Tag Archives: Incomplete plans

An estimators guide to design trends

We often think of trends in design as driven by an aesthetic or fashion.  However design is a business, which means that market trends can have an effect on the outcome.  Just as business can influence the trends, so too, can the trends influence business.  From the estimators desk, it’s critical to spot the trends which lead to changing design practices.  Adapting to these practices allows your business to stay abreast of all the challenges that new trends may bring.

Abby finds it difficult to maintain a trendy surfer accent while yelling.

Throughout my construction career there have always been innovations which promised to simplify or consolidate complex assemblies.  In some cases, this took the form of factory-built replacements like pre-manufactured homes which tremendously reduced the work of constructing a house on site.

Trends impact design

Innovations that simplify or consolidate complex assemblies are most often manufactured solutions.  Getting these innovations into a design-teams plans will typically require that the manufacturer provide the necessary design of their product.

In simple terms, a portion of the design is converted into a specified part.  This part may be depicted in a manner that is visually similar to conventional assemblies, but without the detail and/or section drawings that one would expect.  For example, custom made millwork will typically detail every joint in a cabinet door, however a premade cabinet assembly might only show the rough layout in plan view.

So how does this affect me?

The fine detail of the pre-made assembly is usually the manufacturer or sales representative’s responsibility to deliver, especially for custom applications.  Here again, trends in business can translate to changes in design practices.  For example, a design team may specify a single manufacturer in exchange for design-assist services.  The drawings landing on your desk may have semi-detailed plans for the premade assemblies that were generated by the manufacturer or their representative.  Cost-conscious clients may require their design teams to allow multiple manufacturers of premade assemblies.  In this case, the plans may feature blocked off areas with key notes requiring final design from the relevant vendors.

Submitted without comment.

Estimators should be aware that “all in one” pre-made solutions tend to be very inconsistent.  Determining “who does what” in terms of trade overlap can reveal very complicated relationships.  The representative or vendor of the pre-made solution may only deal with the design teams.  There may well be completely separate individuals who quote, design, fabricate, and install the pre-made solution.  It bears mentioning that these firms are seldom “built” to facilitate the needs of an estimator.  The sales agent working with the design team will often have access to information that the quotes department does not.  Many such firms will insist on a process that is almost guaranteed to oppose conventional workflows.

For example, some firms will only quote work per internal directives.  This is particularly common when the manufacturer has a contract with clients that build retail chains.  In this case, the quote may look nothing like what you’re seeing on the plan.   In other cases, there are firms that will only quote after they’ve completed their design.  This is a particularly difficult requirement in situations where you are competitively bidding a conceptual design.

Trends impact designers

Thus far, I’ve focused on manufacturing innovations.  Market trends can affect the design as well.  Despite the many advances in computerized design, getting from concept to construction documents takes a lot of time.  Design professionals tell me that this is because clients are seldom decisive, disciplined, and aligned to the realities of their situation.  Competition drives prices down, so naturally, design firms look for ways to improve profitability in competitive markets.  “Standards of care” or “Design level” are terms that relate to industry defined practices for design professionals.  Greatly simplified, design professionals offer services priced by different performance levels.  This allows a client to inexpensively hire a design team for a crude schematic design for example.

Some market trends have evolved to counterbalance hiring design teams at a lower standard of care by requiring additional services of the build-team.  This can take many forms including a design-build contract, or a design-assist contract.

Responsibilities rolling downhill is a trend too!

In some situations, this counterbalancing is done by adding requirements to the specifications (specs).  This can include tasks that would typically fall under due-diligence for the design team.  Indeed there is a design trend where design and engineering consultants actually require subcontractors (subs) to hire their own independent engineering firms to verify that the proposed design is safe and appropriate for the existing conditions.  Coordination tasks are also being pressed onto subs via requirements for shop drawings of assemblies that involve multiple trades.

This can create a lot of issues for the build-team, which affects their ability to price the work.  For example, the specifications might require the electrical contractor to provide shop drawings of floor box layout with dimensions coordinating furniture, millwork, glazing, framing, structure, mechanical and plumbing. Typically, the electrical sub does not have any contractual authority over the other subs.  The specification requirements for these shop drawings never include a rubric governing which systems have precedence in the event of a conflict.

Advancements in debate technology are still in the experimental stage.

Consistently lower standards of care have found their way into construction administration practices as well.  Design teams still require submittals, shop drawings, and close-out documentation, however they eschew any responsibility for the information they review.  Many such firms will stamp “Reviewed” or “No Exceptions taken” with requirements that the contractor verify that everything they submitted complies with the construction documents.  Hand-in-hand with these requirements are specifications which state that conflicting requirements will resolve to the most stringent standard, as determined by the design team and the authority having jurisdiction.

Since this approach does not reveal mistakes, omissions, or clarifications in the submittals, we can expect two obvious outcomes.  The first is that the wrong material will be installed, which has the potential to compromise design integrity unless the design team catches it during their inspections.   The second, is that the contractors will recognize the trap laid for them by the design team.  If there is no way to prove that you have met the specified criteria, there’s always a risk that the design team will require costly changes when time is short.

Submitted without comment (again)

This trend obviously increases the contractors risk.  Savvy subs who find themselves in this situation may try to mitigate this risk by refusing to place a costly material order without Architect of record, or Engineer of record approval.  Please seek qualified legal council where necessary, as many states have laws pertaining to professional obligations.  It’s also worth knowing that contracts with a severability clause may feature clauses that cannot be legally enforced.   This may be part of a strategy to bluff contract signers into accepting unfair/illegal conditions.  Please seek qualified legal council before signing any contracts!

We’ll fix it with technology!

Some General Contractors (GC’s) attempt to supplement the lack of design coordination with Building Information Modeling (BIM) which is used for clash detection.   Since most GC’s lack extensive knowledge of Mechanical, Electrical, and Plumbing, (MEP) trades, they prefer to require that subs in these trades generate their own BIM model of the project, which will then be used for clash detection.  Here again, standards of care and detail levels play a vital role in defining what actually gets done.  In the context of competitive bidding, BIM modeling requests are generally between vague and meaningless.  These requests are vague because the GC has no idea how coordinated the plans actually are, so they don’t know how to quantify what it would take to resolve the issues.  The only party who does actually know what needs to be fixed/coordinated is the original design team.

“Go ahead and ask them what’s missing, I’ll be right behind you..”

Be forewarned that the same market trends that make it necessary to sell lower standards of care, encourage design firms to eschew “premium” services that don’t sell.  In the worst cases, the end result are plans of poor quality, which must be aggressively salvaged by a slapdash application of technology.  Please seek qualified legal council where necessary, as many states have laws pertaining to professional obligations.

If you are trying to price BIM and clash detection services, I would start by separating the proposals.  One price should be for a specified number of hours to develop a BIM model at a specified level of detail.  This should stipulate the required documents, standards, and files before the process begins.  The second price should be for a predefined number of hours to address clash issues.  Make sure to stipulate the hourly rate for overages.

