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This chapter is current as of February 02, 2011


Every institution explores and evaluates different approaches to project delivery to determine the most expedient and cost-effective approach. Delivery systems span the full spectrum of implementation: design-bid-build, design-build, CM at risk, and the like. Although each of these approaches has merit, many institutions also rely on in-house units to deliver timely and cost-effective projects. Often these in-house units are an expansion of maintenance-type service necessary to maintain the operational aspects of campus facilities. The key is to understand the specific niche environment that can make these operations successful and marketing the services accordingly without competing with outside sources.

This chapter will cover the business model (yes, it is still a business!) required to implement and maintain a successful operation. Of utmost importance is that this operation will not function as a normal design and construction unit that you might find in the private sector. To maximize any chance for success, the management team that you develop for this unit must understand that fundamental principle. In fact, everything from office geography to estimating should be fully integrated without separating designer and superintendent roles. The staff must understand that they are an integrated team and success relies on many factors, the most important of which is open communication. Each side must feel comfortable that it can communicate throughout the life of the project on any issue without fear of contradiction or retribution. Every project has inherent problems, and the staff's ability to resolve issues becomes the real measure of success.

Your business plans for initiating this unit, or amending current units, should address each of the following:

  • Mission and goals
  • Justification; advantages/disadvantages
  • Defining your niche
  • Budgets, fees, and rates
  • Staffing
  • Measuring performance
  • Clients



Mission and Goals

What will the proposed mission for your new/reorganized unit be and what are its measurable goals? What are the benefits? You must  answer these basic questions before forming your specific plan to move forward. If you have a multicampus system, then your specific mission could vary from campus to campus while the overarching mission would need to address quick initial response to customer needs, minimum delay in project definition and documentation, and the efficient procurement of materials with fewer errors, lower cost, and higher quality. The three-legged stool of quality, cost, and schedule definitely gets tweaked here! The measurable goals are the result of positive client feedback, a favorable bottom line, and smiles on the faces of your administration. Among the benefits are smoother project delivery and the elimination of a backlog of smaller projects that prevent management from focusing on the larger, more complex projects.

It is also important to recognize that there will be projects that are best suited for the unit individually. For example, the design staff may develop a particular niche for roofing projects that can be designed and bid conventionally, or they may work directly with a furniture vendor/installer for some larger office projects. The construction workers could perform tuck-pointing repairs or specialize in HVAC replacements with Maintenance without designer input. Flexibility is the key. Once a project is received, a quick review should provide the best course for implementation. It is a balancing act to ensure that both staffs remain busy and productive.

This balancing act does not come without a cost: communication. Communication becomes more difficult and challenging in direct proportion to the number of balls in the air. It is most likely that brief daily meetings at the start or end of the day (especially with construction) will be necessary to evaluate progress and shift work assignments to respond to shifting priorities.


Justification: Advantages and Disadvantages


  • Supplement local consultants and contractors. Depending on the local market, your unit would not have to rely on outside forces. Although this is often market driven—peaks vs. slowdowns—your unit will target a baseline workload.
  • Quick response. Your organization should be positioned to respond quickly to a customer or project need. Even if you have outside blanket contract arrangements, you still are subject to outside forces that may delay response.
  • Support for other units. Other campus organizations will benefit from your availability and service capability. More important, your staff will develop key working relationships with units across the campus. Most clients would prefer to work with friendly and supportive campus staff than with outside consultants or contractors. This familiarity gives your team a clear advantage over outside companies.
  • Campus knowledge. Your staff will have a firm understanding of what to do on campus. More important, they understand what not to do on campus. This institutional knowledge cannot be underrated and eliminates the learning curve required by any outside company.
  • Reduced errors and omissions. As the team develops, they will understand that any problems can be handled immediately and seamlessly (to the client) among the staff. There should be no need for requests for information or change orders except for a requested change in scope.
  • Ready resource. Having a permanent staff that understands the campus and related culture provides the administration with a resource for quick studies, mock-ups, and assessments that greatly aid in quick decision making and instill a level of confidence among administrators that is hard to replicate with outside vendors.


