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A Guidebook for the Evaluation of Project Delivery Methods (2009)

Chapter: Chapter 5 - Tier 2 Weighted-Matrix Delivery Decision Approach

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Suggested Citation:"Chapter 5 - Tier 2 Weighted-Matrix Delivery Decision Approach." National Academies of Sciences, Engineering, and Medicine. 2009. A Guidebook for the Evaluation of Project Delivery Methods. Washington, DC: The National Academies Press. doi: 10.17226/14238.
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Suggested Citation:"Chapter 5 - Tier 2 Weighted-Matrix Delivery Decision Approach." National Academies of Sciences, Engineering, and Medicine. 2009. A Guidebook for the Evaluation of Project Delivery Methods. Washington, DC: The National Academies Press. doi: 10.17226/14238.
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Suggested Citation:"Chapter 5 - Tier 2 Weighted-Matrix Delivery Decision Approach." National Academies of Sciences, Engineering, and Medicine. 2009. A Guidebook for the Evaluation of Project Delivery Methods. Washington, DC: The National Academies Press. doi: 10.17226/14238.
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Suggested Citation:"Chapter 5 - Tier 2 Weighted-Matrix Delivery Decision Approach." National Academies of Sciences, Engineering, and Medicine. 2009. A Guidebook for the Evaluation of Project Delivery Methods. Washington, DC: The National Academies Press. doi: 10.17226/14238.
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Suggested Citation:"Chapter 5 - Tier 2 Weighted-Matrix Delivery Decision Approach." National Academies of Sciences, Engineering, and Medicine. 2009. A Guidebook for the Evaluation of Project Delivery Methods. Washington, DC: The National Academies Press. doi: 10.17226/14238.
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Suggested Citation:"Chapter 5 - Tier 2 Weighted-Matrix Delivery Decision Approach." National Academies of Sciences, Engineering, and Medicine. 2009. A Guidebook for the Evaluation of Project Delivery Methods. Washington, DC: The National Academies Press. doi: 10.17226/14238.
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Suggested Citation:"Chapter 5 - Tier 2 Weighted-Matrix Delivery Decision Approach." National Academies of Sciences, Engineering, and Medicine. 2009. A Guidebook for the Evaluation of Project Delivery Methods. Washington, DC: The National Academies Press. doi: 10.17226/14238.
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Suggested Citation:"Chapter 5 - Tier 2 Weighted-Matrix Delivery Decision Approach." National Academies of Sciences, Engineering, and Medicine. 2009. A Guidebook for the Evaluation of Project Delivery Methods. Washington, DC: The National Academies Press. doi: 10.17226/14238.
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Suggested Citation:"Chapter 5 - Tier 2 Weighted-Matrix Delivery Decision Approach." National Academies of Sciences, Engineering, and Medicine. 2009. A Guidebook for the Evaluation of Project Delivery Methods. Washington, DC: The National Academies Press. doi: 10.17226/14238.
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Introduction The Tier 2—Weighted-Matrix Delivery Decision Approach provides a means for owners to further examine project delivery methods for an individual project when an obvious choice was not found in the Tier 1—Analytical Delivery Decision Approach. The Tier 2 approach involves prioritizing project objectives and selecting the delivery method that best aligns with these objec- tives. The Tier 2—Weighted-Matrix Delivery Decision Approach is founded upon successful delivery decision tools developed by academics and professionals over the past 20 years (Loulakis 2000, CII 2003, Skitmore and Marsden 1988). Owners should complete a Tier 1 approach before conducting the Tier 2 approach. The Tier 1 approach provides owners with two key pieces of information. First, the completion of the Tier 1 approach requires owners to define their project goals in terms of cost, schedule, quality, main- tainability, sustainability, and other options. These project goals are critical to application of the Tier 2 approach. Second, the Tier 1 approach provides a short list of available project delivery options. Only those project delivery methods that are feasible and have the best potential for suc- cessful application will pass through the Tier 1 filtering process. The filtering process involves examination of go/no-go issues and consideration of 24 pertinent issues involved in the project delivery decision. Knowledge of these pertinent issues is helpful in the Tier 2 approach. Forms for the Tier 2 approach are provided in Appendix E, which is available on the TRB web- site at http://trb.org/news/blurb_detail.asp?id=10054. The Tier 2 approach has three primary objectives: • Present a structured framework to assist agencies in prioritizing their unique project goals and delivery selection issues; • Assist owners in aligning their unique goals and issues with the most appropriate project delivery method; and • Further document the project delivery decision in the Project Delivery Decision Report estab- lished in Tier 1. The Tier 2 approach provides a framework for agencies to use in prioritizing their project goals and selecting the project delivery method that best aligns with these goals. Priorities for project goals and critical selection issues are unique to each project. Likewise, project delivery methods vary in their ability to achieve these goals and their suitability with regard to various issues. The Tier 2 approach will align these two facets of the delivery decision. At the completion of Tier 2, there is still a possibility that an agency will not have a single, clear, and logical choice for a project delivery method. If this is the case, the agency is advised to move to the Tier 3 approach with the short list of delivery methods emerging from completion of the 78 C H A P T E R 5 Tier 2—Weighted-Matrix Delivery Decision Approach

