Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

Architect-Led Design-Build: a PRACTICAL business plan

2,922 views

Published on

Return of the Master Builder: For years, lawyers and insurers have told architects and engineers they cannot guarantee construction prices or completion dates or take responsibility for the actual construction of what they design. These warnings are wrong. By structuring projects carefully and intelligently, architects can increase their prestige, self-esteem, and earnings as design-builders.

Published in: Real Estate
  • ⇒ www.WritePaper.info ⇐ is a good website if you’re looking to get your essay written for you. You can also request things like research papers or dissertations. It’s really convenient and helpful.
       Reply 
    Are you sure you want to  Yes  No
    Your message goes here
  • Did you try ⇒ www.HelpWriting.net ⇐?. They know how to do an amazing essay, research papers or dissertations.
       Reply 
    Are you sure you want to  Yes  No
    Your message goes here
  • Hi there! I just wanted to share a list of sites that helped me a lot during my studies: .................................................................................................................................... www.EssayWrite.best - Write an essay .................................................................................................................................... www.LitReview.xyz - Summary of books .................................................................................................................................... www.Coursework.best - Online coursework .................................................................................................................................... www.Dissertations.me - proquest dissertations .................................................................................................................................... www.ReMovie.club - Movies reviews .................................................................................................................................... www.WebSlides.vip - Best powerpoint presentations .................................................................................................................................... www.WritePaper.info - Write a research paper .................................................................................................................................... www.EddyHelp.com - Homework help online .................................................................................................................................... www.MyResumeHelp.net - Professional resume writing service .................................................................................................................................. www.HelpWriting.net - Help with writing any papers ......................................................................................................................................... Save so as not to lose
       Reply 
    Are you sure you want to  Yes  No
    Your message goes here
  • To get professional essay you must go for experts like HelpWriting.net
       Reply 
    Are you sure you want to  Yes  No
    Your message goes here
  • Get Instant Access to 12000 SHED PLANS, Download plans now. ➜➜➜ https://url.cn/I86oXShh
       Reply 
    Are you sure you want to  Yes  No
    Your message goes here

