Fundamentals of Alternative Delivery Methods Today’s Agenda
• Advantages of Design-Build
• Legal Aspects of Design-Build Projects (FL Municipalities)
• Design-Build Fundamentals
• Procurement Methods
• Case Studies
• Design-Build Resources Today’s Goals
Recognize...
Advantages of Alternative Delivery Methods
Benefits of Best Value Procurement Strategies
Availability of Design-Build Resources What is Design-Build ? Design-Build is…
A project delivery system Design Bid Build Construction Management at Risk Design-Build
Sole-source responsibility Single Contract Single Point of Responsibility Shift of Liability
Also a mindset Highly collaborative Fully Integrated, Innovative Process Mental Shift – Owners and DB Team Design-Build looks like…
• Integrated Firm
• Contractor Led Integrated Firm • Designer (A/E) led 28% • Joint Venture
Contractor Led 54% Designer Led 13% Joint Venture 5% Advantages of Design-Build
Causes of Uncertainties in Construction Mitigating Uncertainties Top Causes of Uncertainty: 7 Major Drivers
Source: McGraw Hill Construction 2014 SmartMarket Report Top Causes of Uncertainty: Ranking by Players
Ranking of Causes Causes of Uncertainty Owners Architects Contractors Unforeseen site or construction issues 11 3 11 Design errors 22 (tie)(tie) 6 5 Design omissions 22 (tie)(tie) 7 22 Contractor-caused delays 4 4 6 Owner program or design changes 5 (tie) 11 4 Accelerated schedule 5 (tie) 2 3 Construction coordination issues 7 5 7
Source: McGraw Hill Construction 2014 SmartMarket Report Top Causes of Uncertainty: Frequency/Impact Analysis
Top Factors Index (1-100) Owner-driven changes 84 Design omissions 59 Construction coordination 53 Unforeseen conditions 51 Design errors 50 Accelerated schedule 38 Contractor-caused delays 37 Index: considers frequency of occurrence and impact on cost
Source: McGraw Hill Construction 2014 SmartMarket Report Top Causes of Uncertainty: 4 Major Mitigating Factors
• Design omissions 91% Single point of responsibility • Design errors
• Owner driven changes 90% Collaborative approach • Construction coordination • Accelerated schedules
83% Clear conflict resolution • Construction delays
35% Risk management & allocation • Unforeseen conditions
Source: McGraw Hill Construction 2014 SmartMarket Report Top Causes of Uncertainty Design Build Model – Best Value Approach
• One Contract Single Point of Responsibility • DB Team = Errors & Omissions
• Shifted liabilities Risk Collaborative • Teamwork • Contingencies Management Approach • Partnering
Clear Conflict • Open communication Resolution • Contractor/A&E – same team Legal Aspects of Design-Build Projects Florida Municipalities Design-Build State Procurement Laws Design-Build Trends
Top 5 States for Design-Build Bids & RFP’s
18% Increase in Design-Build Bids and RFP’s in 2015 Cities = 38% State Agencies = 25%
Source: Onvia, Inc., Database Design-Build Florida Legislative History
Prior to 1986 – Florida Statutes only recognized Design-Bid-Build where the Owner hired an Architect or Engineer utilizing the Consultants’ Competitive Negotiation Act (CCNA).
Florida Statutes 287.055
CCNA Before Design-Build • Qualifications-Based Selection Process • Applies to Architects/Engineers/Land Surveyors • Issue Request for Qualifications • Rank Potential Consultants • Select Top Three • Negotiate Price with Highest Ranked Design-Build Florida Legislative History
1989– Florida Statutes includes provisions for Design-Build under the Consultants’ Competitive Negotiation Act (CCNA).
Florida Statutes 287.055
• Qualifications-Based Selection Process • Short list “no fewer than 3 firms” • Negotiate contract “with most qualified firm” • Competitive Proposal Selection Process • Issue Design Criteria Package • Short list “no fewer than 3 firms” • Evaluate responses or bids • Establish Guaranteed Maximum price (GMP) and guaranteed schedule
• Authorizes Agencies to Develop Design-Build Procedures Qualifications-Based Selection Process
• Design-Build firm is based on Qualifications • Select in order of preference “no fewer than three firms” • Price is negotiated with the highest qualified • If negotiations fail, price is negotiated with the next highest qualified • Follows rules of CCNA Competitive Proposal Selection Process
• Design Criteria Package • Select no fewer than three Design-Build firms • Qualifications • Availability • Past Work • Evaluate Design-Build Proposals (Weighted Criteria) • Price • Technical Aspects • Design Aspects • Execute Contract 1996 Federal Acquisition Reform Act Redstone Arsenal (AL) 16 Bidders, $4 Million 2 Phase, Qualifications Based Design Criteria Professional
Design Criteria Professional is a licensed architect or engineer employed by or under contract to the agency for providing architectural or engineering services in connection with the preparation of the design criteria package. Florida Statutes 287.055(2)(k)
• In-House Professional Engineer or Architect • Consultant Professional Engineer or Architect hired under CCNA • Develops Design Criteria Package • Evaluates Design Criteria Package • Evaluates compliance of project construction with Design Criteria Package Design Criteria Package
“Concise, performance-oriented drawings or specifications…to permit DB firms to prepare a bid or a response...to a request for proposal..”
