Finding work in a down economy

[rockstar.esq]

As a construction estimator, it's my job to find profitable work for the company.  Like most people, my job gets a bit (o.k. a lot) harder when the economy is down.

There are a few things that I thought I could share to maybe help people to find work in a down economy.

The first thing I would recommend is a shift in perspective.  A lot of people will look for leads based on who's got the most stuff out to bid.  The thinking is that "chasing everything" increases your odds of winning a job.  In a down economy, many, if not most of the "bid opportunities" aren't actually going to get built by anyone.  There is a very good reason for this; financing.  If the economy is down, there's less chance that the financiers will see a return on their investment.  

For this reason, I recommend looking for clients who are fully funded.  

There are a few "tells" to help sort one from the other.  Let's say you're looking at the plans for a restaurant that bids a week after the invitation to bid.  They're marked "not for construction", or "for bidding" and dated several months ago.  The request for proposal implies that the client is ready to proceed with construction immediately.  

In contrast, let's say you're looking at plans for a bank remodel that bids two weeks after the scheduled job walk.  The plans are marked "for construction" with yesterday's date.  The request for proposal stipulates a construction start and end date, as well as their required phasing to allow the business to stay open during the remodel.  Not only are the plans in for permit, but they've got a date for when the permit is expected to be approved.

The restaurant job is a perfect example of a bid to nowhere.  The reason they're putting it out to bid, is that their previous bids came in over the budget their financier approved.  Now that work is slow, the client is hoping that they'll snag lower pricing by putting it back out to bid.  Even if they do get lower bids, the market conditions are such that the restaurant is unlikely to succeed.

The bank project is more promising since they are probably self-funded.  However, that's only part of the story.  Putting in the effort to make the project successful speaks to the clients intent.  They can't/won't afford any waste or lost business.  Strict timelines and protocols may well make the job harder to perform, but it "connects the dots" on what matters to the client.  These are the things you should pay attention to.   The goal here is to prioritize on what the client actually cares about.

Building on that last point, I think it's important to understand that boom market default behaviors aren't going to make the best impression.  Take something like a proposal form.  Most businesses will generate a standard form which they use for everything in the hopes that it makes them appear "more professional".

During booming markets, I can afford to focus only on highly profitable clients who don't generate a lot of difficulty for me because everyone working there has extensive Construction Management knowledge.  My proposals can be very generic without it affecting my ability to win work.  

In contrast, I might have an entrepreneur client who needs to build an addition to their facility.  Such a client might have an incomplete understanding of the work being proposed. "Standard" inclusions and exclusions may come across as menacing lists of worrisome mysteries.  A proposal with a bit of narrative referring to attached drawings may convey confidence, competence, and communication skills that your client will prize over lowest possible price.

The attached drawings can be simple stuff like a roughed-out phasing plan might illustrate how the work will proceed, or a marked up drawing showing how and where you "filled in the blanks" on their design.  The goal here is to "customize" your proposal to address what your client actually cares about using the least amount of effort.  Less is more here because you don't want to provide a client with everything they need to hire your competitor.

Finally, I'm going to recommend something that a lot of people struggle with.  Ask meaningful questions of your client, and be honest with yourself about their reply.  

Here's an example of what I'm talking about.  The maintenance man at a local facility for a national client called my boss because his manager wanted a bunch of work done.  He said we're on their approved contractor list so they just need a bid to turn into his facility director before he can authorize us to proceed.  I meet with the maintenance guy to what needs doing, put together the pricing, and send it in.  Weeks go by, nothing.  I call, leave messages, eventually a month or so later, the maintenance guy calls with another project.  While we're on the phone I ask about the last thing I bid.  "Oh, see any non-essential repairs above a certain value have to be contracted annually by our (out of state) home office."  If my boss had asked this guy how they intended to fund this project, we could have told this guy that his project was too big for his maintenance budget right then.

[George N. M.]

