What Do Google Employees and Prisoners of the California Department of Corrections Have in Common?

There was an interesting discussion at the San Francisco Bay Area Design Build Institute of America Luncheon today, entitled “The Cost of Design-Build Pursuits.”

John Igoe, Director of Real Estate Design and Construction, discussed Google’s 1.1 million square foot Bay View campus being built down by the Bay in Mountain View.  He said that Google's marching orders to the design team at NBBJ was:  1) enhance the employee interaction; 2) make it as healthy as possible for employees; and 3) make it as green as possible while serving the first two goals.  Also on the panel was Mike Meredith, Project Director at the California Department of Corrections and Rehabilitation, who was careful to point out that maximizing the subjective quality of occupant interaction is not the goal of CDCR—despite the recent re-emphasis on rehabilitation.  CDCR tends to be more utilitarian.  However, Igoe and Meredith share a view that design-build is the way to go. 

Igoe reported that Google does approximately $150 million of tenant improvement construction per year, all of it design build.  For this work in existing buildings they bring the contractor in very early in the design process to guard against unforeseen surprises.  They are big fans of the “big room” and having the entire team collaborate.  “Tell any owner to do this,” says Igoe.  

Meredith from CDCR agreed.  He reports that the Department has obtained tremendous value from the design-build process.  He is hopeful that the legislature will remove all sunset provisions from existing design-build enabling legislation soon. CDCR uses a two-step process:  pre-qualification, followed by proposals by pre-qualified/selected teams.  “We believe D-B teams compete with each other” [to advance design further than the RFP might require, thereby providing great value for the Department], said Meredith.  He noted that one of the constraints on public entities is that they will always need to use an objective process.  There are a lot of stakeholders in public construction, and this limits some of the flexibility in team selection.  “Hire now, we’ll work things out later” won’t fly, said Meredith.  The need for transparency and accountability introduces costs that Google might be able to avoid.

The third presenter, Steve Steinberg, a principal with The Ratcliff Architects located in Emeryville, California, shared just how tremendously expensive it can be for design-build teams to compete for these projects.  They successfully teamed up with the Smith Group and Clark construction on a recently completed $431 million Highland Hospital Project in Oakland, California.  The team spent $1.8 million in pursuit of the project.  The owner provided a proposal stipend of $500,000 to the unsuccessful competing proposer.  Nevertheless, pursuing these projects is a high stakes proposition.

A clear challenge for owners, whether public or private,  is to evaluate the benefit that might flow from a given delivery method and to size a stipend to encourage a number of quality proposals, while still optimizing value for the owner.