• Legal description of site • Survey information • Interior space requirements • Material quality standards • Schematic layouts and conceptual design criteria • Cost or budget estimates • Design and construction schedules • Site development requirements • Provisions for utilities • Stormwater retention and disposal • Parking requirements Design Considerations….
• Level of Design in the RFP • Performance based • Prescriptive
• Who Controls “details” of the design? • Design-Bid-Build: Owner owns details and gaps between plans & specs • Design Build: DB Team owns details and gaps between plans & specs
• Shifting Risk • Owner vs. DB Team • Delicate balance Design - Balancing Act
Performance Based Prescriptive • Functional Requirement • Material Requirements • Building Concepts • Equipment Preference • Process Descriptions • Design Details • Operational Performance • Construction Techniques
Performance vs. Prescriptive
Too Little Too Much
Expectations not met Increase Risk Profile The Spearin Doctrine
• Supreme Court – U.S. v. Spearin (1918)
• Owner Provides Contractors with 2 Specific Implied Warranties Plans and Specifications are Accurate Plans and Specifications are Suitable for Intended Purpose
• Remedies (Errors and Omissions) Contract Changes Clause Additional Time and/or Money
Owner is Responsible for Gaps! Design-Build Fundamentals
Develop Acquisition Strategy Project Delivery Methods Project Delivery Defined
3 fundamental Owner decisions:
What project What procurement What contract delivery system? method? format?
Developing the “Acquisition Strategy” Project Delivery Methods
DESIGN-BID-BUILD 01 Sometime called “traditional”
CONSTRUCTION MANAGEMENT AT RISK (CMAR) 02 Also known as CM/GC
03 DESIGN-BUILD Project Delivery
Always 3 basic parties involved in the project delivery process:
Owner Designer Contractor Importance of the Delivery Project Method
• Establishes when the contractor becomes engaged
• Influences the choices of contractual relationships among the parties
• Influences ownership and impact of changes and modifications of project cost Influence vs. Cost
Project delivery selection influences when Contractor gets on board. Contractor on-board early allows best opportunity to achieve objectives
RAPIDLY MAJOR LOW DECREASING INFLUENCE INFLUENCE INFLUENCE Large High
COST INFLUENCE
Low Small Planning & Design Construction & Operations Contractor Involvement . . . When?
Speed to market considerations…
Design & Bid Construction
No Project Contractor Design-Bid-Build Involvement Overlapped design & Design & Bid construction Construction
Extensive Contractor CM-at-Risk Involvement Possible Contractor Involvement . . . When?
Speed to market considerations…
Design & Bid Construction
No Project Contractor Involvement Design-Bid-Build
Key Subs included in Design & Bid design phase Construction
Extensive Contractor Involvement Design-Build Design-Bid-Build Contractual Relationship CHARACTERISTICS OWNER • Three linear phases: Design, bid and build • Three prime players: Owner, designer, constructor Designer Contractor • Two separate contracts: • Owner to designer • Owner to constructor Sub Sub
RESPONSIBILITIES • Owner: program, finance, management • Designer: prepares plans & specs, normal services • Constructor: Prime & sub construction Project Delivery Considerations Design-Bid-Build
Opportunities Obstacles • Widely accepted procurement method • Linear process requires time • Owner controls design and selection of • Owner liable for errors/omissions equipment • Delay in obtaining accurate • Designs more easily “shelved” construction costs • VE opportunities during design • Limited contractor innovation • Competitive bids = low initial prices • Final costs unknown until completion CM – at – Risk Contractual Relationship CHARACTERISTICS OWNER • Three linear phases: Design, bid, build may be fast tracked
• Three prime players: Designer CM-GC Owner, designer, CM-constructor • Two separate contracts: • Owner to CM-constructor Sub- Sub- • Owner to designer consultant contractor
Two Part Contract Pre-Construction Services (Design Assist) RESPONSIBILITIES & Construction • Owner: program, finance • CM-Constructor: Provides pre-construction & project management services, coordinates design prior to construction, is prime with the subcontractors • Designer: All normal services Project Delivery Considerations Construction Management at Risk
