The Q4-2023 Newsletter from ATLAS consultants llc
An update...
In June of 2023 I fully retired from Turner Construction Co. after thirty-four years in the Chicago Business Unit (you may have the noticed the uncharacteristic change in position and company on my LinkedIn
page). While I have largely taken the summer off to enjoy time with my family, fly-fish and generally decompress after a full-time run of 40+ years, I have been "free-lancing" under the ATLAS banner.
I founded ATLAS to provide clients with seasoned guidance in the planning and and execution of building projects. My proven industry knowledge and experience will support your goals and enhance your decision-making confidence during both the preconstruction and construction phases. If you're interested in connecting, the best way to reach me is through my email, gmulac@atlasguidance.com. or through the website, www.atlasguidance.com.
In addition to the newsletter, ATLAS consultants llc can be found on LinkedIn. Please visit the website and subscribe to the Think... quarterly newsletter
This is the first quarterly ATLAS newsletter, building upon the Think... page of the website. The use of the word think for the page title was very deliberate. In my experience, having the time for critical thinking is always challenged by a myriad of competing demands. Without time to really think, and truly understand an issue, we tend to go directly to default positions. While these default reactions are typically based on experience, or an experience, they may not be "wrong", but potentially could cause us to miss out on opportunities to realize greater benefits. I touched on this in a brief blog that was posted in February of this year("Seasoned, Learning from Lessons Lived"). So the idea with the newsletter, is to look at a topic from different perspectives, provide some thoughts, observations and opinions, and hopefully get us to (wait for it...) Think . The topic of this inaugural newsletter is Delegated Design.
Delegated Design
I came across a white paper by the American Institute of Architects (AIA) and the American Institute of Steel Construction (AISC) titled "Collaboration on Construction Projects, Part 1: Delegated Design, Design Assist, and Informal Involvement - what does it all mean?" I encourage everyone to read the paper, as I believe it provides some valuable insight into the differences of these approaches. Here is the link https://zdassets.aiacontracts.org/ctrzdweb02/zdpdfs/design-collaboration-paper_aia-aisc_081320.pdf
In the Chicago metropolitan area, we are all familiar with Curtainwall, Fire Protection Systems and Earth Retention Systems (ERS) / Support of Excavation (SOE) being specified as Delegated Design. These components are delegated to the contractor to:
a.) allow the incorporation of proprietary materials / systems;
b.) respond to specific municipal requirements; and
c.) support the contractor's means & methods ;
With the right delegated design, the project benefits from the contractors being able to propose / bid based on their preferred systems and methodology.
For the purpose of the newsletter, I will lean in a bit on Delegated Design. What is the trend in Delegated Design, are more systems being directed that way? Does "atypical" Delegated Design limit competition or participants? Where does the A/EOR stop and the delegant begin? Where are the fees? What are the legal implications?
What is the trend in Delegated Design? I've been surprised by the requirement for engineered shop drawings on relatively simple cold-formed steel framing project and the general increase in building components whose design was not historically delegated. While once limited to the examples above, structural steel connection design and perhaps utilitarian stair design, the amount of design being delegated to the contractor is ever-increasing. You have to ask why. There are a number of reasons, from the perspective of the Owner, the A/E of Record, the Contractor. We'll use the term Contractor for the CM / GC of the project and the trade partner or subcontractor.
From the Owner's perspective, the following benefits:
Predictable Outcomes: By engaging specialty contractors in the design, the outcomes measured in first cost, schedule and operating costs become more certain, reducing the potential for cost and schedule overruns.
Project Timeline: The overall project timeline (read here, design and construction) results in better speed to market for the project.
From the A/EOR's perspective, the following benefits:
Costs of Services: The design firm's desire to keep costs of their services down in an always competitive market. Those design services, or a part of them, is shifted to the Contractor, or delegant.
Limitations: Recognition by the design firm that the installing contractors may be design experts in certain instances, for certain components.
From the Contractor's perspective, the following benefits:
Value: The selection of the contractor will become more of a "best-value" discussion in lieu of the purely low-number selection.
Control: Greater control of their scope of work in terms of schedule and cost.
Now let's take these perspectives and identify some considerations to the delivery of the project. Let's break down the project delivery process into a few components. The Owner's Procurement Plan for Architectural and Engineering Services; Selection of the Contract Type; Procurement of CM Services (or GCs bidding the project); Bidding; Awarding; Building; and Occupying / Operating.
