Go Back

Team or Counterweights?

When a person or business needs a building constructed, they have several fundamental and difficult decisions to make.  Oddly enough, the toughest ones have more to do with relationships than the building itself.  Going back several centuries, most building was done by owners themselves once they had learned the fairly simple talents involved.  Complex projects were designed and built by “master builders” who were very hands-on and improvisational.  The nearest thing to master builders today is “design/builders”.   We’ll get back to them in a later article.

Once building materials moved beyond wood and stone, specialization was needed.  There was so much to know that both the designers and builders fragmented into guilds and trades.  Soon, the master builder no longer could control every element needed.  The biggest separation was between the design side and those with building skills.  Their interests diverged and owners ended up mediating the disagreements.  This was tough on owners. The least knowledgeable player was stuck between two or more parties with vastly more knowledge and experience.  Predictably, many arguments ended up in litigation or duels.

For the last century, the default answer has been for the owner to have separate contracts with each major party that pits them against each other.  Standard forms of these contracts try to keep them aligned with each other and allocate risk in a predictable way.  One way of crafting them is to have the design team members counterbalance the construction team members.  There is usually a process for interpretation and compensation that pits the sides against each other.  In theory, this relationship delivers the most value for the money.  In practice, it frequently misses the mark.  Issues become contentious, feelings get hurt, egos override common sense, and experts get rich pontificating on what each party should have known or done.

The fatal flaw in this system for the owner is that they get put in the middle of arguments they can’t fully understand.  It is like putting a rookie ringmaster in the circus ring with wily old lions, tigers and elephants.  He is theoretically in charge but ends up on the menu, or at least his pocketbook does.  Put more delicately, there are strong incentives to take on exaggerated postures and simultaneously conceal information that might help solve a problem but may harm their interests.  Public construction is mostly stuck with this scenario because of procurement rules intended to prevent favoritism.  Many architects and contractors have lived in this world so long that they can’t visualize it being any other way.

The maddening thing about contracts, just like relationships, is that people quickly figure out their incentives and act in what they perceive to be their best interests.  In any win/lose contest, the weakest player seldom triumphs except by luck.  I would argue that the only real asset the owner has in this situation is his money. Spending more money on unexpected costs turns out to be the solution to most construction problems.  To change the results, we must change expectations.

If an owner can build a team where the members cooperate with each other, he stands a much better chance of getting the building he needs at a price he can afford.  Here is where incentives come in.  Once the designers and the builders experience the peace and savings of working together as a team, they don’t want to go back to the situation I described above.  So the key for them is showing the owner that it is in his best interests as well so that he will join in the team spirit.  They do that by modeling the alternative behavior for the owner and dialing down their defensiveness.  It is also important to be sure the owner reaps the rewards of their cooperation.  Contracts can be written where costs are capped and savings are shared equitably. When you aren’t worried about being taken advantage of, you will make better decisions every time.  This applies equally to all three of the major players:  owner, architect, and contractor.  Sometimes this blissful situation can be threatened if any of the subordinate players don’t agree with the major players.  In those cases, the primary relationships can be strained.  Each party needs to work through the problem, remind itself of the shared goal, remember the distasteful alternative, and not panic at the first rough patch.

A project owner just needs to find others who believe in this relationship model to ensure that they get the right building for a fair price.

For more information about our home and commercial construction services, please contact our team today!

Jay True, former vice-president of JMA, became partners with Jim Murphy in 1987. In 2015, Jay and his wife Elaine True, our office manager, retired from JMA and moved to Michigan to escape the cool summers and warm winters in Santa Rosa.