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Before any building is built, influential owners, architects, and general and electrical contractors decide not just who will build it, but who will design it and how it will be constructed. Every contractor knows significant planning and design work lay the foundation for a successful project. And some contractors want to do it all—both design and build the job they are working on. In design/build contracts, an electrical contractor needs to know that, despite the many benefits to doing the job yourself, significant drawbacks must be acknowledged before moving into the design/build business.
Types of contracts
The design/build contract is an agreement between an owner and a builder that outlines who is responsible for designing and building a structure. Before it comes to that, though, the owner has a lot of soul searching to do, according to Mike Abbott, president of Abbott Electric Inc. in Canton, Ohio, a firm that specializes in design/build work. He said an owner has to look at the bottom line to figure out what works best for the project.
“You have multiple contractors bidding what they think is right for the job,” he said. “From the owner’s standpoint, am I getting the most competitive price?” The eye for the bottom line keeps owners looking for their best options. For some owners, the design/build contract is an attractive, cost-effective and timely way to get the work done.
Don Campbell, a former electrical contractor and current executive director of the National Electrical Contractors Association (NECA) Northern California chapter, said design/build contracts usually follow a general formula.
“Design/build contracts are the process by which an owner hires an architect who then hires or staffs an electrical engineer to do drawings that are around 90 percent complete. Owners pay the architect who then pays the engineer to do his job.”
However, that is just one model, he said. There is a second type of design/build contract where the owner hires a contractor to do it all.
Under the first scenario, after the architect has the electrical engineer do the drawings, the architect either hires a general contractor to do the building or, Campbell said, the architects become the construction managers, making themselves responsible for all the general contracting duties. As a result, the owner deals directly with the architect for all the design and building components of the job.
The second type of contract is contractor-driven, either by a general contractor or an electrical contractor. He or she does everything the architect would do. In this case, the contractor hires architects, engineers, subcontractors and others to provide a finished building from start to finish.
Many benefits make design/build contracts attractive to contractors with both the interest and the experience to juggle the different hats design/builders wear.
For Abbott, there’s no question what the benefit is. He said doing design/build work is what motivates him.
“Designing makes the project your own and makes the day interesting,” he said. If you’re stuck doing the same installations from the same old plans, design/build work might be for you.
Not only does design/build offer something different each day, it also combines the design and scheduling of a project to a single source. According to Abbott, it shortens the time it takes to complete the job and smooths the way to success.
“One major benefit is the ability to make changes on the fly,” he said. “Being involved with a customer from the ground up, I know the job better than anybody.”
Abbott also noted that design/build contracts are easier for the contractor.
“[When a change is needed in the design] there is no need to discuss the project with other people,” he said. “I can make the decisions on my own.”
As a result, contractors feel more in control, a sensibility not present in other project-delivery systems.
Campbell also feels this type of contract work has complex elements of scheduling that all come under one roof.
“You have all elements of the project from foundation to electrical coming from one source,” he said.
In a way, design/build contracts give contractors a sense of freedom they might lack under other agreements. According to Abbott, a design/build contractor manages every aspect of the project they are working on.
“We are able to do anything regarding electrical work where other companies can’t,” Abbott said. “We get a feel for what the customer wants—high-end, bare-bones and anywhere in that range—but we never cheapen a job,” he said.
The design/build model gives contractors more say in where and when resources are used. If you don’t want that sort of responsibility, then these contracts might not be for you.
But both Campbell and Abbott agree that owners like the single form of accountability that design/build contracts afford them. Things can go much smoother if the owners deal with a single source, not multiple sources as in a more traditional contract.
“Owners like to have someone they know they can trust from start to finish,” Abbott said.
Those owners are more likely to let the electrical contractors do their jobs, instead of serving as a firefighter putting out needless fires. Abbott also said design/build contracts work exceptionally well if you work with the same team from job to job.
“Everybody knows their responsibilities,” Abbott said. “If people aren’t talking when they are designing, something is going to be missed.”
When both parties can concentrate on their jobs, rather than dealing with competing personalities, the owner benefits.
“They are getting the best ideas and design,” Abbott said.
Campbell noted one last benefit that cannot be overlooked. It is the sense of knowing what you’re getting yourself into. In a regular bidding process, you may be uncertain of your job. In a design/build project, your responsibilities are clear.
Despite the many benefits these types of contracts have, there are certain drawbacks that could discourage those thinking about getting into design/build work. Chief among those is the liability involved, but there are others. If something goes wrong with the system from the design or construction side, the contractor could be liable for any damages.
“If an underground, high-voltage system blows up, the electrical contractor and electrical engineer will get sued,” Campbell said. “If you do a poor design, you’re liable for any mistakes.”
Accordingly, a contractor must take care and design well.
Abbott agreed that liability is an issue, but he didn’t see it as a drawback.
“If you’re an engineering contractor, you’re still the guy that did the design,” Abbott said.
If the contractor championed a poorly designed project, there is not much a contractor can do to avoid responsibility.
“[But,] if you do make a mistake, you get the opportunity to fix it early in the project, and the customer doesn’t have to pay more because you’re going to fix it. We’re liable for every design we do, but that’s not a drawback,” Abbott said.
“There has to be a lot of faith and trust [between owner and contractor] because you are putting everything into one person’s hands,” Campbell said.
You need to have a strong, open relationship between contractor and owner for these types of contracts to be successful.
Abbott agreed, but he also saw inexperience as a potential drawback for a contractor thinking of entering into a design/build contract. A design/build bid is not your regular bid.
“You don’t have a typical bid with plans in front of you,” Abbott said. “You need experience to know what the costs will be and design the job as you’re bidding it.”
Contractors also need to be adept in coordinating a project.
“You have to make sure all things are covered,” Abbott said. “There are a lot of gray areas on a construction site that need clarifying, and you won’t find out until the job is halfway done that no one is covering it.”
Those could be anything from needing more lighting fixtures than you originally bid to knowing which contractor has responsibility over a crucial part of the plan that could delay the job for weeks. It takes a keen design/build contractor to cover all of the bases.
First-time design/build electrical contractors ought to consider what they are getting themselves and their businesses into before starting the process. Abbott suggests that newcomers be cautious of everything they do.
“There is design/build out there from $5,000 to $5 million. You need to realize what your company can handle,” he said.
Contractors should know their own limitations when it comes to this type of work. As Campbell said, “Architects do what they do. Electrical contractors do what they do.”
New design/build contractors must realize, if they design poorly or install improperly, they may face more troubles than they expected going into the project.
Before you decide to go into design/build contracts, look at all your options, and talk to other design/builders to learn strategies they used to become successful. Learn from the challenges they faced, too. Design/build contracts have the potential for giving you a wide range of benefits, but you need to know the potential obstacles ahead of time.
KOHMSTEDT is a freelance writer in Champaign, Ill. He can be reached at [email protected].