Best-Value Procurement Methods for Highway Construction Projects (2006)

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78 4.1 Conclusions Based on the findings and critical evaluation, some con- clusions are made as follows: • The literature, case study findings, and survey results indi- cate that many different approaches have been used for best-value parameters and criteria, rating systems, and award algorithms for construction projects. All of these approaches need to be carefully evaluated and considered for applicability to a traditional procurement process. • The use of best-value procurement in the highway indus- try was limited to a relatively small number of projects— 25 potential case studies were identified and many of these were design-build projects. The most frequently used selec- tion strategies were meets technical criteria—low bid or A+B bidding, which suggests that the best-value selection strategies adopted by highway agencies were more closely aligned with the low-bid system. • Initial performance results indicate that projects procured using the best-value method perform as well or better than traditional design-bid-build projects based on common performance measures. • A best-value procurement system, particularly for an agency considering its use for the first time, should be flex- ible in terms of parameters chosen and evaluation system used, adapting to the needs of the specific project rather than using one approach for all highway construction projects. In summary, a best-value system that is flexible in the selec- tion of parameters and criteria, rating systems, and award algorithms will have the greatest likelihood to be successfully implemented in the context of a traditional low-bid system. For success of implementation, the project screening system will ensure that best value is applied to projects that will real- ize a significant benefit from the use of additional factors in the selection process. The final products of this research include the following: 1. A common definition and a conceptual framework for the use of best-value procurement methods for highway con- struction projects. 2. A baseline of projects and performance results against which performance outcomes for best-value highway projects will be measured. 3. A best-value procurement system that allows for flexibil- ity in the choice of parameters and award methods. 4. An implementation plan that includes a project screening system for selecting candidate projects and a step-by-step process for selecting appropriate parameters, criteria, and award algorithms. 5. Strategies regarding developing legislation and procure- ment regulations for best-value procurement. 6. A model best-value specification to be used as a template for development of detailed specifications. 7. A compendium of case studies for best-value procurement in the highway construction industry. Finally, the research team has recommended, as part of a long-term implementation strategy, that selected agencies champion the use of best-value procurement for pilot proj- ects and use selected performance metrics to evaluate the results compared with similar projects using the traditional low-bid only procurement. 4.2 Suggested Research The research in this study provides a practical implemen- tation guide that is firmly based in best practices of public sector best-value procurement. However, the U.S. highway construction industry has relatively little experience with non-traditional procurement. Some of the best practices from this study are derived from best-value procurement in C H A P T E R 4 Conclusions and Suggested Research

79 federal and state building sectors and international experi- ence with best-value concepts where the system is more mature. The primary need for future research involves meas- urement and refinement of the best-value system in U.S. highway construction. The research team suggests the follow- ing topics be considered at the national and state levels: • Conduct pilot studies to test the proposed best-value system. Each agency should test best-value procurement and meas- ure its effectiveness within the agency. Pilot projects are an appropriate avenue for further refinement and testing of the process. The research component of these pilots involves the design for measurement metrics and testing procedures. • Measure the performance of highway best-value projects on a national level and determine the cost, schedule, or quality implications of the system. Agencies need data to make good decisions. A long-term national study on the effectiveness of best-value procurement will allow agencies to make more informed decisions concerning the appro- priateness of its use. • Develop national or state baseline metrics for individual evaluation criteria. Many of the individual best-value pro- curement criteria would benefit from data pertaining to baseline measurement metrics. Past performance is an obvious candidate for historic baseline data, but personnel experience, life-cycle costs, and other criteria would bene- fit from historic databases for comparison as well. • Prepare a User’s Implementation Guide to Best-Value Pro- curement based on the results of this research and develop AASHTO best-value guide specifications for Highway Construction. The guide specifications will promote stan- dard and consistent implementation of best-value pro- curement throughout the country. • Create project selection criteria that are based on historic data specifically from highway projects. Due to the small number of best-value highway projects, the project selec- tion criteria developed in this report had to be based on user judgment rather than statistically significant correla- tions to project characteristics. The selection system guides users to an informed decision using their own judgment rather than reliance on past performance data as originally proposed. It is possible that different users from the same highway agency will select different projects for best-value procurement from the project selection criteria contained in this report. As more best-value projects are completed in the highway sector, more project performance data will become available and more objective project selection models can be developed. Much more research in best-value procurement is needed if the highway industry expects to change from the low-bid processes that are currently in use in the industry. This research is needed on a longitudinal basis so that the impli- cations of its use can be measured objectively and accu- rately. The framework provided in this report provides a consistent model for the application of best-value procure- ment. This model allows for more significant research to be done in the future.