In an unprecedented departure from the norm, the performance-based design-build team for a fast-tracked office building nearing completion in Seattle is at risk for 0.5% of its original $66-million contract award. The team will not receive the $330,000 held back by the owner unless the three-story building meets energy-use targets promised by the team long before a shovel hit the ground.
Photo courtesy ZGF Architects
The fee holdback, combined with a 12-month, post-occupancy measurement and verification period to fine-tune building operations, is the brainchild of the U.S. General Services Administration Northwest/Arctic Region. Many eyes are on the proof-of-performance procurement twist, which GSA is pioneering at the from-scratch Federal Center South project and at two existing buildings undergoing mechanical-system upgrades.
GSA's goal is for the contractor-led design-build team to make good on its promise of delivering a 209,000-sq-ft building that uses 30% less energy than the ASHRAE 90.1-2007 standard. That translates to 27,600 Btu per sq ft per year.
"We looked at the [holdback] as a cost of doing business and allocated it to those [on our team] involved in making the project happen," says Jack Avery, senior vice president for integrated project delivery at Sellen Construction Co., Seattle.
The building is 80% complete. To date, the process has been "very successful and one we want to emulate in the future," says Rick Thomas, project manager in the Auburn, Wash., office of GSA.
But Thomas cautions that the approach relies on "tremendous collaboration" among the owner, the design-build team and the tenant—in this case, the U.S. Army Corps of Engineers. "It is an integrated process," he says.
Expectations have to be laid out and understood from the beginning. Open communication among the parties is critical, and success "depends on the design-build team selected," he adds.
The design-build team supports GSA's approach. "There's a lot of buzz in the industry about proving that buildings perform as per the design model," says Todd Stine, a principal in the Seattle office of project architect ZGF Architects. "From that vantage point, I think [the GSA's approach] is a step in the right direction for the industry, and I think it will become more commonplace," he says.
Though saying the job was challenging because of its complexity and speed, Stine adds, "We often talk about doing integrated design, but we really did it this time," he says. "Everyone rolled up their sleeves to create maximum value."
Avery also supports the approach, saying, "I applaud the government doing it." However, he suggests that, next time, GSA should offer an incentive to exceed the energy-use goal, not simply hold back funds if the goal is not met.
The holdback took some getting used to. So did the performance-based design-build delivery method. Sellen is more accustomed to negotiated, private-sector work. If not for the economic recession, the contractor probably would not have competed for the project, says Avery.
Federal Center South is one of 22 GSA green design-build projects that are funded through the American Recovery and Reinvestment Act (ARRA). In March 2009, GSA received authorization to redevelop/modernize a warehouse at Federal Center South into a high-performing office building.
GSA's original informational meeting in October 2009 drew 116 parties. GSA then received 12 submissions for the project. After reviewing technical qualifications and past performance, GSA shortlisted three teams to participate in a design-build competition. There was no stipend for the losers, though GSA says it would consider one in the future.
Sellen, which was awarded the contract on March 26, 2010, invested $500,000 to win the job. Thanks to the fast-track schedule, the team had only 18 weeks to advance design to a level that allowed it to guarantee a maximum price for delivery.
In addition to ZGF, the original team included the local office of WSP Flack+Kurtz, for mechanical-electrical-plumbing-lighting-telecommunications engineering, including energy modeling; the local office of KPFF Consulting Engineers, for structural and civil engineering; and the local SiteWorkshop LLC, for landscape architecture. "The entire team took the project more seriously than if there were just goals without measurement and validation," says Andrew Corney, a WSP F+K vice president.
Sellen, ZGF, WSP F+K and the mechanical and electrical contractors— brought in early to assist with design—are all sharing the risk related to the holdback. "We are all on the hook, responsible for performance, which is new to us," says Tom Boysen, project executive for University Mechanical Contractors Inc., Mukilteo, Wash.
Separate from the fee holdback, Sellen plans to share any leftover contingency funds with ZGF and the main subcontractors. In turn, ZGF will share any leftovers with other consultants, proportional to the risk they assumed during the competition.
Abatement and demolition of half of the existing warehouse started in July 2010. Pile-driving for the new building started in January 2011. Originally set for July, the completion date was pushed to September because of unforeseen site conditions, tenant improvements and $1.3 million in additions to scope, including rainwater harvesting, a geothermal system, upgraded lighting, a building management system and other "betterments."
The current total design-build contract cost is $73.6 million, which includes demolition of the rest of the warehouse. The total project cost, including management and inspection, is $75.2 million. The construction cost is $293 per sq ft, which includes the build-out. The cost is about average for prime office space in the region, says GSA.
In addition to the energy-use requirement, all ARRA-funded federal buildings must comply with the Dec. 1, 2008, Guiding Principles for Sustainable New Construction and Major Renovations.
The team plans to supersede the minimum goals. This includes a LEED Gold rather than a LEED Silver rating from the U.S. Green Building Council's Leadership in Energy and Environmental Design program. Based on energy modeling, the team predicts the building will use 20,300 Btu per sq ft per year, which is 40% below ASHRAE 90.1-2007's energy-performance benchmark. If all goes according to plan, the structure will be in the top 1% of energy-efficient buildings in the U.S., says ZGF.
Federal Center South has a cornucopia of features to minimize energy use, including a high-performance facade, optimum orientation and dimensions for daylighting and passive solar heating, and high-efficiency lighting that uses 0.7 watts per sq ft. In addition, the building has an overhead, water-based chilled-beam system of pipes for cooling. It also has a phase-change thermal storage tank—like ice storage—coupled with a ground-loop heat exchanger to capture and reuse otherwise wasted thermal energy.
GSA, Sellen, ZGF and WSP F&K are working out specifics for the measurement, validation and fine-tuning period, which begins in September. One issue they must agree on is how energy-use data ought to be assessed, says ZGF's Stine.
Energy models are based on assumptions about weather, occupancy hours and how the building is going to be used by individual occupants, who may violate assumptions made in the model, explains Stine. For example, the model assumes there will be no electrical-plug loads from individual space heaters or refrigerators.
In reality, while the building operators have been trained in all the systems, "there are variables that we don't control," says Stine. "If [the occupants] operate the building outside the assumptions or if the weather is different, the benchmarks need to be adjusted."
"Operational energy performance is difficult to achieve, despite best efforts," agrees WSP F+K's Corney.
He adds, "GSA has done a good job of setting up a process to transform the market. Any public- or private-sector owner looking at performance should look at this method."