  • Developing and keeping staff. Outside forces will continually impact your staff as people leave for better opportunities. Although this will vary by location and market conditions, it does provide a challenge to ensure that your staff is well trained and motivated.
  • Setting rates and fees. Ultimately, you are competing with outside sources, so it is critical that billing rates be below market. Often this is offset by higher benefits and more security.
  • Technology and equipment. As budgets are developed, funds need to be set aside for purchasing and upgrading computers, software, tools, and even vehicles. This necessary equipment must be considered a part of doing business and will vary depending on how your organization is set up: recharge or campus supported.
  • Project management skills. Interpersonal skills with the client and other team members are extremely important in maintaining client relationships. This will require training and counseling. Depending on the size of the staff, project team leaders could be developed.
  • Maintaining productivity. The constantly shifting workload will challenge staff to keep moving forward on their projects. Software programs are beneficial as long as they do not require huge commitments of time, talent, and money.
  • Budgets. As a business unit, the team must understand their responsibility as it pertains to budgets, income, and expenses. The staff should understand the budget process and be aware that their productivity directly impacts the bottom line. If the unit is self-funded (recharge), this is critical to avoid becoming a financial burden to the campus. This will generally require a leadership role focused on the finances to keep the financial aspects of the unit in alignment with campus expectations.



Defining a Niche

Defining the proper niche is crucial for your business model.  First, review the types of projects that your current organization handles. Identify which projects get bogged down in dealing with small headaches: office remodels, space planning changes, small lab changes, and so on. Those are prime candidates for a rapid and responsive design and construction unit. An experienced staff can minimize the amount of detail necessary to accomplish these projects by reviewing the scope and having the construction unit define what information they need. It’s not necessary for a designer to detail wall construction, because the workers are well versed in building walls! All they need to know is what type of wall, material, rating, and so on, and off they go. This is particularly advantageous if your campus has detailed standards with which everyone is familiar. This gives you a clear advantage in meeting customer needs in the most expedient and cost-effective manner. Nor are you necessarily required to create a bid environment. Often clients prefer a time-and-materials approach to their project with nothing more than a “not to exceed" agreement to allow them to budget properly. Every client is delighted when a project is below the initial estimate!

When permits are needed, it is best to add standard details to a variety of sheets that can be edited to meet requirements of the project. This can also be handled with an AutoCAD library of details that can be used and reused.


Budgets, Fees, and Rates

In the business environment, the accountant is supreme. Anyone who has done corporate, public, or institutional work understands that in-house services are prime targets during difficult times, mergers, or acquisitions. Ironically, legal and accounting units never seem to face layoffs. Even if the in-house unit is the most successful, productive, and supportive unit on a campus, it will be eliminated in a matter of seconds if it is perceived to be an unnecessary cost to the campus. Ultimately, anyone can be outsourced, with or without cause, so one of the keys to longevity is to structure the in-house unit as a 100 percent recharge organization to minimize exposure.

Admittedly, it is difficult to organize a unit as a 100 percent recharge-based and self-sufficient unit. Therefore, as part of the business plan, a smart strategy would be to structure your initial budget at 60 percent recharge and increase the percentage of recharge each year thereafter until you achieve 100 percent recharge. Start with small projects supported with a small staff and develop a feel for what it takes to run the unit. One of the difficulties is covering the start-up costs and monitoring other nonproductive aspects of your operation — in other words, a learning curve.

  • The design team will need computers, workstations, plotters, and software, which could run as high as $25,000 per person.
  • The construction staff will also require some computers, but the bulk of the cost is in the tools and shop space necessary to complete the work. Costs could be reduced by using outside shops for fabrication initially, but eventually this needs to be brought in-house for better cost controls Hand tools would be the responsibility of the employees, but replacement costs would be borne by the unit.
  • Space availability is a problem for start-up units. As an illustration, the University of Missouri has approximately 9,000 sq. ft. that house a design staff of 15 to 20 and a construction unit of 72 tradesmen, supervisors, estimators, and administrative staff.

The fees and rate structure should be designed to cover all costs, including salaries, benefits, and downtime. For the design team, the rates can be set competitive with outside consultant rates. It is most likely that an in-house staff will not have the same salary structure as a consultant. For starting a new design unit, the most straightforward approach is to use an average consultant rate across several firms and disciplines and reduce it 10–15 percent. Over time, you can expand to a more detailed approach once you have a track record of staff costs. 

Fees are the total of the hourly rates times the number of hours necessary to complete a given task or project. 

There are three types of fees:

  • A fixed percentage of estimated construction cost. This is used on larger projects of known scope and budget. It is also often used as a comparator between different consultants.
  • Lump sum. This is a fixed-price agreement, broken down into phases: preliminary, design development, construction documents, and construction administration. This is generally calculated from an estimate by the designer for the amount of work (hours) necessary by task.
  • Time and materials. This is used for projects of unknown scope, and the fees are directly charged based on the hourly rates and the number of hours required to perform a task. Clients tend to favor this approach because it appeals to their sense that the fee quoted initially will actually be lower if the project proceeds smoothly. This is also ideal for smaller projects, because the client can control fees by reducing scope, change orders, and the like.

