The Return of the Master Builder

by | Oct 10, 2018 | Buildings, Economics

Master builder is a job, if not a name, that is coming back into vogue. The reason is that master builder is a good description of the role construction firms are now playing in public private partnerships (P3s). In P3s, the design, bid, build (and sometime operate and maintain) process for buildings and infrastructure is undertaken by a consortium led by a new “master builder”.

A P3 consortium, often a special purpose vehicle company, is usually made up of: a construction firm; architects; designers; engineers; an operating company; and, equity investors. Construction companies often take the lead in these P3 consortia. This new breed of master builders needs to watch the value of a P3 bid to all of the project stakeholders. The best way to do this is with Triple Bottom Line Cost Benefit Analysis (TBL-CBA).

As an example, Skanska is leading LaGuardia Gateway Partners in a P3 to rebuild and operate LaGuardia’s Airport’s Terminal B. This joint venture is comprised of Vantage Airport Group, Skanska and Meridiam for development and equity investment; Skanska and Walsh Construction as the construction joint venture; HOK and Parsons Brinckerhoff as the design joint venture; and Vantage Airport Group for management of the operations.

P3s – Making What is Old Relevant Again

A term master builder is an anachronism. It pre-dates the modern professions of architect and engineer. The term peaks in usage in 1910 and has been in decline since, just as architecture and engineering science and these professions have developed.

A master builder used to be the central figure leading construction projects. Wikipedia cites a 1926 source:

To become a Master Builder an architect must not only be possessed of the theoretical knowledge of engineering and a knowledge of the details of building construction, but he must become the devisor of methods of construction.[1]

In the last two decades as P3’s have grown in popularity and the new “master builder” role has solidified. The master builder moniker very well describes the new construction firm’s role in P3’s. While they use to just construct, now they manage. They manage architecture firms, engineers, designers, the building landlords, as well as the people holding the purse strings. In trying to win a P3 contract the new master builder must understand what is of value to the owner. That is, they need to have a deep understanding of the public value of the project. They also need to make sure that the designs being proposed are what is financially beneficial for the consortium as the project operator. Managing the multiple bottom lines of different stakeholders requires a
TBL-CBA perspective.

Master Builder = Master (Architect + Engineer + Constructor)

 

The new master builder needs to take a broader perspective than the architects and engineers design firms working as part P3 bid, one that considers capital and operating costs, long-term value and public objectives. TBL-CBA value answers the questions “is this the right project?”, “is it done right”, and “what’s in it for me?”

Construction firms used to build. Now they manage project and stakeholder value in complex P3 joint ventures.

TBL-CBA, can be used to choose the right projects, provide the information to make them acceptable to stakeholders, and help ensure that they are designed and built in an optimal fashion. Master builder – a tough job that is coming back into fashion.

[1] Source: Proceedings of the Annual Convention of the American Institute of Architects, Volume 59, p. 145. From Master builder – Wikipedia, the free encyclopedia, https://en.wikipedia.org/wiki/Master_builder

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