We cannot solve our problems with the same thinking that we used when we created them” -Albert Einstein

Trying to coordinate a design using third party independent contractors in a process named “Clash Detection” has a few obvious pitfalls.  GC’s and subs alike should understand that the resultant “BIM Team” works very differently than if the same firms contracted with one another to design the project.

Not all clashes are easily resolved.  Some resolutions will materially change the cost, profitability, duration, utility, aesthetics, or performance of the end-product.  It’s also important to understand that clients purchasing clash detection, do so assuming that this process will eliminate change orders.  For these, and many more reasons, clash detection has the potential to consume a tremendous amount of time.  Estimators should carefully manage their clients expectations.

Trends in bidding

Estimators working in markets with an influx of pre-made solutions should adapt to the lack of detail by exposing what they do, and do not, know, using the Request For Information (RFI) process.  Bear in mind that in most cases, someone on the design team has been working with someone at the manufacturer.  Asking for the contact information of the manufacturer’s representative is an excellent way to get access to the individual who knows the most about this project.  Be advised that the representative may not be aware that the job is out to bid.  Clients with national accounts for materials, vendors, and subcontractors, have a bizarre predilection for design teams who systematically withhold any mention of these contractual relationships.  When asking about these accounts, provide any information you have, because many reticent design teams have no interest in communicating their client’s contractual relationships. Sometimes these relationships range from tricky, to downright risky.

For example, there’s one major firm with a national account for lighting fixtures which goes out of it’s way to conceal that this account arbitrarily excludes emergency egress fixtures such as exits, and frogeye lights.  The client demands that electrical subcontractors buy all their lighting fixtures from the national account  vendor.  However, that vendor will not provide pricing for the exits or frogeye lights until after the contract award.

When they do, the national account  vendor’s price for the egress fixtures are artificially high.  The client refuses to accept financial responsibility for this outcome since they believe they made their requirements clear.  Whether by coincidence or by design, that National Account relationship sets the contractor up for an ugly surprise.  RFI’s about this subject put the issue on the record for all bidders to see.  If/when the vendor refuses to quote the full package per the client’s direction, the contractor can forward the vendor’s response to the design team while asking for direction.  If/when the design team runs out the clock on that RFI, exclude, qualify or quantify the costs for the issue(s) in question on your proposal.

The client set up a national account vendor to secure advantageous terms on pricing, performance, and quality control.  The vendor may be technically selling their goods to the subcontractor, but they view the national account holder as their client.  Estimators pricing work requiring these vendors, should anticipate a lower level of vendor performance as compared to market leaders.

You might say they’re hard-headed and crooked, but that’s just one point of view

In particularly competitive markets, there is a trend where the General Contractor (GC) is awarded based on a hard-bid of the schematic design (typically 10% complete).  The awarded GC then conducts a competitive bid based on the design development set (typically 50% complete).  This bid is often “open book” to the client which means they are presented with all the bid information.  In many cases, the most complex and/or time-critical subcontractors are awarded.  The GC then conducts a competitive bid on the Construction Document (typically 95% complete) set.  This is ostensibly to award the remaining subcontractors, however the subs awarded on the 50% round are expected to revise their proposal and offer guidance on constructability, scheduling, and cost-control measures.  Finally, there is the budget reconciliation round which is the permit set (typically 100% complete).  This is where the client expects the GC to lead their subs in value engineering exercises.  In extreme cases, the client will threaten to suspend, cancel, or re-bid the entire project unless their budgetary, design, and schedule demands are met.  This practice only happens in especially competitive markets since nobody on the build-team is paid for their design-assist work.

 

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© Anton Takken 2021 all rights reserved

 


Why people won’t follow instructions

If you work long enough, you’ll eventually have a moment where you’re stuck wondering why someone didn’t follow your instructions. Estimators, especially estimators working for a General Contractor (GC) struggle to get their subcontractors (subs) to follow instructions all the time. It would be easy to suppose that typical explanations such as inattention, or laziness explain this behavior but there are overlooked reasons that could be playing a role here.

Why people won't follow instructions

“Wait,  I can explain…”

 

A reflection on risk

Let’s start by considering something that all estimators have in common; risk. Risk is the uncertainty of a return and/or the potential for a financial loss. If we really think about it, controlling risk is more important than simply winning work. For example; winning a risky job is worse than losing a profitable opportunity.

The GC’s contract exchanges the liability of the entire project scope for their bid amount. The GC controls the risk by contracting portions of the project scope out to subcontractors. Once the project scope is divided and attributed to the subs, the GC’s remaining risk is greatly reduced because they have the contractual means to enforce performance.

This means that the GC estimator is primarily concerned with “complete” sub proposals. Exclusions, clarifications, or limitations that leave uncertainty for the GC estimator are considered potential “holes” in their plan. It’s understandable that subs not following instructions is a common frustration for GC estimators.

Perspective on the plans

The sub estimator has a profoundly different perspective because there is very little contractual latitude when it comes to accepting liability for their scope of work. Sub estimators are keenly aware that they must bear responsibility for misunderstanding, overlooking, or underestimating the scope of work shown in the Contract Documents (CD’s).

It’s incredibly rare for design teams to accept financial responsibility for misleading, incomplete, contradictory, or incorrect information on their designs. Specifications often stipulate that any design errors or omissions must be brought to the design teams attention BEFORE the bid via a Request For Information (RFI). Many projects obligate the bidders to walk the job. Some specifications even require bidders to verify hidden conditions during the walk regardless of how impractical or impossible that really is.

Why people won't follow instructions

“We’re all along for the ride, but Engineer’s hate field trips…”

Essentially the design team expects the CD’s to be vetted and reviewed for constructability before the bid deadline, free of charge, and they believe this is grounds to dismiss change order claims based on the inadequacy of their design at bid time.

A competent GC estimator understands that they are empowered to write RFI’s, and bid directives to communicate the questions and answers necessary to work around issues with the CD’s. Sadly, many GC estimators assume a passive role when it comes to inadequate CD’s because timelines are tight, Architects might get cranky, and it’s a lot of extra work. Some GC’s won’t write an RFI unless there’s a subcontractor “revolt” where all the subs of a given trade refuse to bid unless an issue is resolved. This attitude starves the subs of any recourse to address uncertainty in the plans, so they resort to exclusions, clarifications, limitations, or outright declining to bid.

Last minute bidding and why we’re all in a hurry

Lots of GC estimators maintain a rigorous bid schedule. There’s lots to do, and little time to get it done. Subs rarely have the luxury of working for a single GC, so they deal with exponentially more projects than the average GC. Their scope is limited, however they’re liable for every single component which makes it very stressful to keep up.

