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Melbourne Brain Centre by Lyons Photographer: John Gollings

Procurement

A Builder’s Prespective

Design

The design of a building is a creative, rather than a calculable process, but unlike other art forms it is concerned with a positive search for solutions.

Architectural procurement has become more dependent on technology, modelling and working in a competitive market. This market relies heavily on documentation software systems to manage the coordinating and approval process, under the control of a project manager or builder through the subcontracting trades. This environment is beginning to challenge the integrity of the design and costing, placing the industry at potentially its most vulnerable position for over 50 years.

I strongly believe that architects are best placed to design and manage major projects at each phase. This should happen before and during the construction documentation phase in conjunction with the builder’s programing, and should include greater responsibility for preparing background material for shop-drawing documentation.

Apartment design and construction is leading the industry in awarding the building contract early in the project’s concept design and planning stages. This is made possible by the volume, means and methods of material procurement strategies that have been developed to cater for the demand, allowing construction contracts to be fixed by price and time.

Leaving design aside, the apartment procurement model has delivered successful financial outcomes for many stakeholders, including opening up the marketplace by creating opportunity for many established organisations to grow and new competitors to enter. The model has also achieved an underlying objective of changing the risk profile deep inside construction contracts. This results in the subcontractor and their suppliers being assigned greater direct and indirect risk, with the emphasis on being responsible for the detailed design procurement via the novated consultant.

 

Procurement Models

Procurement models continue to evolve. Recent past and present examples include:

  • Construct only
  • Construct only – fast track
  • Design and Construct
  • Private Public Partnerships
  • Design, Novate and Construct

The process and scope of building works has not changed greatly in recent times. However, the major change from the design and construct model is in the quality and level of documentation that the works are being contracted against. There is greater emphasis being placed on fixing the principal’s project requirements (PPRs). So, who is carrying the risk and at what price?

 

Current Models for apartments

Prior to the contractor’s involvement, the client’s project manager invariably manages the design team and cost plan to reach an agreed scope and standard. This is typically done by using the following design documents:

  • Approved town planning or master planning documentation
  • Marketing, sales and presentation documentation
  • Design intent documentation
  • Performance based documentation
  • Standard details and profiles
  • Heavily qualified principal’s project requirements

Part of the project manager’s obligation is to ensure the level and standard of documentation that has been instructed and briefed is suitable for contracting. An appropriate standard transfers all errors and omissions in the consultant’s work to the builder. This happens under the terms of designer’s novation agreement. (The novation agreement also describes the ongoing obligation and fees of the design team.)

As this model becomes the norm for design and construction of significant high-rise apartment projects and infrastructure works, the task of managing the integrity of the design and allowing adequate time for the due diligence process to take place can become compromised and confused. At a minimum, communicating the design intent incorrectly in the early stages results in lost time, money, and quality; at worst, it may result in design failure.

 

Delivery Culture and Design

I have been fortunate to work for 27 years at Grollo family companies that consider design documentation a cornerstone tool. This documentation creates a culture where construction projects are managed and delivered by communicating the build via design and detail. This lets us focus on innovation. It also lets us foster team and subcontractor relationships, including the ability to apply strict contracting discipline with integrity both up and down the delivery line. This also ensured that safety strategies are planned and incorporated in the design process without compromising time, quality and cost, and with less reliance on asserting the contract.

 

Risk Transfer

Often through lack of time, consultants produce poorly coordinated and incomplete design drawings, often reflecting subjective (and therefore challengeable) design intent. This can lead to the transfer of risk part-way through the design process, a major concern for most developers and contractors.

This model can descend into confrontation and even litigation, but technology can improve clarity in design and increase productivity.

 

Design Novate Construct and Early Contractor Involvement (ECI)

Some clients on a number of Australian projects now consider ECI the way to de-risk even further. However the process focusses heavily on the client’s cost plan requirements. Risks to time and design get passed onto the subcontractor through:

Design intent (incomplete documentation – eg reinforcement kg per square metre).

Performance based specifications.

Written principal’s project requirements and standard scoping details.

While forming the basis of the contract documentation, these components do not necessarily encompass all the qualitative issues relating to design. Design needs time to explore, research and resolve.

