Business, Construction, Design, Property Development, Technology

The Development Professions- Commodity Technology or a Growing Value Add?

November 5, 2014

The Project Team – A growing package of commodity services or an evolving value-added business strategy that will continue to serve owners well?

I graduated from College in the 1970’s, first with a degree in Electrical Engineering and then with a dual MBA/ MSIE (Industrial Engineering) degree. Like Engineering students today, I worked long hours for each degree, often in night classes and more often, remotely because of an especially aggressive, professional travel schedule. With each degree, I found that I had only touched the surface of the subject matter and learning became a life-long focus and passion.

It was a unique time in technology as I moved from drafting tables, mylar drawings, rapidograph pens, slide rules and TI Calculators, to increasingly complex computer based tools. The first flatbed plotter was eye-opening because the floor plans then had multiple overlays—one for each discipline— and keeping the backgrounds up-to-date was no longer an issue— it was automatic. We saved time on every project and the documents were more uniform and professional. A heretofor critical part of the professional team, the draftsperson, began to disappear. That position was being replaced by a knowledgeable computer operator—often a graduate engineer or architect whose skill set went well beyond drafting.

In early 1981, we moved to Denver to work with an excellent electrical engineer, Bob Clay , who had developed a complete suite of programs for commercial electrical design that calculated and balanced power panel loads, analyzed one-line diagrams, fault currents, and essentially all of the code-required data with very little human intervention other than data entry. We still had to prepare the project drawings but the integrated programs were revolutionary. They assured that calculations were performed in a uniform manner; and the building department understood every assumption that was included and exactly how the calculations were made. The programs were also critical to the business’ survival as the electrical engineering fee for most buildings was approximately10 cents a square foot, which was not much. You truly did have to make that up in a high volume of project work. Mistakes were costly. Those type of programs are the standard of service today in commercial electrical design.

The same evolution was occurring in all engineering and architectural design disciplines, and the professional engineer and architect’s role changed rapidly– from the role of calculator and or sketch provider, to the provider and keeper of the project’s knowledge base. The engineer/architect’s role was to collect, manage and understand notebooks of computer, calculations, project contacts, meeting minutes, hand- written site notes, photos, etc . All were neatly catalogued and kept as a reference– on the shelf in the office. The engineer and architect had become the keeper and distributor of project knowledge, which was a unique value-add for the client and project team. It was common, however, for all of that project knowledge or information to be held in only one location, where it was less if not completely in-accessible.

This captive knowledge base and experience of the older or senior Architects and Engineers led to a hierarchal management approach to all projects, large and small. There was a significant compartmentalization of the design process, and it was an accepted approach used widely in the industry .

Technological Change: It is continuing at an accelerating pace

Relentless change in Technology has continued over the last thirty years and today’s architectural and engineering teams have much more sophisticated tools available to them at a fraction of the costs paid earlier. The project team has expanded dramatically; it has disintermediated into very specialized areas; each of these specialties has the ability to accomplish substantially more, faster and with a smaller staff. The tools each team member uses are more sophisticated yet easier to use, and they will continue to evolve. Continued education is essential for all team members.

This disintermediated “team” allows the ownership to look at a very wide range of building options, testing the impact of different systems, wall types, glass, building geometries, site location, utilities, etc . — by simply and quickly varying options within each discipline or professional team. Soon even that process will be simplified. This optimization process will include 3 dimensional models that can be reviewed and tested under a variety of conditions by a single user. The user will be able to visualize the changes as they change the different materials and dimensions, delivery schedules, etc. These are called parametric models, and these tools are available today, they are time consuming, they are complicated– and they are changing.

Very soon there will be a parametric modeling application, not unlike Google’s (discontinued) “Sketch-up”. It will be as simple to use and yield results that the owner and professional team alike will be able to use to reach decisions on a building’s design, orientation, materials, development schedule and (rough order of magnitude) cost. In time, even the cost modeling component will have sufficient precision to be relied on for decisions.

In short, the Development, Architecture and Engineering professions are rapidly going through what McKinsey calls, the “Automation of Knowledge” work on a very significant scale. The automation of the design process, which has been complicated, will be simplified and it will cut across multiple professional disciplines. It will also be inclusive of construction data and schedules (which will be addressed separately in a post in two weeks).