Dear Rockstar,

A couple more things to consider when looking at a project/proposal from a government entity:  As you say, find out how it is being financed.  If it is by bonds find out where in the bonding process it is.  It can often take a considerable period of time between approval of the bonds by the governing body or the electorate (depending on the state) and actually having the money available.  Also, find out what the architect estimated the cost to be.  I have seen more than one project dramatically cut back when the architect designed for project costing $X and when the bids came in the real cost was $X plus a considerable amount.  Finally, and I'm sure that you know this but I'm putting it in for other folk:  Know the difference between a Request for Proposal and a Request for Bid.  By submitting the latter you have committed to a legal obligation and contract if the bid is accepted.  In the former, there is nothing firm, it is just the entity testing the waters and getting an idea of how much something will cost.

"By hammer and hand all arts do stand."

[rockstar.esq]

George,

Wonderful comments as always.  Interesting tidbit on your last point, it's virtually unheard of for clients in my market to issue anything other than a Request for Proposal.  They include contract's and provisos that any submitted bid is contractually enforceable for some specific number of days.

As for Architects underestimating project value, I've participated in forum discussions where design professionals ardently claimed that the public would never vote to approve "real" cost estimates, so they intentionally under estimate it.  Some of them presented the huge VA hospital boondoggle in Colorado as a perfectly executed strategy.  

[George N. M.]

Rockstar:

The terms RFP and RFB get used a lot incorrectly.  Purchasing agents/officers often do not know the difference.  If it is labelled an RFP but has bid language and commitments it is really and RFB.  Also, purchasing agents often get testy if it is pointed out that their standard forms have legal flaws.  They claim that this language has been used for years without any problems.  As an attorney I will point out that just because there has not been a problem does not mean that there will not be a problem in the future and do they want their name on it if there is a problem and they rejected legal advice to change it.

The problem with inaccurate cost estimates by the design team is that a governmental entity often has a fixed amount, e.g. the net amount of a bond issue, that it cannot exceed no matter what.  In Colorado that would mean going back to the voters and asking for more money.  I always have tried to put language in the contract with the architect that if the bid exceeds the estimate by X%, usually 10%, that the architect will revise the scope of the project and the design at their own expense.  I've had architects squawk that that is not in the standard AIA contract but I've usually been able to convince them that estimating the cost of a project is part of their professional expertise for which we are hiring them and if they don't have enough confidence in their own professional ability that maybe they should be in another line of work.  Also, I have found that the standard AIA contracts, as to be expected, are very much in favor of the architects but don't do a very good job of protecting either the contractor or the project owner.  On a large project I have spent days revising the standard AIA contracts to protect the project owner and be fair to the contractors and subs.

This is probably beyond the scope of a blacksmithing forum but I will try to add some relevance by saying that the same principles involved in a contact for a multi-million dollar construction project apply to a contract or subcontract for hand forged railings or handles as part of the big project.  Even a small blacksmith shop has to go through the same estimation and bid process for a couple dozen hinges and 50 handles.  It is on a smaller scale, of course, but a small shop could be hurt as much by the failure of a several thousand dollar contract as a larger company would be by having to eat or litigate under a multi-million dollar contract for a big project.

If I ever found out that an architect or design firm had intentionally low balled a project figuring that the over runs would just be added on I would seriously look at a possible fraud action.  Also, I would put the word out to other governmental entities what kind of problems we had with X firm and the other governmental entities may want to consider what happened with us when they are looking for similar services.  I sure would not have wanted to be associated with the over runs on the Denver VA hospital.  IMO, that would be a professional black eye of the worst kind not to mention any ethical considerations.  I certainly would not want to have a conversation with the Attorney Regulation Counsel about why I approved a contract that ended up costing my client multi-millions of dollars.

"By hammer and hand all arts do stand."   

[Latticino]

I've been on both sides of this discussion in my engineering career.  I spent a lot of time in the trenches doing detailed "nuts and bolts" formal estimates of plan and spec jobs for a large mechanical contractor, and have been tasked with providing an "engineer's opinion of probable construction cost" for projects that have barely made it past the conceptual design stage for consulting engineering firms.  What owners don't want to acknowledge is that the latter method of pricing a potential project is never going to have the same level of accuracy as the former.  The engineer, or architect, is often expected to come up with a number in a couple of days for a design that is nowhere near complete.  They rarely get the chance to confer with equipment vendors, quantify materials, and accurately estimate labor.  Their main tools are usually the RS Means books or historical square foot records for similar projects, which are hardly gospel.

