
• When the contractor is serving as the real-estate developer, critics identify a “complex delivery method, lack of direct communication between owner and architect, and owner and contractor” and a “potential for compromises in quality to meet budget.”

Also of interest, AIA altered its code of ethics and published a collection of design-build contracts in 1986 to guide members. Members were concerned about the perceived conflict of interest between protecting the owner and potentially profiting from the construction services and materials.

None of the glazing contractors interviewed for this article notes any difficulties in honoring design-build contracts. Their major concerns were:
• The fast-track schedule
• Coordinated communication
• Being a part of the design-build process from its earliest stages
• Value-engineering systems to meet the budgets before the project moves into construction.

“Some owners and contractors have the attitude that design-build costs more than the design-bid-build process,” Cole says. “But when the curtain-wall contractor does design and engineering, the fabrication, assembly and application are no more expensive.”

Putz adds: “With design-build, there are more unknowns than with hard bids. In hard bids, the thought process and details have already been established. In design-build projects, there are more uncertainties that the glazing contractor has to account for in its bid. These uncertainties tend to drive up the cost. Also, there are inherent risks in design-build that the glazing contractor has to budget for.

“The biggest unknown is to envision the design intent of the architect at bid time and to account for it in your bid. Working with the design team up front helps ensure that the glazing contractor knows the team’s intent.” Putz says.

“On design-build projects, it is possible to negotiate a contract that is friendlier to the glazing contractor and possibly includes better payment terms and sooner retainage reduction, or a reduced retainage amount throughout the project,” Putz adds.

“There is really only a limited downside to design-build for the sub and that lies in the nature of the paperwork and the form of the agreement,” Haber says. “The sub needs to be careful to limit his or her liability—regarding the design, final cost and schedule—if changes are made to the job. Also, errors and omissions insurance is recommended if the sub provides engineering services.”

Regarding profits, Haber advises, “they should be the same; however, sometimes you may lose the ability to use a higher markup in exchange for the job being taken ‘off the street.’  Other factors come into the decision in terms of a repeat customer you try to secure for the job in question [and] future projects.”

Strong relationships remain the key ingredient in breaking into design-build. The owner’s preferences for a particular glazing contractor may have greater influence in a design-build project led by the general contractor. The glazing contractors’ customers remain essentially the same: general contractors. Yet architects, consultants, owners and suppliers all influence the final choice of a glazier.

“Don’t get involved in projects that you financially cannot handle,” Kusy says. “Don’t get involved in project types where you have no expertise. Don’t get involved in projects where you cannot be involved in the scheduling of the work. Don’t get involved in projects with unacceptable liquidated-damages clauses. And if you’re not prepared to spend the additional hours, then stay away from design-build.”

At times, Kusy warns, design-build “can interfere with your other day-to-day responsibilities when unexpected meetings or conference calls are introduced with little or no notice.”

Haber adds, “You must have sufficient qualified people to help design and engineer, and attend to the needs of the designers and contractors during this process that can be quite drawn out. You must be careful not to put all of your resources into these types of jobs because it can be quite some time before you invoice the customer and get paid. Meanwhile, your business that generates cash flow needs some attention, too.”

Finally, the design-build process creates an opportunity for glazing contractors to take a larger leadership role. “The subcontractor’s expertise is acknowledged and rewarded,” Haber says.

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West is a Minneapolis freelance writer, heatherwest@earthlink.net, 612/724-8760; and Hicks is a St. Paul, Minn., freelance writer, 651/ 235-7809, bob_hicks@comcast.net.