Architectural and Engineering Services:
If a greater than traditional level (traditional = ERS, Fire Protection, Curtainwall, structural connection design) of Delegated Design is being contemplated to address certain features of a project, how, or is, this defined in the professional services proposal, and (later) how will that requirement (of the subcontractor's professional design services required by the design being delegated to them) be accommodated in budgeting/estimating the project? The cost of professional services will be borne, or perhaps even duplicated in the subcontractor's price/bid. How "performance-based" or "prescriptive" will the A/EOR be for that work? Here's where all the words get fuzzy....Delegated-Design, Design-Assist, Design-Build, Designer of Record....you can feel the storm brewing.
Recommendation: Know what you are buying. To achieve the value of an expanded level of Delegated Design on a project, it would be prudent in having these open discussions with the potential designers in your procurement process. Have an objective look at the way the Delegated Design is specified (not just the AE's contract) and seek clarity on the roles and responsibilities of the A/EOR and the delegant. While the specifications come later than the contract, if the A/EOR has done it before, there will be examples. The operative word here is clarity.
Recommendation: Coordination counts. Develop both your design contract with the A/EOR, and your contract with the Builder concurrently. Generally speaking, the design contract with the A/EOR is executed before the Builder's contract. This typically creates the potential for un-coordinated language in general, and in the case of Delegated Design, confusion about roles and responsibilities between the A/EOR and the delegant, which likely leads into problems for the project and unexpected cost to the Owner.
The Owner's Selection of the Contract type:
I won't go into the virtues of different contract types here, but the expansion of Delegated Design begins to render the traditional "design - bid - build" delivery counter-productive to achieving the benefits (predictable outcomes, speed to market) sought by delegating design to the experts.
Recommendation: Determine what is right for your project. As I said, I won't compare options in contract type, but there are a number of collaborative delivery systems that are value-based ranging from the tried and true Construction Manager as Constructor / GMP (CMAC) though Integrated Project Delivery (IPD). Seek input from AE's, Builders, and major Trade Partners, and spend time determining what level of Delegated Design is appropriate for your project, schedule and budget.
Procurement of Construction Manager Services:
While the procurement of CM services doesn't really change, it is an opportunity to dig a little deeper into the world of Delegated Design, much like my comments regarding architectural services.
Recommendation: Know your market. In preparing your RFP, you may want to solicit input on what the subcontractor market depth, and value-driven players, might be for the anticipated Delegated Design packages in the project locale. This would accomplish a few things. First, it would demonstrate each CM's knowledge of the market place, and secondly, it may inform you on the value of proceeding/or not proceeding with certain scopes of work as Delegated Design if the market cannot support it.
Bidding / Awarding:
Just like the contractor that bids a Delegated Design Component of the project, the Owner (or perhaps CM) needs to fully understand how to evaluate the bids.
Recommendation: Don't be lazy. Just like any scope letter to a bidder for any building component, the scope letter for a Delegated Design component needs to be clear and complete....and then some. Remember that you are buying some level of design services, dependent on how prescriptive, or performance driven the specifications are written. What should you be asking bidders? Are they designing, or are they hiring outside firms? What is the "design schedule?" What level of completeness are the A/EOR's Construction Documents at when you buy this component?
Building:
Probably one of the biggest post-award challenges with delegated-design is the approval process with the A/EOR.
Recommendation: Delegate, but define. Building on the "know what you are buying" recommendation above, the approval process has to be clearly laid out for the bidders in the specifications along with the performance criteria and / or prescriptive items. Fight the "gotcha" clauses in the specification. Clauses like "in the architect's sole discretion." In this case, the A/EOR is supposed to have delegated the design, the "gotchas" do not support the delegation. It needs to meet the specifications. Having the gotchas or vagaries in the specification only cost the Project...more specifically they cost the Owner, because the "gotchas" get built into the bids.
Occupying / Operating:
Even though this is the last phase of a project, it should be thought of first. I'm fond of the statement "plan with the end in mind" because in fact the end is synonymous with achieving your goals for the project, right? From a high altitude, here are some questions that have an impact on just about everything you are doing in the beginning of your planning. What is your anticipated ownership horizon? Are you selling shortly after completion, or are you operating the building for 20 years? What is your occupancy plan? Is it phased? Do you need early access for equipment installations?
