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It is generally agreed that the more influence electrical contractors have on materials specifications and selection, the less financial risk and more potential profit there is in a new construction project. Design-build offers the opportunity to participate in design-assist at the outset and before plans are released. Contractors employing registered professional engineers may enjoy a preferred position on the design team.
ELECTRI International—The Foundation for Electrical Construction sponsored a research grant report that states electrical contractors should understand what a design-build project really is and determine its corresponding benefits and risks. Their role within a design-build project may vary from a prime contractor’s role to a subcontractor’s role and from providing design, fabrication, and construction-to- construction services only.
Of those responding to the research survey, 75 percent said that the design-build project delivery system provided better opportunities for success than the traditional design-bid-build system. Respondents felt that design-build provided increased flexibility, allowed better control of the project and decisions, and allowed for early input into the design process. However, there are potential pitfalls waiting for the unwary contractor who may not realize all the responsibility involved.
Opinions of surveyed contractors
I surveyed 80 self-described design-build contractors nationwide from the NECA Connection Web site (www.necaconnection.com) for their good and bad experience with design-build projects and obtained the following comments.
“Design-build allows us upfront contact with the owner/user to design and implement our work to correspond with their needs in a timely manner,” said Larry Zelenovich of PayneCrest Electric Co. “Many times we complete full working drawings before ever receiving a contract, rather then having an owner discuss designs and needs with an architect, then having the architect contact the engineer, and then the engineer recommends things back to the architect. [Then] the architect contacts the general contractors, and finally, the electrical contractor is given some direction. You can see how design-build speeds the process up and at a competitive rate.”
According to James C. Craft of Walker Seal Co. Inc., “In our experience the design-build project really isn’t much different than a bid-build project. The only difference is the design engineers work for the general contractor or construction manager instead of the owner. Our role is really more of design-assist to the designing engineer. From the perspective of the installation contractor, we are able to more closely control costs by assisting in the design process. This not only benefits us as the contractor but in many situations benefits the owners through VE proposals. It creates more of a team atmosphere on projects by bringing all levels of the industry together.”
According to Craft, an advantage of value engineering (VE) credit would be reduced costs to the owner. With the designer and installer working together, cost isn’t placed on the backburner, because the installer is looking for the most cost-effective design.
“Drawings and design approvals also don’t differ much from a bid-build project,” said Craft. “Drawings are required to be stamped by a P.E. in both cases. We have found, though, that due to the fast pace of design-build projects, the design sometimes isn’t as detailed as you would see in a bid-build project. This, in turn, increases the necessity for the electrical contractor to create installation shop drawings in house for our people to install from. For us as installers, the benefit comes from being able to work closely with the designers and look for the best way to install the work.”
According to Arthur Ashley, Ferndale Electric Co., drawings in design-build are only 50 percent complete for bidding. Then several contractors are interviewed and a design team is chosen.
“As the design is finished, the contractor can input suggestions for budget controls and product selection. Negotiations help to make trade-offs for the final selection. Contractors do not actually specify but they influence the design,” said Ashley. “In hospitals, a budget of $1.80 to 2.40 per square feet for lighting could be as much as $10 per square foot in the initial design. Decisions must be made to offset budget against realistic needs. The contractor can look out for the owner’s interest and balance needs with budget. We turn the design drawings into 3-D showing conduit runs, pipe offsets around obstructions, etc.”
Walker Comm. Inc., a low-voltage contractor on the second tier of design-build contractors, has problems with design-build because they are not listed on the team. This causes electrical contractors to shop their bids after the estimate is completed, said Gary R. Walker, president of Walker Comm.
“We have issues with the owner asking us to design the work and then bringing in a consultant after the fact who changes everything,” said Walker. “I find it is very important for a team to be put together and be very clear on what the design is and who does what. In our case, the electrical contractor at times makes commitments and changes without our knowledge and then expects us to complete it under the contract even if that is not what we agreed to.”
Legal issues involved
The law of design-build is still evolving with experience. As usual, benefits come with burdens, so contractors must carefully look before they leap.
According to Gerard W. Ittig, the legal column contributor to Electrical Contractor and an electrical engineer, the problem with design-build is owners do not want to cede control. The second main problem is coordination of design. Someone has to check coordination, and that company is not usually the electrical specialist. A perfectly fine electrical design will be less than ideal if piping hides gauges, for example. Both of these concepts need close attention in defining the contract’s scope of work.
“The primary, if not sole, change is the acceptance of a broader liability by the electrical contractor for ‘rent-a-pencil’ design services,” said Ittig. “The increased liability is not simply in the guarantee that the equipment will work when the switch is thrown, or that the right fittings are used given the application. It is also in how the contractor achieves acceptance of the work. Errors and omissions coverage is very expensive. And, a contractor’s standard personal injury policy may not cover injuries caused by defective design. As a result, the rent-a-pencil people are asking for indemnities from electrical contractors.
“Design-build encompasses ‘no damages for delay’ where delay relates to design issues,” Ittig said. “It can also mean liability for interferences to other contractors. The electrical contractor must also increase his staff and improve procedures for tracking shop drawings, expediting approvals and performing in-house design reviews. He will need to budget for these activities, as well as budget for more intense checking and startup efforts and possible commissioning. Lastly, his warranty obligations are expanded beyond repair or replace to redesign, repair or replace.”
If you decide to pursue a role in design-build contracting, you may find the entry process is a bit daunting. One of the main barriers identified in the foundation report to entering the design-build market was the requirement to invest more time and overhead to successfully propose on and be awarded design-build projects. It was unanimous that design-build projects require investments in qualified design professionals, in a CAD workstation, and in marketing, in addition to a greater level of managerial expertise.
The Clark Construction Group is among the top 10 design-build firms in the United States, according to Engineering News Record. It requires subcontractors to file detailed financial and experience information on the Internet through its Web site at www.clarkextranet.com/subform. No fax or mail submittals are accepted. Compiling all that company information may be a challenging exercise for those firms that need a management checkup. But, as they say, you can’t win if you don’t play. EC
TAGLIAFERRE is proprietor of C-E-C Group. He may be reached at 703.321.9268 or [email protected].