Radically Different MEP Preconstruction

Contents

Contents

Acknowledgments

Preface

Part 1 Transforming Your Company

Chapter 1 Differentiated MEP Preconstruction as a New Weapon

Chapter 2 Comparison of Common MEP Project Delivery Types

Design-Bid-Build (DBB)

Design-Assist (DA)

Design-Build (DB)

Chapter 3 Building a Preconstruction Mindset

Your Why, What It Means to You, and Your Unique Selling Proposition

The Need for a New Culture

Grit

Chapter 4 Company/Department Structure

Support from Top Management

Skills and Roles Needed within the Preconstruction Process

Preconstruction Department versus Preconstruction Managers

Organization Charts

Compensation and Incentive Bonuses

Preconstruction Resource Groups as Profit Centers

Document Management

Chapter 5 The Core Model of Preconstruction Activities

Part 1 Ideas to Set Apart

Part 2 Business Development and Prospecting

Chapter 6 Finding the Right Customers

Chapter 7: Being Likable and Trustworthy

Chapter 8 Relationship Building and Advocacy

Chapter 9 Networking

Chapter 10 Project Selection

Chapter 11 Capture Planning

Chapter 12 RFQ Review and Response

Part 2 Ideas to Set Apart

Action Plan:

Part 3 RFP Response and Management

Chapter 13 Gathering Information and Planning

Chapter 14 Proposal Writing and Management

Chapter 15 Contract and Risk Review

Chapter 16 Site Visit If a Tenant Improvement or Remodel Project

Chapter 17 Team Selection, Including Consultants, Resumes

Chapter 18 Preconstruction Plan

Chapter 19 Target Value Design (TVD) Approach

Chapter 20 BIM Approach

Chapter 21 Design Scope Writing

Chapter 22 Budgeting

Chapter 23 Contingency, VEs, and ACEs

Chapter 24 Risk Register

Chapter 25 Preliminary Construction Schedule

Chapter 26 Personnel Loading Chart

Chapter 27 Sustainability

Chapter 28 DEI Plan

Chapter 29 Safety Plan

Chapter 30. Construction QA/QC Plan

Chapter 31 Commissioning and Turnover Approach

Chapter 32 Fee, Rates, and General Conditions

Chapter 33 Interview Management

Content Message and Preparation

Practice and Delivery

Part 3 Ideas to Set Apart

Part 4 Management of Design and Internal Operations in the Design Phase

Chapter 34 Bring-on Meetings

Chapter 35 Contract Review and Negotiation

Chapter 36 Administrative Setup

Chapter 37 Consultant Contract for Design Services

Chapter 38 Design QA/QC Plan

Chapter 39 Design Meeting Attendance

Chapter 40 Issue Log Management

Chapter 41 Variance Log Management

Chapter 42 Design Review, Page-Turn Evaluation

Chapter 43 Budget Updating and Tracking

Chapter 44 How to Handle Budget Overruns

Chapter 45 Buyout Plan

Chapter 46 Final GMP Estimate

Chapter 47 Construction Schedule Development

Chapter 48 Thorough Spec Review, Material Matrix

Chapter 49 Contingency Log Management

Chapter 50 Submittal Log / Submittals

Chapter 51 Procurement Log

Chapter 52 BIM Planning and Bring-on

Chapter 53 Constructability Review

Chapter 54 Fabrication Plan

Chapter 55 Sustainability Responsibilities

Chapter 56 Transition to Construction—Internal Project Administration

Chapter 57 Construction—To Transmit to Your GC Customer

Chapter 58 Construction Closeout

Part 4 Ideas to Set Apart

Part 5 Training and Continuous Improvement of Preconstruction

Chapter 59 Process Endurance

Chapter 60 Amplifying the Customer Experience

Chapter 61 Professional Development

Chapter 62 KPI's

Balanced Scorecard

Preconstruction Effectiveness Scorecard

Part 5 Ideas to Set Apart

Further Reading Recommendations

About the Author

Acknowledgments

Innovations in MEP construction continue to advance, thanks to so many curious minds and thought leaders helping to pave the way. I have been truly blessed to be around and observe so many others who are open and share their opinions on the needs and possibilities of our industry.

