Keith R. Molenaar & Robert M. Leicht | Issue 2 of 2015
While, historically, many of our public buildings in the United States have been designed by an architect and built by the lowest bidding general contractor, the trends of the last 50 years have seen a steady increase in the use of integrated design and construction delivery methods. The private sector has also seen an increase in design and construction integration over this period to the point where some private sector owners are involving the primary construction team members at project concept, jointly developing a target price and signing waivers of liability to ensure a non-litigious project environment.
Given the fact that you are reading DBIA Integration Quarterly, you are likely interested in how team integration, such as that inherent in design-build project delivery, influences project performance. You may have a gut feeling, or specific project experience, telling you that integrated delivery results in better performance. However, there is no substitute for empirical evidence about which project delivery strategies provide a higher probability of project success. As academic researchers working in the area of design and construction, we have devoted much of our careers trying to understand how project delivery methods impact project performance, seeking to increase an owners’ chances of success on any given project. We have recently completed a two-year study, sponsored by the Charles Pankow Foundation and the Construction Industry Institute, to answer these very questions, ultimately developing an Owner’s Guide for Maximizing Success on Integrated Projects.
Our research builds upon the seminal 1997 study supported by the Construction Industry Institute on Project Delivery Systems (Research Summary 133). That study provided empirical evidence that demonstrated better cost and schedule performance with design-build delivery, as compared to construction manager at risk and design-bid-build. Evidence from this study was cited in the changing of state and federal procurement practices as well as parallel adoption in private sector processes. Since that time, however, there have been few substantial studies on project delivery performance. In addition, the industry has seen a blurring of the lines across delivery methods as owners seek to improve design and construction performance. There have also been broader changes in our industry, from the ascent of lean construction to drastic technology changes, such as building information modeling.
Our present study provides empirical evidence defining how integration impacts success. We collected comprehensive data from more than 200 projects that were constructed between 2008 and 2014, of which 62 percent were publicly funded and 38 percent were privately funded. Facilities included commercial space, lodging, office, correctional facilities, education, manufacturing, sports/recreation and healthcare. Projects ranged in size from 5,000 square feet to over 1-million, although approximately 60 percent were less than 200,000 square feet. The unit cost of projects ranged from $50 per square foot to over $1,200, with 55 percent reporting less than $400 per square foot.
As you likely know, the choice to use design-build as the delivery method alone does not guarantee success – there are many factors for design-build to be done right. Our research took this one step further by empirically showing that delivery methods (design-bid-build, construction manager at risk, design-build and IPD) are only part of the equation for project success. Through a latent class analysis and structural equation modeling we determined that an owner’s ability to enable integrated teams and foster a cohesive environment are the best predictors of success. Projects in our pool with more integrated teams had less schedule growth (4.4 percent less by project duration). Similarly, projects with more cohesive environments had less cost growth (2.3 percent of budget) and higher-rated quality and turnover experience by the owners.
Integrated teams and development of a cohesive environment are the key factors for delivering success. We found that project owners can influence these factors through their project delivery decisions. By viewing the decisions as strategies across the organizational structure, team assembly and contract payment terms, five distinct classes were identified that could be tied to team integration and cohesive environment. These five classes were statistically significant in terms of predicting project success, and will be described fully in the soon-to-be-released Owners Guide. In summary, three critical elements emerged for enabling more effective integration and cohesion. Developing a team able to deliver the desired project results was best enabled through: early involvement of the core team, qualification driven selection of team members, and cost transparency in accounting.
Early involvement: Early involvement – not only of the builder, but of critical design-build or design-assist specialty contractors as participants in the design process – is an essential element to delivery of integrated project requirements. Engagement in the process was critical before the development of the schematic design to garner the full value from this approach. Early involvement is necessary to enable their participation in key collaborative processes, such as the development of project goals, participation in design charrettes, and the development of a building information model execution plan.
Qualification driven selection: To enable the early and high quality interactions to take place amongst project team members, the means of assembling the team by engaging the builder and specialty trades for the project is essential. Projects with the most cohesive teams relied primarily on qualification-based submissions and interview processes to assess the quality of the team members. The shift away from selection based on the cost of the construction scope, toward the qualifications and team chemistry of potential collaborators, is an essential first step to breaking down the barriers to developing an effective team.
Cost transparency: The use of open book accounting processes during the design proved critical in the development of trust amongst the project team. While most common in the builder’s contract, the most effective projects in this study often extended this transparency to the core team of specialty trades. Contracts which bring the team together with shared risk and reward (through incentives or shared responsibilities) were most common in the delivery of successful projects, likely due to the ease of aligning goals and responsibilities.
In the end, owners must develop integrated and cohesive teams like those inherent, for example, in design-build project delivery. Our guide provides a logical process for developing a project delivery strategy that will improve owners chances of success based upon the projects in our database. Owners can influence the levels of team integration and group cohesion on their projects by selecting an appropriate delivery strategy that considers each of the following decision points:
- Project Organization Decisions
– Design responsibility – single vs. multiple contracts for design and construction
– Timing of involvement – when to contract the builder and specialty contractors
- Payment Terms Decisions
– Cost transparency – open book vs. closed book accounting for the builder and trades
– Risk for design and construction unknowns – shared vs. split management of contingency and incentives
- Team Assembly Decisions
-Selection criteria – qualifications based selection vs. cost of construction
-Selection process – shortlist vs. open procurement
-Prior experience with owner – previous vs. first-time working relationship
-Interview process – use of builder and trade interviews prior to selection
While each project is unique and many internal and external uncertainties influence project outcomes, consideration of these decision points —organization, payment terms, and team assembly—will increase an owner’s likelihood of success.
As with all Charles Pankow Foundation research projects, the Owner’s Guide for Project Success on Integrated Projects will be freely available. To get the most up-to-date guide, resources and news about the research project, please visit the project website at: http://bim.psu.edu/delivery
About the Authors
Keith R. Molenaar is the K. Stanton Lewis Professor of Construction Engineering and Management at the University of Colorado – Boulder. His teaching focuses on risk and decision analysis, cost engineering and project controls. His research focuses on risk analysis and alternative project delivery methods. Dr. Molenaar has published more than 175 journal articles, technical reports and conference proceedings. He has also performed cost and risk analysis for projects including the U.S. ITER fusion energy project, the San Francisco-Oakland Bay Bridge and the Panama Canal Expansion. Dr. Molenaar holds a Bachelor of Science degree in Architectural Engineering and Masters of Science and Doctoral (PhD) degrees in Civil Engineering from the University of Colorado – Boulder.
Robert M. Leicht is an assistant professor in the Department of Architectural Engineering at the Pennsylvania State University. He is the Director of the Partnership for Achieving Construction Excellence (PACE) at Penn State. Before returning to Penn State, Robert served as the Virtual Building Operations Manager for DPR Construction’s East Coast offices. In this role Robert dedicated much of his time to the process of integrating design, construction and owner’s efforts using BIM Platforms. Dr. Leicht holds a Bachelor of Science, Masters of Science and Doctoral (PhD) degrees in Architectural Engineering from the Pennsylvania State University.