9 Money and contracts
The idea of the architect as a maker has to be backed by a new kind of contract in which he is recognized as the maker, and has the expertise, experience, and desire to work every day with money and to take actual responsibility for pouring concrete, placing steel, building the structure, and so on.
The key issue in the contract needed to create life is control over money.
Within the normal construction contracts common in the 20th century there were two fundamental problems.
(1) The typical contract has a contractor making a bid, on a set of architectural drawings. The contractor makes a bid of say, $1,200,000 for the building. He has to deliver according to the contract and specifications. This means that the architect has to tie down millions of pointless details (which cannot possibly be known in a true way, at this early stage), only so that the contract is legally binding. The contractor makes his money according to how cheaply he can meet the specifications and get away with it. If he can build the building for $1,000,000, he puts $200,000 in his pocket. If he can build it for $850,000, he puts $350,000 in his pocket. This is the craziest conflict of interest, but it is the basis of nearly all modern construction contracts. The less the contractor can put into the building, and satisfy the architect’s drawing, the more money he puts in his pocket.
(2) Second, in this system, it is difficult to make changes. The changes can only be arranged by change orders. Since the contractor already has the contract, he can make the cost of the change orders high (and nearly always does so). Effectively, this discourages changes from being made and bleeds the client.
The construction manager is not paid by profit, but by a fixed amount of money (we typically use 20% of hard cost, or about 17% of the contract). The rest of the money, 83% of the construction contract, is also a fixed sum. It is the manager’s responsibility to do the most he possibly can to make a beautiful building, within that money. The system has open books. Clients are able to see the checks, payments, of every penny. Changes can be made (and are expected) inside the Toal of the 83%, without change-orders. Any time a change is made, within the total of the 83%, and the money needed is obtained by economizing on some other part of the contract. The construction manager’s job is to juggle the money within the 83% so as to get the most and best quality of building from the given sum. To make this possible, the manager also has the right to reduce certain specifications in the building to compensate for others which have been increased. Thus there is a trust relation. The client knows that he will get just what this money can be stretched to pay for. But he has to be realistic about his expectations, and cannot take the conventional adversarial approach to the construction manager.
#book/The Nature of Order/3 A Vision of a Living World/15 All Building as Making#