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  -March 17, 2008 -  

Logistics News: Is Design-Build for Distribution Center Automation a Smart Choice?


Yes, says Gene Forte – It Reduces Risk, and Delivers Better Results for Automation Users


This is Part 1 of our Point-Counterpoint series on the merits of “Design-Build” for distribution center automation. Design-Build refers to an approach in which a single firm does the design, engineering and implementation of an automation system, such as a Sortation system. In traditional approaches, one outside firm or the company itself does the design, and then contracts with another firm for implementation.

Below, Gene Forte, Forte Industries’ president and chief executive officer, provides a view in favor of Design-Build. Next week, EnVista’s Jim Barnes will argue against the Design-Build approach.

By Gene Forte

When evaluating capital investments in supply chain facilities, organizations are often tempted to work with a consultant to create a bid specification and bid the project to multiple vendors in the belief they’ll get more for their money.  Often, the reverse is true.  In today’s dynamic business environment with all of its complexity, Design-Build delivery methods are the best approach and provide the customer with the best value.

Typically, the hallmark of a Design-Build project is that one organization is responsible for the design, integration and post implementation support of the project.  Design-Build brings one company experienced in consulting, engineering, systems integration and technical support to the process.  That means one organization would analyze, conceive, design, engineer, procure, install, commission, implement and support the solution, working collaboratively with the customer.

The single source accountability approach of design build compresses the overall project schedule, delivers superior systems quality and performance, reduces customer risk and reduces total cost of ownership. 

(Distribution and Materials Handling Article - Continued Below)


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Design-Build Delivers Solutions Faster

Forte Says:
A Design-Build program provides the customer with a single point of accountability for all aspects of a project and installed system performance from inception to installation and training of personnel.

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One benefit of using Design-Build instead of a bid process is the ability to reduce the overall duration of the project by eliminating a second procurement process for the build phase and allow for more concurrent processing of design and implementation activities throughout different portions of the same project. This streamlines the extended and sequential approach associated with a bid approach. With the Design-Build approach, a Design-Build firm will strive to bring together design, integration and implementation expertise in a collaborative environment with the customer to complete these tasks in reduced time.

Of course, a shorter schedule can translate into lower costs, and savings may also be realized by having a single entity responsible for overall project coordination and eliminating the customer’s staff support costs associated with sourcing, maintaining and managing multiple provider relationships throughout the project. This is in marked contrast to the bid approach, in which two or more contracting efforts must be undertaken in sequence to procure design and build services independently on a negotiated-price basis producing fragmentation of responsibility.

Design-Build Minimizes Customer Risk

The Design-Build approach provides an integrated solution for the customer.  A Design-Build program provides the customer with a single point of accountability for all aspects of a project and installed system performance from inception to installation and training of personnel.  This is in contrast to the bid process that contractually insulates the project participants while leaving the customer with virtually all of the project risk.  Design build minimizes the "finger-pointing" that is often commonplace in complex projects, and allows the customer to look to one entity with any questions or concerns.

Integrating the design and build activities to reduce the potential for design errors and discontinuities between the design plans and integration/implementation efforts results in fewer change orders and unanticipated project “add-ons.”

Design-Build Delivers Highest Solution Quality

Instead of having several service providers (consultants, integrators, software providers) operating autonomously, a customer has just one entity to deal with. Requirements changes, design revisions, project feedback, schedule changes, implementation issues, and billing can all be routed through the Design-Build firm.  This single point of contact allows the customer a greater degree of flexibility and adaptability.  Most Design-Builders will leverage that flexibility for the customer’s benefit by continually refining the project to maximize the owner's value at the completion of the project.

When a single firm is accountable for the entire project, a customer is less likely to encounter design errors and omissions, performance issues associated with designs that are not implementable, or implementations that cut corners based on interpretation of criteria not explicitly stated in the consultant’s bid specification, thus compromising long-term systems performance.  Indeed, the best scenario would be one where the Design-Build firm also maintains and supports the installed system, assuring a high degree of customer/vendor alignment on long-term systems cost, performance and value.

Typically, in order for an integrator to bid on a project, very specific details relating to the methods and materials must be given to avoid any ambiguity and to make an "apples to apples" comparison of bids. In a Design-Build context, the customer, and the Design-Builder can work together throughout the project to determine what concepts, processes, designs and equipment will maximize the owner's value.  In instances where marginally more expensive materials, designs, or implementation methods might yield a higher return on investment for the owner than those of lower cost, the customer has more flexibility to adjust the project approach without having to re-bid the entire project, or compromise vendor accountability.

Innovation, Performance and Confidence

In summary, Design-Build offers customers the following:

  • Absolute accountability, with limited risk of unanticipated change orders or budget creep.
  • Efficient process and one project team from beginning to end of job means that nothing is lost in translation.
  • Lower overall project cost when compared to the outdated bid approach with expensive consultants creating multiple bid specifications to be put out to bid to various equipment and software vendors, followed by the consultant proposing to project manage the process for additional fee, but with no clearly defined accountability.

What’s your opinion on the merits of Design-Build? Do you have experience with the results – either way? Let us know your thoughts at the Feedback button below.

Gene Forte is FORTE’s president and chief executive officer. He has over 30 years of experience in supply chain execution and material handling engineering.  Forte introduced the Design/Build project methodology to the industry over 20 years ago—a commonplace way of doing business today.

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