The highly competitive nature of the construction industry presents challenges to gaining important traction in advancing Diversity, Equity & Inclusion (DE&I). At every level, companies and individuals are advancing their own goals and outcomes. Creating a shared purpose across all parties and inspiring them to rally around a single project goal means overcoming potentially divergent, individualistic tendencies. The inclination to stick with what’s familiar, fear of losing the competitive edge, or concerns for productivity and cost control can override every good intention.
Overcoming discomfort to embrace the unfamiliar is critical. The industry is aware of the need to act to expand DE&I, but what does meaningful change look like in practice?
Pepper’s authentic commitment to advancing DE&I on the UI Health Specialty Care Building project demonstrates how our thoughtful, deliberate action is affecting positive change. Our joint venture partner on the project is Brown & Momen Construction. The 200,000-square-foot clinical building currently under construction will provide six floors of patient care space that includes eight operating and eight procedure rooms, 48 pre- and post-surgery bays, clinic space for gastrointestinal, ophthalmology, otolaryngology, transplant and urology clinics, as well as a pharmacy, MRI and PET/CT imaging departments.
With support from the client for what we’re doing and how we’re doing it, we are building on our approach to create a successful ripple across all our projects and the industry at large, and we’ve asked our team to share their perspective.
How do you set up a project with defined DE&I goals?
We recognize that success, both immediate and long-term, of our project and our role as an industry leader includes a proactive focus on DE&I. This requires deliberate decision making in the project planning stages. Establishing specific DE&I goals starts with defining the target value for XBEs: a minimum dollar amount of project scope to be performed by businesses owned by minorities (MBE), women (WBE), veterans (VBE) or persons with disabilities (PBE). Owners may also establish goals for specific ethnicities within the MBE class.
The project also needs to determine which certifying agencies to rely upon for reference. Firms may be certified by either or all of the City of Chicago, Cook County, the State of Illinois or national certifying agencies. Determining which agency certification(s) to honor provides clarity to the marketplace and reduces uncertainty.
On the UI Health project, we took the simple first step to ensure our bid lists had a balance of XBEs and majority firms. When it came to reviewing subcontractor bids and presenting award recommendation to the owner, the XBE firms' status were listed (as well as XBE teaming participation for majority firms). This ensured the final selection considered diversity as a factor in choosing the best-suited partners for the project. For majority firms with XBE teammates, our team engaged in detailed research to know specifically which elements of the work were to be performed by XBE partners, securing thorough explanation of commitments, going beyond just checking the box for numbers. We worked to build collective ownership while keeping an eye on exceeding our benchmark goals, which set up a strong foundation for success.
In addition to defining XBE goals to promote diverse company ownership, we set project expectations for a diverse workforce in the field. Defining individual diverse workforce participation applies to all firms on the project, XBEs and majority firms alike. General talk is not sufficient.
Through our UI Health project, we are intentional in supporting a workforce that is representative of the community in which we’re building. As we set out to build the center and clinics, we dug into the specific commitments proposed by each subcontractor, pressing for detailed responses that show exactly what their efforts would be. Beyond goals for minorities and women in the field, we also have goals for the project hiring individuals who reside in the local community, the City of Chicago, and the State of Illinois.
Hear more from AnnMarie Gal, Project Manager, Pepper Construction:
How do you engage with local community groups that are active in the project arena?
Our outreach to community organizations is grounded not only in putting the best talent on a project, but also in giving community members the chance to contribute to economic growth in their neighborhood. In many cases, project teams can reach out to local organizations with bid notifications, contacting groups like the African-American Contractors Association, the Hispanic American Construction Industry Association, and Black Contractors United. On the UI Health project, we’re collaborating with Target Group, a Chicago-based consulting firm whose mission is to create positive economic impact by matching people and business to opportunities. While Target Group has helped us build our outreach processes and network of contacts for XBE opportunities, the project also engaged with Communities Empowered through Construction (CEC) to connect with qualified local neighborhood candidates for jobsite employment. This collaboration helped us broadcast the project opportunities to a broader network of XBEs and individuals and made the project accessible to those searching for a chance to be involved.
