- Not speaking the right language.
- Failure to quantify risk, opportunities, productivity, linkages of built environment to organization success/failure.
- First-cost vs. life-cycle cost approach.
- Inability to collaborate internally and externally with services providers, stakeholders.
- Lack of standardized terms, metrics, robust and proven business processes and metrics.
- Following the “traditional/safe” path, i.e. existing legacy technology and/or data project delivery methods (design-bid-build, design-build), vs. integrated project delivery and/or job order contracting).
- Failure to compare in-house and service provider material, equipment, and labor costs with standards such as RSMeans Cost Data.
- Reactionary vs. pro-active approach and methods.
- Failure to adopt agile and continuous improve approaches
- Lack of relevancy.
Simple answer… an industry-wide lack of collaboration, transparency, and shared risk/reward.
Change however is possible IF and ONLY IF Owners, Contractors, and AE’s take the time to understand and implement collaborative construction delivery methods correctly. Job Order Contracting (for renovation, repair, sustainability, and minor new construction projects) and Integrated Project Delivery (for major new construction), are examples of readily available, proven solutions to the construction sectors lack of productivity and legacy of legal disputes.
Fundamental change in how construction industry players perform business must occur. That said, not everyone will be able to, or wish to, participate. Excellence in both education and execution are requirements for the transition.
JOC and IPD share the following characteristics:
– Parties that understand and “buy-in” to the processes (not everyone will be up for the task)
– Robust, well-organized cost data (enhanced RSMeans line item cost data with full material, labor, material, and equipment breakdown, supplemented as needed for localized requirements, see http://www.4Clicks.com)
– Shared risk-reward
– Supporting software to assure consistency and reduce deployment costs
Design-Bid-Build, DBB and even Design-Build, DB can’t resolve our industry’s problems. We MUST change.
“Many/most projects are currently done with low bidders, ill prepared, with parties being dragged through the project just to try to get the work done with some reasonable quality. People’s actions are driven in two ways, reward or punishment. There is too much punishment and not enough reward. How many jobs have liquidated damages for delays but how many have you seen that gives a reward for finishing on time or early? We all know that construction is a “risk” business the question is how much risk are we willing to accept for little reward? The issue is achieving and “all for one and one for all” mentality.”” – quoted from a Linked-In discussion
BIM is supposed to be the “life-cycle management of the built environment supported by digital technology”. Unfortunately, far too much emphasis is being spend on 3D visualization and low level technical “mumbo jumbo”, vs. defining core processes, a robust onology/glossary, and associated sharing of rich information.
Learn or Retire?
What is an IDIQ / Indefinite Delivery Indefinite Quantity construction delivery method?
• Focused on smaller projects (up to low millions)
• Allows more efficient and higher quality construction for owners of large facility infrastructure
• Multi-year contract—ability to develop long- term facilities partners
• Well-suited to facilities with security concerns and/or ongoing operations—ensuring that contractors are pre-approved to begin work
There are multiple types of construction IDIQs
•Time and Materials – for simpler/smaller tasks
•MATOC (Multiple Award Task Order Contract) or MACC (Multiple Award Construction Contract) – for larger construction projects
•Job Order Contracting (JOC) – more the numerous renovation, repair, sustainability, and minor new construction projects, averaging $50,000-$100,000+ up to low millions. A form of Integrated Project Delivery, IPD, and also referred to as “Design-Build Lite”.
T and M Basics
•Pre-agreed labor rates and/or materials markup
•Suitable for the smallest projects
•Extension of/option to in-house crews
T and M Advantages
•Most immediately responsive
•Ideal for emergency work
•Flexible for projects with unknown scope
•Best suited for the smallest projects
•Extension of staff
T and M Disadvantages
•Little price control or up-front commitment
•No ability to subcontract—limited to trades called out in contract
•Pricing structure does not incentivize efficiency
•Prequalified shortlist of contractors to bid on multiple projects
•Phase 1 selection is always qualifications-based (can have price component in the form of a seed project)
•Per-project competition is usually price-based
•Simple to implement
•Similar to DBB
•No special skill set required
•Assurance of quality contractors
•Easy to ensure competitive pricing
•Can be used for larger projects
•Streamlines post-bidding award, security clearances, etc.
•Little room for innovation or collaborative process
•Must have full bid documents to ensure prequalified contractors are bidding “apples to apples”
•Spreads volume among many contractors, reducing operational efficiency
•One contractor can dominate, leaving lack of competitive pricing
•Contractors are higher quality, but DBB process and mentality remains
Job Order Contracting Basics
•Coefficient (factor, multiplier) applied to Unit Price Book
•Individual projects are scoped and proposed based on unit prices, which converts to a lump- sum delivery order before proceeding
Job Order Contracting Advantages
•Operational efficiencies from having one “go-to” contractor
•Extension of your staff
•Early contractor involvement, Design-Build, design to budget
•Standardized pricing based on competitive process
•Savings on “soft costs”
•Expedited delivery of projects
•Maximizes opportunity for M/DBE subcontracting
•Very different approach/process— requires partnering mindset of owner and contractor
•Requires staff training in unit price book estimating and evaluation of line item estimates
•No multiple quotes for comparison
•Cost efficiencies diminish above a certain threshold