One important and far-reaching consideration design-build remodelers face is how much design work they should complete before securing a signed construction contract. This decision needs to be made, clearly defined and then shared with your prospects before you let them enter your design-build process.
It’s about managing expectations, so everyone is on the same page about what is included and when—well before you start working on any design. It’s also about making sure the purpose of design includes getting a decision to move forward or not.
What Are You Actually Selling?
I am writing this article based on the assumption you are a design-build remodeler. If you are a design professional selling design or a bidding contractor, you will likely look at this differently.
If you are a design professional looking to partner with a remodeler doing design-build, it’s important to make sure your design process will help that remodeler sell the job and not get in the way of selling it. In my opinion and experience, the traditional design model used by most architects and designers often delays the sale of construction and costs the client way more than necessary.
As a design-build remodeler, your clear goal should be to sell the contract for the construction, not sell the design and then see what—if anything—happens. As a contractor you stand to earn much more gross profit to cover overhead and earn much more net profit by selling the construction.
Sure, you can make money doing design, but nowhere near the amount you can earn by being a full-service, design-build remodeler. Plus, a permit-ready set of plans (with all the specifications built into them) is of no value to your business if your design client doesn’t commit to the construction.
By spending too much time finishing the design before getting a commitment for construction, you not only risk not getting that project, but you also risk the opportunity cost. The lost time might also keep you from selling another job.
So, if you call yourself a design-build remodeler, be sure you and your team are focused on selling the construction, not the design.
How Far to Take Design Before a Commitment
In the traditional design-bid scenario, the designer makes his or her money selling design, often using hourly rates billed for every hour of service. The more involved and the more hours needed for design, the more they can bill the client. As a design-build remodeler, I felt these designers had a biased motivation to sell more design, not help my business secure the construction.
Prior to adopting design-build, I was handed too many “complete” and detailed sets of plans for projects that never got built, usually because the design was way overbudget. The designers got paid to do the first set of plans as well as the next set, or more, as they sought to redesign to meet the client’s budget.
Do we really need to invest another 10 or 12 hours of design time to specify the details and exact shelf-height measurements of a mudroom closet before we can ask the client to sign the construction contract and get them and their job on the production schedule?
Choose a Design Process
The design-build retainer agreement that I used clarified the initial process of design. It stipulated drawings would be created as needed to express design concepts, so the owners could visualize the design intent. In addition to traditional, drawn plan views, my company mostly used “picture views” and “‘interior overviews” to help clients visualize new spaces and/or visualize the overall massing of the new or modified structure.
Our team will draw a built-in closet to see where it will go and its size but will leave out the details of shelves until after the client is committed to construction. The total price included the time to finish the design of that closet and/or draw the addition framing plans needed to apply for permit, but those things did not happen until the contract for construction was signed, and the check cleared the bank. How and when these things happened were each documented.
Choose Your Target Client
I admit that our process was not for everyone. It was designed to speed up the design and sales process to know as early as possible whether we would secure the project. We also trained our sales staff how to sell and get decisions. To keep the focus on securing a construction contract, sales staff should not get any commission on design work until they sell the construction contract.
Our process worked well for clients who wanted to make decisions. We opted for clients who prioritized doing something and getting it done by a certain date over those just thinking about it. Be wary of hiring indecisive salespeople; they will attract indecisive clients.
How to Tell if Your Prospect Is Decisive
Again, the process I briefly describe here is designed and intended for people who can and want to make decisions. One way we qualified whether the prospect was really prepared and committed to making decisions was to include a paragraph within the agreement we used. It simply reads:
“All plans and specifications shall be for the exclusive use of and will remain the property of Custom Contracting, Inc., until a construction contract agreement for the proposed work is reached between both parties. No plans will be given to owners during the design process.”
Indecisive prospects and those looking to bid out our design would never agree to that detail. That’s what I call prequalifying your target customers. QR
Shawn McCadden is a speaker, business trainer, columnist and award-winning remodeler with more than 35 years of experience. He can be reached at shawnmccadden.com.