Recommendation: Know your end-game. Your project goals, ownership horizon, occupancy and operating plan have to be kept in the forefront of your thinking. Is it first-cost, or is it total cost of ownership? Do I need flexibility to accommodate phased occupancy? All of these goals impact decisions to proceed as delegated design, or not. Don't miss an opportunity to benefit the project with delegated design.
Perspectives:
In April of this year I posted a blog on feedback and perspectives. While not on the topic of delegated design, it underscores the the value in soliciting, and actually listening to, the viewpoints of others. For this newsletter I asked Charlie Young, RA and Greg Eichorn, Esq. for their thoughts on Delegated Design.
Charlie Young, RA:
As an architect, we look at Delegated Design as a complementary tool for the design of systems. The manufacturers are experts at their trade, however each has their own approach to the solution. Delegated Design gives a manufacturer a comfort level to utilize their internally designed systems which manifests itself positively in competitive bidding. Every manufacturer has their own preference and approach to anchorage as an example so, that from our viewpoint it makes no sense for an AE to micro-design a system beyond the criteria provisions for performance. AE’s shouldn’t be taking on liability for designing specialty components that are highly variable due to differing manufacturer’s needs, field conditions and the need for adaptability and fabrication alterations quickly. Delegated Design makes inherent sense to speed up the response to field conditions.
The overall success of Delegated Design eventually comes down to the balance of cost for the systems and design efforts. The goal is to make this process simple, focused and targeted so that the Owner, AE and the manufacturer all succeed at a reasonable cost. Duplicity of effort should be minimized. The A/EOR must provide proper criteria guidance in the Construction Documents for this to be successful. Constraints such as materials, finishes, size, load points or durability expectations should be addressed so the parameters are clear to bidders. Specifications should be written specifically to permit the manufacturer the ability to design the complete system without being encumbered by unreasonable controls.
AE’s need to understand their role in this process and accept the limitations and parameters. Not all do. We desire to control the aesthetics and profiles for the relationships to adjacent materials. Beyond that the performance criteria is important but not a lot more. By accepting this process the value to our client comes into play. Reviewing submittals need to take this into account and not micromanaging the reviews unless there appear to be performance or configuration concerns. The more that the system is altered during the submittal process the more impact to the schedule, QC and communication happens.
Greg Eichorn, Esq.
As a construction lawyer, my first concern is always whether the language contained in the Contract Documents is clear when dealing with Delegated Design as well as Design Assist. To put it simply, who has the risk and is the risk clearly defined. For Delegated Design, the primary risk is defining the limitations of responsibility that have been delegated to a 3rd party designer/builder.
Typically, the Delegated Design scope of work is required to meet a certain set of performance criteria. The first thing to look for is whether the performance criteria is complete and contains all the necessary parameters required to complete the design for the applicable work. If the performance criteria are lacking completeness, it may require, and/or open up the Delegated Designer to additional, unintended design duties (i.e., Delegated Design of a mechanical system where the R-value is not included in the performance criteria – is the Delegated Designer now responsible to determine the R-value of the exterior skin of the building?)
Another issue is found where certain prescriptive requirements of Delegated Design specifications conflict with performance criteria. One common example of this is where there is a wind-load performance criteria coupled with prescriptive requirements for the materials to be used (i.e., certain glass thickness and certain type of aluminum mullions). This situation potentially allows the overall designer of record to get a second chance of choosing a design, albeit after the Contractor has already entered into a contract based upon the Contractor's anticipated design.
As pointed out by Greg Mulac above, another risk involves conflicts between the Owner/Contractor contract language that was negotiated for the Delegated Design work and the standardized specification provided by the Project designer. This problem is also pervasive in Design Assist scenarios. The simplest fix for this type of situation may be to set forth an order of precedence in the contract that establishes the contract taking precedent over anything contained in the drawings and specification. Keep in mind that this fix may not address the other two issues identified above.
The last major issue involving these type of design responsibility transfers is the need to have properly licensed professionals with adequate insurance completing the applicable work. This should be discussed and confirmed before entering into any contract.
It's been said that there are three types of unintended consequences for an action or decision: A positive, unexpected good effect (known as Good Luck); A negative, unexpected bad effect (known as Bad Luck); and a perverse, unforeseen effect which is opposite to what was intended (known as WTF !). Here are some additional considerations:
Look at Delegated Design through the prisms of each of your project goals. Does delegating the design of this project component support the project goals? (Cost, Schedule, Quality, Safety, Community)
Do you know your market? Does having more than the traditional amount of Delegated Design components limit subcontractor participation?, and in turn drive pricing up?