Project Quality: It has improved dramatically using BIM modeling tools.

Project quality has improved dramatically in the last 10 years, primarily thru the extensive use and acceptance of sophisticated project modeling. One of the critical jobs of senior architects and engineers in the past was always the quality assurance of the documents and eventually the finished building. That tedious, meticulous process is also being “Automated” through the use of “Building Information Modeling” or BIM programs. Simply searching Google with the Keyword BIM yields an enormous number of programs in use by all professional disciplines. Wikipedia contains a good definition for BIM which is;

Building Information Modeling (BIM) is a digital representation of physical and functional characteristics of a facility. A BIM is a shared knowledge resource for information about a facility forming a reliable basis for decisions during its life-cycle; defined as existing from earliest conception to demolition.[8]

The use of BIM models across all disciplines allows the team to autonomously check for walls in the wrong location, equipment that has been mis-located, clashes between piping and ductwork, etc. etc. etc. In short, the use of BIM modeling systems is automating the role of the plan checker. The BIM models are even diminishing the value of a full set of paper prints substituting IPADS and large screen video monitors.

The impact of Technology Change

The net of all of these areas of change within the development professions is a significantly flattened and broadened organizational project structure; there are significant productivity gains for each professional firm; and a reduced number of data silos. The project team, in aggregate, has a broader technical focus but with fewer participants. The technologies have been broken into distinct specialties with many more professional firms involved, each specialized, and each with a key focus. The project knowledge base has become much more publicly available to all team members, and success depends on a very unique set of leadership skills –more than ever.

Today the typical medium and large scale project team will include most of the following team members from a diverse set of specialized companies;

1- Project Ownership, which might be a single owner, a partnership, a major investment group, a life insurance fund—and others. There is a strong likelihood the ownership will be International, and may judge the project and its development on a wider set of metrics- metrics used in Europe in Asia and in the US.

2- The Development Manager will represent and report to the Ownership, and must be knowledgeable in a wide range of technical areas. The Development Manager must also be a deeply collaborative leader, a team builder, they must have a clear understanding of the ownership’s objectives, and they must have a clear understanding of the decision making time line that ownership and team will adhere to. They must be able to sort thru and prioritize those decisions in a manner that accommodates multi-discipline prefabricated portions of the project, and allow Building Department Reviews on a timely basis to keep on-site work moving.

3- The Core and Shell design team, including the Architects, Engineers, Technical Specialists, and related team members required to complete the Core and Shell Design and collaborate with the Tenant Finish teams and other specialists .

4- The Tenant finish Architects and Engineers. These professionals are typically selected by the individual tenants to complete the finishes in the tenant’s space, but they must also work with the Core and shell team members to complete their work.

5- Client/ Tenant Representatives— these are experiences people who understand the development, design and construction industry, but are not always licensed professionals. Their role is to represent their client- typically tenants– during design, construction and move in.

6- Independent Cost Analysts, whose role is to provide a third party opinion of the estimates and of bids prepared by the professional team and the General Contractor and sub-contractors.

7- Permit expeditors who specialize in working with the Building Department in expediting document reviews and permits.

8- Independent measurement professionals who typically have good experience in the industry and understand how to use advanced laser measuring equipment to validate the BOMA calculations of gross, useable and rentable square feet of a building. This is usually a BOMA certified professional and is a requirement of all tenant leases, lenders, and potential purchasers. .

9- Independent Code Analysts who review the interpretation of the various codes the professional team must comply with and often will help the team work with the Building Department in code applications and interpretations.

10- Purchasing specialists who help the Developer/ Owner/ tenant purchase Furniture, Fixtures and Equipment, and expedite the delivery and set up.

11- Risk Management Specialists that coordinate project insurance coverage, and insurance strategies for limits of coverage, Roll-up policies, coverage periods, deductibles, etc. Project Bond requirements may also fall within this specialty.