Architect-Led Design-Build: a PRACTICAL business plan

  1. 1. © Schiff Hardin LLP. All rights reserved | schiffhardin.com ARCHITECT-LED DESIGN-BUILD: A PRACTICAL BUSINESS PLAN Jeremy S. Baker Mark C. Friedlander Construction Law Group Schiff Hardin LLP 233 S. Wacker Drive Chicago, IL 60606 312-258-5506
  2. 2. Design-Build Is Here to Stay The popularity of design-build construction as a project delivery method is growing rapidly. Its growth is fueled by owners who are attracted to its single-point responsibility and shortened project delivery times. Traditionally, however, contractors have dominated the lucrative position of prime design-builder, employing the architect as subcontractor. schiffhardin.com | 2
  3. 3. Designers Lose Opportunities The architect usually has the initial relationship with and trust of the owner, who in many cases would like to rely on the architect to see all aspects of the project through to completion — even construction. But most architects have been taught not to assume any of the risks associated with construction – and do not know how to structure their practices to take advantage of the opportunities and profits involved in running a construction project without undue exposure to risk. schiffhardin.com | 3
  4. 4. Potential Upside for Architect Design-Builders • Strengthen relationships with Owner and Contractor teammates. • Earn profits during construction phase that dwarf design phase profits. • Gain marketing advantages for traditional architecture work. • Increase market share by offering potential owner clients a guaranteed price and schedule early in the design phase – without undue risk. • Maintain control of the project so completed structure is as designed. • Increase profits during the design phase by eliminating unnecessary work. • Minimize risk of claims. schiffhardin.com | 4
  5. 5. WHAT A PROJECT OWNER WANTS • Fastest project delivery • Quality design and construction • Fair and reasonable prices • Early price determination • Single point responsibility for problems • Not to have to make premature choice of delivery method • No disputes or litigation schiffhardin.com | 5
  6. 6. TRADITIONAL DESIGN-BUILD schiffhardin.com | 6 Owner Owner Contractor Architect Contractor A In-house architect OR
  7. 7. The “Flip Side of the Coin” schiffhardin.com | 7 Owner Owner General Contractor Architect General ContractorArchitect
  8. 8. Developing Architect’s Design-Build Capabilities • Step 1: Create design-build company to carry construction risk. • Step 2: Enter into master subcontract agreements with preferred general contractor teammates. • Step 3: Enter into traditional design contracts with owner and subconsultants. • Step 4: Provide blank form Design-Build Proposal to owner. – Develop design, perform conceptual estimating – Revisit whether owner wishes architect to build project – Complete the Cost and Schedule components of Design-Build Proposal – Significantly advance design – Revisit whether owner’s original program and scope evolved • Step 5: Enter into construction agreements. schiffhardin.com | 8
  9. 9. Preliminary Structuring: Create The Architect’s Design-Build Company schiffhardin.com | 9 Professional Design Firm Non-Professional Design-Build Company Architect Step 1
  10. 10. Architect-Led Design-Build: The Single Contract Approach schiffhardin.com | 10 Owner Architect’s Design-Build Company Architect G.C. Sub SubConsultant Consultant
  11. 11. “Sequential” Design-Build: Structure of the Relationship (Private Sector) schiffhardin.com | 11 Owner Architect Architect’s Design- Build Company G.C. Consultant Consultant Sub Sub Design Contract Architect’s Design-Build Proposal (a/k/a Price and Schedule Guarantee) Construction Contract
  12. 12. The “Teaming” Agreement schiffhardin.com | 12 Step 2 Architect’s Design-Build Company General Contractor Teaming Agreement • Master Agreement • An agreement to subcontract future projects to contractor • Future “Purchase Order” will identify owner, project, drawings • Immediate Services from Contractor paid on T&M basis: • Conceptual Estimating • Preconstruction services (100% Subcontractor)
  13. 13. Considerations in Architect Selecting General Contractor Teammates Mandatory Qualities • Financial Security • Professional Approach schiffhardin.com | 13 Issues of Judgment • Size • Geography • Industry Niche
  14. 14. Architect’s Contract: Owner and Subconsultants schiffhardin.com | 14 Step 3 Owner Architect Standard Owner-Architect Agreement • Ex: AIA B101, Owner-Architect Agreement • Blank form Design-Build Proposal as Exhibit Standard Architect-Sub Consultant Agreement • Assumption: trade contractors to finalize design of engineered systems
  15. 15. The Design-Build Proposal: “Price/Schedule Guarantee” schiffhardin.com | 15 Owner Architect Architect’s Design-Build Company Step 4 • Architect’s Design-Build Company’s price and schedule guarantee is contingent upon it being selected by Owner to build project. • Architect’s Design-Build Company supplants Architect during construction phase. • Legal safeguards included regarding budget and estimating. • Construction Contract eventually supersedes Design-Build Proposal.
  16. 16. Architect enters into “Construction Agreements” schiffhardin.com | 16 Step 5Owner Architect’s Design-Build Company General Contractor (100% Sub.) Construction Contract Architect’s functions during Construction Phase provided by Architect’s Design-Build Company Subcontract for Particular Project Purchase Order from Teaming Agreement attaches and subcontracts 100% of Construction Contract to Contractor teammate
  17. 17. Pros and Cons of a 100% Subcontractor PROS • Construction risks virtually eliminated • Contractor’s presence may assist marketing or sales • Contractor likely to refer projects back to Architect • Architect not perceived as competing with contractors • Contractor may be source of financial security for owner • Contractor may be additional source of management expertise • Contractor may negotiate better deals with subcontractors schiffhardin.com | 17 CONS • Reduces available profits • May be harder to explain to owner, at least initially
  18. 18. Advantages to the Owner of Design-Build schiffhardin.com | 18 • Fastest delivery (fast-tracked) • Design-Builder is single point of responsibility • Early price determination • Fewer disputes – less litigation
  19. 19. Advantages to the Owner of the Architect Leading the Design-Build Team schiffhardin.com | 19 • Architect is trained to balance design quality vs. cost • Owner can delay the design-build decision • Owner and Architect often have pre-existing relationship • Architect has less conflict of interest than when contractor leads team • Common complaint of Architect lacking cost discipline disappears when Architect must construct to a fixed cost • Contractor as 100% sub can still be source of financial capitalization
  20. 20. Advantages to the Architect of Architect-Led Design-Build schiffhardin.com | 20 • Additional profits – Mark-up on the construction cost – Savings accrue to architect – Reduced labor costs in production • Marketing advantages – Guarantee of price and schedule – Owner can delay design-build decision until design advances – Contractor becomes source of future work • Control over construction – Avoid unwise design changes – Allow necessary or advisable changes • Reduced liability – Construction accidents insured by contractor – No claims from obvious design omissions – Cooperative resolution of design problems
  21. 21. Benefits to the Contractor from Architect-Led Design-Build schiffhardin.com | 21 • Contractor makes usual fee, assumes usual risk, has potential to share in construction cost savings with Owner and Architect • Projects often developed by Architect and presented to Contractor “on a silver platter” with no Contractor marketing expense • Negotiated pricing rather than competitive bidding • Enhanced relationships with Subcontractors/Suppliers • Reduced likelihood of claims/litigation • Increased profits from reduced overhead (see next slide)
  22. 22. Source of the Architect’s Construction Fee (i.e., Contractor’s Savings) schiffhardin.com | 22 • FEE DOES NOT COME FROM OWNER’S POCKET!!!! • Larger profit margin in negotiated vs. competitively bid contracts • No contactor marketing overhead for project = leaner pricing • Cost analysis certain to result in project or compensation • Minimal contingency for bidding errors/oversights • No contingency for adversarial administration
  23. 23. Architect-Led Design-Build Program schiffhardin.com | 23 • Feasibility Consultation • Establish and Incorporate Design-Build Entity (i.e., LLC) • Design and Construction Registrations with State • Employee Lending Agreement • Resource Sharing Agreement • Master Subcontract Agreement • Owner-Architect Agreement • Design-Build Proposal a/k/a Price & Schedule Guarantee • Fair Model Construction Contract • Standalone Design-Build Agreement (GMP or Lump Sum) • Consulting During First Project
  24. 24. For More Information Contact: Jeremy S. Baker Partner, Construction Law Group Schiff Hardin LLP 233 South Wacker Dr., Suite 6600 Chicago, Illinois 60606 (312) 258-5506 jbaker@schiffhardin.com www.schiffhardin.com Please connect with me! Twitter: @builderlawyer www.linkedin.com/in/jeremysbaker schiffhardin.com | 24
  25. 25. schiffhardin.com | 25 Attorney Responsible for Content: Jeremy S. Baker This publication has been prepared for the general information of clients and friends of the firm. It is not intended to provide legal advice with respect to any specific matter. Under rules applicable to the professional conduct of attorneys in various jurisdictions, it may be considered attorney advertising material. Prior results do not guarantee a similar outcome.

×