Thursday, March 8, 2012

Adjusting the Compensation Model

Crafting an incentive based compensation mechanism, tied to metrics that matter to the owner, is a critical step in negotiating an integrated agreement that works for the owner, designer and contractor.  The article linked below mentions the concept of Value-Based Design fees but fails to explore the topic in depth.  The topic is very important.  If your team is struggling with issues related to the need to adjust the compensation mechanisms on your project it might be worthwhile to schedule a collaborative workshop to explore the issue in detail.  If anyone is interested in having Collaborative Construction help don't hesitate to call.

If the value-added approach is used, then the base fee can be lower and the upside can be higher. Smart clients will understand that it’s in their best economic interest for the design team to hit as many of the value targets as possible. One of the biggest advantages of this new approach is that it invites a full dialogue between the owner and the architect at the very beginning of the job, so each party fully understands what really matters most to the project. This alignment of interests creates both synergy and leverage, which makes for a richer design process and a better outcome for all concerned. 
The "full dialogue" actually needs to include the GC / CM / Trade Contractors / Suppliers and others as well, but at least leaders in the design community are thinking about a path forward.

Value-Based Design Fees

Welcome to the Collaborative Revolution!
James L. Salmon, Esq.
Collaborative Construction
300 Pike Street
Cincinnati, Ohio 45202

Summary of Services and James L. Salmon's CV

Office 513-721-5672
Fax 513-562-4388
Cell 512-630-4446
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