Startup Industrial Design Firm Promotes New "Designer-at-Risk" Business Model

Sterling Langley describes themselves as “a new boutique industrial design company.” Their website features no portfolio of work, but they came across my radar because they’ve put out 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 this emulates. If you’re already familiar with CMAR, skip the next eight paragraphs, where I’ll explain CMAR first.

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The CMAR model sort of falls in between the Design-Bid-Build process and the Design/Build process. In the more traditional Design-Bid-Build method of construction, a client hires an architect or designer, who takes on liability for the design; the client pays them for the design; the client then takes bids from contractors to execute the design.

In the best-case scenario, D-B-B allows the client to vet competitive construction bids. In the worst-case scenario, the client selects an incompetent contractor who has way underbid, the designer and the contractor disagree or have poor communication, people start calling their lawyers, and the project gets stalled.

With a Design/Build firm, both the designer and construction teams are under the same roof. It’s one-stop shopping with just one contract covering all of the work. Because the designers and builders are the same entity, in the best-case scenario there should be no disagreement between them nor construction cost surprises down the line, and the project should move more quickly than with D-B-B, as there is no pause for the bidding process between designing and building.

The downside to Design/Build is that there can be a lack of up-front cost transparency. With no bidding process, some Design/Build firms pitch a client with general estimates, with the detailed design work and actual cost calculations produced only after they’re hired.

Another knock I’ve heard on Design/Build firms (and which I want to discount) is that they’re less creative, relying on predetermined cost-effective “modules” that they’ve learned work well, and which they just plug into your design. I don’t believe that this criticism can be accurately applied across the spectrum; I have to believe that it’s all down to the individual designers’ integrity.

Construction-Manager-at-Risk or CMAR sort of falls between these two procedures. The client hires an architect, as with D-B-B, and also hires a CMAR firm early in the design process. The CMAR is meant to collaborate closely with the designer to determine accurate costs, and as the model’s name implies, the CMAR provides a Guaranteed Maximum Price (GMP), and takes on all responsibility if the project goes south. Generally speaking, if you go with CMAR you can be sure they’re not just working with the lowest-bidding subcontractors, but are giving you the prices for competent subcontractors who can do the work properly, since it’s the CMAR’s tail on the line.

The only knock I’ve heard on CMAR is that cost transparency is essentially up to them, i.e. that things can be marked up behind-the-scenes. But as with the Design/Build criticism, this isn’t something I can easily corroborate, and again I have to believe it comes down to individual integrity.

(If you are directly involved with either of these three practices and feel I’ve misrepresented or misunderstood some of the finer points, please do let me know in the comments, and please provide some mechanism whereby I can reach you with follow-up questions. I’d be happy to print clarifications here.)

Sterling Langley says they’re going with a Designer-at-Risk model to drum up work, i.e. they “needed a creative solution to entice their clients to provide them with the opportunity to produce new peripheral products.” As for what the DAR model entails:

[IN a CMAR model] the CMAR is assuming all the financial burden and the financial risk to complete the project as designed within the building construction schedule. Sterling Langley LLC developed a similar but new model for industrial engineering titled Designer-At-Risk or DAR.

Unlike a CMAR that requires monthly payments or a weekly cash draw for the percentage of work completed, the DAR is compensated only if the client accepts some of the final project’s intellectual property that includes new features, new functions and new benefits, as presented.

“The client is always in a Win-Win situation,” says Lloyd Aronoff, the principal. “If our client does not accept any of our intellectual property designs containing new features, new functions or new benefits, all costs for our application engineering, prototypes, material, labor, documentation and travel remain with Sterling Langley LLC.”

“We would rather absorb all of our costs from a non acceptable product challenge than lose the client entirely. It is our goal to have the same client consider us again, for their next new peripheral project opportunity.”

Do you all think this will catch on?

Source: core77

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