marketing cx and owner education · rocky mountain institute (rmi) 2015 analysis • 80% of...

Marketing Cx and Owner Education

Bill McMullen, LEED AP, DewberryDiana Bjørnskov, BCA

AIA Quality Assurance

The Building Commissioning Association is a Registered Provider with The American Institute of Architects Continuing Education Systems (AIA/CES). Credit(s) earned on completion of this program will be reported to AIA/CES for AIA members. Certificates of the Completion for both AIA members and non-AIA members are available upon request.

This program is registered with AIA/CES for continuing professional education. As such, it does not include content that may be deemed or construed to be an approval or endorsement by the AIA of any material of construction or any method or manner of handling, using, distributing, or dealing in any material or product.

Questions related to specific materials, methods, and services will be addressed at the conclusion of this presentation.

AIA Quality Assurance

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Learning Objectives

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1. Explain the value proposition offered by Cx in the building industry of the future

2. Help colleagues eliminate barriers and advance Cx as a profession

3. Work with owners and designers to improve procurement processes through Qualifications-Based Selection

4. Conduct business development activities that maximize value to owners and stakeholders

1. Forecasting the Future Building Industry

2. Cx Economics 2.0

3. Commoditizing Cx: Barriers & Drivers

• Discussion – 25 minutes

4. Procurement: A Two-Way Street

5. Business Development in Today’s Market

• Discussion – 25 minutes

Presentation Structure- Game Plan

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• Power, energy, water, environment, resilient design, materials, construction, regulations

• Different regions creating new climate-related regulations and code changes

• New construction = higher standards, higher cost/SF

• Existing buildings = retrofits to meet new standards

• Regional redistribution of construction dollars

Building Industry of the FutureClimate Change is Changing Everything

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Building Industry of the FutureOwner-Stated Sustainability Priorities next 5-10 Years

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• Energy Efficiency• Sustainability/Resilience• Performance Technology• Codes & Standards

Building Industry of the FutureGlobal Drive toward Continuous Improvement

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• Benchmarking & Metrics• Building Materials• Building Systems• Operating Practices

Image Credit: Takipi

• Large companies are moving back into the city to “attract and retain workers who favor renting in walkable neighborhoods.”

Wall Street Journal

• “One of the biggest trends of the next generation will be repurposing an incredible amount of existing suburban development.”

Ed McMahon, senior fellow, Urban Land Institute

Building Industry of the FutureAccommodating a Different Workforce Trend

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“The Future Ain’t What It Used To Be...”- Yogi Berra

AIA Annual Survey of ResourcesConsensus Construction Forecast 2015-2016

Source: http://www.aia.org/practicing/AIAB105516

Future of Cx – Global Revenue Forecast

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• Brick & Mortar Retail Space

• Education: University/College Campus Growth

• Healthcare: Medical Office Buildings

• Office Space

• Online Shopping & Banking

• Education: Online Degree Programs

• Healthcare online, digital diagnostics, digital records; more regional services

• Working from home; hoteling; sharing of office space

Future of Cx – New & Repurposed Buildings

11Source: CMD (formerly Reed Construction)

Bridging a Widening Gap … from Now On

Rocky Mountain Institute (RMI) 2015 Analysis• 80% of today’s commercial SF will still be operating in 2030• $1.4 trillion dollar value over the next 40 years from deep energy

retrofits using whole systems design, driving whole building Cx

Navigant Research 2014 Analysis• Global revenue for building commissioning services will grow from

$2.7 billion in 2014 to $6.6 billion in 2024.• Global revenue for energy efficiency commercial building retrofits

will grow from $68.2 billion in 2014 to $127.5 billion in 2023.• Global market for energy efficient building products and services

will grow from $307.3 billion in 2014 to $623.0 billion in 2023.

Future of Cx – Building Forecasts

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• Less about the number of new buildings that need Cx

• More about existing and repurposed buildings

• More about better buildings and truly integrated project delivery- not Cx Provider as “overseer”

• Not about “How smart and experienced you are as a provider” It’s about results

Future of CxIt’s About Quality and Change

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Image Credit: “Buildings of the Future Scoping Study”US DOE, PNNL December 2014

SECTION 2: Cx Economics 2.0

Price of Admission

Value Problem• Commercial & Institutional owners/tenants dissatisfied with

building performance• Regulators & Policymakers want to measure performance

Value Solution• Cx brings whole building quality review & documentation to

owners and project teams from design through operation• Cx helps ID early access to owners’ financial, operational

and personnel savings

Cx Value Proposition in Today’s Market

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Proactive

Assured Outcome

Lower Risk

Offset Contingency Cost

Good Project vs Bad Project

Commissioning EconomicsThe Real Value Proposition for New Building Cx

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Cost and Schedule Impact

Removing Defects & Variables from Owner’s BuildingsPersistence Phase

Cx Affects Total Project Value Proposition

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Source: RMI Deep Retrofit Value Report

Image Credit: RMI

Old View

Cx Value Proposition in Tomorrow’s Market

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New Vision

Fill Gaps In Design (Review)Document ProblemsIdentify Issues“Opinion” On Will It Work?Test Equipment Fill Gaps In ConstructionCx Report- RecommendationsSystems Manual Contracts , Means, MethodsLiabilitySwim Lanes

