The Passiv Report

Relational Contracting: Bringing Trust and Communication to Commercial Construction

I have been a proponent of true design/build methods for over 30 years. In the past, I have had a hard time expressing the benefits of true design/build, because the message gets muddied by the over use of the term “design/build” in a way that is not true to the master builder concept I promote. It has not been until the past few years that I have been able to talk about it in a way that begins to make sense to the industry. Terms like Integrated Delivery, Lean Construction, Big BIM and Relational Contracting. These terms begin to express the basic principles I have championed for years.

Imagine you are a pilot flying a plane, there are three dimensions (x,y,z) roll, pitch and yaw to control. As the pilot your brain is controlling all three “levers” (x,y,z) so to speak. Your actions are coordinated and your only “fear” is screwing up and crashing the plane. Now imagine that the same plane is being piloted by three pilots, but each is only controlling one “lever” and they are doing it not in the plane, but in separate offices on the ground with interactions limited by e-mail, phone or occasional meetings to communicate to the other two pilots. Add the threat of a law suit if they “screw up” their “lever”. What would happen? First, you would recognize that you had only control of one “lever” and to protect yourself from the threatened lawsuit, you would be very conservative with your lever. Second, you would try to communicate in good faith with the other two pilots controlling the other two levers, but because of lack of real time interactions, you would probably agree on some basic and conservative assumptions about how the “levers” would interact. Lastly, the chance that the plane would successfully take off, fly and land at the intended location may be accomplished but not in a timely or efficient way. And what if the plane crashes? Well then the lawyers get involved to try to point blame, when in reality the crash was caused by the process not necessarily by any individual’s actions.

This is typical project delivery.

I wrote a blog post a while ago about delivery methods and postponed talking about Relational Contracting. I wanted to address this in a post dedicated to it because it is so different. In relational contracting, the whole contracting method changes and becomes one in which all parties — owner, architect, engineers, builder, even subcontractors — join together to share responsibility and success (liability and profitability) for a project. This type of contract demands trust, open communication and breakdown of silos. In essence, if you take the analogy of the plane above, in Relational Contracting, all the team members are now in the cockpit together in real time and the successful take off, flying and landing of the plane in an efficient and safe manner is a life or death issue for them.

The cutting edge of delivery is Relational Contracting, in which primary actors share the responsibility for all aspects of the project. Individual liability is reduced because it is shared overall. In this method, the beginning point is the Owner’s business case including: cash flow, energy, finishes, life cycle costs, etc. At Structures, we have been delivering projects using this method for over fifteen years. Starting with the business case, with the responsibility for success of the project, also comes a huge amount of power and the ability to guide a project to a successful completion on all levels.

The most difficult part of this type of delivery is having an integrated team that can work as one. The problem is one of trust and communication. For my firm Structures, we have built relationships over 20 + years with our team members, so this has become second nature to us. At Passiv Science, my goal is to help guide other teams to the same type of success we have had at Structures. It isn’t always easy for folks to change the way they carry out projects, however, and the high level of trust and communication required in relational contracting can be startling. Many times when we take on a project it is the first time working together for some of the team members or the team members have worked together before, but never in this way, so there are old habits that need changing. I have methods for helping folks, but cooperation and the work of learning a new delivery method can be a difficult hurdle for many. For those brave folks who are interested in this type of methodology, I say, go in with your eyes open and find a guide that can help show you the way. The path can be very difficult at first, but well worth the effort.

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