12- Technology Specialists who help the Developer/ Owners and tenants identify, purchase and install specialized systems . These might include Digital Amplification Systems which amplify cell phone signals so cell phones can be used within a building. (The energy saving glass used in major buildings also has a shielding effect on digital and other signals). These specialists also specify, purchase and install Fire Department repeaters throughout the building should there be fires in the garage or other out of the way areas. On packaged HVAC systems, the control systems may fall within this category as well.

13- Security Specialists for the specification (and often installation) of Security Systems.

14- Financial specialists that minimize the annual tax bills, provide cost segregation of the building elements for varying depreciation tables for different asset types, and review and approve all loan draws on behalf of the banks or other lending agencies

15- Utility experts that work with the building’s utility providers to optimize the costs of water connections, gas connections, power connections including renewables. For example, the difference in a 2 “ and 3 “ water connection impacts both water and sanitary connection fees and the difference can be $140,000 or more.

16- Real Estate Leasing professionals to market and lease the space within the building; to represent tenants who are considering leasing in the building, and Real Estate Sales experts to help in the sale of the property.

17- The Investors and lenders— Banks, Life Insurance Companies, Equity providers, Investors and more.

18- Independent Engineering experts in ground water if the building is built within the water table. This includes an expertise in pumping, re-injection, outfalls to waterways and other related areas.

19- Environmental experts for any required coordination with EPA , CDPHE (Colorado Department of Public Health and Environment) and other environmental regulators.

20- Energy specialists, who typically might work with XCEL Energy to review the building’s design and offer suggestions for minimizing energy use without compromising the building’s operation. These folks are typically paid by XCEL which leads to unique contracts. The use of this type of Engineer can result in large payments from XCEL for avoidance of additional generating capacity or operating costs.

21- LEED Professionals to develop all of the documentation necessary for LEED Certification and provide guidance to the building Engineers and Architects in their selection of systems and materials.

22- Soils experts to provide an independent evaluation of the soil conditions and recommend foundation design for the structural engineers.

23- Traffic engineering specialists to coordinate with the local zoning specialists on traffic related analyses and design of changes that might be required.

24- Parking experts to design and often manage the parking within the building, especially if the parking will be a revenue generator. They bring their own staff and will consult on pricing and parking regulations as well.

25- The legal team which typically has expertise in Design and Construction contracts, land acquisition, C ity legal requirements such as easements, leases for tenants, and any third party leases for equipment and systems.

26- The General Contractor or Construction Manager, their subcontractors, suppliers and vendors—these team members are critical to the project’s success and will be addressed in a post in two weeks as noted earlier. This part of the team is changing every bit as fast as the design team.

The team members listed above will typically contract directly with the Developer and or Ownership and their work is managed by the Development Manager and Base Building Architectural team. In short the management of this team, in total, has moved from the (Core and Shell) Architect as Master Builder to the owner, the Owner’s representative, or the Development Manager. Many times a professional Construction Manager- if sufficiently experienced- can fill this role.

The unique aspect of this very complex team, is that each team member is under the constant pressure to improve their individual technical or project knowledge; each team member is seeing the constant pressure of the “Automation of Knowledge Work” where the rote portion of their core expertise Is being turned over to an App- or perhaps a complete computer program; each team member is working hard each day to be relevant and to contribute to the project’s success.

Ironically each team member also believes their service package is being commoditized (and it is) and each team member is searching for a way to provide a higher level of value-added service for their client. The goal is to yield a better fee/ profit,to ensure future work, but most importantly to provide the best product they can.

The challenge to the Owner/ Development Manager is to lead this team to provide their best expertise at each project step, to gain the absolutely best advice from the team, and to end with a world class result- literally.

We now compete on a world-wide stage and that international competition will only continue to grow.

Development, Design and Construction remain an intensely personal business

All of the above is a very proscriptive approach to the delivery of a building or similar Capital Asset. In the projects I have managed over many years there has always been a very personal, high level connection that ultimately led to the great success of that project. It is a relationship between the leadership of the project team and the ownership of the project. I have seen that personal connection yield extraordinary results—but it always took a deep and sincere commitment to the project and the owner’s objectives from the senior members of the Development Team;

1- In the late 1970’s, I watched Paul Kennon , President of CRS and Dean of the Rice School of Architecture crawl up on a large scale model of a new Cummins Engine Manufacturing facility planned for North Carolina with J. Irwin Miller, CEO of Cummins Engine to see exactly what kind of connection to the daily weather changes each of the employees would have through the building’s, roof mounted, skylights. Those concerns reflected a deep commitment to the Cummins employees that were stationed on that production line each day, and Mr. Miller and Mr. Kennon worked together to provide a unique work environment.

