Reflecting on the first Futures Forum: The Form of Things to Come (www.future-re.com), at which a small number of powerful executives who are collectively charged with writing the checks for billions of dollars in new design and construction projects considered provocative and important issues related to the future of building.
The commercial design and construction industry with its $700B of annual spend (equal to three times the size of the US automobile manufacturing industry) is a significant driver of the US economy. The industry directly employs some 3-400,000 architects, engineers and consultants along with approximately 10M building contractors and trade workers. But are all these man hours directed toward the best outcomes?
The Futures Forum participants are decision makers who will hire tens of thousands of these architects, consultants and contractors who will create millions of square feet of new environments to support learning, working, living, research and healing.. Collectively, they represent significant heft in the industry and their thinking mirrors concerns shared by others throughout the industry: how to align what gets built with the mission of their organization.
Buildings take years to design and build. Think back to what was happening 3 or 4 years ago. How much has changed? According to the Associated General Contractors (AGC), the cost of construction materials rose at twice the rate of the CPI (32% vs 15%) between 2004 and 2008 as the country embraced one of the most robust building booms since the end of World War II.
How much has changed in the last 6 months? We’ve gone the other direction. Credit markets have frozen, GDP has dropped by 9.3% (1). Unemployment has risen to 8.5% (2). What’s next? The coming 12-18 months, according to the AGC,will see increased volatility in the availability of materials, higher price spikes, transport bottlenecks, fuel price swings and increasingly uncertain costs. The AGC goes further to project Producer Price Index increases of at least 6-8% for the industry and an increase in construction labor costs of 3-4%. How does one manage investment in long duration projects amongst so much uncertainty? Data: (1) Bureau of Economic Analysis (2) Federal Reserve, Bureau of Labor Statistics
The small group of powerful executives who participated in the Futures Forum share one fundamental concern: They are about to spend billions on buildings that will not be optimized around what they need when they are completed. They believe that current processes and practices will result in as much as 25% of their investment being totally wasted. They will to a great extent, build the wrong buildings. Tens of billions of wasted investment.
Their fundamental issues do not center on the transparency of pricing or the integration of new technologies like BIM. They looked much farther to ask: How often do we spend years designing and building a solution to a problem that’s no longer a problem? How often do we invest heavily around the viewpoints of key stakeholders, only to find they’ve moved on and a new set of stakeholders now exists to inherit the previous vision?
How often do we design to accommodate a set of criteria only to see it change once, twice or three times before the process has been completed?
In the healthcare industry, hospital administrative teams can turn over completely every 2-3 years. Doctors can turn over more often that that. For the typical 4 year, $200M new hospital, this can mean that the team of doctors, hospital staff and administrators that provided design guidance at the front end of a project has turned over not once but twice before the completed building is moved into. New perspectives, new viewpoints, new requirements imposed on the project. Healthcare technology is changing even faster, and just as profoundly.
The healthcare industry is not alone. All industry segments engaged in the design and construction of facilities are exposed to the same uncertainties and the same volatile market dynamics. Higher Education is searching for more public/private sector collaboration and greater employment of mixed use building models. Office user/builders, long considered the most adept at developing efficient buildings are searching hard for new strategies to squeeze even more value and integration from the design and construction process. All industries are dealing with the increasing pace of technology development and deployment and the corresponding impact it has on buildings. Buildings can simply no longer be designed around specific technologies –they change too fast.
How can processes deal with such a dynamic and changing landscape and how can they be re-envisioned to align more fundamentally with usable outcomes? What has to change?
The Futures Forum will continue to engage thoughtful leaders to rethink these provocative and important questions.
