Building Infrastructure-Sustainable Design-Build Opportunities

Introduction

Facility planners and associated financial advisors will state that first cost investment into a building program can range from 15 to 20 percent of the total cost over the life of this building. This rule-of-thumb is based on buildings that routinely have a sustainable life of 40 to 100 years in use. The reality of the associated building infrastructure is that mechanical and electrical systems have a useful service life in the range of 20 years on average. The useful service life of communication systems, based on rapidly changing computer technology, is more along the lines of five to 10 years. As a result, the design-build industry and, more specifically, the “trades” can and have played a significant role in providing on-going building solutions in the following areas of business:

• Healthcare and especially hospitals.
• Museums and libraries.
• Institutional buildings such as courthouses.
• Colleges and universities.
• Government buildings.
• • K through 12 schools, high schools, and private schools.

All these facilities are built to endure over the long haul with interior upgrades, repairs, and replacement of building infrastructure. Design-build trades have been providing infrastructure services quietly over the past 40 years. Now it is time to elevate their services and raise awareness of the sustainable design-build opportunities that are in need because of building owners’ urgent needs, capital planning, and energy conservation measures.

Who Benefits From Sustainable Design-Build?

Since the late 1980s building commissioning has grown significantly. Initially, commissioning began when building owners and operators were dissatisfied with the facilities’ heating, ventilating, and air-conditioning (HVAC) systems. The result was the publication of commissioning guidelines produced by ASHRAE (American Society of Heating, Refrigerating, and Air-Conditioning Engineers) in the 1990s. Today it is a prerequisite for any LEED™ (Leadership in Energy & Environment Design) new construction certification project. The “driver” for commissioning services has been and continues to be unsatisfied clients. A second driver is the more educated building owners and operators who recognize the value of commissioning with improved system performance, less construction phase issues and concerns, and a job that operates more energy efficiently on the first day of occupancy.

The design-build process is positioned to embrace building system commissioning with the design-build industry’s single-source solution approach to problematic issues and concerns. Staying “below the radar screen” for all these years, many mechanical, electrical, and communication “trade” firms have overlooked the annual business opportunities that sustainable design-build opportunities provide. For most in the building industry, design-build is perceived as a single-source solution for new construction, major renovations, and roadwork. The mechanical, electrical, and communication system infrastructure needs that make up a facility manager’s operating budget each year are overlooked. Whether it is deferred maintenance that contributes to a reduced equipment service life or a need to reduce utility operating costs, design-build solutions are usually not marketed as the answer to the problem. Those on the client’s side of the action plan, who can benefit from this often-overlooked business decision, are the building owner, building manager, facility manager, and asset manager. On the implementation side of the client’s action plan can be the mechanical, electrical, and communication trade firms. Clearly, this is a win-win situation that has not been aggressively pursued as a partnering opportunity for all.

What is BI?

Building infrastructure (BI) consists of those systems that serve the facility and the associate equipment that make up each system such as the following:

• Central heating plant
  • Boilers
  • Pumps
  • Heat exchangers
  • Feed water pump and  receiver set
• Central chiller plant
  • Chillers
  • Pumps
  • Cooling towers
• Central air systems
  • Air-handling units
  • Heating and cooling coils
• Specialty systems (to name only three)
  • DI water
  • Process water
  • High purity water
• Compressed air systems
  • Compressors
• Automatic control systems
  • Building automation computer
  • Direct digital controls at terminal equipment
• Communication systems (to name three)
  • Intranet
  • Fire alarm
  • Security
• Electrical power (to name three)
  • Normal power distribution
  • Emergency generator
  • UPS (uninterruptible power system)
• Lighting systems (to name three)
  • Exterior lighting
  • Interior perimeter lighting
  • Specialty lighting

Each of these systems and their associated equipment and distribution provide sustainable design-build opportunities for the trade firms because all of these systems have an estimate useful service life far less then the life of the buildings they support. The pressure to replace, upgrade, modernize, and/or expand these systems is discussed by building owners and operators on an annual basis because of the building application now and in the future.

