Quality, Consequences and the Construction Industrial Complex (part 331).
“Design me a building and I am OK paying for design errors and omissions”, said no client ever!
However, building design and construction is an unusual business. For design, bid build projects the owner pays for design errors and omissions via the contingency budget. For design and build projects the client pays for errors and omissions and inappropriate value engineering via high operational costs and inefficiencies over the life span of the building.
The unspoken truth is that clients accept poor work product and defects in their building projects. They have been conditioned to do so (Stockholm Syndrome?) and for some reason, they do not demand great work nor impose consequences for poor work.
To keep this short let’s talk about designing buildings. There is a KPI on every project that is a referendum on the quality of the design teams work, it is called the Request For Information (RFI).
There are two types of RFI:
- The RFI that asks a question that can be found if the specification and drawings are read. This is lazy and can be answered with “contained within the issue for construction documents”.
- The RFI that is genuine. It identifies an issue that is real e.g. a drawing error, a copy paste error, incorrect design, incorrect services coordination or missing information.
In my experience, there are more genuine RFI’s than clients expect and they normally result in change orders paid for by the client from the contingency budget. Bottom line, the total number of RFI’s are inversely proportional to the quality of design work.
IMHO, the only way to reduce design Errors & Omissions (E&O) is to impose consequences for poor design work. The consequences have to sting i.e. be financial.
If I was the client I would gamify E&O as follows:
- Clients would deposit 5% of total design fees into escrow.
- Design teams would deposit 5% of their fee into escrow.
- Each RFI due to design E&O would result in a fine to the responsible firm of $1,000 drawn from escrow to the clients account.
- Each change order resulting from an E&O over $1,000 would be paid for in full by the responsible firm or their E&O insurance provider.
- Numbers of E&O driven RFI’s & change orders would be published following each project so a league table of the best performing firms can be developed.
- Design teams on projects that meet or beat an agreed benchmark on number of acceptable E&O driven RFI’s are paid out a bonus of 5% of their fees. Good firms and work must be acknowledged and incentivized.Consequences must be matched with rewards for great work. The building design and construction process is not good at rewarding great work. Bonuses for beating agreed KPI’s are as important and consequences for poor work.
Clients are the key to change. Great work must be demanded, incentivized and rewarded.
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