BY GAVAN RANGER
13 November 2018
Ways we can work better together on D&C Contracts
D+C contracts in their various forms continue to be a preferred method of delivering projects. Like many of our industry peers, we’ve found that there have been some emerging areas in this transition. So we gathered a group of developers, builders and project managers in our studio to discuss ways in which we can work better, together. This is what we uncovered.
Traditional vs current d+c procurement methods vary greatly.
Traditionally, a basic set of drawings, schedules and detailed brief was issued to the builders at the completion of the schematic design stage. This would allow for the consultant team, builder and subcontractors to determine how the building was best delivered from this point, with the budget allocated.
Currently, we are seeing the appointment of builders and novation of consultants occurring much later in the documentation process. Late novation to the builder and tendering of the D+C contract limits the time for effective value management within the project; therefore, the contract reflects more of a ‘document and construct’ as opposed to a ‘design and construct’, as all key design decisions have already been made and can be prohibitively costly to change.
The resolution: Strong communication is needed between all parties at the initiation of the contract and throughout all phases to ensure clarity of role and purpose. It was noted that close and careful management of the transition points between phases would ensure continuity of brief; decisions made in the previous phase would be communicated appropriately; any revised contractual requirements adhered to; and clear expectations of what would be required of each party in the coming phase/s would be identified.
Strong communication is needed between all parties at the initiation of the contract and throughout all phases to ensure clarity of role and purpose.
Documentation requirements have increased dramatically with d+c contracts.
Many details within the documentation were once left to the discretion of the builder. In the current market, and responding to risk mitigation by clients, requirements for documentation packages are tending to reflect full documentation. This increased risk placed on the builder causes them to seek a greater level of resolution in the documentation, with a consequent flow on to the consultant team.
Yet commercial drivers have also placed pressure on ‘fees for service’ where the scope of documentation tends to be reduced to be in line with reduced fees. Lower levels of documentation are then provided to the point of contract, whereas the actual documentation requirements on site are much higher. This often leads to frustration between the foreman, the contract administrator and the architect.
The resolution: Where possible, an earlier appointment of the builder would allow for the maximum impact of intelligence and value engineering to the project. It would inform contractors about the cost for change and how it increases dramatically as the project progresses. This would allow the builder to take ownership within the project and mitigate some of their risk by proactively addressing issues at hand. The inclusion of subcontractors within the design process would also enhance knowledge within the documentation at an early stage and ensure detailed documentation also reflected these requirements.
An earlier appointment of the builder would allow for the maximum impact of intelligence and value engineering to the project.
The Differing Perspectives Of Commercial Parameters
For the developer, their focus is on commercial reality. This means great importance is placed on value management, but more so in the later stages of the project. They are hesitant in believing they will gain value for money under any contract if they tender too early. From their perspective, by tendering for a D+C contract later in the process, they can have more time to resolve the brief and have the opportunity to divest risk whilst staying in control of the overall outcome of the project.
For the builder, this ideally means better integration of early contractor involvement (ECI). The real challenge is to agree on contractual arrangements which allow for the positive considerations of the contracts early enough in the process of working with the design team to achieve really significant project outcomes.
The resolution: A clear brief is needed from the developer, with defined expectations for all parties and a clear process for managing the documentation and delivery of the project. It would be advantageous for all involved with the project to understand the D+C procurement method specific to the project, and their roles and responsibilities under this form of contract. In doing so, the architects and consultant team can better understand the commercial parameters of a project and deliver more for the developer. The consultant team and builder can then work in a more integrated and collaborative manner to deliver a robust documentation package, more reflective of brief and budget.