Tier 2 approach and make the final decision based upon a detailed risk analysis of the issues involved with each delivery method. The Tier 2 approach is composed of five distinct steps listed below and shown in Figure 5.1. Step 1. Define Selection Factors Step 2. Weight Selection Factors Step 3. Score Project Delivery Methods Step 4. Choose Most Appropriate Project Delivery Method Step 5. Document Results Step 1 of the Tier 2 process begins by defining a concise set of selection factors. These selec- tion factors consist of the project goals and any of the 24 pertinent issues examined in Tier 1 that were deemed critical (see Chapter 4 for Tier 1). The Tier 1 approach asks owners to establish their project goals at the very beginning of the process. The first step in Tier 2 is for owners to develop a concise set of selection factors by combining their project goals with the most relevant of the 24 pertinent issues examined in Tier 1. These selection factors will be used throughout the Tier 2 approach. In Step 2, owners rank and then weight selection factors. Some selection factors may overlap with others, in which case they can be combined. Other selection factors may stand alone for analysis. Completion of Step 2 results in a list of up to seven selection factors for further analysis. Step 3 of the Tier 2 approach requires owners to score each delivery method in terms of the selection factors. A further examination of the advantages and disadvantages for each delivery method will form the basis for these scores. Since the scores will be subjective, the owners will need to be diligent in documenting the rationale for the scores. Step 4 involves a determination of the most appropriate delivery method through the com- pletion of a weighted-decision matrix (see the weighted-matrix template in Table 5.3). Owners will make the determination by multiplying the selection factor weights by the project delivery scores and then summing the values for each delivery method. The highest score will indicate the Tier 2—Weighted-Matrix Delivery Decision Approach 79 Step 1. Define Selection Factors Time: ______________ Cost: ______________ Quality: ______________ … : ______________ … : ______________ … Step 5. Document Results PROJECT DELIVERY DECISION REPORT Tier 1 Project Description Project Goals Delivery Methods Considered Advantages and Disadvantages Delivery Method Decision Tier 2 Weighted-Matrix Decision Chart Step 2. Weight Selection Factors Step 3. Score Project Delivery Methods Step 4. Choose Most Appropriate Project Delivery Method PROJECT DELIVERY METHOD DBB CMR DB DBOM Selection Factor Factor Weight Score Weighted Score Score Weighted Score Score Weighted Score Score Weighted Score Factor 1 (e.g., Project goals) Factor 2 (e.g., Agency experience) Factor 3 (e.g., Market issues) Factor 4 to 7 … Total Score Figure 5.1. Tier 2 approach overview.

