Design-build risks– solutions to participate in the new generation of projects

Challenge

Small and medium engineering and architectural firms are having a tough time in the alternative delivery market. At a recent conference of engineering consultants, small firms (less than 50 employees) identified this as a top three area of concern. They identified that they feel compelled to participate in the market and to agree to terms in which they are not comfortable. This threatens their very existence. The good news is that there is now substantial history from which to learn and owners are outsourcing project planning services more than prior to the recession. So, there is a large opportunity for the educated and disciplined firms.

Understanding

Understanding services connected to the alternative delivery approach is critical for all professional services firms because the alternative delivery market is here to stay and is growing fast. ENR Magazine (June 9, 2014) reports that Design-Build revenue rose 4 years in a row to $60.9 billion in 2013. CM-at-Risk followed suit advancing to $77.8 billion. ENR concludes that, “More owners are turning away from Design-Bid-Build.”

Donovan-Hatem, a leading Boston and New York law firm, sponsored a roundtable on the topic and identified several areas of risk. Founder David Hatem, Esq. identified flow down (of blame), a heightened standard duty of care, liquidated damages exposure, exposure to quantity cost overruns, and withholding of payments as some of these risks that needed to be managed for a firm to successfully provide these services. Solutions he identified are to seek a limit of liability clause, adapt the standard duty of care definition to acknowledge there is limited ability to control the project’s outcome, and to seek a covenant not to sue. He also stated that persons involved in the delivery teams were learning how to change their behavior that was learned in the design-bid-build era. Persons must be collaborative, team focused, and have consistent interaction from the earliest stages to beyond the completion of the project, no matter what the role of the sub consultant.

Solution

FosterGrowth.biz’s experience and observations are that in addition to behavior changes during the project, it is critical to start with the right team. To do this, one can examine widely proven sales methods:

• know your strengths
• identify the qualities you desire in a prime engineering/architecture firm and contractor
• develop relationships with these entities
• screen for these qualities.

Then, only work with these screened firms. At that time, you will have a trusting relationship with persons in those firms, and you will know they have a good track record on alternative delivery projects. Discipline will be difficult but important so that you can manage risks and enhance, not damage your reputation.

If you are new to alternative delivery methods or are not happy with progress you seek, there are several steps one can take:

1. Examine your capacity to change. Put away your ego and seek knowledge and advice.
2. Identify your market place value, so that prime firms, and owners see why you are important to the team. This goes far beyond your technical skills. Everyone has technical skills so focus on what is unique about you.
3. Invest time developing trusting relationships with prime firms and even owners. If an owner has a preference for you, you are strongly differentiated from their other sub-consultant choices. This is the ideal place to be.

It is possible to compete and work with the giants. It takes education, commitment and adapting to a new way of business. FosterGrowth.biz and its business partners are available to assist you to be successful in this next generation of project delivery methods. Take action now and become part of this generation.

I look forward to seeing your comments. Let’s connect on Twitter or LinkedIn.