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WMF Builds…INSIGHTS #3   |   Transparent and Open

by D. Richard Fox, AIA

It’s YOUR money. Whether it is design fees or construction costs, your team of professionals should treat your money like it was their own. You should know how every dollar is applied on your project and
you should be guided to spend it wisely.

Back in the days of the “Master Builder,” I suspect that the sponsors of various projects had fairly direct control over the spending on any project because they delivered bags full of coins to pay the labor and material costs as the project progressed. I can’t help but wonder if there were such things as Construction Estimates or Guaranteed
Maximum Costs, or if there was simply a periodic shouting match concerning how much was being spent by the Master Builder (or perhaps the occasional beheading).

In any case, the processes that have evolved in “modern” project delivery systems have pulled the Architect and the Owner increasingly further away from the nasty business of paying for specific components of their project. Instead, they have introduced multiple layers of overhead, mark-ups, contingencies, insurance premiums, surety premiums, and on and on. Most of this is done in the spirit of passing off the liability for the risks associated with complex projects, but all of that insulation comes at a cost which represents little actual construction value.

One of the most difficult aspects of any of the various alternate delivery systems is in defining “the cost of the work.” Does it include fixed overhead, variable overhead, allowances for benefit time, tool allowances? Then there are all of the suppliers and subcontractors “cost factoring.”

 

Wouldn’t it be nice if “cost” was simply the cost? And wouldn’t it be nice if that was the methodology that was reflected in the estimating so that value engineering could be understandable? While it is likely impossible to strip all of the levels of business organization away from contemporary construction business, it is surprisingly easy to significantly simplify it.

Design and construction should be viewed as a professional service. Team firms should get paid for their time and effort and everything else is cost. Really. Cost. Some significant material purchases are done directly by purchase order (after competitive bidding) and typically sub-trades are employed directly. Yes it is more coordination and more accounting, but the pay-off with the transparent open-book culture is that clients know the true cost of decisions. The Owner and Design team have direct connection to trade contractors doing the work (more
on that benefit in a subsequent “Insight”).

Every dollar saved is a dollar that clients can re-program back into project betterments or simply not spend. Your team should have no financial interest in how much is spent, other than the insatiable desire to make every project the best project that it can be.

For more information please see “The Guild Master” white paper

For More Information on Integrated Project Delivery Please Contact
Dick Fox  |  814.490.6096  |  dfox@wmf-inc.com
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