Working with general contractors is often described as challenging. We’ve all heard stories from HVAC mechanical contractors who, after completing work on a project with a general contractor (GC), say they feel like they were left holding the bag. So this raises the question: is the general contractor a friend or a foe?
The answer depends on whether you want to work with GCs to develop Design/Build projects. If you do, you must first understand the differences between the two main delivery systems used: plan/spec and Design/Build. Each method has its advantages and disadvantages, and, depending on which one a general contractor uses, can have a serious impact on your project experience and bottom line.
According to some statistics available from the Design/Build Institute of America (DBIA) and McGraw Hill 2000, the market penetration of traditional plan/spec (today it’s evolved into Design/Bid/Build) has been steadily declining since 1985. In fact in the Year 2000, this delivery method accounted for 54% of the market (in 1985 it accounted for 82%) and it is projected that by 2015 it will represent only 35%.
By definition the plan/specification construction delivery system begins with the owner hiring an architectural/engineering (A/E) firm which prepares all the plans and specifications for a project. When those plans are approved, the A/E sends out a request for bids and typically takes the low dollar bid from a general contractor. The owner lets separate contracts for design and construction.
The advantages of this process: it provides a low-risk methodology and is the established way to do things. Furthermore, plan/spec is suitable for competitive bidding where the A/E works directly with the owner. Because of the extensive litigation that has occurred using this delivery method, there are well-established legal precedents, plus there are no legal barriers in procurement and licensing. And last, but certainly not least, insurance and bonding are well defined.
The disadvantages include: the owner must manage two separate contracts and handle all disagreements between parties. Plus, the owner bears the risk for the design adequacy. Inherent in this process is the issue of each party having its own agenda and/or objective ¯ which may or may not coincide with the owner’s needs.
The Design/Build delivery method has been on a steady increase, with regard to its penetration into the marketplace. Once again, we turn to statistics provided by the Design/Build Institute of America and McGraw 2000: In 1985, Design/Build held just a five percent marketshare. In 2000 it was at 35%, and is projected to hold a 55% position in 2015.
What is Design/Build? Simply stated, it’s a project delivery method where the owner executes a single agreement (contract) with one entity (the Design/Builder) to provide design and construction services. True Design/Builders place themselves “at risk” for the financial and system performance of the building and its mechanical systems.
- The advantages of this methodology are many. Key among them:
- Design submission and pricing can be done at the proposal stage
- Contractors can provide owners more accurate pricing
- Design/Build is the fastest project delivery system.
In addition, Design/Build provides owners with one point of responsibility, removing them from the role of arbitrator and reducing the litigious aspect of construction project delivery. The A/E, the GC, and the constructor sit on the same team providing unified recommendations to the owner. In fact, because of this, the Design/Build method encourages design innovations and options from which an owner can select, making it a very cost effective delivery system.
Like anything else, there are a number of disadvantages to this delivery method, including things like barriers in some states with regard to procurement and licensing. Because it’s so different from plan/spec, there really are no apples to apples comparisons that can be made and there is resistance from people not familiar with the approach.
General Contractors and Design/Build
Now that you see the basic differences between Design/Build and plan/spec, how does doing business with a GC benefit a Design/Build contractor? To answer this question, we need to understand how a GC thinks and works.
General contractors usually have a few “traits” that can affect your relationship with them. Many general contractors (GCs) are accustomed to being in control of their projects. And many have what is known as mixed houses — they do both plan/spec and Design/Build work, and often have their own unique perception of what Design/Build means. The fact is, many GCs are prone to mix the two delivery methods into what has become known as Design/Bid.
There are other factors as well. GCs typically are responsible for design integration, but the mechanical contractors pay for any mistakes. In the typical scenario, the GCs control the design team and establish the approval process. It’s during this process when the scope of design deficiencies is discovered.
The Design/Build process typically involves less review/approval time. The mechanical contractor has total liability for deficiencies.
GCs typically let the contracts to their subs. They drive the terms, are responsible for coordination of the sub-
contractors, and are in charge of all drawings and specifications. The
Design/Builder, on the other hand, provides the contract, handles the down payments, design fees, and the project timetable.
Keys to Working with GCs
OK, there are plenty of differences between the typical GC and a Design/Build mechanical contractor. So, why market to them?
There are four major reasons:
- Working with GCs shortens the sales cycle
- GCs often get repeat business
- There certainly is a common vocabulary between GCs and Design/Build mechanicals
- Working with GCs provides the
opportunity to access larger and more complex projects.
For GCs, there certainly are major drivers for them to consider Design/Build and work with us:
- Fast track construction provides for earlier project completion and earlier occupancy.
- Single-source responsibility makes project coordination easier and
reduces any disputes between design and installation.
- Design/build provides the owner with guarantees on price and system performance, neither of which is provided via the plan/spec process.
The best part for GCs is that there is less conflict, lower costs, increased quality, and an expanded ability for design innovation.
To work with a GC, mechanical contractors must educate themselves and understand the GC business process. They must understand the differences in how GCs and mechanicals approach the marketplace and find a middle ground from which to work together. It’s important that any GC you work with has a solid reputation. You can learn more about them by actually participating in their organizations. You need to learn to trust them and they you.
When it comes to working together on a Design/Build project, you must have a good foundation of the goals and mission of the project and should position Design/Build as the way to go before the project begins. In your defense, you should understand and abide by a set of “walk away” principles — if certain criteria aren’t met, then you walk away from doing the job.
In the end, is the general contractor a friend or foe? It depends on your niche, your relationship with the GC, and your marketing proficiency. If you can find a GC who will allow you to sell value and let you get involved in projects early enough, then they are a friend and both of you will benefit. n
Dan Thayer, PE, CIAQP, CEM, is president of the Thayer Corp., a commercial/industrial/residential Design/Build contracting firm headquartered in Auburn, Maine. The company is a LINC Service company as well. Thayer is a member of the Contracting Business Editorial Advisory Board and is an active member of ASHRAE, ACCA, and a number of other organizations. He can be reached at 207/783-4197 or by email at email@example.com.