To all the great individuals at small and large general contractors I’ve had the pleasure of learning from who truly recognize and value the contributions of MEP contractors. Specifically, for the content in this book, thank you to David Westmoreland and Trevor Graafstra, of Graham Contracting, for their help. David and Trevor are long-term general contractor leaders, friends, and advocates of MEP preconstruction; it has been so great working with them. Steve Larson, MEP Preconstruction Manager at Mortenson Construction: I’ll miss all the ideas and discussions we’ve shared at DBIA conferences. And, of course, Tim Graybeal, PE, Preconstruction and Design Manager at Lydig Construction; and Brian Aske, Director at Lease Crutcher Lewis—with both of whom I’ve shared the seat of DBIA NW Region President, and I am so grateful for their mentorship, presentations, and teaching me some best practices of preconstruction. Sincerest thanks for everything you have done for our industry, your impact on me, and on this book!

Certainly, without the experiences and support from my peers and colleagues at Hermanson Company for a quarter century, this book would not exist. We’ve been through a lot of trial and error together, but mostly successes, as evidenced by phenomenal growth, people development, and market share capture in the Pacific Northwest and beyond over the decades. I’ve never seen another company be so transparent and provide so many opportunities for entrepreneurship. I owe a debt of gratitude to leaders Rick Hermanson, Paul Robinett, Kevin Almon, and Joel Smith for laying a foundation and providing a great work environment that has encouraged my continual growth and development in all areas.

To my brilliant editing team; Michael Fedison, copy editor, and Andrew Dawson, copy and proofreader; your clever meticulous eyes helped smooth out and fill in all my cracks. To Andy Meadon, a wonderful creative genius and production guru. This book would not look the same without you all.

Finally, to my family: My three older brothers and parents, who instilled the values of relationships and hard work in my formative years and supported my early collegial efforts; my two wonderful kids, who put up with my experimentation in raising them, including Science Sundays, were tolerant of my time away at work, have shown true grit, and will be great contributors to society; and, of course, my amazing wife, Amanda, who has always encouraged me and allowed me the time and independence to stretch to all of my aspirations. I thank you and love you all so much!

Preface

This book is devoted to helping you win more projects of the type you want, and teaching you how to better execute and radically-differentiate your MEP preconstruction efforts. It includes all the fundamentals of MEP preconstruction; however, fundamentals—while a given prerequisite—are not enough to win work. In order to make the sale of profitable projects, you must differentiate your proposal from your competitors. Historically, we are all used to this differentiator being the lowest price, but that has proven to be unprofitable in the long run. While price will always remain an important factor, differentiating in other areas can be impactful. Projects that require extensive preconstruction efforts provide an avenue for differentiation. To do this effectively and profitably, however, requires top-notch A-players to understand how and when to apply the differentiating strategies, ideas, and tips in this book.

To clarify the scope of this book, it is assumed that you have already done a market industry analysis and determined there is adequate demand for projects requiring preconstruction services in your area, and even construction in general. Also assumed is that you have excellent construction operations already, or are working on that with resources outside of this book. This book contains a comprehensive list of unique strategies and tactics applied to the organized preconstruction activities and resources needed before and after the sale is made, for small to large MEP firms. Part 1 discusses how to set up your company to attract and retain these star players. Part 2 delves into building relationships and showing your worthiness in order to work with the companies that you want to work with. Part 3 gives examples of how to assemble a winning request for proposal (RFP) and make the sales so that in Part 4 you can differentiate in your post-sale preconstruction activities to transition to construction execution in the smoothest and most lucrative way. Finally, Part 5 discusses how to continually grow and train your people, improving processes and subsequently your reputation in the marketplace. This book will help beginners—explaining and organizing all the activities in preconstruction—but it will help experienced professionals in the MEP trades, too, with practical examples and strategies for how to improve and differentiate their current preconstruction efforts.

