The Key to More Efficient Construction Projects is Collaborative Contracts
Business Solutions According to the United States Bureau of Labor Statistics, the architecture, engineering and construction (AEC) industry is the only industry that has become less efficient and productive since 1964.
Albert Einstein said that doing the same thing repeatedly and expecting different results is the very definition of insanity. The way we traditionally contract, design and interact in the AEC industry fits this definition.
The AEC industry is one of the most important drivers of current and future success of the U.S. economy. It’s a homegrown industry and probably still the best way for someone to start their own business. Construction jobs have a great home field advantage to create the infrastructure foundation we need for future success. But, if we don’t get out of the old ways of doing things we will lose a golden opportunity.
The AEC industry is fragmented and slow moving. The legal industry, which drives the structural relationships in construction contracts, is even slower to change. The combination has us stuck in the morass of contractual silos that create confrontation. Some wear this as a badge of honor. They follow a similar pathway that has been around for over a hundred years and have a mountain of case law dissecting the corpses of dead projects gone wrong interpreting this approach. A siloed approach is done in the name of protecting one party over another. But the studies demonstrate that this leads to busted schedules and costly overruns, followed by claims and litigation. Success in today’s world requires communication and collaboration; fortunately, things are changing. However, they’re changing too slowly.
A better foundation to build requires three things: trust, collaboration and innovation.
Fueled by a combination of frustration with current results, a desire to improve and a technological revolution, the industry is trying new things. The most expensive and complicated construction per square foot, the hospital market, has been a market leader for change. The change comes from searching for a better way of doing things. And that better way is through collaborating… really collaborating.
Improving the foundation
A better foundation to build requires three things: trust, collaboration and innovation. If you don’t have trust, you don’t have anything. To build trust you need to be understood and act in accordance to what you’ve agreed to in letter and spirit. You can’t say “general contractor” without saying “contract.” The words that bind you matter, so use them wisely. Good legal writing is simply good writing. Don’t try to address all contingencies up front, you are more likely to muddy the water. Vague and broad responsibilities that place all the risk on parties that are not able to control or mitigate the risk is the antithesis to trust. Ambiguities will naturally arise. Don’t hide in your turtle shell when they do. Communicate constructively and avoid the blame game.
The common thread of failed projects is a lack of communication. Parties in a construction project often meet as strangers and leave as enemies. That’s not a recipe for repeat business. Traditionally, contract structures funnel all information and most decisions to the architect. A better approach is to encourage parties to communicate directly and positively. Empowering people in-field who are most familiar with the information can be transformational. Creating a communication structure in which parties must talk to one another about timely issues before claims become intractable leads to less litigation. Early involvement by builders incorporates a practical constructability analysis that enhances overall project value. A race to the bottom to slash an impractical budget that becomes bloated with what might be labeling value-engineering (but is anything but) should be avoided.
The key is innovation
Innovation is what is really driving a great opportunity to change. There has never been a time when there was a greater incentive to build more efficiently. Execution is so much better, safer and more valuable to the end-user when you maximize the impact of technology. To deploy these technology tools, it is necessary to build better teams early. Treat a project as an opportunity to learn and gain efficiency each step of the way, rather than to simply avoid the blame game. Then, and only then, can you yield the most out of the today’s wave of incredibly powerful and time-saving construction technology devices. Today, the technology has arrived, is proven and is very powerful.
To build a better way, you must try something new. Structure your next project to truly collaborate by building trust, encourage the flow of timely information and embracing the maximum power of technology. Don’t just pull out the same contract from the drawer and sign it without thought. Use the contract as opportunity to memorialize a business relationship that gets better results.