Change—it is all around us and accelerating every day. You need look no further than your front door to encounter the phenomenon. Remember that last home computer you bought? By the time you got it home, hooked up the cables, and loaded the software, two things had happened...the technology was out of date and the price had dropped. Project delivery is not exempt from these shifts, and, like all change, it is a two-sided coin. On one side is risk—new, changed, emerging and more of it. On the other side is opportunity—new, changed, emerging and more of it. And the trend is the same all over the world. Transformations affecting project delivery today are: • Increased project size and complexity. • Shortened periods of “competitive advantage.” • Transition of project responsibilities from the public to the private sectors. • “Impatient” project equity (looking to make a return and quickly exit). • Low risk profile of project debt. Each impact increases the risks that must be managed by those responsible for project delivery. For “risk managers” Design/Build provides an effective tool for handling the associated development gamble. Let’s look briefly at each of these changes and how Design/Build provides an effective risk management tool. Dealing with Change—Managing Risk Project size and complexity are expanding with each passing day. Around the globe, we have contributed to Design/Build teams on a wide range of projects—a billion dollar transit system on the west shore of the Hudson River, a pacemaker assembly facility in southern China, an underground gas storage facility in the eastern US, or a floating bridge in Hawaii. Each, however, has one attribute in common—a high degree of complexity. Financial, regulatory, and constructibility are all issues not previously faced in the risk framework which we are experiencing today. Increasingly, the skills to manage the myriad interfaces among designers, contractors, and suppliers are not resident in the project developer. Rather, similar risks such as those involved in the design and construction process are bundled, and risk management or actual risks “assigned” to parties other than the developer. Design/Build represents just one method of bundling these risks. Ability to gain a sustained competitive advantage is limited in today’s fast-paced marketplace. Advantages of being first to market or having a lower cost structure are fleeting at best. A time frame of one year, six months, or less can make a real difference in manufacturing, real estate and many other sectors. In these markets, speed is the primary driver for the utilization of Design/Build. Here, efficiencies of sequential design and construction are traded off for the efficient use of “capital” which is made possible through shortened project delivery. This accelerated project delivery cycle allows impatient equity to exit a project more quickly, reducing the exposures it faces while employed. “Exposures” include changed market conditions, inflation and, quite frankly, the emergence of better opportunities elsewhere. Project equity’s growing impatience is in many senses driving this rate of change and a concomitant move to the use of Design/Build. While the impatience of project equity has increased, the willingness of debt providers to tolerate risk has decreased. Debt requires ever more “certainties” and “guarantees.” Design/Build presents the opportunity to, in essence, provide two key guarantees to the providers of non-recourse-project debt: 1. Schedule (time to market, revenue service, etc.). 2. Initial Cost. While Design/Build does not narrow market or operating risks, it removes a major portion of the risk profile from the debt holder’s perspective. Perhaps the newest of the change factors leading the marketplace to use Design/Build is a transition of project responsibilities from the public to the private sector. Traditionally, the public sector has undertaken projects for the “public good” which are characterized by long development time frames, largeness of scale, environmental/community sensitivity and complexity, and inevitably, a certain degree of controversy. In many instances it is the desire to avoid this last factor—controversy—which drives some of these “public” projects into a Design/Build delivery approach, with its single point of responsibility. Change orders and claims are increasingly unpopular to explain to a taxpaying public, therefore, transference of the vast majority of claims and cost risk is increasingly attractive. But does Design/Build represent an acceptable and, in the long term, affordable insurance premium for the public sector? It is important to comprehend these underlying factors affecting project delivery in order to first understand how your “client” is changing as well as identifying new and emerging clients. The Changing Client When an “owner” chooses Design/Build over design-bid-build it is not just his risk profile that he is changing. More fundamentally, the delivery process itself is being altered as are the rules of all others involved in project delivery. In a traditional design-bid-build model there are three roles for designers: • Owner’s engineer/general design consultant—Dependent on the in-house capabilities of the owner as well as the scope and complexity of the project. Design services provided here range from the 15–30% level. • Detailed designer(s)—One or more depending on project size and range of facility types. Design services here typically carry design from the 15–30% level to the 100% level. • Contractor’s designer—Principally responsible for detailed construction drawing, shop drawings, etc. In Design/Build, a major portion of the detailed designer’s responsibilities are combined with the contractor’s designer’s responsibilities. Deliverables for this design element of the Design/Build team, however, change dramatically. The notion of 30%, 60%, or 90% drawing submittals disappear in favor of perhaps one intermediate submittal—usually delivered early in the process. The notion of 100% drawings or bid set drawings is completely forsaken in favor of “as-builts.” Comments from the owner’s engineer or general design consultant are no longer the detailed designer’s principal driver. In its place are the contractor’s preferred construction methods, available equipment, labor, and surplus materials. The designer’s very client has changed. Correspondingly, the former contractor’s engineer must now bring a level of design development capability that has not been previously required. The detailed designer and contractor’s design roles are combined under one hat, which creates a new paradigm in the delivery of design services. The role of the owner’s engineer or general design consultant is also transformed. Opportunities provided through an iterative design process, and more complete design prior to the “build” phase in a design-bid-build approach, no longer exist. Completeness in terms of scope, acceptable methods, and practices are critical at an even earlier stage. When you only have one opportunity to “get it right,” project definition cannot be allowed to evolve. Rather, it must be “fixed” very early in the project development process. Advanced “conceptual” design and owner’s “sign-off” are more important than ever. Creating New Roles As roles are being altered to suit the Design/Build scenario, new roles are also being created. The investor is now making a financial commitment to fund construction sooner in the process—at a time when the full extent of project complexity and potential constraints are still largely unknown. This new risk needs to be managed, whether it’s equity from a private developer, another third party investor, or the lender of project debt. The role of investor’s engineer has emerged with great