Industry-recognized guidelines for MEP preconstruction activities are lacking, leading to inconsistencies and inefficiencies in execution. Often, preconstruction becomes a reactive, unplanned process of responding to unique general contractor (GC) directives, resulting in overlapping tasks, unclear job duties, and, ultimately, poor performance and service. This book breaks down preconstruction activities and provides strategies to improve individual and company performance in proactively managing these activities. The preconstruction activities described here are applied to the three delivery models of Design-Bid-Build (DBB), Design-Assist (DA), and Design-Build (DB), which are most commonly experienced when working for GC customers. While not all activities outlined in this book are applicable to every project, the model at the end of Chapter 5 provides an organized, chronological framework to determine which activities are relevant and quickly reference the corresponding chapter from this book for how to apply these strategies effectively.

The Core Model of Preconstruction Activities in Chapter 5 provides an overall visual guide to the different activities that could be present in an MEP project. Each subsequent chapter discusses how to successfully carry out that activity for each delivery model to which that activity is applicable. It is assumed that most of your work will be for GC customers; however, there are references to owner-direct work where it is applicable. You can use this as a reference book as you work on proposals for ideas to differentiate your proposal and make it unforgettable. Highlight areas or chapters that are new or different to you in order to be sure to incorporate them.

Whether you are new to the construction industry or an experienced professional seeking a comprehensive reference, this book provides valuable insights into preconstruction activities. For newcomers, a thorough read is recommended to gain a holistic understanding of the subject matter. Experienced professionals, particularly those transitioning from project management to sales and preconstruction, can use the book as a handy reference guide for specific project delivery types. While this book focuses on pre- and post-sale preconstruction activities, it complements project management duties and touches on on-site construction activities to provide examples of the seamless integration needed between preconstruction and construction phases.

The ideas and strategies in this book do not promise to be easy or quick, and some may not be inexpensive. However, they do promise to radically differentiate your company if you and other influential champions in your firm commit to being role models for positive changes and growing leaders who live out these strategies and can teach them to others.

Part 1

Transforming Your Company

"In differentiation, not in uniformity, lies the path of progress."

—Louis D. Brandeis

Launching a new initiative in a company demands meticulous planning, preparation, and execution. Part 1 emphasizes the importance of preconstruction activities in differentiating your company and achieving market dominance as the company that employees will want to work for and general contractor (GC) firms will want to do business with. It sets up key concepts and definitions used throughout the book. It guides you in defining your company’s objectives and purpose, outlining a method for achieving a compelling reason for employees and customers to choose your company. It also explores creating the right mindset and culture for properly executing preconstruction-focused projects.

Having a great company infrastructure to attract and retain A-players is an important aspect of differentiating. Characteristics of superstar A-players are often intuitive, but many A-player traits can be defined. A-players:

Have a broad range and depth of experience in your trade

Have a high degree of business acumen; they know how to find and keep money on a project, and simultaneously know how to help customers and owners with their business models

Are growth-oriented, working to continually develop themselves to become better

Enjoy making and developing new relationships

Are driven by the results of the work they do; their high compensation is a result of this, but is not necessarily a primary motivator

Make sound decisions and judgments, and take ownership and accountability for all their actions

Are visible and well known in the community with an excellent reputation

Model behavior that others aspire to and want to be around

Are relentless about customer satisfaction

Throughout Part 1, we examine various tools to set up your company structure to be effective, creative, and different. This approach enables the attraction and formation of exceptional leaders, A-players, and teams aligned with your company’s philosophy. Finally, this part concludes with a comprehensive model of preconstruction processes that are presented throughout the book in a chapter-based format, allowing for quick referencing during RFP preparation or design-phase activities.

Chapter 1

Differentiated MEP Preconstruction as a New Weapon

Business as usual no longer works. The MEP industry is constantly evolving as new technologies emerge, and market cultural forces are forcing the industry to adapt. Many trends exist today in MEP construction that are drastically changing the landscape from traditional methods of years ago:

Artificial Intelligence (AI), data, and technology-driven decision-making

Older generations retiring

Modular construction and fabrication

Net-zero initiatives

Remote working arrangements

Expectation for higher-performing facilities, with even more limited budgets

The way we communicate with different devices and online chatbots

Software, including that for project management, estimating, engineering, marketing, engineering, accounting, etc.

