Feature by Dan Adams, President
Design-Build (D-B) has moved from alternative to main stream, particularly at McMillen Jacobs Associates: half our current projects are delivered using D-B. We serve in a multitude of roles: as owner’s advisor, project manager/construction manager, the builder’s lead designer, and as the lead designer’s subconsultant.
Over the past couple of years, we’ve been seeing wildly varying, and in many recent cases, unexpectedly high pricing in our D-B market. Most in the industry attribute the drivers for this as: escalation in hot markets, late scope added to appease stakeholders, and/or a shift in risk allocation from owner to design-builder. One pricing factor few talk about, however, is lack of experience with decision-making in our next generation of leadership.
Successful projects have a key common thread: leadership from all sides that recognize the need for all parties to communicate openly, acknowledge each other’s concerns and objectives, and make timely decisions. The ability of project leaders to communicate requires an in-depth understanding of human behavior and the dynamics of group decision-making. And decision-making requires experience and authority based on years of being immersed in similar situations. Generally speaking, these are skills that engineers coming up have not had sufficient opportunity to develop. The scope, dynamic, and impact of decision-making change dramatically from small projects to large. Sometimes individuals successfully scale up from smaller projects to acquire the skills necessary to manage megaprojects, but not often enough. Learning these management skills on the job is usually not practical. Yet engineers who have done well on a small project or a single element of a larger one are today being cast into leadership roles on megaprojects with little experience in working through conflicts or major changes. When the delivery schedule is accelerated, and the velocity of cash flow is high, the stakes of a timely decision grow exponentially. When leadership experience is lacking, uncertainty settles on the team and the project often goes sideways.
Owners, engineers, and contractors all face this issue. This experience gap is perhaps the result of boomers retiring, a dilution of the talent pool due to the number of mega-projects today, or a combination. Regardless of why, we encourage academia and the industry to work together to improve the skills necessary to manage the current and future crop of megaprojects. Without this leadership, D-B procurement will continue to see an upward trend of costs to address risk due to poor or untimely decision-making.
As a firm, we’re recognizing these impacts on the market around us and adjusting accordingly. Our training has expanded to cover emotional intelligence, conflict resolution, and decision-making. Mentoring our staff in project management skills has taken on a new sense of urgency. We are also becoming selective in the work we pursue and the clients we choose to work with. And yes, when we’re teaming as a builder’s designer, we’ve adjusted our pricing to reflect the reality that the designer is at the front of the line when waiting for decisions, but at the end of it when it comes to payment. Regardless of our commercial approach to design on D-B, the bigger issue that drives our evolution is a strategy to address the leadership experience gap, to prevent projects from going sideways.