As I mentioned earlier, RFI’s are part of the bid process which inevitably leads to changes in the CD’s or scope of work. Design teams love to answer all questions a day or so before the deadline. Maybe this is because they’re hopelessly optimistic that they’ve resolved every possible issue for the bidders. In truth, it’s very common for addenda answers to actually create more problems than they solve.

Why is it so hard to know what changed?

Every year, fewer and fewer design teams bother with addendum change narratives which itemize the changes made to the CD’s. The assumption is that the Architectural standard practice of “clouding” or “bubbling” changes to the CD’s makes it clear what they’ve done. In reality, there are often changes made that aren’t bubbled. Presumably the assumption is that everyone is using digital take-off systems that can do overlays to reveal the hidden changes.

Overlays can take a lot of time to do. Minor changes shown on an overlay can induce eye-strain, making the addenda a literal headache! Often it’s less work for the Architect to simply revise the entire drawing set and transmit it digitally. This can mean overlays of pages without any changes at all. Larger projects may have several such Addenda, which can quickly overwhelm a subcontractor.

For the sub who’s always several bids deep, the most efficient way to handle this deluge of information is to do their quantity take off (QTO) at the last moment. Bidding off the final addenda set avoids all the misery of earlier overlays, but it leaves them with little time to complete their estimate.

GC estimators looking for less drama on bid-day should itemize the changes made in each addenda according to their bidders scopes. Maintaining a running list of changes and supplementing with instruction/ direction where necessary limits the amount of scrambling a bidder has to do to deliver a complete proposal.   GC estimators who strive to lower their subs risk get better pricing. The GC with the best sub-pricing can be simultaneously cheaper, AND more profitable than their competition. I know of a few GC estimators who’ve rejected an Architects addendum until they provided a change narrative and bubbled drawings. Setting a precedent with the design team at the start of the project kept the addenda from becoming unmanageable.

Email mountain

The ease with which information can be transmitted via email can lead to inboxes that are inundated with messages. Bid letting software allows an estimator to mass-communicate with all the invited subs to share every document, file, and change. Many bid-letting programs automatically send out reminders to bid, often to multiple contacts at each subcontractor. On the receiving end this can mean upwards of a half-dozen emails per project, per client, and per contact. Projects with short deadlines can go from invitation to bid, to addenda, to bid day reminder within 24 hours. Many of these systems don’t communicate the basics about the project in any of the emails. Subs have to log in and navigate to files they must download in order to find out what they’re being asked to do.

Sure, the information is available, but it’s parceled out into several “Go find what I sent you” exercises that waste the subs time. If GC’s want their instructions followed, they should put themselves on the receiving end of their systems to see what’s going out to their bidders.

Why people won't follow instructions

“Our servers improve your fitness by exercising your patience”

Cloud based file sharing has become incredibly popular because all the documents are constantly available to everyone. Some teams are careful to separate different editions of the CD’s to maintain documentation of the changes. Other teams make no real effort to retain older CD’s which means the documents can and do change between the invitation to bid and the deadline. This can create a real hazard to the bidders who may not receive any notification of the changes. I’ve worked for unscrupulous GC’s who replaced the CD’s after the contract was written in an attempt to avoid paying for change orders. All the supposed benefits of shared files pale in comparison to the risk of being unable to prove what was and wasn’t on the CD’s at bid time.

I encourage every estimator to download and save the most current CD’s on bid-day into a time-stamped file.   Keep that file for your records, because it may not be there later on.

Smarter than you think

So far, I’ve focused on information and risk management reasons why a bidder won’t follow instructions. The GC estimator should provide leadership to clarify, consolidate, and communicate what needs to be done. There is a lot of trade-specific knowledge required to understand and bid the scope of the skilled trades. A lot of GC estimators aren’t sure what to do when they’re presented with a complex issue, so many default to asking for alternate or breakout pricing. Alternates can double or triple the amount of work to bid a project. Not only is it more work, alternates might be misunderstood, misapplied, or used against the bidders interest. Arming the client with information that leads to wrong decisions is bad business.

If the GC estimator don’t understand the issue, it’s unlikely that they will clearly communicate the alternates to their client. Some GC estimators in this position will simply add up all the alternates just to “be sure” they’re covered. Subs see these GC estimators losing bids because they don’t exercise good judgment with the information presented. In some cases the sub is truly trying to help the rookie or fraidy-cat GC estimator win, by ignoring their alternate request.

Don’t kick the hornets’ nest

Material specifications don’t happen by accident. Design teams are paid to select, define, and enforce the material specifications for their projects. This becomes a very contentious issue when a specified material is overpriced. Corruption thrives wherever transparency, competition, and accountability are lacking. Some material vendors and distributors have extensive relationships with design teams who protect them from competition by sole specifying their product. Lots of GC’s will request alternates for Value Engineering or Alternate equal pricing to replace overpriced material. If the difference is significant, they present it to the client.

Subs may refuse to provide this pricing for several reasons. First off, the design team has a vested interest in their specified vendor. It’s therefore unlikely that they will happily accept an alternate product that would expose their budgetary irresponsibility.   Second, the more extensive the corruption, the more control the malefactors have in the system. Releasing material pricing just before the deadline is a favored tactic because it precludes bidders from seeking another option before the deadline. The subs may simply not have time to find an alternate solution. Finally, the sub understands that solving the GC’s budget issue isn’t a guarantee that the sub will be awarded a contract. Many GC estimators see no problem using one sub’s alternate in conjunction with another subs proposal. They figure their low sub will be able to find the same deal on the alternate material later on. So the sub who kicked the hornets’ nest gets noncompetitive pricing on all their material bids, while their competitor lands a contract.

Why people won't follow instructions

 Chris has plenty of time to consider how his hard work left him in the cold.

A lot less than nothing

It bears mentioning that lots of GC estimators entertain endless post-bid client requests to value engineer the job. Some clients instruct their design team to incorporate all the best ideas, then put the job back out to bid. I call it “Design by bid” and it’s an incredibly expensive way to give your competition a job.

GC estimators looking for a solution here should consider writing RFI’s requesting alternate specifications for sole-specified overpriced materials. In some cases, it’s smarter to ask for performance specifications because it’s difficult for a design team to go on the record refusing to accept an equally performing product.

Most design teams stipulate that alternate materials must be submitted for approval before the bid. Since it’s virtually impossible to know precisely how overpriced the material will be before the deadline, it’s hard to tell when this will be worth doing. Experience in a given market will expose the relationships underpinning the corruption, so long as you’re paying attention.

Defensible decisions beats conditional clarifications

Contradictory, misleading, and confusing requirements are part of an estimators life. Controlling risk often comes down to judgment calls on the information you’ve got at hand. It’s a weird quirk of estimating that people tend to overlook justifiable confusion during the bid because they’re sitting on the post-bid answers. “Of course they wanted X instead of Y, here’s all the supporting reasons that make it obvious…” Nobody cares that there may be just as many compelling reasons to support a preference for Y, because now the client’s telling you what they want.