The concept that this sort of dart throwing could expose a firm to prosecution or a design penalty is a bit outrageous.  If this kind of accuracy is necessary to a project, in my experience, it is best to utilize a Design/Build delivery format (where a RFQ is sent out to a number of firms and a Architect/engineer team with a GC firm is selected to provide a turnkey project at a fixed final price).  While this is a longer selection process, it is, in the end, often better for the owner.  This is a very common delivery method for large Federal projects, that has the additional benefit of limiting expensive change orders to only out of scope modifications made by the owner.  Coincidentally it is also the common method of delivery for a blacksmith doing architectural work.

13 hours ago, George N. M. said:

I always have tried to put language in the contract with the architect that if the bid exceeds the estimate by X%, usually 10%, that the architect will revise the scope of the project and the design at their own expense.

I can't imagine why an architect/engineer would intentionally low-ball an "engineer's opinion of probable construction cost".  If they are doing it as the registered professional for a project, they already have the project and have no reason to  under estimate.  If they are doing it as part of a Design/Build team (the associated contractors should be doing all construction pricing, they would only be responsible for the cost of the design work), they would be liable to perform the design for their team at that cost.  Personally I would never touch a project that came in with a contract with a rider like you propose.  Particularly for a large job, where the design phase might be months or even years ahead of the construction, there is no reasonable way to estimate the cost of construction within 10% before the design is complete and without adequate time to produce an estimate.  I've seen bids vary more than 25% between contractors on plan and spec jobs after the contract documents are complete.

[rockstar.esq]

I see the designers argument as framed.  The design isn't done, so they're working off less information, hence the conceptual estimate isn't going to be accurate.  Sure, but the qualified designer isn't doing this for the first, twentieth, or hundredth time either.  They got hired in part because they've seen the real costs of their designs for similar past work.  

There are "test-fit" design firms in my market who pretend that they need a full-blown competitive bids to budget check their 10%, 50% and 90% drawings of an office build out that's basically identical to the last 240 offices they designed.

Indeed the whole reason they get hired for test fit stuff is that they're experts who do this all the time.  The mechanical engineer isn't tasked with a wide-open design.  They are working with the same systems over and over again.  We routinely go through three to four rounds of competitive bidding to win a job.  That's a ton of feedback for these design professionals, yet every routine project budget is an unknowable mystery for the people requesting this assistance.

 

[George N. M.]

Latticino:

This is why project owners hire design/architect firms, to design a project and give an expert opinion on how much it is going to cost.  There are two basic approaches:  A) the owner can say we want a factory, office building, house, etc. of X size and with Y features, how much will it cost? or B ) (And this is the scenario with which I am most familiar) the owner says that we need a new building of some sort and we have $Z to spend, what can we get?  In both of these scenarios the owner is relying on the expertise of designer to accurately estimate the cost.  Any decent size design firm has a wealth of expertise and experience as to how much an office building, factory, warehouse, home, etc. is going to approximately cost per square foot from past and concurrent projects and should be able to give a pretty accurate answer and should be willing to stand behind that answer.  This is part of why they are in business and is part of their stock in trade.

Example:  About 20 years ago the county that I was working for needed a new Human Services building.  The county voters approved a bond issue of $X.  We hired a large Denver architectural firm to design the building.  After many meetings about what we wanted/needed they came up with a design that was estimated to be within our budget.  When it was bid out the lowest bid was about 40% higher than the estimated cost.  We had to dramatically cut back on the scope of the project to get the cost within budget.  The excuse was that the cost of steel had gone up.  IMO that is something of which the designers should have been aware and should have taken into consideration. 

GNM

[rockstar.esq]

In fairness to Latticino, I have done design-build projects where I presented the economic impact of every choice along the way as Cut, Same, or Add.  The client's frequently chose the "add" option each time. I kept a running tally of my budget to narrate the clients changes.

For projects like office buildings or warehouses, the lighting package will be worth roughly 50% of the electrical budget.  That's just to buy the lights.  It's incredibly common for the Architect and/or Engineer to specify fixtures from one lighting rep in town.  With no competition, these reps over price the package and blow the budget.  I routinely present alternate equal packages from competing reps that cut my total bid by 20-50%. I've been on several projects where a competitive lighting package cut the total construction budget by 20%.

