RIVER EDGE, N.J. – As a partner in Peckar & Abramson’s New Jersey and New York offices, Levi W. Barrett spends a lot of his time pondering legal risk within the construction trades. Working closely with contractors, construction managers, owners, and developers, Barrett structures and negotiates contract documents—pricing risk into projects nationwide
During a session at Construction Super Conference, Barrett (pictured here at last year’s CSC in Hollywood, Fla.) shared his evolving thoughts during Pricing Risk – A Construction Insider’s Point of View.
Third Thursday sat down with Barrett to learn more about why the design-build model isn’t always so smooth.
Third Thursday: What is one key to success for design-build projects?
Barrett: From the design builder’s perspective, one of the keys to success is making sure that you’ve got a level of comfort and experience with the owner and the subject matter, and that the owner has experience with the subject matter as well.
Third Thursday: Where do parties tend to go off the rails?
Barrett: Parties get into trouble when there is a lack of experience with the delivery method, a limited understanding of the process, or a lack of familiarity with the ingredients that are necessary to make a design-build project successful. We need to make sure that parties understand the importance of appropriate risk allocation because we see parties that use design-build in a manner that it was not intended to be used. When you’re working with an owner who views design-build purely as a way to pass all the risks of the unknowns to contractors, you are starting out misaligned. Risk “dumping” is a practice to be avoided and a fair allocation of risk is a critical component of project success.
Third Thursday: What are the ingredients of a successful design-build project?
Barrett: A successful design-build project is one that is collaborative — where the parties have good access to one another and an understanding of the roles each party is expected to play. They can work through problems together as they arise. Where you don’t have those factors, and there isn’t a shared understanding of the need to have all of the parties rowing in the same direction, there’s cause for concern.
Third Thursday: What are the sources of tension between large general contractors and large design professional firms?
Barrett: It goes back to the way risk is allocated under a design-build contract. One of the tensions I’ve seen on the designer side is making sure the designer is psychologically oriented to work with a design builder as opposed to an owner. Many designers are most comfortable working directly for an owner.
Moving from design-bid-build to the design-build world can be a fundamental shift and it’s imperative that designers appreciate that change.
Third Thursday: How would you describe the tone of design-build discussions at CSC and or within the profession?
Barrett: It’s hard to put a fine point on that one. There’s a level of concern from the design-build community. There’s a desire for better alignment between the parties, making sure that everybody is engaging for the right reasons—and it’s not being utilized purely for purposes of unfairly dumping risk.. Design-build should be used as a means of fostering innovation, and allowing the market to resolve problems on the project front.
Third Thursday: What new issues are on the horizon for design build projects?
Barrett: I’m seeing a lot of talk and discussion in the market around progressive design-build as a way to strive for that alignment. Progressive design build is something that is gaining a lot of traction in the discussion groups around the United States for sure. It is a system where alignment between the parties comes first and the price comes a little bit later. The parties are allowed to gel. The project designs are allowed to come together and crystallize a little bit more, and then we get to finalize pricing. We’re not putting the price out there first and trying to make everything else work behind it.
Third Thursday: How do you like Las Vegas as a destination point for CSC?
Barrett: I look forward to getting together with my colleagues at the super conference regardless of the setting – but Las Vegas truly has a lot to offer right now. With the opening of the Sphere and some of the sports venues out there, I’m really looking forward to making the trip.
Levi W. Barrett is a partner in Peckar & Abramson’s New Jersey and New York offices where he serves as co-managing partner of the New Jersey office and chair of the firm’s Contracts, Project Documentation, and Risk Management practice. His primary focus is on construction law, counseling clients on all aspects of public and private construction contracts.
