This document discusses best practices for engaging mechanical, electrical, and plumbing (MEP) subcontractors early in integrated project delivery. It recommends a three-step process: 1) Subcontractor "auditions" where subcontractors present their qualifications without a contractual agreement; 2) A planning stage agreement (part 1 of 2) if the audition is satisfactory, defining work to be performed; 3) A construction subcontract (part 2 of 2) executed after design development when subcontractors have invested resources with an expectation to perform the work. The document emphasizes establishing clear expectations and commitments at each stage to ensure fair and ethical treatment of subcontractors while allowing the contractor to receive needed expertise and input to benefit the project

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Soundandethical businesspracticesforintegratedservices
(disclaimer: this document is solely the opinion of George Wilkinson and Wpg Ltd,
and does not represent that of The La Macchia Group or any of its Owners or
employees)
Introduction
In the middle of the last century, various practitioners began to assemble teams of designers
and builders under single contracts and the label “design-builders” was coined and applied
to these business arrangements. This was a watershed idea provokedsubstantial protest in
special organizations such as the AIA. It was not until the last decade or so of the last
century that the AIA recognized the role of design-builders. Since then what started as a
revolution has become ordinary. In fact,the language is even changing still, for example
"integrated project delivery."
Amid all of these changes and in this writer's opinion, there are several themes: i) value
arises when design and construction are closely intertwined in the earliest planning stages
of a project, and ii) integrated delivery requires effectiveinteraction between a wide variety
of professional disciplines.
Accordingly,a great deal can be written about design-build and integrated productdelivery.
The short document intends to focuson i) bringing subcontractors to the table early in the
planning process and how to do so fairly and ethically to the benefit of both the LaMacchia
Group and the subcontractors themselves, and ii) engaging mechanical electrical and
plumbing contractors early in the projectdesign processes
Languageandwords
First, some language needs to be adopted. I'lluse these terms: program, schematic design,
design development, and constructiondocumentation. Common definitions of these terms
are generally consistent throughout the industry.
Further, I'mgoing to use the terms cost planning and estimating, preliminary project
description and outline specification,and preliminary plans versus final plans (e.g.
construction documents).
• Cost planning: preliminary estimates paired before scope of work is well-defined
• Cost estimating: counting and measuring quantities and applying unit costs to
knownscope of work
• preliminary projectdescription: a narrative generally following the uniform at
classification of systems and subsystems
• outline specification: an outline of descriptive project information followingthe
master format classification
• preliminary plans: descriptive images usually at a schematic or design
development level
• final plans: documents suitable for bidding, buying, and construction
Thespecial andimportantroleof MEPsystems
MEP systems are large part of project costs for freestanding buildings and major
remodeling projects. It is not uncommon that MEP systems can comprise 35-40project hard

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costs. Further, performance outcomes from these systems are a large part of the basis for
long-term owner satisfaction.
Due to the criticalimportance of these systems, this writerasserts there is a strong case for
involving mechanical electrical contractorswith relevant design-build experience early in
the process whether contracts ultimately will be determined by competitive selection or by
negotiation. How then can planning be undertaken with the assistance of subcontractors
before enough is known to enter into contractualagreements?
Given the complexity of this question, it is not uncommon for business conflictsto arise.
What steps in can be taken and what business processes can be adopted to fairly serve all
parties to the process?
There are some clues as to good practice throughout the industry .I suggest a three-step
process:
a. Subcontractor "auditions"
b. A planning stage agreement (the first part of a two-part agreement)
c. A construction subcontract(the second part of a two-part agreement)
Subcontractor"auditions"
Providedthat Contractor (LaMacchiagroup in this case) has a reputation forfair dealing,
most subcontractors are willing to trade some intellectual property for the opportunity to
become known and perhaps winthe opportunity to be selected forthe project. In pure
negotiation and business terms, common sense is a guide: each party trades something to
get something. The rules of the road for fair dealing include these:
• the criteria for subcontractor selection need to be specific and well communicated
• the timeline for planning and subcontractor selection need to be explicit and
respected
• Contractor must avoid“shopping” good ideas among candidates
• subcontractor participants should be assured they will get their “fairshare” of
project opportunities in return for participation
The audition step is a good time forcontractorlearn about the potential and expertise of
subcontractor. Their workproduct and methodology tell a lot about expertise.
Subcontractors whoare accustom to auditioning in the early stages and often have work
product that signals their experience and depth.
Well-qualified subcontractors naturally cite applicable experience and lessons learned
during the early planning stages. This builds credibility.In general, "talk is cheap" and the
way in whicha subcontractor attempts to engage planning speaks volumes.
For example, subcontractors skilled in so-called "preconstruction services" often have their
own forms and proprietary means of presenting their workproduct. For example, a letter
entitled "opinion the probable cost" suggests that they have a practiced business process.