I know with certainty that every lighting rep has a salesmen who calls on the design professionals involved.  These salesmen provide "free" research assistance, spec writing, photometric studies, lighting control schematics, etc. in exchange for no competition on the lighting package.  I wouldn't strike such a deal without a binding "not to exceed" quote from the rep.  If that was common practice, the design professionals could take bids from the local reps and award the best value.  I could provide dozens of examples of nearly identical projects that illustrate the cost of corruption. 

Nothingburger government offices with the aesthetic appeal of gray bologna routinely come in with lighting packages that are triple the price of identical "white shell" offices built for cheapskate property management firms.  Based on the revision dates on the plan legends, it took the government office design teams longer to draw the project than it did to actually build it.  In most cases, the office job for the property management firms will be up and running before the government office design team hits 50% complete on their plans.  The additional time in plan development doesn't typically translate to construction savings either.  I've had projects where change orders exceeded 35% of my original bid on plan sets that were in development for two years.  Mostly for completely optional stuff that a high-ranking end-user threw in during construction because they were not communicating their expectations for the project while it was in design. 

I very much believe that this difference in performance is down to design contract terms like those that George is suggesting.  When savvy people demand accountability, prices go down.

[Latticino]

George, well, though I hate this sentence, I guess we will just have to agree to disagree on this one.  I see your and rockstar's point about the experience of “test fit” design firms with construction estimates for multiple, similar projects, but have never belonged to one, so don’t have experience with their typical project tracking systems.  However I don’t think you are taking into account the extremely wide variations a construction project can have, even for a similar client.  Not counting renovations, which at my current small MEP consulting firm makes up around 85% of our business and are always extremely different, new construction projects can have widely different costs depending on some of the following circumstances (Note, bear with me as I’m a Mechanical Engineer specializing in HVAC, so have only limited experience with the issues surrounding other trades):

1. Site conditions:
   1. Greenfield or Brownfield site
   2. Utility availability
   3. Structural considerations (slab on grade, foundations requirements, piles…)
   4. Water table level (have seen projects canceled due to new 100 yr flood considerations)
   5. Municipality requirements (sound, aesthetics, historical style requirements…)
2. Code variations:  regular updates to construction codes can radically change the type of construction required or mechanical, electrical and plumbing systems designed.  In particular energy code changes have had a huge effect on building insulation requirements, lighting systems, mechanical equipment selection and even plumbing distribution piping.  This leads to significant effect on construction cost.
3. Technology changes: building systems are always evolving, and the new ones aren’t usually cheaper (at least initially).  Owners often want the upgrades as soon as they hear about them (i.e. wireless BMS systems with occupancy sensors tied into daylighting controls, demand control ventilation and measurement and verification tracking.  Much more expensive, but a potential energy cost savings – I've heard: "I’ll give you three days, how about providing a Life cycle cost analysis for the upgrade?").
4. Building configuration:  A 70,000 SF office that is a single story with large, open office call center rooms is vastly different than a similar overall size that is a 5 story glass box with primarily individual offices requiring individual control zones per office.  Not to mention things like onsite or offsite data centers (which have a huge, and rapidly evolving, cost per SF).  In my career I’ve never designed a facility that was exactly like a previous one, even when presented by the owner as a copy of a former building, just rotated and on a different site.  There is always a change (“Let’s make it just like the last one, but instead of furnaces with Dx evaporator coils we will go with a Variable Refrigerant Flow system, oh, and it is in Florida this time instead of Pennsylvania”).
5. Changes in cost of materials.  You mentioned changes in steel prices 20 years ago.  Do you remember the huge spike in construction material costs that happened when China started buying up all the scrap steel, lumber and sheetrock when their economy began to boom and construction went rampant over there?  These changes are often unpredictable and extremely hard for a design firm who only peripherally hears about scarcities to evaluate the impact on general square foot prices, even for a specific trade, since they don’t do a “nuts and bolts” estimate and don’t have accurate record data of the percentage of cost of materials to overall cost of construction (like a contractor should).
6. Changes in cost of equipment:  There can be wide variations here as well.  For example I’ve seen large, custom, hospital grade air handlers go for as little at $2/CFM and as much as $15/CFM, with essentially the same characteristics.  The first manufacturer ended up being unreliable, delivered the equipment 6 months late and went out of business the next year, but the historical record for that job was based on equipment bid at that price.
7. Owner preferences or design standards.  Unsurprisingly these tend to have a significant impact on construction cost.  Some owners demand the Cadillac, others are happy with the Chevy.