Opportunities Obstacles • Owner controls designer • Initial project costs may be higher • Works will with complex, phased • Owner liable for errors/omissions of projects with multiple trades designer • Build to budget • Success depends on willingness of designer/contractor collaboration • Earlier contractor involvement (costing) • Potential for not reaching a GMP • Early identification and resolution of • Engineer led team vs. constructor led design and construction issues team Design-Build Contractual Relationship OWNER CHARACTERISTICS •Integrated process-overlapped design & construction Design- •Often fast tracked Build Entity •Two prime players: Owner & design-build entity •Entity can take on many forms • One contract: Sub- • Owner to Design-Builder A/E Sub contractor RESPONSIBILITIES •Owner: Program, performance requirements, & finance* •Design-Builder: Design & construction. Can include programming & post construction services
* D-B can expand services to include programming, finance, operate, etc. Project Delivery Considerations Design-Build
Opportunities Obstacles • Ability to fast track schedule • Limitation of Owner’s staff with skill set and experience to manage DB projects • Requires limited upfront design by Owner • Requires commitment to provide expeditious reviews • Shift schedule risks (and errors and omissions) to DB Team • Less Owner control over the design • Early team integration enhances • May be difficult to review and compare innovation variable scope proposals • Sole point of responsibility • Poorly defined risks and allocation may impact GMP Progressive Design-Build Contractual Relationship CHARACTERISTICS • Integrated process-overlapped OWNER design & construction • Often fast tracked • Two prime players: Design- Owner & design-build entity Build Entity • Entity can take on many forms • One contract: Sub- • Owner to Design-Builder A/E Sub contractor RESPONSIBILITIES • Owner: program, finance, management • Design-Builder: Design & construction. Can include programming & post construction services
* D-B can expand services to include programming, finance, operate, etc. Project Delivery Considerations Progressive Design Build
Opportunities Obstacles • Uses qualification based procurement • Cost certainty not achieved until GMP to select DB team is negotiated • A design is not required to select the • Requires negotiation and execution of DB team two contracts – design and GMP • Increased Owner participation during • Difficulty in GMP negotiations could design result in design-build-bid delivery • Project risks better allocated to entity • Strong Owner management is required best able to manage risks to manage schedule, budget and risks • Can incorporate studies and • Requires collaboration throughout preliminary designs design and construction processes Comparison of Project Delivery Methods (CII/Penn State Study)
Metric DB vs DBB CM@R vs DBB DB vs CM@R
Unit Cost 6.1% lower 1.6% lower 4.5% lower
Construction Speed 12% faster 5.8% faster 7% faster
Delivery Speed 33.5% faster 13.3% faster 23.5% faster
Cost Growth 5.2% less 7.8% more 12.6% less
Schedule Growth 11.4% less 9.2% less 2.2% less
Re: “Comparison of U.S. Project Delivery Systems,” Mark Konchar & Victor Sanvido, Journal of Construction Engineering and Management, Vol. 124, No. 6 (1998), pp. 435-444. Which Project Delivery Model is best? ….
• Impact on stakeholders • Owner & funding sources • Local professionals and contractors
• Market conditions IT • Qualified DB teams • Get the word out DEPENDS • Owner profile • Risk management • Performance-based results
• Project Specific Factors • Schedule and budget • Complexity
Match owner & project characteristics to project delivery system options Project Delivery Selection Approach DBIA Rocky Mountain Region/University of Colorado https://dbiarmc.colorado.edu/
Owner Forums
DBIA Certification
Design Criteria Professional Procurement Methods
Procurement Options Contract Formats Traditional Procurement
• Historically Designer-only selections have been qualifications-based (Brooks Act 1972)
• Historically Contractor-only selections have been selected on basis of price Design Build Procurement Options
• Limited Competition: • Sole Source (direct) • Negotiation
