Using design-build as a project delivery method allows the electrical contractor to provide early input into the construction process and gives the contractor more influence over what product types and brands go into a project. So, which contractors are taking advantage of this lucrative market and offering design-build to their customers?
According to a survey conducted by ELECTRICAL CONTRACTOR magazine and published in the June 2002 issue, an average of 44 percent of the respondents' dollar volume in 2001 was completed on a design-build basis. Contractors also reported that 12 percent of their work involved substantive changes being made to the drawings and specifications provided by others, and in another 14 percent of their projects, slight modifications to specs and drawings supplied by someone else were necessary. Finally, in 30 percent of the projects, contractors followed the specs provided by someone else. This basically means that electrical contractors have direct input on a project's design 70 percent of the time.
Oddly enough, though, it seems larger companies--those with 50 or more employees--are more likely to adhere to supplied drawings and specifications, while small companies with fewer than 10 employees are twice as likely to work on a design-build basis. That is probably attributable to the fact that large contractors are more likely to work on larger, more sophisticated projects with multiple-firm project-management teams.
Different contractors approach design-build work in a number of ways. For example, at Ewing Electric Inc., Edmonds, Wash., design-build projects tend to be large in scope and can take a long time from inception to the beginning of construction. According to Paul Sorensen, a Ewing vice president, design-build projects account for close to 55 percent of sales volume, but only about 10 percent of the total number of projects.
"Most of the time in design-build, work is spent in the up-front planning and discussion phases to determine the customer's requirements," said Sorensen, whose company performs most of its work in the commercial, manufacturing, industrial and health care markets, and works with a team of outside architects and engineers to design systems for the facility. "We use our decades of experience to ensure that the electrical system design will fulfill the customer's current and future needs."
Coghlin Electrical Contractors Inc., Worcester, Mass., also offers design-build services as part of a team that includes outside architects, engineers and construction managers. The goal of offering design-build services, according to Ted Coghlin, Jr., president, is to add value to the project. The company provides services such as general electrical, lighting and power distribution systems design for the industrial, commercial, pharmaceutical, and high-tech computer network and telecommunications markets. "Design-build is a customer driven-market which accounts for about 25 percent of our projects," Coghlin said. Seventy to 75 percent of the company's work is on a negotiated contract basis, and the remaining projects are won on a traditional competitive bid-build basis.
According to Randy Maddox, vice president of business management for Ermco Inc. of Indianapolis, the most successful design-build contractors have a dedicated design staff. "Design engineers are more focused on reducing customer's costs through more precise planning of the project from inception to completion," he observed. About 15 percent of Ermco's telecommunication and electrical projects are design-build or design-assist and are in the health care, commercial, hotel, industrial, manufacturing and plant process facility markets.
Design-build and increasing market share
Does offering design-build services help a company's position in the marketplace? According to Sorensen, design-build definitely improves a company's competitiveness. "The design-build process allows the electrical contactor to talk directly to the facility or building owner about their requirements to provide a more cost-effective final product that truly fulfills their needs," he said.
Another way design-build helps position a company is by promoting a full-service relationship with its client base, architects, general contractors and construction managers. "Design-build allows us to build a reputation of being able to provide a full range of capabilities, which enables us to get in on a lot of projects we may otherwise not," stated Coghlin.
In addition, design-build allows the electrical contractor to differentiate itself from the competition and make a value-added partner in the project. According to Paul Archambault, vice president and senior project manager for Ace Electrical Contractors in Minneapolis, the design-build approach allows the end-user and electrical contractor to interact directly and decide together exactly what systems are needed to perform the necessary functions that will fulfill the end requirements. Ace Electrical also takes the approach of using partners with specific expertise to assist in the design phase of its design-build projects, which account for roughly half of the company's work.
Stumbling blocks to design-build
The most challenging aspect of the design-build delivery method is convincing customers, particularly those with smaller projects, that design-build is actually a more cost-effective delivery method than traditional bid-build.
A major concern when dealing with design-build projects, according to Coghlin, is how the systems being installed will be used. "The electrical contractor must be able to design a system that will provide sufficient quantity and quality of power to meet changing needs within a three- to five-year time period," he said. This is especially true in the high-tech, voice/data/video (VDV), and industrial markets because electrical needs are constantly changing in accordance with technology advances and the customer's growing needs.
Another difficulty in successfully offering design-build services is when the project is awarded on a bid, rather than a negotiated, basis. "The traditional bid-basis award of a design-build project makes it more difficult for the contractor to provide the preconstruction design-build services that often ensure the smooth completion of the project," said Maddox. On the other hand, negotiated contracts mean that the design team and owner work closely together to determine the customer's requirements and the best ways to achieve them. Of course, a company must first develop the initial reputation of providing quality design work before it can increase its market share through negotiated contracts.
A major up-front investment can also be a major stumbling block on the road to successfully offering design-build services. "A design-build contractor has to invest in equipment and tools for designers and estimators, such as the latest AutoCAD and other computer software and hardware," said Coghlin. That figure could run up to $100,000 for the initial investment and then, over time, upgrades must be continually made.
In addition to equipment, investments must be made in personnel and training. "Training is imperative," said Coghlin, whose company has three classrooms available for customer training in systems and continuing education for its work force. "Electricians, technicians and the company's management team must remain current on the latest technologies and their applications in order to provide the quality services expected by the customer."
Finally, the successful design-build electrical contractor must demonstrate through marketing itself that design-build is the preferred delivery method for applications that require shortened schedule durations, that design-build projects have fewer change orders, and that design-build is frequently the most cost-effective way of successfully completing an electrical installation. EC
BREMER, a freelance writer based in Solomons, Md., contributes frequently to ELECTRICAL CONTRACTOR. She can be reached at 410.394.6966 or by e-mail at email@example.com.