Builders can bring value along with their key sub-contractors at the early stage of an ECI and can advise on preliminaries and give orders of cost. This allows the independent quantity surveyor to consider the cost against intent only. As the ECI is normally managed and controlled by the client’s representatives, the builder and subcontractors will mainly focus on protecting their time and cost.

A justification for ECI is that it should produce documentation that, although not fully coordinated, is sufficiently transparent in its detail and wording to reflect the construction risk for all builders and subcontractors to underpin a final price and time in a competitive market.

 

Private Public Partnerships (PPP)

The PPP model is particularly suited to large complex government projects that are tendered against a rigorous brief and base scheme (sometimes referred as a public sector comparator).

The interesting issue concerning procurement with this model is that all players – developer, builder, operator, design team and financier – all commence together to develop the design in a collaborative and collegiate manner because they all rely on each other for success. Design is usually weighted highly as a key criterion.

However, risk is assigned or asserted to all the parties prior to bidding. Contractual challenges can confront the builder and design team with the complex cascade effects embodied in labyrinthine project contracts and obligations.

Notwithstanding the risks and challenges, some outstanding architecture has been developed through this model, including notable Melbourne projects such as the County Court by by Jackson Architecture and Lyons, Southern Cross Station by Grimshaw Architects with Jackson Architecture, Royal Children’s Hospital by BillardLeece Partnership and Bates Smart, Melbourne Convention Centre by Woods Bagot and NH Architecture, and La Trobe University’s AgriBio Centre also by Lyons.

Melbourne Convention Centre by by Woods Bagot and NH Architecture in joint venture.

Photographer: Peter Bennetts

Southern Cross Station by Grimshaw Architects with Jackson Architecture.

photographer: John Gollings

La Trobe University’s AgrBio Centre by Lyons.

Photographer: Dianna Snape

A better model for managing risk

If for a moment we considered testing a procurement model in a laboratory that would deliver the best outcome for all, we would seek to answer the question: what is best for the whole?

In our theoretical lab we would remove risk from the matrix and frame a model that delivers the greatest value to the client and builds to the highest and most appropriate standards within an agreed timeline (of course, risk will need to be assigned but it will be more transparent and measured).

The project would commence with the client procuring the brief.

The brief is one of the most critical documents for ensuring the clarity and integrity of the project. Therefore, the architect would play a major role in its development and structure. The design is brought to architectural design development stage only in conjunction with the cost planners.

In order to achieve this, the architect must be able to conceptualise, test, develop and detail the design to the fullest extent possible. Ideally, there would be an adequate, agreed timeline to allow the completion of the design up to design development. This would come with the understanding that engineering elements be kept to a minimum. The brief would describe the scope and obligation to ensure the client’s interests were protected, as all engineering disciplines would form part of the builder’s scope (including the engineering consultancy obligations).

This model assumes the architect stays assigned to the client, and the engineering disciplines form part of the builder’s scope in both tender and delivery. This allows for early, competitive price tendering to take place on a level playing field for all, including the sub-contractors.

The contractors tender on architectural documents (DD) that would be described and supported by the written brief including specifications, engineering design intent, façade performance-based requirements, and engineering concepts. These all fall within normal contract conditions to ensure design risk dollars are priced into the project.

In this model, the client owns the responsibility of brief via superintendent, architect and contract conditions. Engineering design consultancy fees will be minimised and the appropriate level of coordination will be increased, returning the highest project value to the client.

 

Conclusion

The three constituents of risk are: time, cost and quality.

Each party should own the risk they are responsible for. The client and architect should hold the architectural design risk. By giving responsibility for engineering consultancies to the builder, the quality and coordination is controlled, and safety in construction is designed and managed. This happens as the standards, specifications, and legislation intend: with the risk staying where it should be – with the builder.

I strongly believe that the architect is the most suitable group to design-manage major projects at each phase, including taking on more responsibility for the preparation of the background documentation for shop drawing documentation.

Subcontractors should coordinate the project through engineering. This ensures the compliance and certification process are documented so the builder can deliver the total obligation to design and construct. Such role assignment removes the need to novate the architect, brings more transparency into the process and will reduce the risks associated with a project.