• Open Competition: • QBS (Qualifications-Based) • Price and design are not selection factors (i.e., progressive DB) • BVS (Best Value) – FAR 36.3 • With Criteria Documents: • Owner’s criteria provided to shortlisted proposers • Selection based on qualifications, technical solution & price • With Bridging Documents: • Plans & specs are developed to +/- 30% • Usually leads to low price selection • Low Bid Phase 2 Phase 1 Shortlisted Two D Phase Offerors Contracting Officer technical proposal Prepare & price Solicitsfor the mostthe qualified Offerors highly - B Selection Contracting Officer Offerors Issues Issues RFP Submit RFQ Contracting Officer proposal offeringproposal Awardto made BestValue Short ListsShort qualified (up to 3) (up offerors most Contract Format
• Lump Sum/Firm Fixed Price
• Cost Reimbursable: • Cost Plus Fee • Guaranteed Maximum Price (GMP)
• Unit Price Guaranteed Maximum Price Example Project – WWTP Rehabilitation
Bid Item Bid Price Actual Cost Owner Cost
General Conditions (1) $ 50,000 $ 50,000 $ 50,000
Engineering 50,000 100,000 50,000
Concrete Work (2) 500,000 900,000 500,000
Pipeline Work (3) 500,000 300,000 300,000
Owner’s Allowance (4) 100,000 50,000 50,000
$ 1,200,000 $ 1,400,000 $ 950,000
(1) Typically Lump Sum or % of Actual GMP (2) Contractor Self Performs (3) Three (3) Bids are Received for Pipeline Work (4) Owner Upgrades Unforeseen Electrical Issues Summary – Project Delivery Options
Construction “Progressive” Lump Sum Design-Build Design-Bid-Build Management at Design-Build Design-Build Operate (DBB) Risk (CM@Risk) (GMP) (LS) (DBO) OWNER
OWNER OWNER OWNER OWNER
DESIGNER BUILDER DESIGNER CM DESIGN/ DESIGN/BUILDER DESIGN/BUILDER BUILDER/ OPERATOR
DESIGN/BUILDER OPERATOR
TRADITIONAL DELIVERY INTEGRATED DELIVERY Summary – Project Delivery Options
Design-Bid-Build Construction “Progressive” Lump Sum Design-Build Operate (DBB) Management at Design-Build Design-Build (DBO) Risk (CM@Risk) (GMP) (LS) OWNER OWNER OWNER OWNER OWNER
DESIGNER BUILDER DESIGNER CM DESIGN/BUILDER DESIGN/BUILDER DESIGN/ BUILDER/ OPERATOR Key Measures of Project Success
DESIGN/BUILDER OPERATOR Opportunity for Owner Collaboration (especially during construction) Project Schedule Cost Control (more control = fewer changes, better value) Quality (including design intent, innovation, installed quality) Summary – Project Delivery Options
Design-Bid-Build Construction “Progressive” Lump Sum Design-Build Operate (DBB) Management at Design-Build Design-Build (DBO) Risk (CM@Risk) (GMP) (LS) OWNER OWNER OWNER OWNER OWNER
DESIGN/ DESIGNER CM DESIGNER BUILDER BUILDER/ DESIGN/BUILDER DESIGN/BUILDER OPERATOR
DESIGN/BUILDER OPERATOR Key Measures of Project Success More
Less 52 Collaboration Schedule Cost Control Quality Case Studies
Progressive Design-Build Design-Build (Performance Based) Small Scale, Short Duration Case Study: UCAP Progressive Design-Build
Owner: City of Tampa Location: Tampa, FL Case Study: City of Tampa – UCAP
• $110 million progressive design build program • 25 water, wastewater, and storm water improvement projects • 50 square mile urban area Case Study: City of Tampa – UCAP
5-Year Program to: • Improve service reliability • Improve water pressure • Reduce pipe breaks • Improve fire protection • Stimulate economy
3 tiered progressive design build delivery method selected City of Tampa UCAP City of Tampa – UCAP Uncertainties – Unidentified utilities City of Tampa UCAP Uncertainties - Unsuitable Fill/Contaminated Soils City of Tampa UCAP Uncertainties - Community/Stakeholder Challenges City of Tampa UCAP: Planning for Uncertainty
Leadership meetings Contingencies Community issues
Teamwork Established claims Pro-active and collaboration procedures outreach program Risk Established Transparent management unit prices communication Conflict Emergency resolution planning Uncertainties Minimized
Proactive Leadership Contingencies Community Meetings Outreach
Owner-driven changes Construction coordination Schedule issues Design changes Contractor delays Design issues Unforeseen conditions City of Tampa – UCAP Success Story • Over $2.5 million in returned savings to City • 94% reduction in public complaints APWA FL Chapter • 3.1 OSHA recordable for 5-year period program 2017 Project of the Year More than $75 M
“The UCAP Team delivered the most successful downtown project the City of Tampa has ever experienced.” Steve Daignault, City of Tampa Public Works Administrator Case Study: Northwest Hillsborough WW Consolidation Program Design-Build (Performance Based)