For an in-house design unit, you must plan for the unexpected as it pertains to productivity. The average person works 2,080 hours per year, and most firms provide 80 hours of vacation as a basic benefit. Many campuses provide nearly twice that amount of vacation, plus 12 days of sick leave, holidays, 60 hours of required training (sexual harassment, hazardous material awareness, safety training, software upgrades, downtime, etc.), and a number of personal days. Often the designers are asked to give advice or assessments prior to the initiation of a project that are not billable. A reasonable expectation might be an actual billable time of 1,430 hours per year.

In setting a billable rate, you must first determine the department factor. This is the factor needed to offset all the associated costs of running a department, such as administrative staff, office supplies, nonbillable managers, equipment replacements, and furniture. To determine your billable rate, divide your total expenses by the total salary requirement.

For example:

Establish factor or multiplier:

$1,320,000 (expenses) / $867,000 (salaries) = 1.52 factor or multiplier

Determine annual income ability needed to cover expenses:

Architect @ $65,000 x 1.52 = $98,000 total income

The hourly rate is determined by dividing the amount of income needed to cover expenses based on an estimated hours of billable time, in this case 1,430.

$98,000 / 1,430 = $70 / hr billable rate for an architect earning $65,000 annually.

For the construction unit, the exercise is similar, although the total number of productive hours is higher, approximately 1,720. Because the trades tend to be more consistent in pay scale, the calculation is easier.


The rates are total expenses divided by the billable rate times the number of employees.        

$4650,000 / (1,720 x 60) = $45.06 / hr billable rate

The multiplier for the construction unit is generally twice the direct wage.  This is higher than for the designers because there is more overhead with management and support staff. The rate can be divided as follows:

  • 100 percent for the employees' direct wage
  • 25 percent for benefits
  • 25 percent for downtime
  • 50 percent for supervision, management, and support




A unique unit requires a unique staff. The design unit must understand that its purpose is to provide quick response, experienced direction, and excellent communication skills. The staff should be composed of architects, engineers (MEP), and interior designers. Civil and structural engineers would not generally be required because the primary focus would be on interior remodels and small additions. It is doubtful that there would be sufficient civil or structural work to warrant this discipline in-house.

Owing to the nature of the projects, the design team should be a technically competent unit able to respond to a variety of challenges. This is not an environment for the flashy designer with a portfolio of high-level designs. Although there may be opportunities for unique designs, basically this unit will focus on solid nuts-and-bolts problem solving. In addition, the construction unit will require a lot of design flexibility to resolve field conditions and budget issues, and the designer may need to compromise to ensure a positive result.

Design team members must also excel in overall project management. They need to be excellent communicators with the client and the construction unit. Frankly, such people are rare finds. They must be able to constantly refocus from the detailed preparation of design documents to maintaining perspective of scope, budget, and schedule. Keeping all these balls in the air while moving forward is a prime job requirement for a designer. An alternative is to assign one or two staff as project coordinators to relieve the designers of this effort.

If your campus has an architecture, engineering, or interior design school, use students for support. Often their exceptional technological skills are a tremendous design tool for a project. Although there is a learning curve, they are quick to excel, motivated to succeed, and a great value. At the University of Missouri, the students are asked to track their project time and it is invoiced to the client as drafting support. Most clients find this economical production approach extremely positive for their project bottom line! The students also appreciate the high level of design and construction experience they gain. Often, there will be opportunities to employ these students after graduation.

Once you have secured a quality design team, the next challenge is to retain them. In a poor job market, this is not a problem; however, in good times, motivating and keeping a staff will be difficult. Although benefits and stability are strong university attractions, salary competition from outside forces can drain any staff.

Some personnel dos and don’ts:

  • Do know your individual staff, what motivates them, and what their strengths and weaknesses are.
  • Do give people an opportunity to grow professionally.
  • Do provide a clear path for advancement.
  • Do provide quality training.
  • Do provide a pleasant work environment.
  • Do allow access to top management.
  • Do provide project diversity.
  • Always keep the staff informed; provide the big picture.
  • Whenever possible, promote from within.
  • Always challenge people and allow them to challenge management. 
  • Don’t limit opportunities for growth.
  • Don’t limit responsibilities or assign responsibility without authority.
  • Don’t inhibit ownership.
  • Never hold back your appreciation.