Then there is the question of how accurate the historical data an A/E firm’s construction cost information is in the first place.  They are never privy to the final profit margin a team of contractors has, which can easily be within your 10% accuracy requirement.  Some contractors bid low and rely on fighting for change orders with a $35% profit margin to makeup their costs.

I reiterate: if professional estimators for construction firms have estimate variations of over 25% from designs that are completed, how can A/E firms be more accurate before the design is complete?

Rockstar, thanks for your consideration.  I’m sure you are aware that most, if not all, design firms do provide Value Engineering services to an owner, gratis, as part of the delivery package (and it can destroy their profit on the design phase of the project).  Your point about change orders and government projects also matches my experience.  The change order issues are one of the reasons that the Federal Government was trending away from Design/bid/build projects and going to Fixed Price Design/build projects (at least 15 years ago when I was still on the construction side and did large Federal projects).  Also, top heavy federal, state and municipal clients often require more review time for their internal teams than are allotted for the actual design, and the design phases get extended to suit those requirements.  Some vendors, contractors, even some A/E firms have vastly different rates for doing this kind of work due to the difficulty of dealing with those clients.  Sometimes it isn’t truly merited, but that is another story. 

[rockstar.esq]

Latticino,

You presented a huge amount of variability in your projects, which truly speaks to me as an estimator.  As difficult as all of this is, I can't help thinking of the thousands of conceptual bids I've done free of charge to help design teams to arrive at bid level documents within budget.  Most of them include value engineering alternates to save money.  If I'm lucky, they'll give me a week to prepare the estimate.  In most cases, they'll have at least half a dozen alternates, each one equal to a full-blown estimate in terms of work.  Despite all of this, I've never missed a deadline.

Some of the biggest names in the Denver metro design community routinely blow their construction budget on projects I've conceptually priced several times over the course of six months to a year.  Every one of my revised bid tracked the cost changes to illustrate what happened.  

Without exception, I can tell you precisely what that design team did to blow their electrical budget.  I often provide "follow the bouncing ball" overlays to plainly show how the money shook out.  I've been hauled in front of hostile clients and their design teams to explain why the price is so high, when I just won a competitive bid against every leading contractor in town.  My price wasn't high, or I wouldn't have won.  I've had lunatic lighting designers accusing me of profiteering on projects where they added 200 hand-made decorative chandeliers between my most recent conceptual estimate and the competitive hard bid I won for the contract.

At no point along the line does the design team ever provide meaningful feedback.  What was their budget at each stage?  Why didn't they use the information they requested from me? This happens all the time.  

 

 

 

 

 

[Latticino]

Rockstar,

Like I said, I've been on both sides of this fence, so can appreciate both points of view.  All I can say is that for my current projects the design team is not typically asking for iterative project cost estimates, it is the owner.  When we get the estimates (often weeks after our progress design submission) while we are tasked with proceeding with the design in the interim to hit an owner's seemingly arbitrary design phase deadline, they are usually a single line item per trade.  Then the owner asks us to confirm the estimate is justified, without any detailed breakdowns.  Typically I end up reverting back to my limited SF cost per type of installation and throw a dart.  Often the, sometimes potential, contractor is tasked with coming up with these numbers from a set of drawings that is in the design development (DD) phase, which many engineers treat as a 50% set.

If I am told in advance that estimates are going to be made based on a DD set, I make every effort to include all major portions of my design in the set.  My DD phase drawings are usually around 85% complete, with only final coordination to be finished (barring scope changes). I also offer to meet with the estimator and take them through the design to specifically indicate what my intentions are and clearly describe what further design work I expect and where there are unknowns.  I do this because I've been on the other side and understand the problems everyone can get into if an inaccurate estimate is produced.  I typically have a list of major equipment scheduled and with part numbers, and can offer contacts for the local manufacturer's rep, who is already familiar with the project.  I've gotten a lot of grief from my boss, who sees me as running ahead of the rest of the design team, which often ends up requiring redesign as other members of the team, or very often the owner, change the project scope (or even grab my design and somehow produce the rest of the project without getting final contract documents), which cuts into our firm's billing.  On the other hand the contractors seem to enjoy working with me, but they don't pay our bills, or sign new design work.