Owner: Hillsborough County Location: Tampa, FL Northwest Hillsborough Wastewater Consolidation Program Hillsborough County, FL
Van Dyke Rd
N Dale Mabry Hwy Mabry Dale
Northwest Regional WRF Dale Mabry AWWTF
Citrus Park Dr
Dale Mabry PS
275 Sheldon Rd Sheldon
River Oaks PS - I
Linebaugh Ave
River Oaks AWWTP Waters Ave Hillsborough County Wastewater Consolidation Program
Estimated Program Costs: Program = $245 million • Expand Northwest Plant = $180 million • Dale Mabry & River Oaks Plants off-line = $65 million
Why Design- Build? • Industry knows best – highly skilled teams • Teamwork – no more “us against them” • Conflict management – rapid resolution to issues Northwest Hillsborough Wastewater Consolidation Program 4 Overlapping Design-Build Projects
Design-Build Summary
7/2014 Northwest Regional WWRF Expansion 9/2019
6/2014 Dale Mabry WWTP 9/2016 4/2016 River Oaks WWTP
9/2019
Program Objectives:
Public outreach – proactive Project team – collaborative & innovative Project delivery – risk management & safety Dale Mabry Diversion Design-Build Project - Pipeline Value to Hillsborough County
Design-Build Summary
Time Savings DCP Selection DB Firm Selection Final Design & Construction Associated with Design- 1/2014 6/2014 3/2015 9/2016 Build
Design-Bid-Build Summary
Procurement of Designer Design Select Contractor Construction
1/2014 6/2014 6/2015 1/2016 6/2017
Note: The Design-Bid-Build Schedule Does Not Include Liability Gap Hillsborough County Wastewater Consolidation Program
Some Procurement Highlights:
• Truly Receiving “Best Value”
• Kept Transition Familiar • Use Existing Formats (e.g. RFPs, Contracts, etc.) • Merge Existing Successful Documents/Language
• Utilize Outstanding Contractor, Designer, Owner Network for Assistance! Hillsborough County Wastewater Consolidation Program
Lessons Learned:
• Much in Outreach & Procurement – “What do you want?”
• Internal & External Shifts in Thinking – “Champion”
• Once D-B Team is On-Board – Hold On, It Will Move Fast!
FL Chapter APWA 2017 Project of the Year $25 to $75 million Case Study: Small Scale, Short Duration Projects Google Data Center
Owner: Google Location: Austell, GA
Scope:
Retrofit Sand Filters with Disk Filters
GMP:
$450,000 ($63,000 Design) Google Data Center Case Study: Small Scale, Short Duration Projects Public Utilities Instrumentation & Controls
Owner: City of Cape Coral Location: Cape Coral, FL
Scope:
I&C Design, Installation, and Integration
GMP:
TBD – Master Services Contract Case Study: Small Scale, Short Duration Projects Allandale Kerr Avenue
Owner: Cape Fear Public Utilities Authority Location: Wilmington, NC
Scope:
Manhole Rehabilitation
GMP:
$250,000 ($20,000 Design) Design-Build Resources
Standard Contracts
Best Practices Standard Form Contracts
• DBIA • AIA • EJCDC • Consensus Docs
• Agency/Owner Specific (FDOT, ACOE) DBIA Manuals of Practice
• Overview • Overcoming Legal Impediments to Design-Build in the Public Sector • Best Practices in Acquisition and Procurement • Best Practices Pre-Award • Best Practices Post-Award • Sector-Specific Best Practices • Transportation Infrastructure Best Practices • Design-Build Process for Civil Infrastructure Projects • Process Industries Best Practices DBIA Position Statements Foundation for Best Practices
http://www.dbia.org/about/positionstatements Final Thoughts….
Owner Education Administrative, Engineering & Field Staff Procurement & Legal Identify Champion
Risk Management Allocate to party that can best control risks Geotechnical Environmental
Allowances/Contingencies
Stipends/Incentives/Shared Savings 0.01 to 0.25% Moving Forward….
First Build the Team – then Build the Project
Identify High Performance DB Teams
Select Experienced DB Team Members
RFP – Bigger is not Better More factors, evaluators = more time, money, complexity Include goals, challenges & constraints – not solutions
Don’t Start from Scratch – many resources are available!
www.dbia.org www.fldbia.org Today’s Goals
Differentiate Between Alternate Delivery Methods
Better Understand Procurement Methods
I nvestigate Design-Build Resources
A dvocate for Design-Build www.dbia.org
www.fldbia.org Annual Conference
Design-Build Done Right
DBIA Florida Region’s 12th Annual Conference October 12 – 13, 2017
Renaissance Orlando @ Sea World Orlando, Florida
Information coming soon!!! www.fldbia.org THANK YOU
Robert H. Garland, PE, PG ENV SP McKim & Creed [email protected]