The construction unit should contain most of the trades needed to complete routine remodels and office changes. This would include carpenters, electricians, plumbers, painters/plasterers, sheet metal workers, and laborers. As your workload grows and you face additional challenges from clients, you might expand by hiring masons, roofers, and heavy equipment operators. As you review the trade requirements, it is important to staff the department to a baseline of work rather than peak demand. This will take several years of experience tracking job/project requests.

The office staff should include a manager, trade supervisors, estimator(s), scheduler, material coordinator, and administrative assistants and clerks. The estimator and scheduler are critical people who work with designers and construction supervisors to coordinate the overall effort. They must be able to handle a significant variety of projects expediently while handling the numerous changes that impact project scope and budget.

Keeping a medium to large workforce is challenging. Busy periods tend to fall during summer and semester breaks. Ensuring that there is enough work for all the trades outside these periods requires creative thinking. The construction unit could develop blanket agreements with Maintenance, Residential Life, Dining Services, Hospital, or Athletics to supplement their staffs in performing routine maintenance. It would also be beneficial to have a series of blanket agreements with individual outside trade contractors (electrical, plumbing, etc.) to supplement your internal resources during busy periods. The difficult challenge in construction is providing the proper level of individual trades for a project to ensure the workflow matches the planned schedule. Nothing is worse than accepting a project and then stretching out the schedule due to a shortage of available trades. Blanket agreements are a great approach to resolving this dilemma. 

While the design staff requires training to maintain their professional credentials, the construction unit needs to have a variety of instruction classes to ensure their productivity. This training would include safety training, hazardous materials, asbestos awareness, fall prevention, personal protective equipment, fire extinguisher use, OSHA requirements, and hearing screening and protection. There may be additional specific training required for a particular trade, such as arc flash protection for electricians or scaffold safety for painters. In addition, there are  requirements for all university employees to attend sexual harassment and diversity training, and so on. At the University of Missouri, we generally allocate 24 hours per year to training for the trades. Although this does impact the total number of productive hours, it is positive for the overall employee welfare.


Measuring Performance

Even when there are plenty of project successes, all employees want to know how successful they are in their organization. And, more important, the organization must have a firm understanding of what motivates the employee. Most managers and department heads would maintain that salary and benefits are at the top of the list of employee concerns. In actuality, at the top of most employee concerns is gaining management approval and acceptance for a job well done. 

It is important for all organizations to pause and reflect on goals and accomplishments. This provides two benefits to the unit. First, it verifies the mission of the organization through a series of individual measurable objectives. Second, it helps align staff needs with management’s overall understanding of enhancing performance. Each employee should receive an annual evaluation from his or her manager or supervisor. This may be part of an overall university human resources program, or a custom-designed approach that evaluates the particular skills/goals/successes for your unit.

An annual performance appraisal should consist of three basic components: self-evaluation, manager’s evaluation, and planned goals for the upcoming year. The first two components are completed individually; the goals are reviewed, negotiated, and finalized during the actual face-to-face evaluation.

The self-evaluation is completed by the employees and is an assessment of their accomplishments from the previous year’s written goals. This should be flexible because there may have been some changes in the organization or operation that may have negated or possibly enhanced certain areas of performance. Likewise, the manager assesses these goals and comments on the success or failure of the previous year’s plan.

The planned upcoming goals are perhaps the most interesting and revealing. Both the employee and manager complete these individually and then review/discuss them during the meeting. From the employee perspective, the goals reveal what motivates them and provides direction in their work. For the manager, this exercise aligns the employee goals with those of the department. If the manager truly understands the employee, the goals should be similar. If not, then both parties need to negotiate what would benefit both the employee and the department.

An interesting outcome is that employees tend to be very tough on themselves in the self-evaluation. One option for this process is that the manager may instruct the employees to consider one or two department goals as part of the third phase of the evaluation. This helps the manager gain perspective from the employees on what is lacking in the department mission.

Some appraisal guidelines:

  • Think of the appraisal as a coaching session.
  • Hold the session in private and allow no interruptions.
  • Focus on specific behaviors, actions, or tasks. Discuss their positive or negative impact on the department.
  • Be specific; cite examples.
  • Tell the truth, even if it’s painful.
  • Document the discussion
  • Prepare an action plan for improvements if necessary




The client is an unusual entity that comes in many forms. The client may be the user, stakeholder, grantor, department funding source, campus administration, or at times other design team members. And it may be all of them! Once a project is assigned, it is the first priority to know who the client is and the client's role in the overall project.