best choice. However, since the scores will be subjective, owners are encouraged to review the totals to determine whether the values are logical and defensible. The objective of Step 5 is to supplement the Project Delivery Decision Report developed in Tier 1. The Tier 1 report will provide a project description, project goals, delivery methods con- sidered, advantages and disadvantages, delivery method decision, and any relevant appendices. The Tier 2 documentation will add to this documentation of the weighted-matrix decision to supplement the archival record of the project delivery decision. The Project Delivery Decision Report will serve to communicate the decision to interested stakeholders and to justify the deci- sion if issues arise years later as the project is completed. The five steps of the Tier 2 approach are discussed in more detail below. In this report, to better illustrate how the Tier 2 approach works, the selection of a delivery method for an exam- ple project is followed through the first three steps of the Tier 2 analysis. Following the descrip- tion of Steps 1, 2, and 3 in the Tier 2 approach is an illustration of how each step was handled in the delivery selection process for the example project. Step 1. Define Selection Factors As stated in Step 1 of Tier 1, understanding and communicating a concise set of project goals is perhaps the most important element in selecting an appropriate project delivery method. The definition of project goals is a key success factor not only in the project delivery decision, but also in the development of procurement documents and the administration of a project. It is the project performance goals (e.g., time, cost, quality, maintainability, and sustainability) that typ- ically drive the project delivery decision. The first step in Tier 2 requires owners to combine the project goals and pertinent issues into a set of selection factors for use in a weighted-decision matrix. This step requires a review and filtering of the project goals and pertinent issues for use as selection factors. Figure 5.2 depicts this process. To create the goal-based selection factors, owners should review the project goals that were established in Tier 1. The Tier 1 review of the delivery method advantages and disadvantages may have revealed overlaps or gaps in the originally established project goals. While the original proj- 80 A Guidebook for the Evaluation of Project Delivery Methods Project Goals TIER 2 SELECTION FACTORS Critical Issues Develop Issue-Based Selection Factors Choose critical issues Remove overlaps Develop Goal-Based Selection Factors Remove overlaps Fill in gaps Comprehensive Non-overlapping Concise Figure 5.2. Tier 2 selection factor development.

ect goals should not change, these overlaps and gaps will need to be removed for the develop- ment of selection factors. Step 1 in the Tier 2 approach allows and encourages editing of these goals as they are rewritten into selection factors. In developing selection factors from the project goals, owners should consider the following questions: • Are there significant overlaps in the project goal statements that can be revised to make them more independent? • Are there goal statements missing that are needed to define the ultimate project success? • Can any of the goals be stated more concisely? The Tier 1 approach provides an opportunity to review 24 pertinent project delivery issues. However, in the Tier 1 approach all of the issues are treated as equally important. Upon review- ing the issues, owners will certainly find that some issues are more important than others. A small number of issues are likely to be important to the final project delivery decision. The next task in Step 1 is to select up to 7 of the 24 pertinent project delivery issues to exam- ine and develop into selection factors. The owner should select the pertinent issues according to the following: • The pertinent issues should be independent of the project goals, • The pertinent issues should be independent of each other, and • No more than seven pertinent issues should be chosen. The final task of Step 1 is to consolidate the goals-based and issues-based selection factors into one comprehensive list. The next step in the Tier 2 process involves a ranking of the goals and critical issues; therefore, one combined list is required. Delivery Selection Process for the Example Project—Step 1. The selection factors for the example project were determined to be the following: • Project complete by November 1, 20XX. • Cost not to exceed $1.5 billion. • Environment enhanced through less traffic congestion and pollution. • Staffing requirements minimized during design and construction. This list of selection factors includes project goals relating to time, cost, and sustainability and a pertinent issue regarding agency staffing. While other issues, such as technical quality, main- tainability, third-party agreements, and so forth undoubtedly exist for the project, the list of selection factors includes the goals and issues by which the success of the project will be prima- rily measured at its completion. Step 2. Weight Selection Factors The Tier 2 approach is based on the premise that owners can establish a unique hierarchy of selection factors. In other words, success will be defined differently for each project and the cri- teria for success can be described by a few key selection factors. The objective of Step 2 is to weight the list of selection factors. Step 2 involves first ranking and then weighting the selection factors. There are numerous methods that can be used to achieve a weighted ranking of the factors. The most straightforward method is developing a ranking and weighting through discussion among project decision mak- ers. The decision will by nature be somewhat subjective, so a diligently documented group deci- sion is preferable. Tier 2—Weighted-Matrix Delivery Decision Approach 81

