As we emerge from the current recession, it’s time to put the days of budget-busting projects behind us once and for all.
There’s an old adage in the A/E/C industry: Of the three critical aspects of a project (time, money, and quality), it’s only possible to deliver two at any given time. Projects that run on time and on budget are at risk for quality problems, and those with high quality standards always seem to cost more and take longer than expected. Essentially, this suggests that at its best, the traditional design/delivery process can deliver satisfaction only two-thirds of the time. That’s not an especially inspiring sales pitch. It’s like going to a dentist whose advertising slogan is “It may be expensive, but at least it’s going to hurt.”
Design and construction are hugely complex and inherently uncertain. Each project is unique in terms of program, site, budget, schedule, and the client’s design goals, not to mention the psycho-dynamics of team interaction. Design is a process of discovery; sometimes not just the answers but even the questions are unclear at first. Once designed, buildings require a tremendous amount of time, money, and coordinated effort to produce. Add in the effect of a dynamic market with constantly shifting costs and the vagaries of weather, inflation, and the availability of skilled labor, and it’s a miracle that things work as well as they do. But is this the best we can do?
Recent studies show that the A/E/C industry is hugely inefficient. About 30 percent of all projects do not run on time or within budget, some 37 percent of all materials end up as waste, and more than 90 percent of clients believe that construction documents are not suitable for the purpose intended. There are exceptions, of course, but they are rare. Most clients approach their new building projects with a sense of anticipation mixed with dread. Clearly, the A/E/C industry has an image problem. It’s time to change the brand.
A brand is an implied promise that expresses what the consumer expects when purchasing a product or a service. Brand equity is more than the thing itself; it also comprises a set of perceptions and assumptions, real or imagined, that define the entire provider/consumer experience. At present, the A/E/C brand promises cost overruns, schedule delays, quality problems, and conflict as standard operating procedure. This is exactly backward from what it should be. Rather than being perceived as a high-cost, low-value delivery system, the A/E/C industry should reposition itself as a value creation system. Properly understood, it’s an industry that builds things of lasting value that make a significant and measurable contribution not only to the economy but to society at large. To get to the essence of rebranding, we need to attack the problem at both ends: technology and process.
When clients conceive of new projects, there is always a set of value drivers at work. Expanding an enterprise in order to offer new services or accommodate more staff, designing facilities to increase efficiency and productivity, or remodeling or replacing buildings that have outgrown their useful lives are all common themes. Clients will compare the opportunities at hand with the cost required to carry the project forward. It follows that the higher the imputed value and the lower the cost, the more compelling the project.
Establishing a firm set of expectations for something that has yet to be designed, bid, and built requires a certain leap of faith no matter how experienced the team involved, especially since the cost of materials and the impact of inflation will surely fluctuate over the life of the project. Schedules can change as well due to unforeseen circumstances, and delays always cost more money. But it’s equally true that every building or remodeling project has significant inherent value. All too often the value is never clearly articulated to either the participants or the ultimate users. Why is a particular project being undertaken? What will happen as a result? How will this affect the people who live and work in the new space? Who will benefit, and in what specific ways? These are questions that pertain to each and every job regardless of size, location, or function.
Once the value proposition is made clear and measurable, it’s much easier to assess the true cost involved. A careful analysis will often reveal that there is no net cost at all: New buildings actually create more value than they consume in resources, and they continue to create value for many decades. Buildings are not merely structures — they are generators of economic activity. In fact, on a cost per year basis, good architecture is remarkably cheap. The problem is that it must be paid for in advance, before the first occupants cross the threshold. This is precisely where the promise of effective branding comes into play.
Establishing prospective value is not that difficult; a wide variety of metrics apply. However, on the delivery side, controlling cost, schedule, and quality is systemic in nature and requires re-engineering the A/E/C process from top to bottom, including participation from all three major players: owners, architects, and constructors. Many established practices in the industry are outmoded and should yield to new technologies. Construction documents are a good example: They are time-consuming to produce, frequently inaccurate or uncoordinated, and even after completion must be substantially done over by means of the shop drawing process. Building information modeling (BIM) is a welcome alternative to conventional document production and addresses all of these problems. The bidding process is another old habit that is ripe for reinvention. Today, prices for labor and materials can be easily and quickly checked on the Internet. Ironically, conventional fixed bidding actually increases the overall cost of the project through added contingencies and by inviting change orders.
Outmoded contracts are a third example. In traditional practice, owners contract separately with architects and construction managers, but there is no direct contractual relationship between those who design the structure and those who build it. Yet standard industry practice calls for the construction manager to communicate with the owner only through the architect. Clearly, it would be much better to align the interests of all concerned in a single contractual arrangement, a process known as integrated project delivery (IPD), which is fast gaining traction.
The combination of technical innovation (BIM) with process innovation (IPD) is extremely powerful. Together, they offer a whole new way of designing and delivering buildings better, faster, and cheaper. With BIM and IPD, creativity and predictability are no longer at odds; in fact, they are mutually reinforcing. This provides a compelling new brand platform for the A/E/C industry, which is second only to health care as a percentage of the national gross domestic product (representing some $1 trillion in investment annually).
Other major industries have successfully rebranded. For example, the focus of health care is now as much on staying well (through diet and exercise) as it is about being taking care of after illness strikes. The energy industry has become a leading advocate for conservation rather than consumption. Even whole countries have been rebranded: China has been transformed from political foe into a valued trading partner.
The most effective way for the A/E/C industry to emerge from the current recession is through rebranding rather than waiting for a return to business as usual when the market picks up. How should this new brand be positioned? As an industry that produces high quality, sustainable buildings that require fewer resources to construct, use less energy to operate and maintain, produce fewer emissions, and provide healthier places to live and work. Delivered on time and within budget, of course. We should put the days of budget-busting projects behind us once and for all. We have the means and the methods to do things differently, with dramatically improved results. And best of all, it won’t cost a dime. There is plenty of waste and inefficiency in the current system that, if redirected and redeployed, can pay for the necessary process innovation many times over.
In financial services, we take it for granted that our bank statements and credit card bills are accurate each month, right down to the decimal point. We expect our utility companies to provide power and clean water that is plentiful and cheap. At the supermarket, we can count on high-quality produce at low cost, even in the middle of winter. Why shouldn’t we have the same level of confidence in the effectiveness of the A/E/C industry?
Scott Simpson is a Senior Fellow of the Design Futures Council and a Richard Upjohn Fellow of the American Institute of Architects. He co-authored, with James P. Cramer, the books How Firms Succeed and The Next Architect. He sits on the DFC Executive Board.