We took the time to learn who was out there and thought creatively about how to give firms the chance to compete for what they’re qualified to do. We actively listened at meet-and-greets, followed up with non-responsive XBE bidders to learn any perceived obstacles to bidding, confirmed that the Invitations to Bid were received, and inquired about each firm’s capabilities. These are straightforward conversations that all too often get sidestepped. We see a bigger picture. Creating the chance for firms to participate by thoughtfully forging connections, we’ve planted seeds for future chances, even for unsuccessful bidders, on other projects.
For example, we saw the opportunity to leverage the project goals and build connections when an MBE lighting supplier contacted us after hearing us present our project at a UIC-sponsored outreach event. We connected the supplier with the prime electrical subcontractor and followed up with the electrician to encourage discussing the project and the supplier's capabilities. The supplier got a focused audience with a large electrical firm that might ripple into an opportunity to earn awarded work for this project or for others in the future. Make no mistake – everyone has to be qualified and earn the work. Our aim is to build community. To successfully build a vibrant community, you have to look beyond numbers. You have to care about the people who are part of that community.
Hear more from Sharon Carter, Ankura, Managing Director, Healthcare Real Estate Solutions, Ankura and Ernest Brown, Owner, Brown & Momen
What can you do to ensure smaller and disadvantaged firms are qualified to do the work?
The key is clear and open communication. The goal is to set the firms up for success. To do that, we need to assess their understanding and experience to ensure we make an effective match between skills and project needs. Pepper/Brown & Momen has a subcontractor prequalification process for any firm we hire. When evaluating bids, we ask candidates about experience on projects of similar size and type and discuss other work currently on their schedule. If there is concern about project size, we talk openly about expected crew sizes, schedule, and any unique scope of work challenges on the project. In these conversations, we tackle safety culture, payment terms, scope inclusions, and other responsibilities carried by the subcontractor head on. Through these bid/scope reviews, potential subcontractor candidates are able to demonstrate their qualifications.
What steps can you take to maximize the potential for participation?
With every step, you can maximize potential for participation. We make inclusion a part of the team expectation, for example, for both majority and minority firms. We look for ways to connect smaller firms that are capable of the type of project work, but not equipped for the size of the project, with a larger firm. At the same time, we challenge the larger firms to incorporate smaller firms into their teams to be a valuable part of meeting the project goals. Award selections for the UI Health project depended on it. In the review for design-assist MEP subcontract bidders, for example, we asked what specific elements that they proposed would be carried by lower tier XBE partners. We encouraged those XBE partners to join the interviews. They had the chance to understand our expectations and project demands directly, and we had the opportunity to learn more about their firms and capabilities.
Encouraging these partnerships, communicating the importance to the prime bidders, and dedicating our time and attention to DE&I, we had nearly 40 XBE firms engaged in the bidding and selection process. Some of these trades included Fire Protection, Plumbing, HVAC, and Electrical work. Many XBE firms would have lacked the capacity to take on the entire scope themselves. We gave them a chance to participate and build some trade partner connections that will continue beyond our project. We see scouring and learning about the firms’ capabilities as a seed moment; it opens the door for possibilities beyond our project, for the greater community, as well as the industry.
Knowing that outreach is networking-based, how do you successfully reach out if you cannot gather in person because of pandemic-induced restrictions?
Networking is happening. The set-up for virtual gathering is effective. Presentations can actually be enhanced with screen-sharing opportunities. Presenters can share project details simultaneously with dozens of people. Individuals still have opportunities to introduce themselves and their firms. Getting the invites distributed is a bit more challenging. A meeting via Teams or Zoom has a very specific web-address to join. How do you get the word out to an audience who you don't know yet or with whom you might not have any direct contact? This is where our collaboration with UI Health, Target Group, and CEC really pays off. Each of those organizations has a network of XBE companies and individuals looking for work to augment the XBE bidders list that we already have established.