This mindset carries into reading proposals at every level. The presumption is that your proposal is presenting a complete scope of work for a bid amount. Clarifications, especially complex conditional clarifications are seen as fine print or worse; weasel wording. Anything that savors of sneaky dealing works against the estimator. From a practical standpoint, it’s better to articulate your scope of work in terms of defensible decisions. The more simple and defensible your decision-making is, the more your client trusts your motivations.

Let’s say there’s an obvious conflict in a design that could potentially go three different ways. If a sub sent over a base bid with two alternates to cover all the options, they’re taking a risk that the GC won’t know how to scope their bid against their competitors who didn’t price any alternates on their proposals. These alternates make the GC estimator responsible for the outcome of their decision-making. Lacking knowledge, experience, integrity, or time, the GC estimator may make the wrong decision. These moments can have real costs in terms of bids, relationships, and reputations.

The imaginary alternate

Some projects have a long list of alternates that are scarcely defined in the CD’s. I’ve seen projects that had four elevation drawings of a single occupant restroom, yet an alternate for an additional building was defined entirely by three sentences in the specifications! I call these “imaginary alternates” because they exist only in the client/architects imagination. Experienced estimators know that any price you provide can be used against you. Imaginary alternates offer no tangible defense for decision-making. The only defensible decision, is to not price them. Estimators should respond to imaginary alternates with “To Be Determined”, or “Price Pending Design”.

The bid template

Just about every rookie GC estimator who has scoped a stack of sub proposals gets tired of how difficult it is to simply compare one against the other. The myriad ways that bidders word their way around promising to “have everything” can be very frustrating. Their grand solution is a bid template which not only orders the information, but neatly prevents the subs from excluding anything inconvenient to the GC. The GC estimators plight is understandable, but misguided because they’re ignoring the autonomy of the subs. It’s the subs autonomy that makes them an effective risk diversification strategy for the GC. Attracting market-leading subs not only lowers the GC’s prices, and raises their potential profit, but it also reduces the risk of subcontractor failure. GC’s with a myopic focus on bid templates convey higher risk to the subs. We’re estimators because there is uncertainty. If we can’t address the uncertainty via clarifications or exclusions, the risk becomes unmanageable without raising the price. Bid templates are an excellent way to efficiently lose bids and repel market leaders.

Why people won't follow instructions

A better alternative

A bid checklist is a subcontractor level list of applicable scope items with columns to confirm, add, or subtract funds to correspond with the GC estimators plan. Not only does the form automatically tabulate the “apples to apples” amount between bidders, it provides all the bidders with the same criteria, and equal time to respond. Getting the subs “on the record” in terms of unclear scope inclusions is invaluable for when Project Managers are writing contracts. Perhaps best of all, the checklist allows the subs to protect their interests and control their risk by supplementing rather than replacing their proposals. If done correctly, it’s possible to use the GC estimators actual estimate to output bid checklist forms, thereby saving considerable time for everyone. It’s easy to overlook just how much time a GC estimator spends trying to call the subs individually. Bid checklists can be mass-emailed to all bidders. The answers return in black-and-white terms that simplify decision-making.

Clear, well-reasoned instructions backed by good faith efforts to make the project successful make all the difference.  Bidders want to be on the winning team, and will happily do their part to the extent they believe it will benefit them.  This means that ignored instructions communicate something counter-productive to the bidders.  Estimators who build on this feedback may find ways to re-focus their efforts and get the results that matter.  If our purpose as estimators is to win profitable work, we should evaluate our processes with clarity of purpose and keep only what works.

 

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© Anton Takken 2016 all rights reserved

 

 


Conceptual estimating, client capture or wasted time?

Where do projects come from? As estimators we’re often less concerned with the steps that came before plans landed on our desk that we should be. Everything starts with a client and their idea. There’s an awful lot that has to come together to translate a clients idea into a reality. The American Institute of Architects (AIA) has outlined the Best Practices for architectural design into three main phases.

Basic concept

Schematic design (SD) is the earliest phase and it’s where the required functions of the project are defined and refined. A lot of effort goes into the research and due diligence necessary to ensure that the project will conform to zoning, jurisdictional requirements, etc.  Estimators often refer to these as the “napkin sketches” because the intent is to convey the magnitude and orientation of major project features without necessarily providing much detail. Smaller projects may feature a narrative which can be as simple as a list of required functions, assumptions, and minimum requirements. The SD drawing set may be put out to contractors as a “gut check” to level the project requirements against the client’s budget. More on this later.

Conceptual estimating, client capture or wasted time?

“It may not look like it, but I’m here to help…”

Rough draft

Design Development (DD) is the next phase and it’s here that more detail is slowly added. Generally, (but not always) these plans lay out the Mechanical, Electrical, Plumbing (MEP) details as well as the structural and architectural details. It’s at this stage that signature elements are typically selected, often based on comparison between one or more schemes. When these plans are sent to contractors, you’ll often see them referred to as “Pricing plan” (PP) or clearly marked “NOT FOR CONSTRUCTION”. The DD phase is typically concluded with a formal presentation to the client in hopes of getting approval to proceed to the next phase.

Final plan

Construction Document (CD) phase is the final phase of architectural design. Complete CD’s are sent to contractors for final bidding and subsequent contract award. Many clients and/or architects require contractors to bid on incomplete CD’s which are marked with the percentage complete.

Concept to contract

Estimators are frequently asked to price SD and DD drawings as a courtesy to the client or the architect. It’s understood that designs must progress in order for there to be work for GC’s to do. Beyond simply aiding a design development, many GC’s seek to lay the groundwork for contract award or negotiated agreements by making themselves indispensable to the client and/or architect.

Conceptual estimating, client capture or wasted time?

Savvy bidders are quick to lock their competitors out

This tactic is called “client capture” and there’s a lot to recommend the practice because GC input early in the design can reduce prices, and increase the odds of project success.

Refine by bid

The GC’s motivation to capture the client is understandable, however their effort can stray into becoming an unpaid construction consultant.   There are clients who limit their design team’s scope of work to SD or DD level drawings, which are then sent out to bid with requests for “complete” proposals. Estimators pricing these projects balance between hard-bidding and design-build as they attempt to fill in the blanks. Each round of bidding provides the client with information to refine their drawings for re-bidding.   Bidding GC’s will find their good ideas incorporated on plans sent to their competitors to bid. It’s entirely possible to spend so many labor hours in conceptual bidding, that the subsequent contract work is no longer profitable!

Conceptual estimating, client capture or wasted time?

Window shoppers

Competitive bidding is the most reliable and consistent means to ensure market pricing. Clients who find their budget’s blown on bid day are getting valuable feedback on their projects. There are some clients who continually re-bid their projects hoping to “beat the bushes” for a better price. If the client can’t raise their budget to market-value, or reduce their scope to suit their budget, they’re not a real client. These “window shoppers” have no concern for the time and money they cost their markets. There are always more window shoppers than real clients, so estimators are well-advised to bid judiciously.