A week is about the minimum amount of time I'd expect for a decent conceptual estimate, with no alternatives, for a single trade.  Typically when I was doing those I had to conceptually size and quantify equipment, get it priced and make conceptual layouts for ductwork and piping.  Long hours, but I also met my deadlines.  My hat is off to you.

You are clearly an expert in electrical estimating, with lots of experience under your belt.  However, in my experience, electrical design and project requirements vary less than a lot of other trades (with the possible exception of conventional Fire Protection). Though you can certainly get into some complicated systems if you do work for labs, hospitals and industrial clients.  My real issue is with George's assertion that an Architect, after coming up with a conceptual design, which most likely only included a rendering of the building exterior, some interior details and space programming, should be capable of tying down the entire project cost within 10%.  There are just too many variables to be able to do that accurately.  Of course the client will have a budget, and clearly the A/E needs to work towards hitting that target.  However everyone needs to be flexible to reach that goal. 

Recently I participated in a national design competition where the goal was to produce a renovation standard for low income housing to provide in place renovations for Net Zero operation.  Apparently someone had read an article that indicated it had been done in Norway.  The kicker was that the housing authority wanted to make these upgrades for the same price as a normal renovation of such a facility.  Most of these spaces would concurrently have to be brought up to current building code requirements as well as adding air conditioning where they formerly only had heating.  It also had to be done with minimal disruption to the apartment occupants.  Another issue was that the Norwegians don't have the same expectations of thermal comfort as we do, and their climate is more temperate (they didn't include air conditioning, just heat and ventilation...).  Multiple design teams put in months of effort, made detailed presentations, but in the end the entire project died.  While Net Zero could be achieved, no one could meet the per square foot renovation cost targets.  

[George N. M.]

Dear Latticino,

So, you are saying that an owner cannot expect a reliable and accurate cost estimate for a project from a design team/architectural firm because there are so many variables.  I understand that it is a complex process and if rushed accuracy suffers.  However, from an owner's perspective it is frustrating to have experienced professionals be unwilling to stand behind what they have been paid to produce.  Also, I understand that there have to be lots of communication between an owner and a design team to hammer out what can be done within the available budget and to set reasonable expectations.  Do you have any suggestions how an owner can get a reliable estimate of the cost of a project?

Also, you should note that the remedy that I have requested if the bids come in too high is that the design team/architect revise the project to fit the budget, not carry the cost of the excess which certainly would be unreasonable.

The expectation of the owner is that he/she/it is paying for both a physical design and the professional expertise of an accurate cost estimate.  

Also, to respond to your list of variables:  A) Most local building codes are variations on the model of the various editions of the International Building Codes modified for local conditions.  There are exceptions where a local building code has been amended extensively over decades but for the most part but for the most part they are variations on a theme.  I would expect knowledge of local building codes to be part of the professional experience or part of the research in coming up with a design.  B ) Groundwater conditions and floodplain designation are two different things.  One is a local physical condition, somewhat similar to soil conditions and possibly requiring engineering or hydrological investigations.  Whether a site is in the 100 year flood plain is easily determined by consulting the local Flood Plain Hazard maps and checking the local flood plain regulations to determine what impact the flood plain restrictions will have on a project, e.g. generally, no basements allowed in the flood plain or the 1st floor may need to be elevated above the base flood elevation by a certain amount.

GNM  

[Latticino]

Going for one last try here:

