Mechanical, electrical, and plumbing

and the benefits of Design-Build vs Design-Bid-Build

Okay, folks.

Let’s dig into Mechanical, Electrical, and Plumbing (MEP).

When it comes to MEP, I want to emphasize strategy versus tactics. (Note: If you’re desperate for tactical stuff, i.e., why I prefer electric mini-splits over PTACs, shoot me a message on Twitter, you big nerd).

At any rate, what do I mean by strategy versus tactics?

Well, look. Let’s get realistic. Unlike interior design choices or selecting amenities for your buildings, you’re never, EVER going to miraculously wake up one day and be a mechanical or electrical engineer. And, if at the end of your first ground-up development, you miraculously have become an expert in fire suppression techniques or heat distribution channels, I’m going to politely suggest that you spend more time with your pro forma and less time with the nerds in the boiler room :-)

What I’m getting at here is that your responsibility as a developer includes developing fluency in the process of development, not deep expertise in every single system that comprises the build. For that, we hire trusted architects and engineers.

Heating, ventilation, and air conditioning (HVAC) systems account for most mechanical design work in multi-family developments. Your mechanical engineer's job is to create a cost-effective and efficient system that meets the needs of your tenants as they move from their private spaces through the public spaces and back again. They’ll focus on equipment capacity and designing smart systems. They’ll figure out where to place air vents, boiler pipes, coolant lines…The list goes on and on. The engineers need to work in tandem. For example, the electrical gear needs to be sized appropriately to handle your mechanical loads, etc.

Again, you need familiarity with these systems so you can ask questions.

For example, my buddy Kirk Pennings at Yellow Tree was recently looking at a project in Arizona. In Arizona, the MEP needs to be fully completed before you can get your building permits, so he was looking at fully designed plans that had individual water heaters in EVERY unit :-0

Say what?!

In Minnesota, we usually have two or three really large water heaters that feed the building. This setup is WAY, WAY more cost-effective. Kirk was surprised by the Arizona set-up. So, he asked around, and their response was basically, “Hey, that’s the way we’ve always done it, but we can do it your way as well.”

It was as simple as that. He just had to ask (and know enough to spot an appreciable difference between the two designs).

At the end of the day, you need to be fearless about asking questions (be an asker, not a guesser) and making suggestions, but you also don’t have to reinvent the wheel. There are standard practices in your market, and there is often wisdom behind those decisions.

Through many, many projects, I’ve come to realize that a coordinated approach to MEPs is more important than hiring subs based on individual (low) bids. You are trying to build a team and eliminate scope gaps in the MEP system as a whole.

This brings me to the distinction between Design-Build and Design-Bid-Build.

(Remember, I said I would focus more here on strategy instead of tactic.)

Kirk will tell you that Design-Build MEP is the way to go, and I agree.

In Design-Build MEP, your General Contractor is responsible for the MEP and the subs. The engineer's primary role is to draw the scope of work that the subcontractor has bid on and confirm it meets code requirements so the sub can eventually submit the plans for permit. The engineer will be engaged throughout the project and assist the sub and project team with solutions to problems as they come up, but it’s more of a partnership between the sub and the engineer instead of the engineer directing the GC what to do and then the GC passing that onto the sub.

There are two benefits to this arrangement.

First, a design-build relationship creates clear ownership of the performance.

If your lobby is too hot or cold, the subcontractor can’t blame the engineer. The GC owes you a system that performs. Conversely, in a Design-Bid-Build arrangement, you’re creating additional layers of accountability, and thus distance, between the person who designs the system and the person who delivers it.

The second benefit of Design-Build MEP relates to cost.

The general contractor will largely control the MEP process. If you’ve partnered with your GC early, they’ve already prepared a preliminary budget likely based on per-unit costs consistent with similar projects they have priced (e.g., they know that the HVAC line item is $15,000/Unit). They will work with the subs to refine the scope to hit the budget. If they can't hit the budget, you may have uncovered a design flaw or a faulty assumption BUT early enough in the process to make changes.

MEPs are one of the first major trades a GC can “hard bid” while the architect is still in the Design Development phase. This is because the bulk of the MEP costs are within the units, and common areas and amenity spaces are relatively easy for an MEP subcontractor to estimate based on gross square footage. You just have to have your unit plans and your unit mix set so the trades can tailor their equipment and scope for each unit type.

Additionally, apartments are repeatable, so a good design-build MEP sub can put together a solid estimate without involving an engineer.

It is a good idea to know what the MEP design costs are, even if they are already included in the GC’s budget. Sometimes a Developer may need to take on a little risk and release the MEP subs to start designing prior to having the deal closed so they can meet procurement deadlines. A good example would be releasing the electrician to design the electrical switchgear system so that it can be ordered early, given lead times are still over 1-year for those materials.

You also may need to release MEP subs early if you are doing any type of energy modeling or utility rebate programs.

Remember, MEPs are 20%—30% of your total construction budget, so they are significant. Design-Build MEP is a smart choice for this and the reasons listed above, as these subs are identified and incorporated into the project team early.

They save you time and money.

Peace,