Some clients find themselves debating between two or more different addresses which require tenant improvement (TI). Metro areas often feature design firms that specialize in tenant planning for leasing negotiations. These firms specialize in drawing plans that facilitate conceptual pricing, but never lead to construction contracts. In fact, there’s little reason for these design firms to involve contractors because historical data coupled with some basic estimating skills would provide their clients with sufficiently accuracy to negotiate leasing terms.

Signs to watch for

Estimators looking to maximize their chances of success must develop judgment to pick the best opportunities to bid. There’s an old maxim that states : “Good judgment is based on experience you can only get through bad judgment”. As a logical starting point, estimators must understand that functional relationships are based on reciprocation. Bidders understand that submitting the lowest complete proposal (for free) by the deadline is their obligation, and awarding the contract to company with the lowest complete proposal is the client’s obligation. Bidding for “free” is the contractors commitment, awarding a contract on the basis of those bids, is the client’s commitment. Moral flexibility separates the window shoppers from the real clients.

Conceptual estimating, client capture or wasted time?

Here are couple examples of how life is better without gray areas.

Many ethical clients see conceptual estimating as an expected courtesy, if not an outright prerequisite for future invitations. If the client isn’t promising to select a contractor based on the outcome of a conceptual bid, the GC’s are forewarned that they can expect additional rounds of competitive bidding before the contract is awarded. Estimators are well-advised to pay particular attention to what is and isn’t promised at the “final” bidding opportunity. There are clients and design teams who expect “do-overs” whenever there’s hope of capturing some additional savings. An awfully old trick is bid the job before submitting plans to the building department, then re-bid the job after they’ve got inspector’s comments. Lots of value-engineering (VE) ideas from the bidders get rolled into that last set. This effectively gives your competitors a chance to capitalize on your good ideas for the client.

Clients who consider conceptual estimates to be a prerequisite to inclusion in the final bidding should be starting with a short list of pre-qualified GC’s. Pricing all the SD, DD, and CD revisions can range from three estimates, to dozens of pricing exercises that could take place over many months. Clients who expect this courtesy should reciprocate by limiting competition to a short list of qualified competitors.

Clients who demand extensive competition throughout conceptual bidding will generally accept any bidder on the final round. These clients may pay lip-service to GC’s making themselves indispensable but they’ll only award after they’re sure there’s nobody cheaper on the market.

Estimators should be especially wary of bidding projects which have different deadlines for participating GC’s. Sharp-eyed estimators will pay particular attention to the dates on the plans. It’s very rare for a legitimate conceptual bid to have plans that are more than a few days old at the time of the request for proposal (RFP).

Often Architects will revise the plan legend as progress is made on the sheets. “Final” or “Pricing set” drawings that aren’t quite 100% complete are fairly typical for hard-bidding, however estimators should consider the timeline of the updates in the context of the final set’s date. If there was steady design progress between updates however the “Pricing set” you’re looking at is several months old suggests that this isn’t the first time these plans have been out to bid. Especially long gaps between “Pricing” and “For Construction” sets, begs the question “why didn’t they award the job on the pricing set?”

Never underestimate the value of direct communication with the client and their design team. Job walks are a vital social opportunity to gain insight into the project and where it’s heading. Clients may freely admit that a project has been out to bid previously. Design teams may drop hints about expected changes, budgetary issues, or client expectations. GC estimators should cultivate their leads in the subcontractor community. Reputations are earned, and people have long memories when it comes to hard-earned judgment.

It’s much easier to close a deal with a client when you’re well-informed.

Tips and techniques

Conceptual estimating, even as a courtesy carries a certain amount of risk. Regardless of what qualifiers, clarifications, or exclusions you might make, the one thing that every client remembers, is the lowest number they heard. Estimators need to be VERY careful about how information might be misconstrued especially at the earliest stages of design.

We all understand that complex assemblies are built of smaller parts and pieces. Clients tend to think of these pieces as individual and uniform when it comes to cost. The cost to furnish and install any given thing seems like it’s an easy enough question. The problem with this thinking is that it’s simplifying the context, and ignoring the impact one part has on the larger system. For example, adding one more faucet may require another sink, which may require another drain which may exceed the design’s capacity in numerous ways.

To the estimator, “menu pricing” conceptual elements is not only risky, it’s potentially never-ending. It’s important to pull back a little, to get perspective on what the client is actually trying to achieve. Rather than indulging in micro-managing breakouts, the focus should be on guidance to achieve the clients project goals within their budget. Identifying cost centers and their proportional contribution to the total gives meaningful feedback on incomplete designs. Estimators looking to capture a client through conceptual pricing should look beyond pricing every request to address the clients root concerns. Helping a client with their problems should not give them the tools to hire your competitor. A pattern of brute-force low-bidding on multiple rounds of conceptual estimating isn’t a substitute for strategy either.

Conceptual estimating, client capture or wasted time?

Hitching their wagon to the wrong horse is a recurring trend in the estimating field…

Not every client will be interested in selecting a GC during the conceptual bidding. In many cases the courtesy bidders find themselves losing to firms that didn’t bid the conceptual rounds. If conceptual bidding won’t lead to client capture, it should at least lead to successful pricing strategies. There’s never an end to going-nowhere conceptual pricing requests because clients and their design teams are getting free construction consultants. It’s hard enough to win profitable work as it is without giving our best efforts away for free.

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© Anton Takken 2016 all rights reserved

 


Controlling Risk

If estimating was simply calculating the price of things that work perfectly, we wouldn’t be estimating, we’d be cashiers. Since estimating involves calculating risk, it’s worth some investigation into what is involved. Risk is the uncertainty of a return and/or the potential for a financial loss. The construction estimator must understand that sometimes things go very wrong which can cost substantially more to fix than the job was originally worth. Taken to its fullest extreme, the sky’s the limit for liability.

Like absolutely everything in Estimating, we start by bounding the problem. Companies purchase insurance policies for a reason, there must be a means to backstop the risk of the worst case situation. This allows us to avoid factoring unlikely risks like acts of nature into everything we do. As a rough starting point, we need to consider how the project, or doing what’s necessary to build the project will present risks to people, property, or contractual agreements.

Contractual risks

Most estimators will hone in on contractual penalties like liquidated damages as their main risk. It’s understandable that an easy-to-read penalty would garner attention, but this ignores a very fundamental aspect of risk appraisal. If you can control or manage the contributing aspects of a risk condition, the resulting risk is reduced.

balance

Skeet diversified his portfolio with a “retirement vehicle”.

Taking liquidated damages as an example, the penalty for being late is less of a concern when the contract blocks the client, owners rep, and design team from impacting the production, or schedule. Some contracts require the bidders to submit their own Critical Path Method (CPM) schedule. This allows the General Contractor (GC) to define their duration, milestones, and completion dates. More control means less risk.