Online presence—social media, reviews and ratings, reputation

Emphasis on teamwork and collaboration

Diversity, Equity, and Inclusion (DEI)

Safety equipment

Building Information Modelling (BIM) improvements

Augmented Reality (AR) applications

Need for repeatability and predictability

Tighter margins, sophisticated competition

GCs and owners commoditizing MEP work (reverse auctions, online bid boards, etc.)

Rapid technical changes to local and international codes, including energy elements

Even with technology tools (which are hard enough to stay current with), we are all working harder and more hours than ever before. The traditional low-bid method of getting work, with its associated pitfalls, is a daily grind. 

MEP contractors face a growing pressure of commoditization by customers, forcing continual productivity improvements, better planning, and other ways to differentiate from the competition. Preconstruction addresses these needs; to be able to better set up the project with less risk and more predictability for a successful and profitable project. However, by its very nature, it is a messy endeavor, since it entails close interaction with so many internal departments with potentially competing objectives or key performance indicators (KPIs), external contacts, and project variables that are hard to determine early on. All of this changes, too, with every new opportunity and set of personalities and priorities associated with the project. MEP preconstruction is getting more and more complex as BIM, project management (PM) software, estimating software, mobile apps, etc. become more advanced. All of these functions are usually carried out separately and are not integrated with each other, while the need for better data and project outcome predictability only increases.

There is also certainly an overcrowding issue of firms selling similar products and services. To illustrate, what if there were a couple dozen or more kids selling lemonade at a baseball game? Sure, it tastes good at each stand, but they are all going to go out of business. Our trade is similar in that it is perceived by our customers as a group of monopolistic competitors, all offering similar products that are nearly perfect substitutes for one another. If there is money to be made in an area, new firms will join the market, increase supply, and drive prices down, thereby eliminating the profit that attracted them there to begin with. If there are too many firms in the market, some will go under, and prices will rise back to sustainable equilibrium levels. Pizza chain restaurants are a great example of this. How many different ways can you offer a pizza? Apparently quite a few: square pizzas, stuffed crust pizzas, thin- and thick-crust pizzas, cauliflower crust pizzas, etc. They must all execute their business flawlessly—that is a given—but they also must differentiate in their product offering to stand out in a sea of competitors in order to sell and increase market share. You need a different way to stand out from the crowd to sell work and make it profitable. A radically different way.

Despite the perceived commonality of projects, there are various ways of delivering them and each project may require a different approach. The most common delivery types for MEP contractors, discussed more in the next chapter, include Design-Bid-Build (DBB), Design-Assist (DA), and Design-Build (DB). The choice of these by the owner or your GC customer can vary given a host of considerations, such as:

Public or private owner—restrictions and rules for the ability to choose the project approach

Experience of the owner team—as well as preferences toward certain delivery models

Type of project—residential, hospitality, medical, retail, high-tech, office, education, etc.

New construction or remodel

Phased—would the project benefit from the input of a constructor’s knowledge early on?

Characteristics of project—size, complexity, location, craft availability, etc.

Requirement for BIM—not just during construction, but to utilize in operations after completion

Level and extent of risk—and to whom it should be assigned

Budget—will the budget be fixed, and the scope be variable to fit this, or vice versa? How important is the first price compared to overall best value?

Overall need for budget reliability, tracking, and transparency

Schedule / Time to market—need for early procurement of long-lead items, etc.

Expertise of the MEP community in general, with respect to particular project considerations

Since there is a spectrum of delivery types along with different project types, different owner teams, etc., the preconstruction process is anything but a commodity, and its successful outcome is not a one-size-fits-all approach.