Sustainable BI Drivers

A measure of investment for equipment is to benchmark the repair cost divided by the replacement cost for this piece of equipment. This measurement is called Facility Condition Index (FCI) and is frequently used by colleges and universities as well as institutional and government facilities. If the repair cost is less than 30 percent of the cost of replacement of this equipment, facility managers are apt to continue to invest in repair and continue to operate the equipment. Other managers may have a cut-off as low as 25 percent or as high as 35 percent. Once the repair costs reach 50 percent of the replacement cost, it is usually a good business decision not to continue repairing an antiquated piece of equipment. The decision of repair versus replace can be influenced by several factors such as annual operating budget, anticipated building expansion, and financial condition of the building owner.

A second BI opportunity driver is to recognize that the equipment has reached and/or exceeded its useful service life. An example of this is a cooling coil which has an estimated useful service life of 15 to 20 years. After that, the coil drain pan may have deteriorated to the point that replacement is essential.

A third BI opportunity driver is equipment reliability, which can have disastrous results should the equipment serving a clean room environment, an operating suite, or an industrial process fail unexpectedly. Closely associated with reliability is liability. In the case of an operating room system failing, the financial impact resulting from legal issues can be in the hundreds of thousands of dollars. If an industrial process fails to deliver on a special shipment, it can result in loss of the client’s business.

Today, as in the past, energy conservation and reduced utility operating costs raise awareness as the economy rises. This is a sustainable design-build opportunity driven by the economy for those trades in the business of reducing mechanical and electrical operating cost. It is not unusual in some states for utility companies to offer energy initiative/financial incentives to en-courage building owners and operators to reinvest in their BI by upgrading equipment, retrofitting systems, and/or changing out antiquated technology. This BI opportunity may also be influenced by another opportunity driver: capital projects.

Capital projects can be classified as major building renovation or building expansion. In either situation, the BI can be impacted. As a result, sustainable design-build opportunities exist to upgrade vintage system ap-plications and/or expand the primary infrastructure such as the central heating and cooling plants, as well as increase the electrical power to the facility or expand or replace the communication systems within this building. Integral with capital projects is the LEED™ new building certification. Another certification that is more BI driven is the LEED™ Existing Building certification.

This second type of LEED™ opportunity will most likely include energy conservation measures that will impact BI. While new construction and major renovation activities may rise and fall with the economy, existing buildings striving to reduce energy consumption are an attractive and enduring design-build application. A by-product of LEED™ is the marketed image that the building, building owner and operator, and the occupants are working to improve this facility’s effect on the environment — a good-for-the-environment and good-for-the-community policy.

A Culture Change for the Trades

Transforming a subcontracting trade firm in a design-build firm leader is a major culture change for mechanical and electrical contractors, as well as consulting engineers associated with the design-build process. It is less of a change for the communications industry that has for the most part been providing single-source solutions over the past 20 years. The cornerstone for trade contractors adjusting to design-build is that for the past 40 years these contractors have been followers of the general contractor and the construction manager. The design engineer has been under the dark cloud of errors and omission liabilities over this same period of time. Neither is comfortable with teamwork, leadership, or single-source responsibility. They have been much more comfortable not taking ownership and “pointing the finger of blame” at the other parties. Design-bid-build inherently encouraged consultants and the trades to participate in finger pointing and assigning blame because of its low-price, adversarial method of project delivery processes.

Experience has shown that consultants struggle with providing limited scope of work that would lead to them accepting ownership for the design. The trades also struggle with this limited performance-based documentation although they have historical data on their side. Each trade has an in-house estimating group that has a wealth of information to assist in firming up a complete project price.

The cornerstone of this culture change is the design-build management skills needed to chart the course and guide the team. Whether a consulting engineer or the trade project manager, the leader of the design-build effort must be a visionary. This individual must communicate to the design-build team what performance-driven deliverables will be turned over to the client. Analogous to purchasing a car, the prospective owner must set the budget, identify the features needed and/or desired, and establish the required delivery date. Buyers understand that if their budget is $20,000, they need to go to car dealerships that sell $20,000 vehicles and not waste time looking at and pricing $50,000 vehicles. Each automobile manufacturer can demonstrate they have a quality control process. The prospective buyers can also purchase their cars with the preferred features such as electric door locks, air-conditioning, and CD player. They can find in their budget range a vehicle that meets their energy consumption requirements too.