Screwing up is always going to hurt you

It’s worth mentioning that there are legal precedents which allow clients to pursue damages against a GC who’s late project delivery led to client losses. Contracts which include the phrase “Time is of the essence”, may not include stipulated liquidated damages however the client can recover damages against the GC for being late. Clients opening retail, resort, gambling, entertainment, retirement, etc, facilities can stand to lose incredible sums in lost revenue for every day they’re prevented from operating. Liquidated damages can actually be the least of your liability problems with high-revenue clients.

Diving deeper into contract law is beyond the scope of this article. I heartily encourage consultation with a contract administrator or attorney as needed. As estimators, we need to understand that penalties for failure aren’t the real drivers of risk. What drives the risk, is what drives the failure.

Flip the problem around. If absolutely everything goes perfectly on a construction project, you have a very simple trade of goods and services for payment. Contracts predominately exist to lay the groundwork for legal action for when things don’t go well.

Production + client delay = your risk

Contracts can, and often do, present conditions that work counter to the project’s success. These are the real drivers of risk. For example, a contract may stipulate the project deadline while also providing clauses whereby the client or their representative can stall production without corresponding schedule extension.

a-funny-looking-rooster-chicken

“We spent the last three weeks making changes, now we just don’t have time to give you a two-day extension”

Owners representatives are virtually never contractually at-risk for the outcome of their actions. Everything from submittal review delays to unanswered requests for information (RFI), can prevent the GC from getting their job done as valuable time passes. Contracts are generally written as though the plans and specifications, known as construction documents (CDs) are perfect. While there are certainly provisions for getting questions answered, and submitting change orders, the final arbiter deciding your fate is normally an unaccountable owner, or owners rep.

Good clients are lower risk but they are harder to find.

Project risk is certainly not strictly bound to the contract terms. Just as hiring good employees reduces the chances of problems, so too, does working for good clients with professional design teams. There are good and bad examples at every level of every market. Estimators must learn to size up their clients to get a sense of how things are likely to go. At present, Architects are often the “gatekeepers” of project opportunities for the GC. GCs looking for leads, should be careful to solicit the attention of Architects who attract good clients. The better the clients, the more discrete the opportunities tend to be.

Low barrier to entry work speaks as much of the client as the project. As Edmund Burke so artfully wrote: “Only fools rush in where angels fear to tread.” Better opportunities are out there, but you’ve got to do good work to see them.

Mitigation by bid scoping

GC’s mitigate risk by contracting out portions of the project scope to subcontractors (subs), and vendors. The subcontract provides a layer of risk-management in terms of stipulations, remedial actions, and so forth. By diversifying the risk among many subcontractors, the potential for a catastrophic problem is reduced. GC estimators spend a good amount of their time scoping subcontractor bids. Inclusions, exclusions, clarifications, and allowances frame the essence of what you’re getting for the proposed amount. GC estimators must be very careful when comparing subcontractor proposals because sub proposals are an integral part of how the subcontractor mitigates their risk on the project.

Specialty scope and the risk of the sub-tier sub

From the GC’s perspective, it might seem as though subs “miss” a lot of important scope, or that they’re lazy about including items that seem like they should be part of the deal. In practice, most subs are perfectly aware that the GC would prefer that they take on additional risk for work that’s not really their specialty. Inexplicably, GC’s will tolerate hiring upwards of half a dozen companies for the concrete work, but they have little to no patience for splitting scope in Mechanical, Electrical, or Plumbing (MEP) trades. If it’s pipe, it’s the plumbers job. If it’s wire, it’s the electrician. Perhaps it’s because concrete work is easier for GC’s to understand than the skilled trades.

Specialty vendors like Fire sprinkler, Photovoltaic (solar), Geothermal heating systems, and Fire Alarm are stand-alone companies that switch between subcontracting, and sub-tier subcontracting. Most subcontractors are ill-equipped to manage a sub-tier contract which adds to the subcontractors risk.

subtiersubtiersub

Artistic rendering of how the sub-tier-sub contract arrangement breaks down

GC’s pressing for these arrangements like the notion that they have only one contractor for “all the wire”. Lacking the willpower to learn about these “ghost trades” the GC’s are choosing convenience over control. Higher risk means higher prices, GC convenience adds up to squandered opportunities.

Risk in bidder spread

Bid scoping can portray risk in very stark terms. For example an estimator comparing three proposals obviously has a high, middle, and low bidder. It’s incredibly unlikely that the middle number will be perfectly between the high and the low. If the low bid is further away from the median amount, it’s an outlier. “Scary” low bids sometimes happen because people make mistakes.

Cost of replacement

The idea here is to quantify how much it would cost to hire a replacement if the low bidder fails. Be advised that once the project is under-way, the real cost to replace a subcontractor will always be more than the bid-day difference between bidders. Taking over the partially completed work of a competitor is a very different situation than the sub priced on bid-day. I should mention that there are plenty of legal recourse’s for subs who made a mistake on bid day. GC estimators must uphold their duty to investigate and correct bidder mistakes. Scary low bids should signal caution, that’s how a judge will see it in their courtroom. The risk in hiring a low bidder can be considered as the monetary difference between the outlier and the consensus median. I use the term “consensus median” to signify a price that would fall in the middle of the market-value proposals. Estimators should be careful about using the second low bidder as their consensus amount because it’s entirely possible that the low and second-low made the same mistake.

peers

Mark and Jay aren’t picky about what they bid so long as nobody else wants it.

The less the estimator knows about the subcontractors submitting proposals, the less faith they can reasonably have in small data-sets. Estimators who’ve bid highly sought-after projects may find themselves inundated with subcontractor proposals. The proposals will tend to stratify according to contractor ability and interest in the work.

The myth of sub coverage statistics

GCs are always looking for greater “sub coverage” because a bigger data-set implies greater certainty in their calculations. It’s certainly nice if you can get it, but unless you’re a market leading GC with an absolutely irresistible opportunity out to bid, the odds are good that won’t happen. Market leading subs are the only relevant contenders for the project. Without their bids, a GC won’t win the job. So GC’s need to have relationships with those market leaders before the bid. GC’s hounding anyone else for bids “just in case” they come in lower, are wasting the subs time.

It works the same in reverse for subs. The subs can’t reliably win profitable work without a market-leading GC, which makes market leaders lower risk. Lower risk means lower prices, higher hit rates, and better profitability for everyone.

GC’s who stockpile sub bids are wasting most of the subs time. They’re perfectly aware of this which is why these GC’s are among the least likely to provide bid results. Often these are the bid-mill estimators constantly calling an hour from their deadline with jobs that “nobody’s looking at”. This often means one of two things; they’re unacceptably risky for your competitors to work with, or they’re hoping your rushed bid includes a mistake that benefits them. It’s bad business either way.

scale

Ed has a feeling he might have under-bid the job.

