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Contractors are Turning More to In-House Design, But It’s Not Without Its Problems

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Any contractor worth their salt is well-experienced in wearing multiple hats. We can observe a newly emerging shift as more and more contractors are taking active roles when it comes to design work, bringing it in-house instead of relying on third-party companies. This can be partly attributed to continually tightening schedules; the proliferation of efficiency-boosting methods like offsite prefabrication is providing the opportunity to shave off precious hours and days.

Capabilities of In-House Design

According to Associated General Contractors of America and FMI Corp’s recent 2019 AGC/FMI Risk Management Survey cited by Engineering News-Record, more than 43 percent of contractors today have taken some aspect of design work in-house, a 5 percent jump from last year.

Firms are approaching developing their in-house design capabilities in a number of ways. Half of those surveyed have hired internal engineers or added members to their in-house teams with design backgrounds. Others opted for hiring internal architects or created entire design teams. Approximately one in five contractors have taken the inorganic route by acquiring a design firm, ENR writes.

But just as having an architect or engineer run a construction crew wouldn’t necessarily be a perfect fit, having contractors assume the role of a designer is also not without its flaws. According to ENR, respondents to the last two AGC/FMI surveys reported recurring problems like incomplete design documents, inadequate risk allocation in design-build, insurance and liability concerns, as well as issues coordinating with design teams.

“Buildings are not getting easier,” said Chris Green, an architect based in Eagle, Colo. and former president of AIA Colorado.

“It may well be that a lot of owners haven’t been brought up in design and construction at all.”

In fact, ENR reports that last year’s AGC/FMI study proved an overwhelming 92 percent of respondents believed design documents to be less complete than they had been in the past.

“We’re seeing this across the board,” AGC General Counsel Michael Kennedy told ENR. “Contractors are having to connect more dots on their own to keep projects moving.”

Scheduling Out the Time

There is another concern when it comes to contractors taking on design responsibilities—they might be hesitant to pour cash into the design phase until a project’s potential for profitability is clearly established, particularly in the private sector. Thus, the amount of time engineers have to work on the design could be restricted, speculated Leonard Monfredo, executive vice president of Massachusetts-based E.M. Duggan Inc.

Some contractors are opting for a more hybrid design-build model. It involves an in-house architect or engineer much earlier in the process so that they can looks over their shoulder during the design process, ensuring they aren’t out of their depths, knowledge-wise.

“We know that it’s impractical for us to do 100 percent of design and construction for every project in every market,” Dan Lumma, president of C&E firm Kiewit told ENR. “In some, we will do it all and sign off as engineer-of-record. In others, we will work with design partners who understand and share our integrated approach.”

Thinking Outside of the Box

Off-site prefabrication, where building components are manufactured in a factory-like setting and transported to the job site for placement, has arisen in recent years. It has been the response to increasing demands on contractors with fewer skilled hands to bear the burden. Contractors have taken advantage of this new capability to unify certain design aspects in an effort to save on materials and time.

Taking design work in-house is another way to magnify those savings.

Another concern raised by survey respondents was liability. Under the Spearin doctrine, established by a 1918 U.S. Supreme Court decision, the owner bears the risk for the quality of plans given to a GC. However, using design-build or other similarly collaborative methods requires contractors to take on additional liability around design quality that may have never been a consideration in their careers to this point.

“Whoever takes the risk should be the one best able to handle it, and it should be priced as such,” Jim Kerns, director of corporate risk management for Parsons told ENR. “Establishing price certainty with 30 percent drawings in design-build introduces a lot of unknowns, and in many cases, owners want contractors to take on all those risks.”

If you liked this article, here are a few eBookswebinars, and case studies you may enjoy:

Uncover the Hidden Cost of Project Silos

The Next Level of Project Management: Design Coordination

Consigli Study

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