An industrial design start-up promotes a new “Designer-at-Risk” business model
Sterling Langley describes itself as “a new boutique industrial design firm”. Their website doesn’t feature any portfolio of work, but they stumbled on my radar because they issued a press release promoting their new Designer-at-Risk (DAR) business model.
The wording is similar to the “Construction-Manager-at-Risk” (CMAR) model, which it emulates. If you are already familiar with CMAR, skip the next eight paragraphs, where I will explain CMAR first.
The CMAR model is sort of between the design-offer-build process and the design / build process. In the more traditional design-bid-build construction method, a client hires an architect or designer, who takes responsibility for the design; the customer pays them for the design; the client then takes bids from contractors to execute the design.
Ideally, DBB allows the client to review competitive construction offers. In the worst-case scenario, the client selects an incompetent contractor who has a vastly lower bid, the designer and contractor disagree or have poor communication, people start calling their lawyers, and the project is stalled.
With a design / build company, the design and build teams are under one roof. It is a one-stop-shop with a single contract covering all the work. Because designers and builders are the same entity, at best there should be no disagreements between them or surprises over construction costs down the line, and the project should move faster than with DBB, because there is no pause for the bidding process between design and construction.
The downside to the design / build is that there can be a lack of transparency of the upfront costs. In the absence of a tendering process, some design / build firms present a client with general estimates, with detailed design work and actual cost calculations only produced after they are hired.
Another hit I’ve heard about design / build companies (and want to rule out) is that they are less creative, relying on predetermined, profitable “building blocks” that they’ve learned to work well and to which they simply connect. your design. I don’t believe this criticism can be applied accurately across the spectrum; I have to believe that it is all due to the integrity of the individual designers.
Construction-Manager-at-Risk or CMAR is somewhat between these two procedures. The client calls on an architect, as for DBB, and also calls on a CMAR firm upstream of the design process. CMAR is expected to work closely with the designer to determine precise costs, and as the model name suggests, CMAR provides a Maximum Guaranteed Price (GMP) and takes all responsibility if the project goes south. Generally speaking, if you go for CMAR, you can be sure that they are not only working with the cheapest sub-contractors, but that they are giving you prices for sub-contractors who are competent and able to do the job correctly, as this is the tail of the CMAR in play.
The only hit I’ve heard about CMAR is that cost transparency is basically down to them i.e. things can be tagged behind the scenes. But as with the Design / Build review, it’s not something I can easily corroborate, and again, I have to believe it comes down to individual integrity.
(If you are directly involved in any of these three practices and think that I have misrepresented or misunderstood some of the more subtle points, please let me know in the comments, and please provide a mechanism by which I can reach you with follow-up questions. I’d be happy to print clarifications here.)
Sterling Langley says they are going with a Designer-at-Risk model to stimulate work, that is, they “needed a creative solution to entice their clients to offer them the opportunity to produce new peripheral products “. As for what the DAR model entails:
[IN a CMAR model] CMAR assumes all financial burden and financial risk to complete the project as designed within the building construction schedule. Sterling Langley LLC has developed a similar but new model for industrial engineering called Designer-At-Risk or DAR.
Unlike a CMAR which requires monthly payments or a weekly levy for the percentage of work done, the DAR is only compensated if the client accepts part of the intellectual property of the final project which includes new features, functions and new benefits, as presented.
“The customer is always in a win-win situation,” explains Lloyd Aronoff, the director. “If our client does not accept any of our intellectual property designs that contain new features, functions or benefits, all costs of our application engineering, prototypes, materials, labor, documentation and travel remain the responsibility of Sterling Langley LLC. “
“We would rather absorb all of our costs of an unacceptable product challenge than lose the customer entirely. Our goal is for the same client to consider us again, for their next new peripheral project opportunity. “
Do you all think this is going to spread?