Outreach events for a project of this size can draw hundreds of individuals and companies. To maximize the effectiveness of the virtual events, we separated and tailored the presentations to smaller audiences of specific trade groups. As the project design progressed and bid packages were ready for bidding, we held separate events for the early design-assist MEPs, then structural trades, envelope/enclosure trades and finally, interiors trades. This allowed us to dive deeper into explaining the scope of work. Groups were small enough for each individual to have a chance to introduce their firm, XBE status, and trade specialty, and to ask targeted questions. Not only did we get to meet them, but they also got to meet potential teaming partners.
Whether in-person or gathered on Zoom, we’re sincere in inviting people to be a part of something significant with us. On the UI Health project, we’ve engaged partners to join our efforts with purpose towards our shared goal. We genuinely care about what happens to them, to the project, to the community, and that translates into what we do to make sure they have a clear view of the objectives of the work we’re doing and how their contribution is important to moving it forward.
Will it cost me more money to incorporate diversity and inclusion goals?
Creating an environment that engages others and opens the opportunities costs nothing extra. There are qualified and competitive XBE firms out there, as well as majority firms. The lowest price bidder is not known until bid day. It’s not a given that XBE goals will cost more. For the UI Health project, we did not increase the budget for the sake of XBE and workforce goals.
The broader question is, "Can you afford to disregard DE&I goals and not engage the community where you’re working?" Certainly not. Our efforts on the UI Health project – to communicate clear goals, to make sure everyone understands these goals, has the right skills, and sees a clear link between their work and the project outcome – have created the team-focused environment that is providing a higher quality service to our clients. We see this effort as a necessary part of the blueprints to produce success.
How do you know if you met the commitment to diversity and inclusion?
There are specific metrics you can use to assess the commitment: periodic reporting from the GC of contract dollars for XBEs as evidenced through pay applications, lien waivers, and reporting forms, as well as certified payrolls for reporting workforce participation. With UI Health, we have the positive feedback from our partners and the client who enjoys our collaborative relationship. We’ve also seen the ripple effect in play. The fact that an XBE firm connected with a majority firm and went on to bid other jobs together beyond this project is a sure sign that what we’re doing is having a meaningful impact.
How do you secure the commitment from the contractor, not only obligating, but entrusting the contractor to make commitments to hire minority women-owned firms and incorporate individual diverse participation on the jobsite?
You can secure the commitment by requiring it in the contract, but that just sets the obligations. Ensuring the commitment becomes reality means you have to continually engage the conversation with the GC, reinforce diversity and inclusion as a priority, and make it integral on the job. It’s a weekly topic in our owner meetings on the UI Health project, and the team has rallied around the stories with enthusiasm, making it a positive experience. The client is clear about expectations and we are clear in demonstrating the sincere effort.
Hear more from Sharon Carter, Managing Director, Healthcare Real Estate Solutions, Ankura and Dan Myers, Pepper Project Director & Vice President:
It's important to note: how the project is delivered makes a difference. Lump Sum contracts and CM at Risk (GMP) contracts have different expectations for owner involvement subcontract awards. A GMP often has a progressive roll-out of design completion, making for a staggered sequence of bidding and selections. In a GMP scenario, trade subcontractor selections require the GC to produce a bid summary and recommendation for review and authorization by the owner. This means that for every package we award, we have the opportunity and responsibility to discuss XBE and workforce commitments, and evaluate recommendations with the client. Unlike lump sum contracts that typically have completed drawings and a complete team of sub selections under the sole discretion of the GC, the GMP scenario sets up a more collaborate conversation about which subcontractor is best suited for the overall project needs.
But delivery method is only one piece of a much larger whole. True diversity is about more than numbers. It’s about how we treat each other. Underpinning everything is our acting on our core principles of treating people with dignity and respect.
On the UI Health project, Pepper/Brown & Momen is achieving diversity and inclusion because we’re living it. We’ve intentionally created and are fostering a culture in which everyone has opportunity to actually join in the effort with the tools to succeed – because we’re building more than a physical structure. Possibilities for inspiring inclusion exist at all touchpoints. As we continue to consciously invest in them, we are unleashing the power of diversity.
See the full video describing our efforts here: