#3 - The Traditional AEC Business Model

Fragmentation is the biggest issue in the AEC industry. The facility delivery process remains fragmented, and it mostly depends on paper-based modes of communication. Errors and omissions in the paper documentation process often cause unanticipated field costs, delays, and eventual lawsuits between the various stakeholders involved in a particular project. These problems cause friction, financial expense, and delays. Efforts to address such problems have included; alternative organizational structures such as the design-build method; the use of real-time technology, such as project web sites for sharing plans and documents; and the implementation of 3D CAD tools. Though these methods have done little to reduce the severity and frequency of conflicts caused by paper documents or their electronic equivalent.

One of the most common problems associated with 2D-based communication during the design phase is the considerable time and expense required to generate critical assessment information about a proposed design, including cost estimates, energy-use analysis, structural details, and so forth. These analyses are normally done last when it is already too late to make important changes. Because these iterative improvements do not happen during the design phase, Value Engineering must then be undertaken to address inconsistencies, which often results in compromises to the original design.

There are three dominant contract methods in the United States:

• Design-Bid-Build,

• Design-Build, and

• Construction Management at Risk.

And, in India, there are six major contract methods:

• Lum-Sum Contract

• Percentage Rate Contract

• Item Rate Contract or Unit Price Contract

• Cost Plus Fixed Fee Contract

• Cost Plus Percentage of Cost Contract

• Special Contract

A new method, quite different from the above methods, called "Integrated Project Delivery" or "IPD" is becoming increasingly popular with sophisticated building owners.

These methods are briefly described in upcoming articles.

Next article, Design-Bid-Build Method

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