Possibilities vs. Price: The Flip

When it comes to the typical building project's life, a need is first recognized, quickly followed by possibilities. Sometimes a little before. It is in our nature to dream. Somewhere between the need and the possibilities a budget is set, most likely the primary constraint to possibilities.

Or, maybe the primary constraint are the dreamers. More specifically, the "dreamer manager". The one that establishes the acquisition strategy.

In the construction domain, the "standard" acquisition strategy is to receive bids based on a set of plans & specs. The logic being: since the constructed results are all the same regardless of contractor, one should choose based on lowest (responsible) price. Based on this logic, the "standard" strategy risks price (budget satisfaction) to the solution (plans & specs). The plans & specs drive the price in the real marketplace. While the solution, one of many alternatives, may satisfy the functional needs of the owner, budget satisfaction is sacrificed. And since predicting markets are tricky at best and impossible at worst, the standard acquisition strategy is fragile and likely to fail budget satisfaction. And its important to note, the point of receiving bids is only the first attack on budget satisfaction: change-orders seem to always follow.

Now reverse the axiom of price and solution: to risk solution to price. When price (instead of solution) is fixed and the solution is bid from a menu of wants and needs (rather than dollars), then budget satisfaction becomes antifragile as the menu contains required elements that are well within budget, along with desired and if-possible elements in rank order. Budget satisfaction is antifragile because price is fixed to the menu, and the chosen menu items are expressed in offered solutions.. While the offers vary, the all meet the "required" scope. This concept is expressed in the diagram below.

• In design-bid-build (left), the owner decides a fixed solution subjected to offers for price from the marketplace: a fixed scope / variable price strategy

• In design-build (right), the owner decides a fixed price subjected to offers for solutions from the marketplace: a fixed price / variable scope strategy

With a fixed price / variable scope acquisition strategy, the project's scope (the menu of wants and needs) is satisfied by competing solutions. The details for how the menu (re: Preferred Price Priority Queue - 3PQ) will be discussed in a future post. As a case study, this is the strategy used on the designbuildoa.com/RSF project.