Relative risk

We often think of a projects risk in isolation, rather than how the project affects our operation. Losing a critical bid can have dire consequences for a company. Deductive reasoning leads us to add up all the risks and consider the potential reward. Inductive reasoning works in the reverse. Starting with the understanding that we must win profitable work out of the available opportunities, we work within the boundaries of our current market to make the best decisions. It’s very easy to convince yourself that projects are too risky when you look at them in isolation.

Lots of companies become convinced that they’re good at building a specific type of project to the exclusion of everything else. I’ve encountered firms that were utterly convinced that they couldn’t build seemingly identical projects to their regular work, simply because the client was new to them.

As a company, the risk of losing an opportunity to capitalize on your expertise is substantial. Projects that are similar to past successes may indicate that your firms risk-mitigation is particularly effective for that kind of work. Your competitors may not have your expertise, which makes the opportunity less appealing to them. Market leadership is built on the ability to capitalize on opportunities that your competition cannot. You have to see them in order to hit them.

Perspective versus pessimism

Estimating is about controlling risk, not adding money for everything you’re afraid of. The more you know about what’s going on, the less you have to be afraid of. Estimators need to understand that pessimism is a poor proxy for knowledge. There are times you’ll know that a job is a time-bomb of risk. Constant pessimism devalues your council to ownership. There are lots of angry estimators forced into bidding bad work simply because their boss tunes out their complaints. The only thing worse than losing a good job is winning a bad one. In my experience, it takes a considerable effort to lose the truly awful jobs because wise bidders steer clear. Sometimes the only way to lose, is to decline to bid.

hyena

“We thank you for the opportunity…but we’re not currently bidding work in the carrion market.”

Timing

Sometimes the most significant risk in a project is how winning it would affect your ability to succeed in everything else you’ve got going on. Tight labor markets can limit growth which in turn limits the amount of work a company can take on before they can’t meet their obligations to perform. Seasonal rushes can quickly overtake the available resources leading to higher prices. Estimators preparing bids for work that will take place during seasonal rushes must consider how this opportunity compares against the most profitable work of the year.   Careless estimators can find they’re suddenly on a hot streak winning bids during slow seasons, only to discover their summer is booked solid with low-profit work.

There’s risk in losing opportunities

Estimates are not free, so estimators must consider the risk of investing their time and energy into losing clients. Subcontractor may encounter GC’s with high bid volumes and low hit rates. I refer to these firms as bid mills since they grind out bids as quickly as they can. Sadly, short-changing the estimate leads to lots of mistakes. When they’re lucky, the mistakes lead to a lost bid, when they’re not, they land a profitless job. As a sub, your irresponsible GC’s problem eventually becomes your problem.

priorities change

Bid mills compete in the warm glow of their accomplishments.

The very best protection against losses is to avoid doing business with irresponsible firms. The time spent on the lost bids could have gone to better opportunities with other clients. The rare and profitless win, consumes company resources to eke out a minimal loss on the project. Those resources were pulled from profitable employment with responsible clients.

The real risk of working with bid-mills is tremendous. Some subs could improve every aspect of their operation by firing bad clients. It’s often difficult for them to see it because they only see themselves occasionally winning bids. Gamblers go broke thinking along the same lines.

Safely getting from existing to proposed

Construction documents generally depict the existing and proposed conditions without going into much detail on how the construction is done. Architects typically rely on the build team to determine the means and methods necessary to realize their design.

On jobs with limited applicable scope, Architects may elect not to hire an expensive engineering consultant. The assumption is that a “little” engineering problem is an acceptable risk for the build team to assume. For example, adding a new piece of roof top HVAC equipment to an existing structure. Without engineering approval beforehand, any resultant failure will be the build-teams responsibility.

Civil projects can present environmental challenges that are safety concerns. Retaining walls are used to hold back soil that would otherwise slump, slide, or erode. Different soil types require “cut-backs” which relate the soils stability to how steeply it can be piled. Sandy soils are prone to cave-in so excavations must have gently sloped edges for worker safety while the walls are constructed. Restricted sites may not allow sufficient room for safe excavations. Ground-water, flash-flooding, and seismic activity can all generate additional safety hazards for workers. These are not simple problems with easy answers.

Projects dealing with compromised or hazardous structures are especially given to unique engineering challenges. These projects demand an engineered plan for every step to completion. Hazardous materials require a site evaluation, testing, and remediation plan built around worker and environmental safety. Estimators are often presented with a false choice; help the client to save money or take chances on safety. There is no choice, build safely or don’t build at all. Playing dumb, or passing the buck on safety issues won’t protect you when bad things happen. Local traditions and “school of hard-knocks” graduates often underestimate the magnitude of what is at stake because they don’t know the margins of error in what they’ve done. A lifetime of narrowly averting disaster does not, an expert make.

Nuclear option

Estimators can contact engineering firms and request a proposal to solve the problem. Often engineers will provide a roughed-out plan of action along with their fees to develop the design, do the calculations, and so forth. Often we get so hung up on the idea that half-baked design is an unavoidable vocational hazard, that we forget that our business is in contracting labor. Estimators work by controlling risk through whatever channels we can. It bears mentioning that estimators should list out the cost of this safety engineering as a breakout cost. Communicating the real cost of safe work may spur an honest client to get their design team on track. Once it’s made so clear, it’s difficult for clients and design teams to pretend they didn’t know it was an issue. Moreover, it gives the client a sense of your commitment to safely delivering their project.

Summing up

Estimating is about controlling risk, rather than simply summing it up. The savvy estimator is looking for ways to mitigate all of the risks mentioned above. Risk is most effectively mitigated by building an operation around successfully controlling problems common to the work you’re pursuing.

Some really excellent clients have horribly one-sided contracts. Until market forces cause them to reconsider their terms, these clients are a bountiful opportunity to the companies who have “seen past the contract” to know what they’re really like. Honest, cooperative, and communicative clients can mitigate the risk of an ugly contract.

Competitive bidding calls for perspective and judgment. Losing a bid isn’t the end of the world, but don’t kid yourself; there are consequences to losing. Time spent on the losing bid wasn’t invested in other pursuits (opportunity cost). Wasting your subs, or vendors time with fruitless bidding costs political capital by lowering your status as a market leader. Failing to justify your place on the client’s select bidders list may get you cut from future invitations.

Taken in whole, the impact of losing a bid carries its own, very substantial risk. “Throwing a number” at work you don’t want is almost always worse than declining to bid. Some GC’s may be concerned about “appearing weak” for backing out of a bid they’ve invited subs to bid on. Estimators understand that there are opportunities that pose much greater risk than they’re worth. Showing good judgment is far superior to a bluff. Showing respect for the sub‘s time is much appreciated. Often it takes a bit of time after the RFP to get a sense of the client and their design team. No amount of perfect bidding will protect against an unethical client. Starving bad clients of bids is one of the best ways to lower the market risk.

example

 

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© Anton Takken 2015 all rights reserved

 


The real obstacles to successful bidding

May you live in interesting times” – Chinese curse.

