Brian Perlberg, Esq.
Executive Director & Senior Counsel, ConsensusDocs
The biggest change in the construction industry in recent history is the continued evolution of general contractors into building professionals. Historically, general contractors have been treated as a fox in the henhouse. Consequently, barriers were purposefully created to protect owners of buildings away from the big bad builder.
The new role of contractors
Today, however, general contractors are demonstrating that their early involvement, from design development and integration through operations and maintenance, yields better results in our nation’s complex infrastructure. Rather than contractually mandate silos, creating an environment integrating the best builders to communicate and truly collaborate with the design teams and building owners has been proven to be the best chance for success. The pace of change in construction is accelerating, with a majority in the industry predicting more change in the industry in the next five years than in the last 50.
Increasingly, general contractors are utilized as master builders and seen as construction professionals. Rather than labeled as contractors that sign contracts, builders are increasingly referred to as constructors. More than 90 percent of constructors report that the design documents are less complete than in years past. Consequently, constructors help fill the gap with their expertise to help develop better quality design documents that give owners more organized information.
Rather than dictating detailed plans and specifications that are developed to as close to 100 percent as possible (and then often re-designed because they are not constructible), constructors and others in construction trades often form teams to collaborate as soon as possible to add value throughout the process.
An innovative new process called design-assist has emerged as a new practice to select constructors and trades earlier in the process on a combination of qualifications and price. Construction trades, who operate on very low margins, may now get selected and compensated for providing value-adding “pre-con” services, rather than “free-con” in hopes of getting work later.
Getting builders involved earlier helps break the wheel of inefficiency of design, estimate, bid, and re-design. Price and schedule are now explicit elements of design. Direct communications between the build, design, and owner teams are no longer prohibited, but encouraged. And while over a quarter of teams use design-assist, more than 40 percent of builders report using design-build, where the build and design teams are either integrated into one entity or team together contractually for a project.
Moreover, governments and owners are considering public-private partnerships (P3), which can take design-build to the next level by adding operations, maintenance, and financing. This empowers teams to look at holistic lifecycle cost rather than just first-cost. Design and material selection are typically considered over a 30-year period.
Lean construction processes and tools are also transforming the industry, and over 40 percent of surveyed builders report utilizing lean construction principles to some extent. Lean improves efficiency by driving waste out of the system and seeks adherence to always getting better by learning and improving in all activities.
While lean was first introduced along with the integrated project delivery method (IPD), it is becoming increasingly common to see lean incorporated in IPD-lite contracts, as exemplified by the ConsensusDocs 305, the first industry standard IPD-lite contract. While lean often starts in the design development phase, it extends to preconstruction and construction phases. No longer is value-engineering just a means to use cheaper materials and cut corners, but rather a mechanism to deduct to add value to the owner with proposals targeted to create savings of time or money, or to increase quality or constructability.
Last but not least is a capital infusion in construction that is predicted to cause disruption and force closer integration. The availability and utility of construction technologies has passed a tipping point. Close to 90 percent of surveyed companies plan to keep or increase their investment in many technologies, according to a recent AGC/Sage Outlook study.
Construction Silicon Valley-based firm Katerra has been aggressively expanding and has an estimated market valuation approaching $4 billion. Katerra is extend the integration of the construction supply chain to provide architecture, interior design, engineering, materials, CM, and general contracting services under one ownership roof. Its vision is to increase investments in new technology to improve technology.
With workforce shortages already the industry’s top concern and growing, attracting a younger and more technologically savvy worker that produces more output may be the industry’s best hope. In my estimation, the near and long-term future in construction looks like it is moving onwards and upwards.