Design/Build: A Manufacturer’s Challenge
Design/Build is not a new project delivery system and not to be confused with Design-Bid-Build.
by Jack Gardiner
Design/Build is not a new project delivery system and not to be confused with Design-Bid-Build. Design/Build has been used for centuries throughout the world, the products of which can be seen in ancient landmarks. In the early years of the United States, much of the public infrastructure was built using this method. However, without the proper technical expertise, the Design/Build fashion fizzled and Design/Bid/Build came into play, a method where a project’s design and construction were contracted separately. The Design/Build customer employs a single entity, known as the Design/Builder, to be contractually responsible for both aspects of the project and this is now an option available that is receiving favorable consideration in the market today, where permitted.
The challenge manufacturers face today, including their independent-representative sales force, is to have the contractor use the specified manufacturers’ equipment and price, low or not. Manufacturers have spent their entire professional careers in the industry trying to take equipment selection out of the hands of the contractors and into the control of the owners and their consultants.
Why? Because in an open-bid scenario, the contractor wants to be the winner. He is forced to make his equipment decision based dominantly on price, not quality or performance. Selection of high-quality equipment, capable of delivering maximum-operating performance with low life-cycle cost, can only be achieved with the support of the owner and his consulting engineer. Over the years, manufacturers and their representatives have strived to educate and nurture relationships with astute owners and courageous field-tested engineers, who know how to evaluate and select equipment capable of achieving these long-term goals. These manufacturing and industry professionals know how to write specifications and prepare bid forms which insure the municipality will get the equipment and treatment processes required to meet discharge guidelines today and in the future.
“It’s unwise to pay too much but it’s worse to pay too little. When you pay too much, you lose a little money – that is all. When you pay too little, you sometimes lose everything, because the thing you bought was incapable of doing the thing it was bought to do. The common law of business balance prohibits paying a little and getting a lot – it can’t be done. If you deal with the lowest bidder, it is well to add something for the risk you run. And if you do that, you will have enough to pay for something better.”
1819 - 1900
Today, in our marketplace, Design/Build has become a favored option for municipalities who want to maximize their return on investment (ROI). The people manufacturers deal with are seldom the mayors, city managers and city council members, but rather their trusted staff members, such as the public works department and local consultants. The Design/Build teams have focused their sales efforts on the non-technical mayors, city managers and council members. The temptation of “less money” and “faster execution” is often irresistible. Once the ruling politicians have been lured and trapped, the city staff and local consultants are either pushed aside or go into a self-preservation mode, struggling to find a seat on the bus.
Theoretically, manufacturers can lobby for restrictions and guidelines in the process which predetermines major-equipment selection. The environment in which this process occurs is somewhat better for the manufacturers, but nothing like the control on bid day of a base-bid supplier.
The pros and cons of Design/Build project executions are debatable. Too often, the positive stories, not the negative ones, are told. Many of these optimistic stories are taken out of context and conveyed by the Design/Build team or a stakeholder. The debate is endless, site specific and subjective.
When a project goes Design/Build, it can be difficult to “align” with various out-of-town teams of experts who demonstrate how they plan to execute the project. Design/Build can be a viable alternative if the owner retains his control of major-process equipment selection. Design/Build is a delicate subject across America, being legalized on a state-by-state basis. Some states have not legalized it, and others prefer to remain on the fence about it, making it legal but with numerous statutes and regulations.
To maximize a municipality’s ROI, manufacturers must focus their efforts upon educating owners at the highest level. It is the manufacturer’s duty to explain the risks associated with ceding control of their project and their money to an entity that consistently makes choices based on maximizing their profits. John Ruskin once said,
“There is hardly anything in the world that some man cannot make a little worse and sell a little cheaper, and the people who consider price are this man’s lawful prey.”
About the author:
Jack Gardiner is Vice President of Business Development & Sales at Headworks® Inc., a Houston-based manufacturer of water and wastewater screening systems. The views expressed in this column do not necessarily reflect the opinions of WWEMA.