Committing The Design Team To Making A Profit
In the planning stages, some designers miss out on the money-making steps.
What is the missing piece after the design contract has been awarded and the basis of design is kicking off the design phase of the project? From my design experience, the first step in the action plan is to understand the owner’s building program, which should address project timeline and construction cost. Also, you must ask if O&M will have a role in this project and the soft cost (e.g., furnishing, consulting fees).
Armed with this knowledge, the owner’s project requirement (OPR) can be drafted next. Integral with this should be the HVAC design engineer completing an HVAC System Analysis and Selection (refer to 2016 ASHRAE Handbook — HVAC Systems and Equipment and 2015 Handbook— HVAC Applications). This analysis and proposed selection(s) should be completed, although I’m sure this process gets passed over and the design engineer simply jumps to the solution, and quite often the solution doesn’t result in a sit-down with the owner, owner representation/project manager, and/or the O&M manager. Omitting this step in the OPR results in the design team moving on to the basis of design (BofD) and begins the conceptual phase of the design.
So what got overlooked in this process? I believe right after the OPR had been substantially established, the HVAC design engineer should have gathered her design team, sat down with them for a roundtable discussion on agreements to date, and then opened up a conversation regarding the team’s mission to meet client and project satisfaction. Next, the discussion should transition to an open forum on the consulting fee and how this HVAC team was going to make a profit, noting this goal is as important as completing a successful design and construction effort. True, the architect heading up the job will be less sensitive, if not insensitive, to the consultant’s goal to make a profit. As a mentor of mine once said, “There is no carrot at the end of the stick” when thinking the extra effort will be appreciated by others. The cold hard reality is that he was correct. If the design team is not profitable, what is their value to the company?
So I use my automobile analogy to explain how to do a great job for owner and project and make a profit, too. If you have $20,000 to buy a new car, you don’t go to a Cadillac dealership. They don’t sell new cars that fit your budget. You head to a dealership that sells new cars in the $20,000 range and buy a car within your budget that includes all the features you would have wanted on the Cadillac but couldn’t afford. That said, the lead engineer for the HVAC design team outlines how much money is in the fee for direct labor to complete the design and construction administration.
Often, the design will begin with no discussion of how many contract drawings to be produced. Instead, the design team simply starts drawing. A rule of thumb I’ve had for years is that every drawing represents 100 hours of design and drawing labor. Sure, a standard detail sheet doesn’t take 100 hours, and a central chiller plant design will most likely take more than 100 hours. If you average all the drawings out, it should come to a budgeted value around 100 hours per. Taking these hours and multiplying the cost using an average hourly rate (e.g., design engineer), this should tell you how much direct labor cost it will be to complete the documents.
Add in labor for meetings, writing the specification, and a select few other categories using more specific hourly rates, and this should tell the team how much the design would cost. If it’s over the direct labor cost of the actual fee, then the team has to go back and rethink the number of drawings to be produced. The team is building a Cadillac with a Toyota budget.
The open forum I’ve just discussed won’t take more than an hour from start to finish, and yet it may be the most valuable hour spent on the job. It also should bring “buy-in” by the entire team. Left in the dark, what do they care if they produce 30 drawings or 45 drawings? Each employee will do what he or she is told unless you change how work is performed.