This same vision and philosophy should be applied to the design-build process. Just like the car buyer who isn’t interested in distributor wire size, fuse sizes, or pressure rating of the tires, the design-build team should propose a performance-driven product based on the client’s needs. Needs such as close temperature and humidity control, an estimated annual energy budget, and emergency power are just a few of the possible design-build project requirements. Getting into the details of less important building system criteria, such as wire size (it has to be per code), pipe material (it has to be tight), and type of automatic controls (they must achieve the energy budget) are issues that don’t come under the performance-driven requirements.

This business approach is built on teamwork and trust between the client and the design-build team. Trust is essential because the process moves forward based on anticipated performance. When an automobile is purchased within budget and delivered on time, a buyer has certain expectations about  the car’s performance (accessories, MPG, etc.). This buyer trusted the design-build team who designed, built, and delivered the product. Sustainable design-build opportunities must be built on similar client trust. How a design-build team establishes a reputation for trust and high quality performance takes time. Reputations can be improved through networking, lecturing, and design-build presentations. Frequently these initiatives lead to negotiated work or, at least, Request for Qualifications and Request for Proposals that will be awarded based on best value.

Design-Build Management Tools

The foundation to a performance-driven scope of work is what can be titled the “concept package.” This is the design document that itemizes the project needs and goals. An example of a design-build concept package for a chiller replacement may be the following:

• Introduction that itemizes the client needs, both short term and long term.
• Project budget.
• Due date — Turnover to owner.
• Cash flow over project timeline.
• Design parameters (chilled water supply temperature, 24-7 year-round application, etc.).
• Equipment selections (capacity and physical size).
• System flow diagram — Sequence of operation (per season).
• System flow diagram — Pipe size.
• System flow diagram — Electrical.
• System flow diagram — Structural weights and concrete pads.
• Project cost including hard costs (construction costs) and soft costs (consultants, furnishing, etc.) for-matted into Division 1 through 16.
• Commissioning process and project closeout.
• One-year (or more) warranty and preventive maintenance contract.

While the design process may be somewhat customized on a job-by-job basis, there are design-build tricks-of-the-trade for estimating the design. In this age of estimating computer software, historical data from an estimating database can efficiently streamline the design-build process. Using this chiller replacement as the example, estimating groups should have historical data formatted into the following categories:

• Chiller and cooling tower equipment cost per ton.
• Piping estimates per hundred feet based on material (i.e., schedule 40 steel, schedule 80 steel, copper, etc.) with and without insulation.
• Equipment assembly costs including the pump cost, assembly cost, concrete pad, inertia pad, electrical power wiring, etc.
• Cost per Division (i.e., percent of construction for Division 1).
• Year-one preventive maintenance service contract.

In addition to these suggested design-build tools, there should also be checks and balance verification using such methods as:

• Project estimate verification based on “furnished and installed” — Cost per ton.
• Project estimate breakout (i.e., 20 percent piping contractor cost, 35 percent equipment cost, 25 percent sub contractor cost, 10 percent startup and commissioning cost, and 10 percent warranty and PM cost).
• Project cash flow versus design-build timeline/due date (i.e., how much money/labor is feasible in a particular month).

When estimating a design-build job, it is important that the team participate in “team estimating,” where all participants contribute to the concept package scope of work, cost estimates, and timeline/deliverables. Consensus should be the determining factor as the design-build performance is compiled into a design-build proposal. The estimating process should also include visualizing the installation as the team takes into account phasing, rigging, etc., that will be necessary to complete demolition and install the new equipment. The estimating process must be more dynamic than conventional estimating because the process is built on performance requirements, historical data, and experience versus the design-bid-build process of drawings and specifications.

Summary

Sustainable design-build opportunities can be endless when the process focuses on building system infrastructure as a core business for the mechanical, electrical, and communication trades. Unlike new construction business that is influenced by how the economy is doing, infrastructure repair, replacement, expansion, and energy conservation have much less to do with the economy and more to do with both immediate and long term needs.

To venture into the design-build infrastructure business, the trades need to recognize and restructure their organization to a visionary, proactive firm and move away from reactive design-bid-build. The opportunities can be permanent.