To achieve the weighted ranking, owners should do the following: • Rank the selection factors in order from highest to lowest with regard to their influence on project success. • Include a minimum of four and a maximum of seven factors. – Remove factors not ranked in the top seven. • Using 100 total points, weight the factors according to their influence on project success. – Avoid equal weighting of factors. – Remove any factors with a value of less than 5 of the 100 points and redistribute points. These three steps describe a simple method for achieving a weighted ranking of the selection factors. Decision sciences provide more precise methods for achieving weighted rankings and developing a consensus. Appendix F (available on the TRB website at http://trb.org/news/ blurb_detail.asp?id=10054) provides descriptions of the following methods to achieve more precise weighted rankings: • The Delphi Method, • Rank Order Centroid, • The Ratio Method, and • Pairwise Comparison. The result of Step 2 will be a weighted ranking of up to seven selection factors. The weightings should total 100 points. Equal factor weightings are not recommended because distinguishing the importance between factors (goals and pertinent issues) is necessary for the decision process. Additionally, no single factor should have a point value of less than five because a point value that low will not influence the final decision and may in fact make the selection more difficult. Steps 3, 4, and 5 involve combining the weighted ranking of the selection factors with a scoring of the project delivery methods to arrive at the selection of the most appropriate delivery method. Delivery Selection for the Example Project—Step 2. Table 5.1 shows how weighted ranking worked in the example project. In Table 5.1, selection factors for the example project have been weighted to reflect their influence on the success of the example project’s delivery. These weight- ings are project dependent and should be agreed upon by key owner team members. Step 3. Score Project Delivery Methods The third step involves a scoring of the alternative delivery methods from the Tier 1 analysis. Each of these delivery methods will have a bearing or influence on the selection factors, which stem from the project goals and pertinent issues. The key decision makers must translate this influence into a score to arrive at a decision. To achieve the total scores for each delivery method, owners do the following: 82 A Guidebook for the Evaluation of Project Delivery Methods Weight Selection Factor 50 Project complete by November 1, 20XX. 25 Cost not to exceed $1.5 billion. 15 Environment enhanced through less traffic congestion and pollution. 10 Staffing requirements minimized during design and construction. 100 Total Table 5.1. Weighted ranking of selection factors for the example project.

• Using the scale given in Table 5.2, assign a score to each delivery method that represents its influence or bearing on each selection factor. Score all delivery methods for each factor before moving to the next factor. • Repeat the previous step for each selection factor. • When all of the delivery methods have been scored, multiply each delivery method’s factor weight by its score to achieve a weighted score for each delivery method. • Sum all of the weighted scores to arrive at a total score for each delivery method. Table 5.2 provides a scale for scoring each delivery method’s bearing on each selection factor. The scores range from 1 to 10 so that when they are multiplied by the factor weight, the total score will range from 0 to 1,000. The scores are subjective, so a detailed definition for each numerical score is provided adjacent to the score in Table 5.2. When scoring the delivery methods, owners should discuss the advantages and disadvantages of each delivery method (see Chapter 3 and Step 4 of Tier 1). The alignment of these advantages and disadvantages with the selection factors forms the basis for the scoring. In assigning the scores, the owner should work in a team to come to a decision by consensus. The reasons for each individual score should also be carefully doc- umented. Consideration should also be given to the relative scores for each delivery method to ensure consistency. Like the development of factor weights, scoring project delivery methods can be done most simply through a group discussion among key decision makers from the owner’s team. If a more precise scoring is desired, one of the decision techniques described in Appendix F can be used. Table 5.3 provides a weighted decision matrix template. The matrix can contain up to four delivery methods, depending upon the results of Tier 1. The matrix can also contain up to seven selection factors for each project. The result of Step 3 will be a scored ranking of the delivery methods in question. The delivery method with the highest total score will be the most appro- priate method for the given project. The next steps involve documenting the individual scores, making a decision, and creating a Project Delivery Selection Report. Delivery Selection for the Example Project—Step 3. Table 5.4 shows how an owner might score the project delivery methods for the example project. Note that only the CMR and DB project delivery methods made it through the Tier 1 filter for further consideration in Tier 2. Also note that the scores are project dependent and will certainly change from project to project. Tier 2—Weighted-Matrix Delivery Decision Approach 83 Score Definition 10 The evidence that the delivery method positively aligns with the project objective or issue is of the highest possible order of affirmation. 8 The delivery method strongly aligns with the objective or issue and is demonstrated in practice. There is a slight risk that the objective or issue may not be beneficial. 6 Experience and judgment point to the delivery method strongly aligning with the objective or issue. There is a mild risk that the objective may not be beneficial. 4 Experience and judgment point slightly to the delivery method aligning with the objective or issue. There is a strong risk that the objective will be negatively affected. 2 There is little benefit to applying the delivery method for this goal or objective. There is a strong likelihood that the object will not be achieved. 9,7,5,3,1 Intermediate values between two adjacent judgments. Table 5.2. Project delivery scoring scale (adapted from Saaty 1990).