Are the roles of A/EOR and the delegant clear? Is the project benefitting from Delegated Design of this component, or is it so prescriptive, is it simply a design-fee duplication and a design-risk shift?
Does the arrangement create an environment where design responsibilities are not clear? Can the delegant rely on the information provided by the A/EOR?, who owns what design?, is an approval process defined in the bidding / pricing documents?. An answer like "we'll figure that out later" should make you cringe.
In closing, just Think...take the time up front to define how you will approach Delegated Design on your project. Please feel free to reach out if you would like to discuss this topic.
Regards,
Greg Mulac
Principal
ATLAS consultants llc
Coming next time.....Quality
One of the things I enjoy in the design and construction industry is seeing what I call certain "irrefutable truths" re-stated over time in different words and / or expanded into more developed practices. How many times has anyone heard the words "effective communication," or "alignment," or "value?" The "buzzwords," or "hashtags" may change, but they still are my irrefutable truths. While we hear these words a lot, project teams need to get into what they really mean.
In the building design and construction industry, it is noteworthy that the application of Total Quality Management (TQM) and Six Sigma practices from the 1970's & '80's; and today's Lean Management share the following key principles:
Customer Focus (identify value from the customer's perspective).
Continuous Improvement: Process Flow (create flow, process approach, setting up a pull system, Turner's plan-do-check-adjust, PDCA).
Eliminate Waste (efficiency, measure, adjust)
Goals (define the conditions of satisfaction, team alignment, KPI's)
Engagement (involve people, accountability, support)
And for me, the most important two, genuine leadership and communication. In our next newsletter, I'll share some thoughts on Quality.
Current work
Building on a relationship that started during the preconstruction phase of the Obama Presidential Center, Jim Durham / Quarra Stone Company has engaged ATLAS in the development and ongoing refinement of a Design-Assist System of Play for Fine Art Installations in Stone. The challenge was to develop a way that the fluidity of the artistic process could be guided, or dare I say managed, with the ever-present realities of cost, scope and schedule. How does the process remain fluid and have an approach that balances the financial risks of all stakeholders? How do you impose this light hand of accountability (cost, scope, schedule) without cramping the artist's creativity? What are key decision points in design, procurement and fabrication? Simply put, the objectives of this System of Play are the collective objectives of the stakeholders; the Client, the Artist and the Fabricator/Installer.
The second area of engagement with Quarra Stone Co. has been on the project level, working with the Quarra team, the Artist and the Client in the development, and fabrication of a significant Fine Art installation in Stone. The project's Non-Disclosure Agreement does not allow me to share any details at this time.
Thank you!
Jim Durham and the Quarra team for providing me the access and insight to your business and your creative process, and the opportunity to provide some seasoned guidance along the way.
Please visit www.quarrastone.com to see some of the fine art installations executed by Quarra Stone Co..
Charlie Young for your permission to use your wonderful photographs of the Modern Wing of The Art Institute of Chicago on the ATLAS website. Please visit the link below to see more of Charlie's photos of the Modern Wing. www.flickr.com/photos/7586224@N02/albums/72157600205701018
Many thanks to Charlie Young & Greg Eichorn for providing your perspectives on Delegated Design in this inaugural newsletter for ATLAS consultants llc.
Charles G. Young, RA
Interactive Design Architects
A founding partner of IDEA, Charlie’s breadth of experience and depth of technical skill provide a solid foundation for all projects. His commitment to craft and design excellence are recognized by clients, peers and the media, his work featured in national and international exhibitions and his participation frequently requested for architectural juries and award panels. Charlie is an avid photographer whose architectural images and other works have been seen in digital and print publications including the New York Post, Fodors, The Chicago Tribune, The Wall Street Journal, Wallpaper, Time Magazine, Arcspace and Reuters.
Gregory A. Eichorn, Esq.
Peckar & Abramson, P.C.
Gregory A. Eichorn serves as a partner at the firm’s Chicago office. His primary area of practice is construction law. This includes representing general contractors, construction managers, owners/ developers, subcontractors and other construction professionals. Greg has extensive experience in negotiating complex construction contracts for sports stadia, office buildings, hospitals, residential high-rises, airports, roads, rail, infrastructure, specialty construction, renovations, and all levels of public and private schools and universities.
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