Collaborate On Filling Design GapsUse BIM And Modeling Find SolutionsModified Testing- Results Based“Build” The Model You Know WorksLiving DocumentsSystems Manual AnalyticsPersistence Measures- SustainingFully Integrated Team

Green = Proactive Step

SECTION 3: Commoditization of Cx“Squeeze Play”

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• A/E Firms –All ClassesAll Sizes, Huge, Large, & Small

• Tab (Traditional) Firms• Manufacturers (OEMs &

Service Providers, Controls)• Specialty Firms (Cx, Building

Consulting), Mid-Size• Construction Mgmt Firms • Small Partnerships < 20

Employees• Web-Capable Software Firms

The Field is Getting CrowdedPlayers In or Entering the Cx/EBCx Game

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• “Commoditized products (services) have thin margins and are sold on the basis of price and not brand.”

• “Characterized by standardized, ever cheaper, and common technology that invites more suppliers who lower prices even further.”

Commoditizing Cx

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http://www.businessdictionary.com/definition/commoditization.html#ixzz3ZI0SWPV0

External• Government Policies & Regulation• Low Standards of Care in Built Environment• Perception of Cx as a Matured/Repeatable Service• Assumption that technology surpasses CxOwner/Project Teams• Cx by Design and/or Construction Team• Price-based Selection Processes• Under-utilization of Cx Capabilities• Status Quo Pushback from Owner RepsCx Profession• Acceptance of Low-Bid Process• Inconsistent Performance• Inadequate Depth of Services on Cx Team

Forces Commoditizing CxDriving Forces, Restraining Forces, Forces Resisting Change

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Energy Codes Influence Cx RequirementsCommercial State Energy Code Status, March 2015

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Best Product

Build a better product, for which customers will

pay a premium

Best Total Cost

Achieve the low cost position on product and

service support

Best Total Solution

Solve the client’s broader problem and share in the benefit

All things to all People? Is Your Goal To Be …

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All things to all People? Then you have to Be..Then You Have To Be …

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Best Product

“Premium priced, but worth it.”

“Our customers ask for it by name”

Best Total Cost

“Great prices and quality.”

“Their products last and last and last”

“ A no hassle supplier”

“Consistency is their middle

name”

Best Total Solution

“They are experts in my business.”

“Their services are exactly

what I need.”

Pick Only One:

• Commoditization- Working for Peanuts?• All markets face pricing pressure as they mature • Clients are not as “awed” by professional knowledge as they

once were – across the board• We still have “recession hangover” • Some of this is actually good, driving efficiency • Coffee is free at Sheetz but people spend 5 dollars at

Starbucks

• Differentiation is key

• Your knowledge counts

• Alignment on what keeps the client up at night – and solving that!

Good Old DaysWhen We Were the Smartest Guys in the Room

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Commoditization of CxCommon Cx Features You Cannot Commoditize

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• Experience & Education• Skills & Abilities• Evidence Interpretation• Physical Observation• Hypotheses & Assumptions• Explanation & Clarification• Understanding & Meaning• Integrated Insight• Educated Opinion• Relationships & Conflict Resolution• Leadership

Best Defense Against Commoditization

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BCA Role

You + BCA help

Not Practical

• Qualifications-Based Selection (QBS)• What it is

• How it Works

• Who’s Doing it & Why

• Who’s NOT doing it & Why

• How we create change

• Other Procurement Issues

SECTION 4: Procurement: A Two-Way Street

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• QBS is an evaluation, scoring and selection process for owners to use when hiring building project professionals.

Qualifications-Based Selection

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• QBS encourages owners to solicit, and project consultants to submit, proposals for specific scopes of work that are evaluated based on qualifications.

• Consultants are shortlisted and selected for budget negotiations after preliminary selection, and before contracts are signed.

Image Credit: KNG Marketing Partners, Inc.

• QBS was formalized by Congress in 1972 through the Brooks Act to force public owners “to negotiate contracts for architectural and engineering services on the basis of demonstrated competence and qualification … and at fair and reasonable prices.”

The Brooks Act

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1. Establish Evaluation Criteria2. Solicit Qualifications

(public announcement required in the public sector)3. Develop Short List4. Interview and Rank ≥ 3 Providers5. Owner/Provider Jointly Refine Scope and Contract

Terms6. Negotiate Contract (or move on to 2nd Ranked

Provider)

How Does QBS Work?General Steps

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• Without QBS, pricing is usually the default.

• Costs of project-wide services and products often rise as the project progresses due to change orders and errors or omissions in planning, design, construction and/or delivery.

• To begin building projects with more accurate and predictable budgets, the BCA believes owners need to understand and use the QBS process as their tool for managing the triad of cost, schedule and quality.

BCA Position on QBS

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• What Owners Want

• How to Approach Your Market (To Win)

SECTION 5: BD in Today’s Market

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Marketing & BD Today -

It’s a Different World!

