Alternative delivery methods have entered the commercial aerospace market in full force. And as with many methods and approaches new to a market, there’s a learning curve.
At RS&H, we’re well-versed in the aerospace industry and the alternative delivery sector, leveraging that combined knowledge to best serve our clients. Below, we share some tips on what commercial aerospace companies should know about alternative delivery.
1. Consider progressive design-build.
Progressive design-build is gaining prominence because it can lower price and shorten schedules.
Design-build is great when you have key performance indicators, clear, well-defined boundaries and parameters in place at project outset and a lot of experience with the work. But design-build doesn’t do as well when there are a lot of unknowns, like there can be in commercial aerospace projects.
Traditional Design-Build Drawbacks
In traditional design-build, the prices you’re getting from bidders across the board are based on initial plans. They will naturally include contingencies and assumptions (costs for materials and tradespeople, expectations for ground conditions of the soils, etc.) because you are at a preliminary stage.
The same thing happens with schedules – because there are unknowns, the schedule will have to allow for surprises down the road. That can drive the price up and push your schedule to the right.
Progressive Design-Build Benefits
With progressive design-build, there are continuous price and schedule updates, and you as the owner don’t have to lock in to an overall price. Instead, you lock in to prices in phases. The first phase includes design up to a determined percentage (often around 60 percent) and pre-construction services, with limited scope and fees.
Once everyone feels comfortable with design, the second phase begins with a not-to-exceed lump sum and takes design to 100 percent, followed by construction. In this method, the owner is empowered to determine the moment to lock in on the design. You can wait until 75 percent of the design has been completed or you can decide on it at 50 percent completion.
As quickly as the launch vehicle, flight hardware and payload or processing needs change, aerospace companies need to respond to adjust course. With progressive design-build, owners benefit by reducing their risk of cost and schedule overruns, while being nimble in developing the infrastructure needed.
Progressive Design-Build Drawbacks
There are, of course, potential downsides to progressive design-build. The owner selects teams based on qualifications and is not selecting based on price or schedule. This can worry cost-conscious owners who want to have cost certainty and confidence.
Some owners combat this, though, by asking proposers to give a rough estimate for proposed cost and schedule, incorporating that into their decision-making as a gut-check on the team’s understanding of the overall costs. Owners will also receive continuous cost input from the team throughout the first phase and be able to help make decisions that influence cost – as opposed to trusting an initial number at project outset.
Once the first phase has been completed, the owner does have the opportunity to reject the guaranteed maximum price for the rest of the project and re-procure for additional bids, but this can delay progress. In some ways, though, this speaks to this delivery method’s broader empowerment of owners, allowing them to shift directions if need be – which is not as easily done with other delivery methods.
In addition to cost concerns, the owner also needs to be prepared to make decisions along the way or risk a continuous iterative design process that doesn’t progress forward; the team behind the owner needs to be skilled enough to communicate when things start to go off-track and to help the owner make the necessary decisions.
2. For agility, choose partners who have alternative delivery expertise.
Aerospace is not for the layman and neither is alternative delivery. In design-build and progressive design-build, you have the opportunity to plan out your schedules, shuffling the sequence to best suit cost, time and product quality elements.
There are essentially three horizons that you need to be considering and planning for at all times: horizon 1 – immediate, horizon 2 – next, horizon 3 – future.
If the team is not experienced in the phasing and sequencing aspects, you might not get the most out of the delivery method and its cost and schedule benefits. You have to understand the traditional path for alternative delivery to identify the critical path.
On top of that, you’re more likely to make mistakes if you don’t have this experience – and more likely to get rattled when inevitable issues crop up.
A team with alternative delivery insight understands phasing, sequencing and planning across all horizons and as a result has the agility and decisiveness to adapt as needed. That yields considerable benefits for you and your project, leading to increased creativity, innovation and efficiency.
3. To mitigate risk, the team has to talk about it.
Sometimes, alternative delivery teams don’t think to share their concerns about risk with the whole group. They talk about it internally within their own companies but don’t share thoughts with each other. Especially when money comes into play, it can be all too easy to avoid the subject. But that’s when risk is actually heightened.
To lower risk, groups need to have honest discussions about how to mitigate it – then, you can adequately plan for it. Different groups will identify risk in different areas of the project and think of different solutions, allowing all ideas to be considered and the best to rise to the top.
4. Look for strong relationships.
Where risk is involved, strong relationships are key. Mistakes are going to happen. What determines the success of the project is whether the team puts a plan in place for when mistakes happen – and whether they then have the strong relationships to communicate about the issue and act to resolve it. That comes from experience.
You don’t want companies to be figuring out how to work as part of a design-build team on your dime.
(An additional note: You also want to choose an aerospace design partner who has grown up in the industry – or better, one whose designers have grown the industry.)
Beyond risk, alternative delivery methods by their very nature require strong collaboration and need teams that can effectively communicate. A design team that has experience working with contractors (and vice versa) is going to be more efficient and collaborative. Design firms experienced with alternative delivery also have existing solid relationships with contractors. By understanding who to work with, alternative delivery professionals ensure the team has the appropriate expertise to deliver the outcomes owners expect – and then some.
5. Get ready to make the sausage.
In traditional design-bid-build, the sausage comes prepackaged. Sure, you’ll make some changes to the design, but it’s already been packaged before you see it the first time.
With alternative delivery, you’re going to help make the sausage. That can be empowering and lead to more collaborative, creative, innovative products, but it is an entirely different process.
You’ll have more hands-on engagement with the project in brainstorming and charrettes. You’ll also be making more decisions in real-time than you may be used to.
In short, it will not just be a different delivery method for your project. It may also at first feel like a different experience for you as the owner – another reason to have on your side a team of experienced alternative delivery and aerospace professionals.
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