I was giving a training the other day on how to structure a contract for construction and I touched on the topic of Design Build projects led by General Contractors (GC). If you have read any of my previous posts on design build contracts, you know I favor design build when it is led by a design professional such as an Architect or Engineer, so I quickly made this point and continued my training.
As I was moving off of the topic, I was asked to elaborate on why in my opinion, design professionals are better for leading a design build project than GC’s, so Today I want to share my perspective on this.
One of the fundamental differences between design professionals and General Contractors is how each is licensed. This fundamental difference promotes a different mindset which permeates throughout the decision making process from each professional.
Design Professional License
Design professionals are licensed by professional licensing boards within each state. These are the same licensing boards that grant licenses to Doctors and Lawyers. These licensing boards require a very high standard for licensure including requirements for; professional degrees, a minimum period of on-the-job training, exhaustive professional examinations, and requirements for continuing education.
Design professionals are also licensed by name. This means that the license that is granted is not associated with the name of a Company it is associated with the name of the individual.
I should point out that the standard described above only applies to the United States and Canada. In Europe, Asia, and South America, licensing standards for design professionals varies widely.
General Contractor Licenses
Requirements for contractor licenses are not as uniformly observed and vary widely from state to state. Most states require nothing more than a name and proof of insurance. There are generally no requirements for testing or for degrees and certainly no continuing education is required.
Licenses for General Contracting are associated with the Company’s name, not the name of an individual.
In short the effort required to become a licensed design professional is significantly higher than the effort to become licensed as a GC.
If something goes wrong and the GC’s license is revoked, it is very easy for them to form a new company and secure a new license under a new name.
If something goes wrong for a design professional and their license is revoked, it’s far more difficult for them to get it back.
Another fundamental difference between design professionals and GC’s is their primary focus.
Now, before I jump into this, both design professionals and GC’s balance a broad range of considerations. Many times, they will have overlapping concerns and many times, one will bring value to the other, so don’t assume that what follows is a bashing of GC’s.
That said, GC’s have a primary focused on financial management.
What this means is that GC’s (often working under a fixed price contract) are specifically focused on how to complete the work as inexpensively as possible. That financial focus is not on how to save money for the Owner, rather on how to save money for themselves so they can maximize profits.
Remember that we are talking about a design-build delivery model. This means that at the time of award the design has yet to be defined.
When you ask a GC to quote a fixed price for a project that has not yet been defined, they are forced to make hundreds of assumptions. These assumptions will color the perspective of the GC and will influence how they quote the project and ultimately this will influence the compromises they make during construction.
Design professionals on the other hand have a primary focused on personal liability. They are not focused on the cost of construction (although some may argue that they should be).
A design professional’s personal liability is impacted by their compliance with code, safety of the occupants of their structures, and meeting the Owner’s expectations for the design.
Of course, both suppliers balance these considerations mutually, but sometimes, the financial focus a GC has may compete with other priorities. This may force the GC to make compromises that may not favor an Owner.
Evidence of this can be seen in the Cole Report published last year. Check out my previous article on this topic which links directly to the Cole Report.
Once again, I don’t want there to be any misunderstanding. General contractors and design professionals alike bear a great burden with a broad range of considerations and responsibilities. Under ideal circumstances these suppliers perform as partners sharing responsibilities for all concerns and mutually solving problems.
This does not change the fundamental differences between them. Recognizing these differences is essential in our understanding of how to structure contracts and we should remain mindful of the focus each brings to the job.
What about you? Do you use GC Led Design Build? How successful have you been with this model? Do my comments align with your experience? Tell me your stories.
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