For the past decade, building owners have been attempting design/build projects to save money and time on construction. During that period, a select number of electrical contractors and others in the construction industry have focused on design/build. For them, it’s a mature market. But with the economic downturn and fewer projects to go around, more electrical contractors are moving toward this approach that gives them design and specification influence with owners, engineers and architects.
The greatest progress is in the government sector, whether federal, state or local government. It’s a trend contractors can no longer afford to ignore, said Alan W. Martin of Alan Martin & Assoc., a business consultant, instructor and speaker for the National Electrical Contractors Association Management Education Institute (www.neca-mei.org) regarding internal planning, business strategies and control methods contractors need to compete in the design/build environment. Economic conditions are fueling the government’s shift into design/build because it helps projects get completed faster and more economically. As government construction projects are gaining funding, contractors need to be ready to provide what’s needed.
For example, an increase in the Marine Corps ranks has led a building boom for the Naval Facilities Engineering Command (NAVFAC) as it supplies the Marine Corps and U.S. Navy with more training facilities. Recently, two projects began for the NAVFAC—one at Camp Pendleton near San Diego and another at the Marine Corps Air Ground Combat Center at Twentynine Palms, Calif. In his region alone, said John Coon, chief engineer at NAVFAC Southwest, what was typically a $400 million annual building budget is $2.2 billion this year and is expected to rise to $3.1 billion in 2010.
“This [has] driven a lot by the growth of the Marine Corps,” he said, for which NAVFAC is building new facilities as well as renovating old barracks.
The American Recovery and Reinvestment Act of 2009 also piped in more funding for the projects in the Southern California and Arizona region.
“We’ve got a ton of work to do,” Coon said.
This means NAVFAC must find a way to finish work with less labor on the agency’s part.
“Our resources are not climbing as fast as demand is, so, today, we use design/build exclusively” he said. “That’s a lot less labor-consuming for us, and we’ve been doing it for some time.”
By taking on the design/build approach, the accountability rests on the shoulders of the general contractor, who then can hire the designer and subcontractors.
Design/build makes sense for NAVFAC because, as Coon pointed out, “Our military personnel change locations every few years, so a design started by one can be picked up by someone else. Our role is to help the contractor understand what our needs are.” He added, “Another good thing we see is, as the design advances, we do see the contractor bringing the subs to the table.”
Design will become even more complex this year when all NAVFAC projects must achieve Leadership in Energy and Environmental Design (LEED) silver certification.
“In these cases, we really need the subs to help design the automated systems,” Coon said, adding that although NAVFAC only hires the general contractor, “we like to see an experienced team. The stronger they show their relationship with each other, the better.”
Other government agencies are looking to NAVFAC for guidance as they set up their own design/build program. The General Services Administration (GSA) and the Army Corps of Engineers have moved almost exclusively to design/build projects.
At the federal level, the National Guard has undertaken the most design/build projects.
Getting into design/build
“With the economy the way it is now, we are seeing a significant increase in our conference registrations,” said Lisa Washington, executive director, Design-Build Institute of America. She added that, between 2004 and 2008, the money expended on design/build projects nationwide nearly doubled, representing nearly 50 percent of all construction projects, based on informal tracking.
Still, she said, the construction industry has been reluctant to respond to the trend, as have many architectural and engineering firms.
“The key in design/build that we found is getting through the mental shift,” she said, adding that participants must adjust to different roles, often hiring new staff, changing their business model and learning to work with a very different set of contracts.
Part of that shift is to make electrical and other specialty contractors feel a part of the overall team, Washington said.
“They’re critical to the success of the project,” she said. “They’re used to being called in later and just don’t think of coming in up front. Some contractors tell us that’s because they’ve never been invited in, but the point is to demonstrate the value of being involved up front. We hope to provide [electrical contractors] with the tools and resources to do that.”
Making it work in general
To get involved in design/build governmental work, a contractor has to be familiar with state and local requirements and, based on those, be prepared to either partner with an engineering firm or hire someone on staff to do the engineering. On the marketing side, most contractors need someone trained to talk to the customers and the other players to replace the traditional role of the project manager as the handler of communications.
The comfort zone for many years has been in the traditional bidding business model, with project selection based on the low bid and the work done without interaction between the electrical contractor and the owner. However, that is not what the owner wants anymore.
“Design/build requires [the contractor] to sit down with the customer, which is a whole different business model. It’s about getting to understand what an owner needs,” Martin said, adding that once an electrical contractor accomplishes that, “the positive end is they can retain a customer.”
Contractors are finding the design/build work through general contractors as well as directly approaching some customers through mailings or other means. Some contractors have established a marketing department.
“Customers are at a premium, and you’ve got to be able to have a constant product,” Martin said.
First of all, contractors need to consider their staff, allocating someone to sales and marketing, someone who interacts with the customer. They also may need engineers to get into fiber optics and a systems approach, who can start by talking to existing customers.
“For the survival of the organization, contractors have got to be able to adapt,” Martin said.
As family generations shift, and newcomers arrive on the scene, they can’t expect electrical contracting to look like their father’s version of the business.
“To be more competitive, you have to know how to communicate with the customers,” Martin said.
In addition, because design/build bids are not based solely on pricing, contractors are moving toward determining what value they offer the customer.
Even without a sales staff, Martin said, “you can do it with your own people, but they have to understand it’s about an overall package. We think we’re the electrical business, but we’re not. We’re in the service business.”
Just asking questions from people who are in the business is a good way to get started, Martin said.
“They have to look at the markets and talk to the most important people—their customers,” he said. “[Then,] if they think that it makes good business sense, then get educated about the products and services they will need to fulfill the needs of their customers.”
The next step is to evaluate the current staff that can support the new line of products, which may require restructuring the organization, he said.
Truland Systems Corp., an electrical contractor in the Washington, D.C., area, manages a large segment of design/build and federal government jobs because the company has spent years in the design/build sector. Keith Bush, director of integrated construction services at Truland said he has seen more electrical contractors jumping into the market in the past few years but said too many think it’s a quick and inexpensive transition.
“You have to have the right resources,” he said, adding that too many contractors don’t. Those resources include an engineering department and integrated construction experience.
Truland’s integrated construction services team works directly with architects and engineers. It is currently doing so on two projects at Fort Lee, N.J. One is installing the electrical system for a masters-level college classroom environment for the Army Logistics University. The other is a training location for artillery maintenance at Fort Lee Central Campus. The industrial space includes facilities for equipment such as tanks, which can be rolled in the building and worked on by students. In both cases, Truland was part of the design team and installed electrical and information technology systems with general contractor Balfour Beatty for the Army Corps of Engineers, Norfolk District. Several companies competed for the jobs, Bush said, but Truland was accepted based on the value it provided.
Federal design/build projects begin with rough early development by the government, either in-house or by a separate contract, during which a general scope-of-work statement is mapped out that defines the project and provides enough information for contractors to submit proposals. The next phase is the submission of detailed information from the general contractor. The government selects its candidates based on technical qualifications, not price. Those determined to be the most highly qualified submit phase-two competitive proposals that include their technical proposals and the cost or price. Based on those responses, the government then awards a contract.
State and local city government rules vary widely, but in many places, a design/build contractor needs its own engineer on staff. In smaller cities, there are fewer concrete demands, and a contractor can design the system it installs without an engineering seal on the work.
SWEDBERG is a freelance writer based in western Washington. She can be reached at email@example.com.