Who Owns The Plans?
Shawn McCadden is a leading remodeling industry expert on the topic of Design/Build. He was the owner of his own multi-million-dollar design/build remodeling business; Custom Contracting, Inc., in Arlington, Massachusetts, incorporated in 1991. Accomplishing his original business goals and his written business plan, his business was employee managed by 1996 and he successfully sold his business in May 2004.
In the article below Shawn discusses ownership of plans and specification in a Design/Build Process.
Who Owns the Plans?
Consider the definition of Design/Build. In a true Design/Build situation, the purpose of the plans is to facilitate construction. Otherwise, there is no purpose for offering design unless you want to offer design as a separate service. This statement may upset some, but consider why you are, or why you became a Design/Builder. Was it to sell design, or to sell the project? For this article we will assume your purpose was to sell the project.
A Way of Doing Business
Making the decision to only offer design services with the condition that you will also get the building contract for the project takes guts. This is one reason I say Design/Build is and should be considered a way of doing business, rather than just another service to offer clients.
One way to ensure that this will happen, and the client will not show your plans to other contractors, is to maintain ownership and possession of all plan copies until a formal commitment for construction is arranged. The client can view the plans at meetings, or visit your office to see them between meetings, but they can’t keep any copies until you are sure that your company will be the only one using them.
Making this choice may leave some possible projects or clients behind. Some contractors might say, “then I will lose the project”. However, keep in mind that you can’t lose something you don’t already have. Offering design in the hopes of getting the build is not necessarily considered Design/Build; perhaps that should be called something different. In most cases, doing the design before you get a commitment from your clients for the build puts you into a bidding situation, something most Design/Builders seek to avoid. If you want to consider this model as a way of doing business, perhaps you should wait to try it until you have a comfortable backlog of work. Making this change will expose new requirements of you, your business and your employees.
A Different Sales Style
If you are committed to the marriage of design and build as one process, typically the greatest challenge or change will be a new or different sales approach. Convincing the client to select your company, give up the three bid option, and pay for a design they will not necessarily get to keep unless they go forward with your company, requires some heavy convincing. But, by doing so, it also qualifies whether the client is really committed to your company. Before you drop the “no keeping plans until construction” bomb on a client, be sure you explain your process, and confirm they fully understand how it works and what benefits they will enjoy should they choose to work with you. To accomplish this I found it helpful to let prospects know my process was different than other contractors and doesn’t work for everyone. I would then ask if they would like me to explain my process so they could decide for themselves. I found getting permission to do so always made it less confrontational because they then knew I wasn’t trying to convince them to do something they didn’t want to do, they had a choice.
Selling the Benefits of Your Process.
First, explain your Design/Build process to the client and how it works. If your client is committed to construction and you have confirmed the scope of work and budget as realistic, they can realize many benefits. The overall process can be quicker and more cost effective than the traditional design-bid-redesign-bid- hope to build scenario many of us have lived through. Pricing of the project should happen simultaneously along with the design. This helps avoid designs or project features that will ultimately bring the project over budget. The client can also commit to a higher budget during the process, but don’t keep designing without a formal commitment. Waiting days or perhaps weeks between the viewing of design options and receiving cost estimates can drag out the process. This may frustrate you as well as your clients. If during the design the client is confident about your company and the design, they can commit to the construction even before plans are complete. If they do this, you can put the project into your construction schedule, complete the plans, and apply for permits so the project can begin much sooner than what is typical with the traditional process. Keep in mind that this process is for clients who can make decisions and stick to them.
Back Up Your Process with a Written Agreement
If this process is new and confusing to you, just think about how your client will feel during the discussion. Create a written agreement that describes your process, and use it during the sales call as an outline for the discussion. (Click here to request a Sample agreement) If your agreement follows the critical path of the overall process, including the design and build, the client should see how and why your process works. This will either convince them that your company’s process is for them, or will quickly identify that they cannot work with your way of doing business. Include the total cost for design and how it will be paid. Instead of calling it a design agreement, consider calling it a construction retainer to start design. With this option the design fee is part of the overall construction cost, not a separate fee. Include language specific to ownership of the plans and how clients can view plans between design meetings. Let them know what happens if they do not go forward with your company for construction. Have they forfeited the cost of design and get no plan copies? Some companies charge an addition fee, up to twice the original fee, if the client does want to purchase and use the plans to show other contractors.
Don’t Get Mad at Me!
The process described above is not for every contractor and it’s not for every client. What I have described should be considered one option, not the rule. True Design/Build is one process, not two separate processes. Many other processes are being used with great success. If you have a process, that includes construction as the purpose of that process, let me know about it. Other readers may benefit from your process as another option to consider. Perhaps a future article can share some of those options. I would love to hear from design firms that include construction in their process.