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Planningstageagreements(part 1 of2)
Providedthat the audition stage was satisfactory and that the candidate subcontractorhas
demonstrated expertise, the part one agreement may be appropriate. Such an agreement
has these characteristics:
• part one is defined to be the first of two parts
• the agreement provides for certain services to be performed and under what
circumstances the agreement will move to part 2
• the agreement defines work product in process. Forexample a Preliminary Project
Description (PPD)prepared by Contractor forthe intended units of work can be
designated as the target forwhich a cost plan or (akaprelimibary estimate) is to
be prepared
• the part one agreement should provide a schedule for the greater project and a
schedule forthe prospective workby the subcontractor
• importantly, from an ethical perspective, the agreement should be clear with
respect to how subcontractor is "rewarded" for its workand also be clear that the
part one agreement is an exclusive right (or not).
Theconstructionsubcontract(part2 of2)
By the time a process moves to part 2, the project in most cases has moved well into the
design development stage and financial planning is in the formof cost estimating (as
compared to cost planning). By the conclusion of design development, subcontractor will
often have invested significant resources both in time and money and have a reasonable
expectation of performing the construction work.Accordingly,the part twoagreement
needs to be clear withrespect to under what circumstances the agreement can be
terminated by Contractor.
From contractor'sperspective, by the time part twois in process, it should be evident that
subcontractor is qualified to do the workand has demonstrated substantial capacity to
assist in planning. However, there is criteria to whichsubcontractor can be held in order to
win the work.In particular, the costplanning frameworkset up in part one should be
progressing logically and consistently to detailed estimates. If indeed scope has been
progressing consistently then it's a red flag if cost estimates suddenly depart from the cost
plan.
Contracts can provide for an “open-book” costmanagement process disciplined by a not-to-
exceed price and can include the requirement that the not-to-exceed price is converted to a
lump sum. Properly done, such a conversion can be a benefit to all members of the team
including the client Owner. Afixing authority to responsibility brings attention and
efficiency.
By the time part two of twois executed, there should be no surprises about the allocation of
risk and reward. Overreaching with punitive terms can break the business process at the
last moment. The audition, part one, and then the part twoprocess is an incremental one
during whichtrust and understanding are built. By the time the parties arrive at part two,
there should be little doubt about good faith dealing and the ability to worktogether going
forward.
TheclientOwner
The tasks that LaMacchia Group undertakes with their client owner has many layers. With
respect to the process of bringing subcontractors into the early stages of design and

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construction, Contractor has various and sometimes competing duties and obligations. In
particular the project is not an end in itself and it serves a greater business purpose. With
that purpose often comes business protocols and requirements, the most common of which
is to understand the process as design...bid…build. In factit is very common for client
owners to believe (and even insist) that the only way to get a competitive lookat the
marketplace is to use the above-mentioned design…bid… build process. Unfortunately,the
harsh lessons of history are often the best teacher as to how the so-called traditional
process can lead to unintended consequences, such as substantial budget overages after a
great deal of design resources and money have been expended.
On the other hand, client owners led by seasoned executives sometimes understand that
"Best value" may not be lowest costnor most likely to be discovered by traditional design..
Bid.. Build process.
These altogether common conditions in the marketplace make it incumbent on Contractor
to arrange a process with the client Owner well in advance of inviting subcontractors to
audition and to begin to devote resources to the project. It is indeed an unenviable business
position forContractor to be caught between it's client owner’s requirements and it's
prospective subcontractor’s expectation.
Thedesignprofessionalsandsubcontractors
As narrated in the first section of this paper, the advent of integrated services as a path to
value is a relatively recent event. During the 50 years whichended at the turn-of-the-
century (2000), all participants in project teams had been affectedby standards of practice
whichsought to deeply intertwine design and constructionservices. Owners, design
professionals, and builders were affected.
Various professional organizations have sought to define a “design-assist” standard of
practice in which builders and design professionals collaborate during the early project
stages to assure high-value cost-efficientoutcomes. The prospect of these collaborations
have raised many questions such as:
• Whois the designer of record?
• Where lies the design liability?
• How do professional standards of practice apply?
In respect to all of these questions, a large body of case law has defined liability and related
insurance matters. In general professional liability is tightly bound to whom-everis
overseeing the design work.Certifications cannot be bought and sold; "responsible charge”
is a fundamental obligation on design professionals. Thus contracts must be very clear as to
where responsible charge lies..
These legal requirements notwithstanding, and somewhat ironically, the duty of
responsible charge is often(in the opinion of this writer) best discharged by close
collaboration withbuilder resources to ensure that projectcan be soundly constructed to
industry standards.
In these collaborations, style counts. It is not unusual that the design professionals share the
head of the table and thus they share the gavel. In that case, the tone of the workgroupis set
by their leadership.

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(more to be added here)
Someconclusions
The LaMacchia Group is de factoperforming as a design-build Contractor. As such, it has a
wide range of duties both upstream (to it's client Owner) and downstream to
subcontractors. There is statistical evidence that liability claims are reduced when there is a
tight fitbetween design and construction.The ideas discussed in this paper describe one
dimension of that fit: the essential relationship between MEP subcontractors and contractor
during the early stages of the project planning.
(File name: PE ethics doc 062116)