The user is the ultimate occupant of the completed space. However, users' goals/requirements must also match those of Maintenance, Energy Management, Custodial Services, and/or Environmental Health and Safety. The bottom line is that "no client is an island." They are an integral part of the campus master plan and must comply with campus design standards, grant requirements/documentation, department needs, and all codes and life safety requirements. To that end, it is important that your staff communicate with clients so they understand the roles and responsibilities on both sides of the table. Clients often do not understand the role of design and feel that they can just move walls, stairs, or other building infrastructure to suit their needs. There are other considerations in the design equation that must be in compliance.

Design is more than meets the eye. Although some clients think that “design” addresses only the aesthetics of a project, it is much more than that. Design encompasses all the work of architects, engineers, and interior designers. Their work focuses on the health, safety, and welfare of all building occupants, while maintaining the integrity of facility infrastructure. This is just as true for small projects as for large ones.

Particularly for some of the smaller construction projects, there may be client comments that stipulate “no design” as a way to reduce costs. Difficult financial times do call for careful use of funds, but that does not preclude the need for design work. You must help the client to understand that design is not an option. It is an integral part of a project and as such may address any or all of the following design-related issues:

  • Standards adopted by the university administration
  • Presentation to the campus planning committees
  • Requirements of Environmental Health and Safety
  • Procurement guidelines
  • Hazardous use classification for labs or research facilities
  • Fire-rated construction, sprinklers, alarms, and fire rating of materials and finishes
  • Number of occupants rating for an office or auditorium
  • Heating, cooling, and ventilation requirements (sick building syndrome)
  • Emergency exiting requirements: signs, lighting
  • Compliance with the Americans with Disabilities Act (ADA)
  • Review and assessment of structural limitations
  • Campus design and space planning standards
  • Review for compliance with other campus facilities units, including Maintenance, Custodial Services, and Energy Management
  • Ergonomic considerations
  • Archiving to final project
  • Development of specifications for bidding and purchasing
  • Phasing assessment for economical, operational, or constructability needs
  • Evaluation of existing building systems to plan for additional/future capacity (e.g., chilled water, steam, electrical)

It is ironic that most clients will exhibit less concern over construction costs than the fees related to the design effort to implement the project. It may be advantageous to include design fees in the construction costs to mitigate issues with fees. This also helps clients focus on the overall project cost.

For an in-house organization, there are several client-related guidelines to keep in mind during project development. Always remember that you have only one opportunity to make a good impression.  More important, you have a limited number of campus clients. If you don’t perform, you will lose them forever. They have long memories! 

When meeting with a client for the first time on a project, ensure that your best communicators are at the helm. They should be well versed in explaining the project process to the client even before discussing the particular needs of the project. On occasion, the construction supervisor may attend to review particular details of the infrastructure of the building that may impact scope and cost. Give the clients comfort in knowing that at every phase of the project they will receive an updated budget and schedule.

In this world of improved technology, communicate via e-mail often and clearly. There are, however, two caveats to solely using technology for communication. Never deliver bad news to a client via e-mail or telephone. Always set up a meeting. Although it will most likely be painful, you’ll be in a better position to answer questions, explain issues, and make adjustments. Always meet with a client when presenting budgets or schedules. Cost estimates are rarely easy for clients to understand, and line items are best explained in person. It is a good idea for the construction estimator or supervisor to present the estimate because they have the best understanding of the nuances of the estimate.

In summary, the in-house design and construction unit is an extremely valuable addition to the campus project delivery approach. The seamless transition from design to construction, rapid response capability, institutional knowledge, and cost-effectiveness are powerful forces in executing projects. They provide facilities administration with another tool to meet the changing campus environment. It will take time and energy to develop the ideal model for your campus; however, your clients will appreciate the improved level of service for their needs.



Kinicki, A., and R. Kreitner. Organizational Behavior: Key Concepts, Skills, and Best Practices, 4th ed. McGraw-Hill, 2008.  http://www.mhprofessional.com/product.php?isbn=0073381411

Kouzes, J., and B. Posner. The Leadership Challenge, 3rd ed. Jossey-Bass, 2003.  http://www.leadershipchallenge.com

Unrath, Robert W. What Is Design? University of Missouri, 2003. http://www.cf.missouri. edu/pdc/whatisdesign.html

Woodward, Cynthia A. Human Resources Management for Design Professionals. The American Institute of Architects Press, 1990.

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