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A little this, a little that
By Chris Thompson
The spectrum of project delivery systems could tempt even the most devout hard bidder, but industry
officials said it's essential to know the rules of the game before rolling the dice.
"It's a whole cultural transition in a company where you're changing the focus from bottom-line orientation to customer-service orientation," Patti Keating Kahn, Bukacek Construction Inc. vice president of marketing in Racine, said. "The old line was that the bottom line would win the job and then we'd get it done. But that's not always best for a customer."
Before a company can move from traditional design/bid/build to design/build, construction manager or negotiated general contractor with guaranteed maximum price, it must assess its own capabilities, Steve Holmgren, J.H. Findorff and Son Inc. director of business development in Madison, said.
"The question becomes: Do you have the expertise?" he said. "You will be heavily involved in pre-construction planning and design, and it could be a year prior to construction. That's a very different kind of discipline than attaching a price to an architect's plans."
Switching to a new delivery system also requires a full understanding of that particular method. For instance, Holmgren said, a firm can use pure, or agency, construction management where it serves as simply an adviser to the owner or it can use contractor construction manager.
"This is where in addition to construction manager, you also self perform, guarantee a price and a schedule and hold all of the subcontractors' contracts," he said.
Any step from the hard-bid line also carries a host of risks, Holmgren said. Guaranteed maximum prices are often based on incomplete drawings, and change orders are held to a minimum.
Once a firm moves away from hard bids, profitability becomes a concern, Holmgren said. Typically, fees for pure construction management are lower than negotiated general contracting because the firm is not guaranteeing a maximum price or schedule. Design/build fees can be larger because they're based on design and construction.
The bottom line, Holmgren said, is a construction company needs to strengthen its internal resources if it plans to move beyond traditional bidding.
"Size and sophistication are considerations because the more you are involved in the front end of the planning, the more sophistication is required," he said.
Making the leap
Keating Kahn said Bukacek made the switch from strictly hard bids to design/build and construction management about nine years ago. The change forced an overhaul of the company's philosophy toward customer relations.
Bukacek first had to reeducate every employee to the new approach to customers, such as faster response time to clients' questions and better communication, Keating Kahn said. The company also focused on new technology to improve customer relations.
"Everybody has a computer - even the site superintendents have laptops - because we have a single-source responsibility and when it's at our fingertips that's real responsiveness," Keating Kahn said. "It's incredibly valuable, and without it we'd still be a hard-bid contractor."
The company also developed new relationships with architects, engineers and real estate brokers to explain why it was important for them to join the Bukacek team on projects, she said. The new relationships carried over to new internal programs geared for every job on which the team worked.
"We put together a 12-step process that walks through any project, whether construction management or design/build," she said. "It includes a kickoff meeting with the whole team, which we never would have with a hard bid, and continued with pre-pouring and pre-erection meetings."
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