2- I walked through a 400 unit faculty housing project we had just finished in Dhahran, Saudi Arabia at the University of Petroleum and Minerals with the Senior Design Architect and Planner (and officer of the firm) Charles Lawrence of CRS, and listened to his critique of each element—why it was a success and why it was not—and how each of these elements would be important to the families who would live there. He was distressed with elements that didn’t work, and always tried to find ways to make them better. We walked that project for four hours and went to our hotel at midnight. It was a unique learning moment for me—but it resulted in a better living environment for those families.

3- I spent many months with the Japanese Management team from Fujitsu working through all of their needs and wants on the first US Fujitsu DRAM ( Dynamic Random Access Memory Chips) plant, and then listened to them congratulate the design and build team for hitting each benchmark as the building opened and what that meant to their Company- and to them personally. It was the culmination of 4 years of 12 to18 hour days and total team commitment to success for the combined US and Japanese team—and we were a combined team.

4- I watched RNL Architect’s design lead Dick Anderson and S.A. Miro’s Senior Structural Engineer Dick Cunningham work together during the design of the rebuild of the Executive Tower Hotel in Downtown Denver and turn a building that was about to be condemned into an extraordinary new hotel and 125 unit student housing complex in the very heart of Denver. That project is still vibrant today. The engineering analysis alone was brilliant as was the planning for the adaptive re-use of each floor’s square footage.

5- I watched Kevin Roche (http://en.wikipedia.org/wiki/Kevin_Roche) arrive at 7am for an interview at the City Council Chambers in San Francisco for a 10 AM interview. While I set up the room, he sat in each of the chairs of each of the interview participants to understand exactly what they would see during the interview—and then the two of us changed the room’s configuration so every member of the client team could see every part of the interview. Mr. Roche was 72, and our conversation that morning lives with me today at every interview.

Conclusion

My conclusion is that technological change will continue at an increasing speed within the development professions. That technological change will allow us to design and build better buildings, using simplified, parametric, design tools; we will build faster using more multi-discipline prefabricated systems (the topic of a future post); we will use fewer crafts as robotics begin to work routinely on the job site; and we will never lose our focus that construction sites must remain safe- no exception.

Building a building will continue to be an intensely personal process. Success will depend on a team commitment to client satisfaction and doing things “right” from start to finish. Success will depend on the understanding that we must work as a collaborative team within a flat organizational structure where we always work with peers. Success will depend on bringing the skills of the individual, committed professionals together to be the “value-add” that each client deserves. Success will depend on each professional’s commitment to delivering a World Class outcome!

Epilogue: Since writing this Post and adding it to the site, A good friend and highly accomplished Real Estate Attorney Mark Senn, referred me to a booklet distributed by a British organization called Building Futures (www.buildingfutures.org.uk ). The booklet’s title is “The Future for Architects”, and it includes the same general discussion as this Post does, but from the perspective of several different groups. The Professionals in each group were recruited and then met as a Roundtables on the the specific topic. The groups included; Architects and Designers; Clients and Consultants; Students and Graduates.
They then drew a number of interesting and thoughtful conclusions which are included in the booklet. These conclusions look at several different “futures” that Architectural Firms might consider. or be forced to accept to survive as companies. The one overriding comment was that significant change is underway and “In 10 years we probably will not call ourselves an Architectural Practice, it will be something else entirely”.
The booklet is worth reading. You can find it at:

http://www.buildingfutures.org.uk/assets/downloads/The_Future_for_Architects_Full_Report_2.pdf

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1 Comment

  • Reply Jerry Blocher November 5, 2014 at 2:27 pm

    I especially appreciate (and agree with) the message Jim shares that no matter what the technology, the common element to successful projects is a visionary and driven leader supported by a committed project team. Some things never change.

  • Leave a Reply to Jerry Blocher Cancel Reply