We do live in interesting times. Technological advances have made it possible to communicate faster allowing more to be done in less time. Estimating in particular has benefited from software programs seeking to provide faster measurements, more accurate materials pricing, and so forth. Most Architects are using Computer Aided Design (CAD) at a minimum. Many have moved to Building Information Modeling (BIM) which further expands their capabilities. More can be done with less.

clean lines

“This efficient design gives you clean lines and a place to lie down when your air runs out.

The curse of the lowest common denominator

Despite these awesome innovations, a simple poll of the industry will show that problems our ancestors struggled with are still with us. Technology, innovation, and horsepower have yet to overcome one simple concept; much of society performs to the lowest acceptable standard. Whether it be price, project duration, code requirements, laws, or professional standards, standards tend to define minimums rather than ideals.

In the manufacturing industry there’s a failure mode described as “tolerance stack-up” which is when all the associated parts are made to extremes of their individual tolerance range. When all the parts come together, the whole assembly fails as a result. This happens in construction estimating as well.

For example: Many projects are put out to bid with incomplete drawings, a short deadline, and a limited budget. The lack of information raises the risk of the project. Limited time to develop an accurate estimate raises risk as well. High risk reduces profitability, so prices are raised to restore balance. The risk stacks up, driving the price which often exceeds the clients budget.  

Backing up a bit, we might ask why the minimums fall short of preventing avoidable problems. I believe it really comes down to how individual professionals choose to balance their efforts against what they believe are the current performance standards (minimums) of their profession.   Incomplete plans are common on projects with a client who’s short on time and money. Design professionals may forgo site visits and investigation into as-built drawings to keep their costs competitive for low-budget clients.

chicken

Drones for remote architect site inspection still have a ways to go.

Incomplete plans in this situation are a function of design professionals balancing professionalism against economic pressures.

The final cost of a cheap (but incomplete) design is hard to prove because competitive bidding is assumed to prove market value. The market consensus on a high-risk job is not the same as the going rate for similar work. Clients can’t be expected to initially realize the impacts of short-changing the design when there’s no mechanism to prove the difference. Architects can’t be expected to turn away paying clients when work is scarce. General Contractors (GC’s) can’t be expected to hit the clients meager budget when the plans are incomplete.

Technology will not solve this problem because it’s not about abilities, it’s about choices. Perspective and professionalism would go a long way towards removing these obstacles. I’m often struck by how simple the solution is to these stubborn problems.

Honesty.

Design professionals know what steps are necessary to produce a complete design. If the client wants to skip steps to save money, they don’t get complete work. Admitting this truth starts with plan labeling.

Design professionals with incomplete plans marked “100% build documents” are rightfully criticized.

If critical information is missing because the client wouldn’t pay for it, the plans should be labeled for the percentage of work they did pay for. Clients should not be lead to believe that 100% designs come at 50% prices. If that were possible, it would imply that the service is over-priced, or the work isn’t complete.

It’s unprofessional and unethical to expect GCs to assume the liability for the intended (but intentionally incomplete) project scope.

in the air

“The design is up in the air,  you’ll need to get under it before we release anything.”

GC’s who enable this falsehood are rewarded with a new normal of incomplete plans and reduced profitability.

Do you know what pros who don’t know do?

Good Architects could reduce the project risk of incomplete designs by stipulating budgetary allowances for unresolved items. Even a simple listing of details the design team knows are missing would be an enormous step in the right direction. Just like burying something critical in an obscure note, the “scavenger hunt” mentality builds distrust and animosity over critically important information. Incredible amounts of time and energy are expended looking for information that isn’t there.

GCs who choose to bid on these incomplete plans could categorize all undefined, missing, and erroneous information into an incomplete design contingency line item. This is the conceptual sum-total of not paying for a full design. This is not an indictment of the Architect, and it shouldn’t be presented as such. GCs are not in a position to know what the Architect was paid to do. It behooves them to make charitable and respectful assumptions of the Architect while remaining truthful about the state of the plans.

inspector

“Erik, I see what you’re looking at but I really think somethings missing here…”

Depending on the situation, it may be wise for GCs to choose not to bid. Clients competitively bidding their project with half-finished plans, short bid deadlines, and impossible start dates are obviously not real opportunities. GCs could cite the plan development percentage as reason for declining to bid. Bids are not free. Bidding a false flag project just to assuage client anxiety, or to avoid upsetting an Architect consumes enormous amounts of time, energy, and money from the market.

By extension, these GCs could reasonably expect the same actions of their subcontractors (subs). Stopping the madness of (over)pricing incomplete designs would benefit everyone.

Compensation in the form of negotiated agreements, or paying for design assist services are reasonable alternatives the client could consider when their project fails to attract market attention.

 

“The best time to plant a tree was 20 years ago. The second best time is now.” – Chinese Proverb

The real obstacle to successful bidding isn’t recognizing that the system has flaws, it’s recognizing how your flaws impact the system. Clients should not expect minimum design to render maximum project value. Architects should not leverage their position as gatekeeper of job opportunities to force GCs to bid incomplete designs. GCs should be honest and forthright about development discrepancies. Playing politics to protect the incomplete design from criticism while overpricing the project serves to encourage these ruinous practices for everyone.

Think it through

Here are four truths we should all be able to agree upon:

  • Nobody’s work is free.
  • Risk is expensive
  • Time is money
  • You get more of whatever you encourage
  • In you’re not aiming at your target, you’re missing

The real obstacles to successful bidding/business come wherever professionals act in contravention to these truths. Pretending that business pressures excuse deliberate choices to short-change professionalism will inevitably lead to higher costs, lower quality, and market constriction for everyone.

In college management course I recall how the professors stressed that there were many different ways to handle business problems. While I can’t prove this to be false, I can say that giving professionals a chance to be honest and forthright will work a certain percentage of the time. As to the rest, I’ve found that working with dishonest people tends to give you lots of opportunities to hone your management skills!

My advice is to avoid them since their motivations are guided by malice.

heat

It won’t stop their sinking, but taking shots at you warms the water…

Philosophically speaking, life is like a path. If we live according to tolerances with the aim of meeting minimums, we’re rewarded with insecure footing on a dark and narrow precipice. In contrast, if we live according to targeted beliefs, we’re rewarded with wide open lanes which reveal more of what’s to come.

The obstacles on that path aren’t about logistics, data sets, or market trends. The real obstacles are the choices we make knowing they’re wrong. Simple answers often demand hard choices. Ask yourself if professionals fifty years from now will still face these obstacles or if this is the generation that removed them for good.

 

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© Anton Takken 2015 all rights reserved