• Low Cost• Little/No Risk• High Quality• On Time Delivery• Smooth Process

Owners don’t have much time, and only give you a portion of it to provide perfection

What Owners WantOwner is not typically a person – Owner is an organization with budgets

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• Am I Doing Market Research? Scouting Reports• What Is The Research Telling Me?- Player Statistics• What Do I Offer That’s

New ?

Better ?

Different?

Are You Asking Yourself The Right Questions?Am I a Competitor?

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• What Is The State Of My Market?What League Am I In?

• Where Do I Fall In It?What’s My Ranking?

• Do We Have The Talent?Team Roster

• Can I Get Talent?Draft Picks?

Are You Asking Yourself The Right Questions?Am I a Champion?

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1. What are we doing to help our clients prosper?

2. What is the quality of proposal (both written and in-person) in shaping and customizing a unique value proposition?

3. How effectively is our perceived cost tied to the attributes client most highly values?

4. How do clients perceive cost vs. what it actually costs them?

5. Does your client know and appreciate where your effort will be, AND have you told him/her?

Write Down The Owner’s Critical Success Factors(Not Yours, Theirs)

Use Them As Your Guide.

Value vs Cost to the Client Show You Understand The Owner’s Vision

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1. The balance has shifted too far in cost-cutting at the expense of profitable revenue growth.

2. When managers think about growth, it’s in terms of homeruns – the disruptive technology, instead of singles, executed at a steady pace.

3. Improving productivity and increasing revenues are seen as separate goals, BUT they are both integral to long-term success.

Doing Things Better vs. Doing The Right Things

Strategic Thinking!

Growing Your Cx BusinessBase Hits or Home Runs?

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Set your firm apart in –• How well you understand your client• How you will do the work• How you will manage the work• The people (intellectual capital) you

will provide• Special equipment you have

available

Demonstrating Your ValueValue Measurements Must Be Client-Focused

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Charter a proposal team• Evaluate opportunity and client’s criteria for selection• Identify and analyze owner’s drivers and key issues• Create a compliance matrix for mandatory requirements, important

criteria, and persuasive messages• List how client will measure your ability to achieve their goal• Identify and analyze risks and potential barriers; conduct a SWOT

analysis of your ability to win the work• Describe your competitive differentiators – what do you offer the

project that no one else does? Why choose you, and not “them”?• Define and do research required to be responsive

How Do You Propose?Before You Write …

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• What’s your compelling value proposition?• What’s your approach to the project (methods/practices)• What’s the owner’s expected outcome of your work• How will you do the work?

• Programmatic• Technical• Management• Resources

• How will you work with owner’s project team?

• How will you keep the owner informed?

• How will you mitigate risk to the owner and the project?

How Do You Propose?Define Your Strategy

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• Executive Summary: what decision-makers will read

• Project Understanding: your own description of the scope and objectives

• Technical Approach: how and why you will develop a project plan and implement it

• WBS (Work breakdown structure): task list with schedule

• Management Approach: how and why you will manage the project; key personnel (bio, commitment, availability)

• Team Qualifications: Individual and corporate knowledge, skills, abilities and experience that illustrate your competence and comprehensive team for the project; specific accomplishments that prove you – and only you –should be hired to provide Cx services.

Your Clients Are Hiring Their Future, and Their Future Depends On You!

How Do You Propose?Writing Could Be The Easiest Part

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Technical Intelligence = Building Performance

46Image Credit: Takipi

Bill McMullen, LEED APEnergy Solutions GroupDewberry

[email protected]

Diana BjørnskovBuilding Commissioning Association

[email protected]

Following Slides TBD

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• As a way to achieve an objective basis to conduct a detailed study, CII established the Commodity vs. Value-Added Contractor Services Research Team to develop a set of common definitions. The effort by the research team includes the following terms:

• Value – benefits provided (used with modifiers such as market value, perceived value).

• Value-added – marginal increase in value created by features or functions of a good or service.

• Net value-added – value in relation to its associated cost.

• Differentiation – dissimilarity of the features and functions of a good or service.

• Commodity – undifferentiated good or service.

• Three of the most important conclusions drawn by the team from its study are:1. The industry needs to use common definitions.

2. Contractors and owners should be aware that many service offerings relate to value-added; however, only a select few actually contribute to net value-added.

3. The more the owner emphasizes price as the deciding factor, the less net value-added is actually realized.

• The team also concludes that value can only be measured from an owner’s perspective. And, just as important, if owners are buying on price, they are missing net value-added.

• -- Construction Industry Institute• RS205-1 – Commodity vs Value-Added Contractor Services

CII Paper

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Business Development

Moss Adams Marketing and Business Development Continuum

• https://consensusdocs.org/FooterSection_About/FooterSection_Coalition

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• QBS goes beyond the JTA. Owners should expect (and confidently request) CxPs to provide:

• Cx team with KSAs required to deliver projects that perform in accordance with owner’s requirements and expectations

• Experience with specified building sector/type, e.g., hospitals, data centers, office buildings, labs, gymnasiums, classrooms, etc.

• Validating performance of building systems that prevail for proposed building types

• Knowledge of codes and standards that apply to the proposed building type and location

• Understanding of (brand-agnostic) technologies required for testing and performance measurement

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Construction Forecasts

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