Fortunately, there is a positive trend toward bringing MEP partners on projects earlier to collaborate with the design team for the specific proactive value they can bring. The activities performed during preconstruction offer an opportunity to set the project up properly and better predict the outcome long before expensive field labor is expended. Preconstruction also affords the ability to pursue project opportunities in a more systematic manner, to get a higher hit ratio of the projects you want to be known for. A successful preconstruction mindset can improve customer and employee loyalty, which is significant considering the average construction company loses 18% of its customers each year¹ and employee turnover in the construction industry is 20%, compared to 15% in the overall U.S. economy.²

However, all of these activities can vary greatly from one job to another, and it is hard to remember and implement the best strategies for every project. Many companies simply perform the preconstruction activities they need as a means of intuitively feeling their way through the project, reacting as needed or requested by their customer in the moment. If not performed properly, this can lead to poor utilization of resources, resulting in just keeping your head above water, versus always being prepared and responsive to your customer. An organized, systematic, and proactive approach to preconstruction, different from your competitors, will help you to win more work and minimize risk and the chance for errors during construction. It will help keep the project on budget and allow you to schedule more accurately, and ultimately increase the chances for better customer satisfaction and higher profits.

This book defines MEP preconstruction as all the critical activities needed to win a project and set the job up for successful execution. It starts long before a project is being considered or even known about—while developing customer relationships—and generally finishes shortly after work in the field begins. Some preconstruction activities may be relevant all the way through project completion and turnover to the owner, such as commissioning planning and BIM. Proper preconstruction activities will help you with proposals and winning more work. They will also help you to look farther out and properly advise your customers to keep them looking good, thereby elevating you in their eyes.

The simple steps to radically differentiate your business in the area of preconstruction are as follows:

Ponder finding your unique selling proposition (USP)

Set up your company for preconstruction execution mode, and to attract and retain A-players

Identify in great detail the right companies, people to work with, and projects to pursue

Build strong, deep relationships

Win projects through highly impactful, thoughtful proposals that stand out from the rest

Execute all preconstruction activities on projects perfectly, responsively, and creatively

Continuously improve, develop people, and track performance

This is not all that profound. No single silver bullet here. The profound part is how to actually achieve this, and this book will show you. You can do it, but the process and effort to arrive at your goals will not come easily, or happen overnight. It is a journey of continuous improvement, and it will take teamwork and support from your whole company. Anything worthwhile requires hard work and time to achieve. Rest assured that the successful implementation of the instructions and strategies in this book will give you the greatest chances of differentiating yourself. Granted, every MEP preconstruction project will have slightly different practices and activities based on a host of situational variables. It is your job to learn the tools, understand the subtle variances in needs by project and customer, and implement these tools to maximize project success for the owner, satisfaction for your customer, and profitability for your company.

To radically differentiate your company from your competitors, you cannot excel in one area and expect that to compensate for any shortcomings in other areas.

To be effective with the strategies in this book, it is imperative that you build the project with exceptional operational processes, to enhance and maintain your reputation as well. This is a given, but of course it is a journey of continuous improvement. Optimizing jobsite operations is outside the scope of this book, but, presumably, you already have a good basis and are always continuing to improve in this area; otherwise, you would probably be reading a book on operations and not preconstruction. The point is that to radically differentiate your company from your competitors, you cannot excel in one area and expect that to compensate for any shortcomings in other areas; you need to be excellent in all areas of your business. There is not a single smoking-gun effort or activity that will make you successful (otherwise everyone would be doing that); it comes down to organizing and doing all aspects better than others.

Chapter 2

Comparison of Common MEP Project Delivery Types

To ensure you have a common understanding of terms and processes, this chapter defines and provides hallmarks of the three primary delivery methods as they relate to MEP trades:

Design-Bid-Build (DBB)

Also called Plan-Spec (PS) bid work, this is the traditional approach of the owner hiring a designer consultant (architect) to produce a set of documents that can be taken to the street for competitive bidding. Historically, contractors are selected solely on their low bid, with no qualifications-based selection criteria. However, there has been a strong recent trend to include some preconstruction qualifications to the pricing criteria on DBB projects. For the purpose of utilizing this book to make improvements, it is assumed that the DBB projects you may be pursuing include elements of external preconstruction that could benefit from these strategies and ideas.

