The most important thing you can do to enhance a project's value is to include the right professionals for a project as early in the design process as possible. If you look at the following Cost Influence Curve, you will notice that the time to achieve significant cost savings is before construction begins.
By including your general contractor early in the design process, you will understand the cost implications of design decisions as they are made. It's unusually critical now in this time of increasing material and labor prices. Cost savings are achieved as the design and construction personnel evaluate alternative materials and building methods efficiently. With a performance based selection of the contractor, this collaborative process brings maximum value and minimum risk to the project.
We can participate with you in a project in two primary ways:
1) Partnering or Design-Build or 2) the traditional Bid-Build
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With partnering, the client contracts directly with the design professionals for their services and directly with the general contractor for pre-construction and construction services. With design-build, the client contracts directly with the general contractor for the design, pre-construction, and construction services, with the general contractor having sole responsibility for the entire project.
Both of these methods avoid the pitfalls of the traditional Bid-Build process. We can help you decide which arrangement is best for you. Both methods get the general contractor involved early which provides significant advantages:
- Confident Site Selection - with the GC's involvement in site selection analysis, the client is confident the site will work for the type project desired and knows how much will need to be invested to prepare the site for construction, which can be significant in relation to the raw land cost.
- Cost Savings - As mentioned, savings are achieved as the design and construction personnel evaluate alternative materials and building methods efficiently. Also, the team performs value engineering and evaluates the constructability of the project in a continuous fashion.
- Guaranteed Maximum Price (GMP) - firm construction costs are known earlier in the process. The project is designed within the client's budget and a GMP is established. The client will pay this amount or less.
- Improved Risk Management - risk for the client is greatly reduced since all project team members have analyzed the project from their standpoint before the project starts and have addressed their concerns in the plans and specs. The possibility for change orders is minimized for the client due the excellent coordination and collaboration. The goal for our projects is "no surprises".
- Cooperative Spirit - The project is people and relationship driven versus document driven. Since the team worked closely during pre-construction, they have common objectives and goals to make the project a success. Since the fingerpointing is eliminated, chances for misunderstandings are reduced, legal fees are minimized.
- Maximized Quality - since subcontractors are pre-qualified and selected based on their track record with comparable projects, and their ability to be a collaborative team member. The team also develops construction documents that have the detail and clarity needed for quality field installation.
- Time Savings - project time can be saved when design and construction are overlapped. Material and equipment procurement begins earlier than normal. Since the project is designed within the budget the first time, time delays due to redesign and repricing are eliminated. Plus, a realistic project schedule is established because the contractor doing the work creates it.
Many federal and state agencies are embracing these delivery methods to provide the best value for taxpayers. The Design-Build Institute of America (DBIA) forecasts that the number of these type projects will surpass the number of traditional bid projects this year.
An objective study of 351 building projects, sponsored and developed by the Construction Industry Institute and Penn State University has quantified specific design-build benefits. The findings of that study concluded that, as compared to bid projects, design-build:
• Unit costs dropped at least 6.1 percent;
• Construction speed increased by at least 12 percent;
• Overall project delivery speed increased to at least 33.5 percent faster;
• Cost growth dropped at least 5.2 percent;
• Schedule growth dropped at least 11.4 percent; and,
• Overall quality of the final project was equal to or better than traditional delivery methods
Chairman & CEO, Wesley Hospitality Hotels & Resorts
"Now that we are underway with construction, I wanted to express my appreciation for the job that Kellogg & Kimsey, Inc. did during the pre-construction period. Your team led a true collaborative process as the project was being designed to deliver great value. This project presented unique challenges with it being the first ground up Hotel Indigo (a new Intercontinental Hotel Group concept) in the U.S. Kellogg & Kimsey, Inc. was very proactive in assisting the local project architect to get answers needed from Intercontinental's design group to complete the design in a timely manner. The joint meetings with the architect, engineers, and key subcontractors were invaluable. Every effort was made to reduce the cost of our project while maintaining the level of quality desired. I'm aware that the subcontractors in your local builders exchange named Kellogg & Kimsey "Contractor of the Year" for the excellent way you conduct your business with them on the jobsites. You get our vote for "Pre-construction Services Provider of the Year". We look forward to completing this successful project with you to give Sarasota a fresh new hotel concept.
For an upcoming project, please Contact Us and we will describe our pre-construction process to yield these benefits.
Although we prefer to participate in projects during pre-construction in one of the ways just described, we continue to be involved in bid projects and are successful in winning competitive bids on a regular basis. Many national retailers use this project delivery method with their prototypical plans that are used for multiple store rollouts. Our collaborative negotiated projects make us a better bid partner. Many times we are the low bidder, but the project cost is still over budget. So when we are asked to help value engineer the project for cost savings, it's a natural process for us since we do it everyday on negotiated project teams.
The previously stated advantages of involving the general contractor during design can eliminate the problems encountered in a traditional hard bid job. In this common method, an owner contracts directly with an architect to design the project with no input or suggestions from general contractors (GC's) who would be using the construction documents to obtain pricing and construct the project. Once the construction documents are completed, then GC's bidding the project obtain prices from the cheapest subcontractors in order to have the lowest bid price to win the work. Please note that this low bid price is only the minimum amount that the owner will pay, not the maximum. This low bid may also be over the owner's budget, therefore the owner may have to pay the architect again for redesign. Time delays occur as project design is revised and the bid process is repeated in hope of receive new bids to meet the budget goal. In today's market, the material and labor increases seen during the time delays may actually negate the savings that the redesign is providing.
Once construction starts, gray areas on the drawings can surface or omissions have to be addressed. This increases the chances for adversarial relationships between all parties to correct the situations. In addition to the administrative cost to the owner to be involved in the resolution of the conflict, the owner's project price starts to rise as the change orders are created to correct these issues/items.
Quality and schedule can be adversely affected as well. In the bid process, each GC invites the subcontractors they would like to have involved with the project to submit pricing to them. But subcontractors that were invited by other bidding GC's or random subcontractors in the market that learn of the bid may submit pricing to all of the GC's involved. Therefore, a GC may receive an extremely low bid from a sub that he does not know, in most cases, just a few minutes before the bid deadline. Knowing that all other GC's will most likely be using that low number, the GC has to use that low bid or risk losing the entire project. Construction projects are like the links of a chain, no stronger than the weakest link. Unfortunately, the extremely low sub or subs often are not capable of producing the quality desired or meeting their schedule. You know the rest of the story...
This entire process selects the contractor based on one premise, the initial price of the low bid. It ignores all of the other unique qualities the general contractors possess.
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