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