The Foundation of the Wall and Ceiling Industry recently issued a pamphlet entitled, “Building Information Modeling-Understanding and Operating in a New Paradigm.” Page 13 of the pamphlet states, “a survey conducted by Construction Clients Forum 1997 showed that two-thirds of (building) owners report cost overruns.”
To repeat Kymmell, “Despite many recent developments in project delivery methods, owners are often still dissatisfied.” What are the different types of project delivery methods?
Design/Bid/Build with Construction Management
Design/Build/Operate and Maintain
Integrated Project Delivery
Each of these delivery methods has a format that is followed from start to finish. Well-educated and experienced people designed these delivery methods but overall owners are not happy. As Professor Kymmell says, “Despite many recent developments in project delivery methods owners are often still dissatisfied.”
Owners who develop real-estate and have buildings built are saying in a nutshell:
“My building takes too long to build.”
“My building cost’s too much.”
“My building does not meet my expectation.”
Owners are not saying that they don’t like the delivery method. But the bottom line is that the delivery method is not getting the building built faster, cheaper or better. I would think that the method of delivery has little to do with the owner’s overall satisfaction.
Faster, cheaper and better seems to be what owners want and the delivery methods so far have not solved that problem. Do we create a new delivery method? Will BIM get the buildings done faster, cheaper and better?
HEAVY WEIGHT BOUT
In this corner we have Mr. Owner weighing in at 450 pounds and in the other corner is Mr. GC weighing in at 300 pounds and in the third corner is Mr. Sub weighing in at 150 pounds and in the last of the four corners is Mr. Legal weighing in at 600 pounds.
There are four people in the ring when it comes to building a building: Owner, GC, and sub-all of who are under Mr. Legal’s contract terms and conditions. Because there is a lot of money involved in the construction business, the attorney’s automatically show up. Do we need them to the degree they are involved? How much money does the legal industry add to the cost of a building?
Are owners, GCs and subcontractors able to work together seamlessly and at a high level of trust? They are able, but do they, and if not, why not? How much does a low level of trust cost the owner? Does lots of money plus a low level of trust equal attorneys?
Is there any industry you can think where the parties involved are able to work together without lawyers being involved? Lawyers have done an excellent job of creating what I call a “perpetual economy.” Stay with me now, because what I’m about to explain is not only important, but it may also spark an idea that most of us have not been able to get our minds around.
Examples of a few perpetual economies are healthcare, oil, tobacco and law. To keep an industry perpetual means that it must continue to grow, generating more and more revenue, as well as jobs outside itself but related. If a pharmaceutical company created a vaccine that cured humans from cancer and heart disease, the impact to the healthcare industry would be staggering in terms of revenue. Cures would literally destroy the perpetual economy that now exists in the treatment of cancer and heart disease. The treatment rather than the cure keeps the industry a perpetual economy.
What would the impact be if Ford and GM started building cars and trucks that traveled 300 miles on one gallon of gasoline? The price of oil would drop drastically and many jobs in the oil industry would be lost. Oil exploration would stop and oil itself would become a standard commodity.
Construction is also a perpetual economy. Homes, commercial buildings, roads, bridges, hospitals, prisons, oil refineries, and unions are all part of this perpetual economy.
If you can’t create a perpetual economy, you can join one. Joining a perpetual economy like construction whether you’re a contractor, vendor, consultant, or lawyer is easy to do. The question is whether or not you want to join an economy that has failed to deliver what the client wants. (Kymmell says, “Despite many recent developments in project delivery methods, owners are often still dissatisfied with the results of the construction industry; projects still take too long and come in over budget, while the quality frequently is not up to the clients expectations.” Why? What’s missing?”
Contracts from owners and GCs are very complicated. Why? Because construction is a perpetual economy and lawyers are deeply entrenched in the construction industry. Lawyers have determined how owners, GCs, subcontractors, and other players such as vendors, bonding companies, and insurance companies, will operate in the construction industry.
Owners, GCs and subcontractors know that some rules are needed, however, the contract rules that exist today are absolutely adversarial. Adversarial contracts separate the players just enough to keep the lawyers in business. Teamwork, complete collaboration, and trust between owner, GC and subcontractor is not what it could be.
Yet, I understand that unfair, complicated, one-sided contracts do create legal problems, which by the way, generates more revenue for lawyers and the legal system. Let’s say that the legal system is laughing all the way to the bank, because they were able to create their own perpetual economy. You have to applaud the lawyers for creating an economy that didn’t cost them a dime, and the fact that it generates bazillions of dollars. In a sense, lawyers sort of climb on the backs of others without any risk and get rewarded for it whether they win or lose, while creating a perpetual economy for themselves.
TTC PROJECT DELIVERY
There are many problems to solve, but the experts tell us that, ‘‘Despite many recent developments in project delivery methods, owners are often still dissatisfied with the results of the construction industry; projects still take too long and come in over budget, while the quality frequently is not up to the clients expectations.”
Delivery methods must change because owners believe there are far too many cost overruns, slow delivery, and marginal quality resulting in unhappy owners.
Remember: Teamwork begins with a fair contract. W&C
This is the first of a two-part story.