Pros

Familiar system—most everyone understands

Contract terms are straightforward, less ambiguity

100% designed, from a risk standpoint

Cons

Depending on the quality of the drawings, often sets up adversarial relationships if change orders are required due to design errors

Often more documentation and administration with requests for information (RFIs), drawing updates, change orders, etc.

Has limitations on complex projects or with schedule constraints since early involvement is not present

Design-Assist (DA)

This type is often formally associated with the GC for a Construction Manager At Risk (CMAR) contracting, or General Contractor / Construction Manager (GC/CM or CM/GC) project. This method is becoming more popular, being able to get early involvement by MEP trades, and usually involves submitting a response to an RFP that contains some performance criteria. This is often associated with Integrated Design Process (IDP) projects, where everyone collaborates early on in the design process in formal meetings. A true IDP project has everyone sign the same risk/reward contract, which is very rare; so, instead, everyone has the mentality of contributing early to the best interest of the project. The risk is transferred to the MEP contractor much earlier than in DBB, so this is advantageous to the GC; and an MEP contractor that knows how to take this on and add value can be an important partner in this delivery model.

Pros

Allows for early collaboration

Usually allows elements of qualifications to be included in award determination

Less bureaucratic

Cons

Higher marketing costs

Contract terms may be more ambiguous

Could be subject to abuse and favoritism by GC or owner (but could be a benefit depending on your approach and relationship)

Design-Build (DB)

Here the MEP contractor has full responsibility for both the design and construction, even if you subcontract out the design. There is usually earlier involvement and deeper interaction with the rest of the design team. As a result, there is greater risk and reward. DB is referenced in this book to include the permutations of Traditional, Progressive, and Stipulated Sum DB (see www.DBIA.org for more information on those). Unless teamed with the GC during the pursuit of a project, the project delivery relationship with a GC usually follows a Progressive DB approach, where the owner has input on the MEP contractors. The risk is transferred to the MEP design-builder even earlier than in the scenario of DA, so it is imperative you understand this process completely before pursuing.

Pros

More control over design; therefore easier to predict financial outcomes

Allows more opportunity for differentiation over competition based on creativity and innovation of your team and firm

Shorter delivery duration

Cons

Requires involvement by very experienced, technically-skilled individuals

Difficult to plan resources, as a large number of staff are committed and can’t be utilized elsewhere

Risk of holding design liability, requires errors and omissions (E&O) insurance

Nearly every project from a GC you can think of fits within these categories, depending on the makeup of the owner, design, and construction team, as well as their capabilities and preferences against the pros and cons above. An experienced MEP contractor who shines in preconstruction will be able to add more value in the collaborative delivery models of DA and DB and thus be able to differentiate themselves from their competition better on these projects. An experienced GC who has seen the positive effects of such a team will encourage the owner to lean toward this type of construction as well, and to bring on well-qualified MEP trades as early as possible.

Proposing these alternative project delivery types is fairly well prescribed in the public sector (school districts, universities, ports, etc.) and often by state laws. Of course, there are more permutations in the private sector where the owner is not tied to defined legislative contracting methods. Private owners have evolved to doing what has worked based on a host of project variables and their people’s expertise in those positions.

Chapter 3

Building a Preconstruction Mindset

Tools and processes do not build buildings; people do. Thus, this chapter is dedicated to getting your people to understand what is required to differentiate in preconstruction. This begins with articulating a defining message as to what makes your company unique, building loyalty with your employees, and then creating a culture around that and what it takes to stand out in preconstruction.

Your Why, What It Means to You, and Your Unique Selling Proposition

Do the market research, or consult a marketing firm, to see where your company image currently stands in the marketplace with respect to your competition. Ask your customers which of your competitors they like using and why, and what they feel is missing from the marketplace as a whole. Knowing your current position establishes an honest baseline from which to start. If there is a fair number of GCs that you’d like to work with that require preconstruction services from their MEP team in your market, then move on to the next step.

Take some dedicated time (with top executives if you belong to a larger firm) to really define what you want your company brand to stand for, why, and how better-executed preconstruction activities can help that. Not