A moment of potential transformation for the A/E/C industry

In 2005, Steve Jobs told Time Magazine, “One company makes the software; the other makes the hardware…It’s not working! The innovation can’t happen fast enough. No one takes responsibility for the user interface. It’s a mess.”

Replace “software” and “hardware” with “design” and “construction” and he could just as easily have been describing the AEC industry today. Jobs left us with several remarkable concepts including how to integrate others’ inventions in uniquely delightful and simple ways, and the realization that one could far better innovate superior and unimagined solutions for customers by “walking in their shoes” instead of asking them what they wanted. But, perhaps his most fanatical commitment, throughout his career, was to control the entire user experience across hardware, software, product design, and service…even down to selecting the quarry from which to mine the marble for Apple’s stores.

What Jobs is really concerned about here is that the interfaces between software and hardware are simply “not good enough.” He envisioned a seamless experience for the user which he increasingly accomplished as new Apple products were introduced. But in order to accomplish this seamless experience, Apple had to customize the interfaces between components and take responsibility for their performance since there were insufficient standards to ensure that multiple, outside vendors could produce components which worked well together. Looking to the AEC world, BuildingSMART is attempting to create those same kinds of standards, but in reality, they are still many years away. So what do we do in the meantime to improve the interfaces between our disciplines?

In the AEC industry, the interfaces (between architect, contractor, subcontractor, etc.) are clearly “not good enough”. For instance, estimating practices, design details, means and methods, etc. are hardly standardized impeding our ability to efficiently analyze and estimate BIM models. Practitioners and customers are constantly experimenting with new contracts and delivery methods hoping to improve predictability and eliminate the massive waste and strife. IPD is just the latest method to get everyone to work collaboratively together attempting to align incentives using contracts. While it is an improvement over conventional delivery methods, many IPD clients avoid sharing risk in these contracts thereby motivating participants to resort to traditional practices. As for those who do implement risk sharing arrangements, one must ask why, as a client, you would pay more by setting up contingencies for contractors and architects and/or take on greater risk simply to encourage your service providers to work in a more collaborative manner? Toyota would never have been able to eliminate 80 percent of the time required to prototype a car if the design and fabrication processes relied on a contract between two firms.

Some owners and practitioners have chosen to innovate better business models instead of relying on contracts. A few architects and contractors have formed joint ventures to pursue specific building types over prolonged periods while some owners have created alliances between contractors and architects to deliver many projects over an extended period of time. Some AEC firms have elected to integrate the disciplines internally throughout the entire firm leveraging a much larger pool of resources to significantly improve the delivery process. These are all customized solutions not based upon any industry standards.

This latter business model innovation, referred to as an Integrated Enterprise (IE), tends to be more effective than contractual innovations (like IPD) because the parties enter each project with a high level of trust between participants which can only be achieved through peoples’ prior experiences working together on the same team. In addition, Integrated Enterprises enable participants to heavily invest in training, technology, and innovative processes to better integrate, knowing they can amortize the cost over many projects with the same teams working together. IPD projects cannot afford this level of investment since the costs are too great to be absorbed by a single project and one can never predict when and if the firms might ever work together again.

If the AEC industry is really serious about implementing significant improvement in the delivery process, participants must make tough decisions to integrate internally in some fashion and commit to some form of Integrated Enterprise for the long-term. Remember that Apple committed to their notion of integration 35 years ago and has been learning from its failures and successes ever since. This is a marathon, not a sprint, but you have to start engaging!

Henry C. (Peter) Beck III is Chairman of Beck Group. The Beck Group is an integrated builder offering project finance, design, construction, and development services through eight offices across the United States and Mexico. Beck is a Senior Fellow of the Design Futures Council and sits on the DFC Executive Board.