Speed is more important than ever in retail construction, as builders rush to shorten the lag time between groundbreaking and rent collection. And slow, conventional building methods aren't cutting it, sending developers in search of new hierarchies and delivery methods. The more efficient design-build method is gaining a foothold in parking decks and office properties, but builders say the technique could work as easily on malls and open-air shopping centers.
Most retail projects are currently built by the traditional design-bid-build method, in which each phase is completed before the next begins. Architects complete design and construction documents, put them out for bid and developers hire a contractor to build the job. Schedules cannot be accelerated, and construction cannot begin until the design and bid phases are completed, resulting in potential delays. Also, the team relies on the architect for the cost, not what the contractor says it will cost. As a result, costs are sometimes higher than the architect estimated.
“Architects don't work with construction numbers all the time. We have an idea but we don't always know what things cost,” says David Hudson, principal at Artech Retail in Chattanooga, Tenn. “Design-build is advantageous because of the relationships between the architect and contractor. The more you do together, the better you get, the better we serve our clients.”
From parking to malls
On a design-build project, developers place responsibility for supervising planning, design, and construction with a single company that remains in charge from inception to completion. The developer hires the contractor, who hires the design team and subconsultants. For developers seeking reduced liability exposure, design-build allows the contracting entity to solve issues and circumvent future problems.
“Design-build enables owners to start construction before design is finished,” says Gaylon Melton, design manager at The Mills Corp. in Arlington, Va., who says that the mall developer has not used the system but sees its benefits. “We can plan and adjust the design as it changes. Fast-tracked schedules are advantageous.”
Design-build is ideal for parking garages, because they are repetitive shell and structural buildings. They are not architecturally driven, and rely on several predictable components, including standard parking layouts, lighting, clearances, exits and column spacing. Nonetheless, they do influence mall designs and architectural features, especially location and orientation of tenant stores and public spaces.
When Pennsylvania Real Estate Investment Trust saw the need for a parking deck at its Willow Grove Mall in Pennsylvania last year, the developer hired construction management firm The Henderson Group to coordinate the structure's completion with architects Timothy Haas and Associates and subcontractor High Concrete Structures Inc. Completed in just six weeks, the 212,000-square-foot deck was completed while the mall remained open.
One reason that design-build has not been adopted yet in retail developments is because of the added complication of tenant participation. Department store anchors often have a say in mall layout and land use. And in urban areas, tenants influence storefront design, notes Tim Gardels, vice president of development services with General Growth Properties in Chicago.
Changing Old Habits
At this point, nobody knows how or if these hurdles will be overcome and design-build will spread to retail. But with construction costs rising, developers are bound to look at any method that will improve efficiency.
Meanwhile, the system is becoming more widely used. But it does require significant behavioral changes. For example, developers and architects advise owners to seek a reputable team that has worked together before, has a proven track record in the same building type and provides owners with a comfort level. Contracting with the lowest bidder, especially if there is no previous relationship, is no guarantee quality will be maintained. All parties — contractors, architects and developers — agree the bottom-line issue is building trust.
“The design-build process requires a different type of team, with checks and balances, and doesn't detract from specialists doing the jobs they do well. Consultants are still separate but work together as a team,” says Andy Frankl, president of IBEX Construction in New York.
“All members come on board simultaneously and move through the project together,” Frankl continues. “In the traditional method, the owner learns the project is over budget after bids are in. Design-build is more interactive.” The major pitfall, say some architects, is that any savings goes back to the contractor's pocket.
“Saving money at the expense of quality is always an issue. In a contractor-led process, the architect may see something different in the field than what is specified, and must tell the contractor, not the owner, which doesn't always mean the change will be made. Who's checking the checker?” says Lance Josal, senior vice president in RTKL's Dallas office.
In order to prevent such dilemmas from occurring, a design-build project team will work together to reduce potential conflict, also reducing the likelihood the project will come in over budget thanks to unanticipated extras. “With design-build we know the costs and commit to budgets as a team, by providing one-stop shopping for the owner and keeping the specialists on board. In a lean market, we must do what's important for owners. The team builds trust with the owner's best interests in mind,” Frankl says.
At the project outset, costs are monitored, construction methods reviewed and scheduling for long lead items and procurement begins, giving the project a jumpstart not possible in the traditional mode. Work can commence before the drawings are done and bidding begins, builders say.
Design-assist: Another option
While design-build isn't that prevalent in retail, the design-assist method is gaining converts, especially on the West Coast. In design-assist, the developer hires both the architect and the contractor separately but still participates in the project after the design phase, says Paul Cunha, vice president of Sacramento, Calif.-based S.D. Deacon.
Developers like design-assist because decisions are made early on regarding cost, constructability and scheduling. During design phases, contractors work with the architect to maximize design within the budget. Developers rely on the contractor's retail experience and familiarity with tenant needs to understand space requirements, costs and scheduling.
Cunha has used design-build for Wal-Mart, and design-assist for Target stores. With design-assist, the contractor takes bids from all subcontractors — not just their ‘friends’ — and post-qualifies subs afterwards, he explains. Some owners think they lose competitive edge in the bid process unless they open bids to all subcontractors.
Post-qualification analyzes subcontractor financial stability and staffing limitations, and weeds out unqualified subs, or those with reputations for poor quality, all of which cannot be done on a lowest-bid basis. Negotiated projects such as these enable the team to review resumes and track records to select the best qualified team for the job.
“Owners may believe competition results in lower initial costs. But quality drawings and knowledge of the architectural/engineering team are just as important. A ‘hard’ bid results in a final cost and value; lowest bids are not perfect, especially if change orders increase. Owners whose philosophies include a collaborative team effort will place more trust in the architect and contractor. The big difference is an adversarial bid process vs. a collaborative, negotiated scenario,” says Cunha.
New projects are harder to come by. So whether working together or as adversaries, contractors and architects are stepping up efficiencies to stay competitive as the number of new retail construction starts flattens in 2003. Design-build and design-assist programs are likely means to that end.
Design-bid-build: Each phase is completed before the next phase begins. Architects complete design and construction documents, put them out for bid and developers hire a contractor to build the job.
Design-build: The developer places planning, design, and construction, from inception to completion, under single-point responsibility. The developer hires the contractor, who hires the design team and subconsultants. For developers seeking reduced liability exposure, design-build allows the contracting entity to solve issues and circumvent future problems.
Design-assist: The developer hires both the architect and the contractor separately. During design phases, contractors work with the architect to maximize design within the budget. Owners rely on the contractor's retail experience and familiarity with tenant needs to understand space requirements, costs and scheduling.