In The Speedy SoCal Market, Only The Cooperative Can Keep Up With Demand

With a stronger economy and higher client expectations, the SoCal office market's delivery speed is reaching new levels, but the traditional method of developing, leasing, designing and building space isn't always meeting clients' needs. To keep up with the increased demand for top-tier properties, many industry professionals are changing the way spaces are delivered. 

One increasingly successful solution is the integrated project delivery approach (IPDA) model, used by companies like Howard Building Corp (HBC). By integrating all parties—from project managers to brokers, architects to general contractors—as early as possible, HBC and its partners are saving time, money and stress, while still delivering high-quality projects. 

The Change In The Game

What’s happening in the marketplace that’s making traditional project delivery approach so difficult?

With the strong economy and intense competition, SoCal brokers are under pressure to leverage their negotiations to get clients into the best office spaces as quickly as possible. At times, that leverage can create undesirable circumstances for the design and build teams (and, ultimately, the client) down the line.

For example, if the broker's not aware of the scope of a client’s design needs or doesn't completely understand a space’s existing conditions, the client can easily be misinformed about a space's schedule and budget. This inadvertently creates an unrealistic expectation before design has even begun, and if the project isn't delivered as expected or the space has more challenges than predicted, project delivery and client satisfaction are negatively impacted.

Another challenge is the expectation of faster design delivery. Design firms are under immense pressure to deliver drawings faster and architects have less opportunity to investigate the best construction approaches to maintain the design intent at the lowest cost. Subsequently, construction documents suffer from a lack of developed details. Without the opportunity to collaborate with the contractor on construction approaches, design can be value-engineered completely out of a project because it's perceived as too expensive, and the space won't reflect the client's original vision. With increased construction costs and labor shortages placing a strain on the industry, projects are up against steep challenges to be delivered to clients’ satisfaction. 

Title 24's challenges may be having a positive impact on how teams are delivering projects. With scheduling issues and increased construction costs, Title 24 regulations are forcing teams to realize early coordination between designers, contractors, engineers and subcontractors is essential to delivering successful, compliant projects. Now businesses are talking about how to adjust the delivery model for Title 24, they're also looking for a broader adjustment across the whole industry, and IPDA seems to be emerging as the “Next Big Thing.”

Changing The Rules Of Engagement 

But the question remains: Is IPDA a better way to deliver projects? IPDA is a crucial necessity for the industry's future success, according to the Executive Education program at Harvard University Graduate School of Design.

“The contribution of the construction industry in our economy and its role in promoting growth is undisputed," according to a course the university offers on IPDA. "The same stands true for the need to raise standards to improve the construction industry’s operating efficiency.” The course information states “the need for a comprehensive approach to the management of the project across all of its phases through…Integrated Project Management…is now more essential than ever.”

IPDA is still not well-known in the US. Europe has adopted IPDA as a standard, but the US commercial real estate industry relies heavily on the traditional, linear model of project delivery that's defined by the most commonly used American Institute of Architecture (AIA) contracts.

In the traditional AIA model (above left), the architect establishes the project budget and delivery schedule at the start of the project. Rarely do the general contractor and the architect discuss budget, schedule and construction approaches at this stage. Actual constructability, in-field schedule and material/labor costs are determined by the general contractor after the design drawings have been completed. This linear approach pushes many issues along to each successive phase of the project, resulting in value engineering exercises and change orders that cause delays and sacrifice original design intent. 

With IPDA (right), everyone related to the project comes together early to clarify and substantiate existing building conditions, assess potential challenges, collectively develop project budgets and schedules, determine design intent and constructability, initiate cost- and time-saving approaches, and proactively collaborate on solutions throughout the entire process. AIA supports this IPDA model through a family of contracts tiered at three levels of involvement to transition teams into the IPDA approach. These contracts are far from industry standard, but this doesn't mean they won’t be in the future.

The Better Way

How do we know IPDA would work better than how the industry works now?

The proof is in experience. Some of the most significant projects HBC has completed recently in SoCal were delivered using IPDA methods. In some instances, before a lease was signed or a property sold, HBC provided pre-construction budgeting, constructability assessments and property analysis for comparison of potential costs based on building conditions. Clients were aware of potential building costs and challenges before they chose a property, and brokers were able to advise their clients with more in-depth information that helped them structure better deals.

With the design and build teams assembled, early design intent was matched with actual construction costs, and schedules took a proactive approach to foreseeable issues, such as long lead items. When issues arose, the team was able to respond and mitigate negative impacts to the overall project. Complicated design elements were collaboratively detailed with a knowledge of real associated costs throughout the design phases.

From HBC’s experience, IPDA requires every party asking one big question at a project's earliest stages: Are we using an integrated approach to secure, design and build a client’s space? If the answer is yes, then it’s time to gather the best team possible.

HBC has found the strongest IPDA teams avoid the historical industry trend of contentious relationships between teams that create conflicts of interest and don't serve the client’s best interest. The most successful integrated teams rarely fall into this trap and share an inherent trust between all members. Open communication, collaboration and a commitment to mutually resolve conflict are key to the IPDA approach. Most importantly, IPDA teams work together to support the client throughout the entire project.

Given current market challenges and pressures, HBC says, the biggest challenge is maintaining the level of service and quality for the client. Success is defined by the positive experience and confidence clients have, as reflected by a new space's quality. The ultimate reward, the firm says, is long-lasting relationships with clients established on the trust HBC has earned through project experiences.

HBC believes the current system is failing to provide the best environment to achieve this definition of success, and says the industry owes clients a better industry standard that builds on a foundation of trust rather than one that creates adversity. IPDA may not be the only answer, but its early successes are building the case that there's a better way to deliver projects than our current system allows.

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