The pros and cons of a D&B approach to office fit-out

The office fit-out market naturally lends itself to approaching a design and build contractor. 

When taking a new space, clients are usually on a tight timeframe to deliver a project and the nature of the design and build (D&B) contractors offering is more attractive, with the upfront, free of charge work, which is accompanied by space planning and visuals of the clients’ potential space.

In my experience, I have found that there are many clients out there, experienced or not, who are just not getting value for money on some extremely straight forward projects.

At MESH, we have been appointed on multiple schemes where there is already a D&B contractor on board.

With many successfully adopting and delivering this business model, I wanted to share some of my thoughts on this method, even if as an independent, client-side cost manager, the majority reading this may think there is only one way this article is going.

Thinking back to basic principles, what are the key considerations you should review prior to starting a project? Time, cost, and quality, and maybe we should also add risk ownership.

So, in office fit-out terms, let’s have a quick look at these four points and my experience in how they fair compared to a traditional project.

Is a D&B approach quicker?

Yes. Stakeholder engagement is never truly reflected in the original programme or promise, the pre-contract period takes longer than expected. However, in most instances, the D&B contractor can move quicker than mobilising a full design team, and they can have a very slick delivery method.

How do costs compare?

D&B isn’t necessarily more expensive as an overall figure but it can be that you do not receive value for money. The negotiation process is typically a painful one for all parties as it’s a lot of meetings going through the granular detail and challenging almost every item.

However, the result following our detailed interrogation of quantities, rates, and scope usually arrives at a cost reduction of approximately 5-10%.

In a more extreme example, one of our clients saw the price drop by 22% for the same scheme using this method.

This wasn’t just a result of either incorrect or not required items, incorrect quantities, or inflated rates. It was the result of all three. Either way, had we not interrogated, the client would be paying far more for the same product.

The initial costs provided will usually include numerous allowances that aren’t required but can’t be confirmed at the early stages regardless of who is carrying out the work. 

A key driver to why D&B is not value for money is because the client is expected to sign up to the total lump sum to transfer the risk, which means they are paying unnecessarily on a lot of straight forward fit-outs.

From a MESH point of view, it is also worth pointing out that we don’t just reduce and omit items, we point out if something is missing or feels too low, we act fairly to both sides. It makes the delivery phase far smoother and removes the risk of arguments and variations.

Does D&B result in worse quality? 

No, I wouldn’t agree that you would always get a poor product. I have been involved with some elegant and well finished offices that have been procured in this way.

However, in comparison to what they could achieve for the same spend, if a detailed design is priced competitively, the client does not receive value for money. But the time of the design and tender process, combined with the upfront cost of a design team, naturally deters clients from this route in the office fit-out market.

How does the procurement route impact risk ownership?

I’m not sure. D&B was intended to give clients a single point of responsibility, yet it may not be as black and white as this. I find that the “one stop shop” is great for leading design, coordination of packages, and delivery of the programme. However, the basis of the contractor’s bid is based on some form of employer’s requirements, which, depending on the quality, will be referred to in the event of a claim.

Any issues identified on site, or with the employer’s requirements, still attract extensions of time and/or loss and expense claims.

It’s imperative that a client proceeds cautiously without a professional team. In multiple instances, we have been brought into the project as a QS or employer’s agent just in time, which was after design had been instructed to the D&B contractor.

Martyn Stokes, director, MESH Construction Consultancy

The single point of responsibility should allow a smooth ride for the client with one person to liaise with, and some D&B contractors do this well, while others do not. The one stop shop ambition also relies on the same team being carried all the way through, which doesn’t happen in many instances.

The level of information provided to the D&B contractor up front will dictate how much risk is truly transferred. Prior to our involvement, I have seen varying levels of employer’s requirements.

These include:

• A developed design and the classic “design and dump” approach: This approach can cause time issues and doesn’t always work. There is not a lot left to design so it should really be competitively tendered.
• A general arrangement and an employer’s requirements document: This is my preference, as the expectation is set, and the layout is broadly fixed to allow pricing upfront which can help to understand affordability.
• Employer’s requirements document and functional content requirement only.
• Functional content requirement only: This can pose problems, unless managed well by both parties. The design process and difference in expectations can be poles apart and make for a protracted process and be unaffordable.
• A verbal brief.

Another important part of the early involvement of the D&B contractor is a validation of the existing services and condition of the space. A benchmark needs to be established. I have seen varying levels of these reports. 

However, if they are being commissioned, and the client is paying for them, then they should be comprehensive reports that state the condition of the proposed building and what works are required to resolve any issues. I have witnessed some scenarios where the validations have been paid for and haven’t provided the client with a useful document that can be used to make decisions on any remedial works that may be required.

The best examples I’ve seen is where a pre-construction services agreement is entered into to develop the design, including validations, costs, and programme. This is beneficial, as it offers the ability to use this set of information for a competitive tender should the proposal, mainly costs, not be in the right place. Where this route has been adopted, the D&B contractor delivered a great service upfront and presented reasonable costs.

This scenario has been successful, and we stayed with the single price on numerous projects ranging between £1.5m and £9m. While a competitive tender process may have achieved a better price, the time delay of a traditional approach in these instances would eventually cost the client more, so ultimately, we still demonstrated value for money.

It’s imperative that a client proceeds cautiously without a professional team. In multiple instances, we have been brought into the project as a QS or employer’s agent just in time, which was after design had been instructed to the D&B contractor.

Where this has happened, we have been able to negotiate the contract sum and ensure the contracts include the correct documents to allow control during and after construction and ensure both parties are treated fairly.

We have some great examples of projects that have been delivered to everyone’s requirements, where the contract is set up properly and the right pre-contract process has been implemented. The final product is typically good too, but I am still of the view you would receive better value for money going down a traditional route.

We have worked with a lot of D&B companies that regularly deliver a great service and I am more than happy to recommend them to our clients. However, there are those who do it badly and those projects are not fun for anybody. Not only do they usually cost everyone more money, but they also take longer than expected to deliver, and become projects that nobody actively likes to admit they were involved with.

At MESH, our role on these projects is to get to the right answer and ensure a robust contract includes enough information for all parties to know what everyone is signing up to. As much as it may surprise some contractors, our fees are not based on achieving a certain level of saving for the client.

In fact, we, as the quantity surveyor, are imperative in ensuring the client is comfortable they are receiving value for money and that the contract is being correctly administered, as well as, for the contractors’ benefit, making sure expectations are understood from the beginning

Martyn Stokes is a director at MESH Construction Consultancy