A: yes, but when the codes change, the transition point may make historical SF data that A/E firms have been able to garner from recalcitrant owners invalid.  I am certainly aware of the standard international codes.  How many code jurisdictions have you worked in?  What I am saying is that regular code changes can make an A/E past experience with any records of former similar jobs useless.  Even if you know the specific change, being able to evaluate the added cost isn't always straightforward.  Just how much architectural or engineering design or estimating have you personally done anyway?  In my experience most projects are not cookie cutter copies of previous designs.  A/E firms are typically stuck providing value engineering assistance to meet an owners expectations, even when they are not in any way responsible for the original budget.  As an engineer I pride myself in giving an owner excellent representation by designing a building system that meets their requirements, applicable building code, maintainability, lifespan, utilizes minimal energy and is at the lowest construction cost that is possible while still meeting the other constraints.  It is the free engineering that is demanded as part of the VE effort that I object to.  Of course if it is in the contract, or for a good client I do it.  But at times it can be extremely frustrating.  I had a recent project that was delivered as a landlord/tenant facility.  I was doing the mechanical design for a health care provider that was to become the tenant for the ground and first floor of a good portion of the facility.  I was informed that I would have a clear plenum space to route my ductwork with a depth of 3'.  I chose the HVAC system type,  performed all the load code compliance ventilation, air exchange calculations and ... selected equipment, laid out the ductwork modeled the design and coordinated the installation requirements.  Then I was informed that the landlord decided to cut construction costs (to meet their budget, which neither I nor any other A/E firm had anything to do with generating - it came from the "centtral office") and was going to drop the ground level ceiling plenum down a course.  Now since the HVAC system concept had already been sold to my client, I needed to completely redesign the entire distribution system, and had to change it to use a plenum return instead of ducted return.  Not only did I have to provide free design work, I had to deal with the client's ongoing complaints for the  next year that they thought their was sound transmission through the return plenum between rooms (a big deal for HIPA requirements, but fortunately due to a different pathway).

B: Like I said, I"m a Mech E with only minimal experience and understanding of structural and site conditions and their impact on that portion of construction design.  All I know is that the flood plane lines were recently redrawn for a proposed project we had worked on and the entire thing had to be scrapped because of the unforseen change.  Maybe it was due to an oversight by the structural engineer, perhaps by the owner, maybe it was global warming.  I don't know, but it was a variable that radically changed the cost of a construction project which resulted in its getting canceled.  I'm sure that you would recommend additional free engineering by any firm unlucky enough to be involved to address this.

Not all owners look for an accurate cost estimate from an A/E firm prior to design completion, not the smart ones anyway.  If they insist on having a fixed fee number, or even a fixed, not to exceed number, they should be auditioning Design/Build teams.  These are groups of contractors and architect engineers, at times even lead by contractors, who will provide a quote to produce the entire project, and work cooperatively, at risk to do so, from the proposal to commissioning.

 

I'm out of this one now.

[rockstar.esq]

George, I see your point about design accountability.   Latticino is writing mainly from the perspective of a consultant to the Architect.  If the Architects aren't asking their consultants to maintain a budget, it's probably because the Architect isn't maintaining a budget.  This is likely because their contracts studiously exclude taking responsibility for hitting their clients construction budgets.  You may already know this, but most collegiate Architecture programs have no courses on estimating, contract law, project management, scheduling, or leadership.  This is very likely why Architecture has one of the lowest job-satisfaction levels of any career.  They spend a lot of their time in management meetings trying to avoid accountability for things they barely understand, and definitely don't care about.  It's terribly unfair to these people.

All of the common construction delivery methods involving either the GC, or the Architect as owners-rep are essentially "the fox guarding the hen house".  

I came up with a potential solution to this problem in one of my blog articles which was published in an estimating trade journal. 

I believe that the construction/design industry needs a new player;  an independent "At-risk Owners Representative".  These individuals need to be independent of the contract design and construction companies.   They need to come from market-leading General Contractors so that they are equipped to maintain effective oversight throughout design, as well as effective leadership throughout construction.  They would establish a budget, which was tracked with internal estimates throughout design and construction.  They would track and manage every other vector the client cares about like quality, schedule, code compliance, feasibility, etc. 

 We can't keep pretending that accountability is a matter of finding virtuous people.  We need to arrange things such that it's profitable for the wrong people, to do the right thing.  This starts with aligning accountability with the people most capable of mitigating risk. If my idea took off, I suspect that a goodly number of Architecture schools would merge their curriculum with Construction management.

Architects are the leading cause of construction delays in my market.  Denver is absolutely covered in hideous "copy and paste" apartment buildings.  I've read a fair number of architectural critic articles which claim that developers were basically using interns to make iterative CAD plans.  Maybe that's true, maybe it's not.  What I can say with certainty, is that the majority of Denver architecture firms can't get their construction documents through the building permit process on their first, second, or third try.  In a busy city like Denver, that can delay the project start by several months.