Rice Building Institute hosts focus group of industry leaders

Rice Building Institute hosts focus group of industry leaders

BY B.J. ALMOND
Rice News staff

The building industry suffers from outmoded traditions and sorely needs to be renovated, according to more than 100 industry leaders convened by the new Rice Building Institute (RBI).

During a recent series of focus-group meetings at Rice University, the RBI surveyed 102 industry leaders representing every major discipline involved in financing, designing, engineering, constructing and managing the built environment.

Complaints about the industry ranged from the lengthy process of designing and constructing a building to the lack of compensation for extra work not described in the original plans.

“The industry leaders we interviewed were of the highest caliber in each of their fields,” said Lars Lerup, dean of Rice’s School of Architecture and the William Ward Watkin Professor of Architecture. “Despite their diversity of expertise and concern, they shared one important belief: The current cooperative practices used to synchronize the complex processes leading to the production of buildings are badly broken.”

The Rice School of Architecture established the RBI last year to research these issues and foster collaborations among industry, community and academic leaders in hope of finding innovative solutions.

“Creating the built environment in the U.S. accounts for 8 percent of the nation’s gross domestic product and involves
1.2 million companies,” said Joe Powell, executive director of the RBI. “The industry is large, fragmented and burdened by a wide collection of outmoded traditions, and none of the major players are happy.”

During the focus groups at Rice, developers, owners, users, lenders, architects, engineers, general contractors, major subcontractors, real estate advisers, real estate attorneys and regulators shared their complaints about the system.

Owners and users noted that because of the rapidly evolving business environment, by the time a building is programmed, designed, constructed and occupied, the original purposes may have changed, making the new building largely inappropriate.

“Today’s project delivery systems have become so complex, with so many experts involved, that it’s easy for teams to lose focus and drift away from the most important possible issue: Are we effectively addressing the owner’s original needs?” said Nick Greco, ExxonMobil’s vice president for global real estate.

Architects recalled incidents in which after their fees had been negotiated down to the absolute minimum, they were asked to tackle problems that were never envisioned. Consequently, their creativity in solving complex problems was often in less demand than their willingness to respond to compressed and unreasonable schedules.

“The traditional system of design/bid/build simply does not fit the current marketplace and economy,” said John Cryer, CEO of PageSoutherlandPage, Architects and Engineers. “Our clients’ needs change so rapidly that we must be able to respond with ‘just-in-time design’ complemented with ‘just-in-time pricing and delivery.’”

Engineers shared similar complaints about compensation and time, noting that most projects are poorly managed complex undertakings for which engineers take up a lot of the slack and provide management services for which they don’t get paid — often in a crisis mode.

General contractors cited the substantial money they have at risk. They’re commonly asked to provide hard pricing based on inaccurate and incomplete construction documents and then expected to make things right when confusion occurs.

“General contractors typically have powerful expertise in dealing with money and time,” said Leonard Rejcek, president and chief operating officer for Manhattan Construction. “Our early involvement in the design and engineering process goes a long way in avoiding expensive rebudgeting and rescheduling.”

Major subcontractors noted that because they actually build the buildings, most problems with budget and time get dumped on them, and reworking a job has become commonplace.

“The problems are almost always the result of insufficiencies in management and communication,” said John Anderson, vice president of El Paso Corp.

“The complex, long-standing issues won’t conveniently yield to conventional thinking,” Powell said. But he cited a few concepts that the industry leaders agreed to:

• Not only do buildings need to be more adaptable, but so do the processes used to create them.

• Traditional sequential project delivery systems must yield to an integrated team approach that allows more experts to get involved earlier in the process.

• New management structures need to be developed so that the performance of one set of experts isn’t sacrificed for the motives of another.

• The entire team of interdisciplinary experts should be put in the same financial boat with similar incentives, risks and rewards to stop the tendency for one group to be hired to “hard trade” the competition.

• Insurance and bonding professionals should help devise more appropriate risk-management protocols for the new organizational structures that are necessary to improve the industry.

“We need new forms of project delivery to pull the technical knowledge of manufacturers and specialty subcontractors into design,” said Charles Thomsen, chairman of 3D/International.

Powell noted that in addition to conducting research to define new insights, the RBI plans to offer executive education to improve performance, publish findings to make them available to industry personnel, and host symposia to facilitate ongoing re-evaluations of the industry and continual improvement.

Professionals interested in joining the RBI founding board of directors can contact Powell at <jmpowell@rice.edu> or 713-348-5577.