Explanations of the scores for the project delivery methods for the example project are the fol- lowing: • Project completion factor. The project completion factor relates to a project goal. In this case, the project has a fixed end date of November 1, 20XX. The owner believes that CMR delivery can achieve the completion date. The owner also believes that CMR will require the use of multiple bid packages to achieve the schedule, which adds a risk for meeting the schedule date, so CMR = 6 (in this case). DB delivery provides for a single entity to coordinate design and construction. DB also allows for an owner to specify a fixed end date in the procurement doc- uments and the contract. According to what has been demonstrated in practice, the owner is confident that the end date can be achieved through a DB delivery, so DB = 8 (in this case). • Cost containment factor. The cost containment factor relates to a project goal. The project has a maximum budget of $1.5 billion. Practice has shown that with DB a fixed price can be set early in the project development process. It has also been demonstrated that DB provides the lowest average cost growth of the two methods in question, so DB = 8 (in this case). CMR also provides the ability to meet a fixed price, but the owner is not as confident with the expe- rience using a GMP contract structure. The owner also feels that there is more risk with CMR of not achieving the schedule than with DB, so CMR = 6 (in this case). 84 A Guidebook for the Evaluation of Project Delivery Methods Project Delivery Method DBB CMR DB DBOM Selectio n Factor Factor Weight Scor e Weighted Scor e Scor e Weighted Scor e Scor e Weighted Scor e Scor e Weighted Score Factor 1 (e.g., Project Goals) Factor 2 (e.g., Agency experience) Factor 3 (e.g., Market issues) Factors 4 to 7 … Total Score Table 5.3. Weighted-matrix template. Project Delivery Method CMR DB Selection Factors FactorWeight Score Weighted Score Score Weighted Score Project complete by November 1, 20XX 50 6 300 8 400 Cost not to exceed $1.5 billion 25 6 150 8 200 Environment enhanced through less traffic congestion and pollution 15 10 150 6 90 Staffing requirements minimized during design and construction 10 8 80 6 60 Total Score 100 680 750 Table 5.4. Weighted matrix for example project.

• Environmental enhancement factor. This factor relates to a project goal. The owner wants the project to enhance the environment through less traffic congestion and pollution. In this case, the owner has met with designers who can help define sustainability goals that can be achieved through their independent designs if they are hired directly by the owner. The CMR delivery method will provide for a direct contract between the owner and the designer to ensure that the goals are achieved, so CMR = 10 (in this case). While the owner can develop DB performance criteria related to sustainability, the owner is not as confident that it can accurately articulate its goals in the performance criteria, and it believes that there is a risk that the goals will not be fully achieved, so DB = 6 (in this case). • Staffing requirements factor. The staffing requirements factor relates to a pertinent issue exam- ined in Tier 1. The owner does not have a large staff and wants to minimize staffing requirements during design and construction. The CMR option will allow the owner to supplement its staff during both design and construction, either with the designer or with the CMR. The owner is confident that qualified professionals exist to meet its staffing needs, but is slightly concerned about exactly how the working relationship between the CMR and the owner will be executed, so CMR = 8 (in this case). The DB option will require the owner to mass its resources (or build up for a short time) during the procurement and design review process. The owner believes that it can supplement its staff with a general engineering consultant, but the owner is not con- fident that the DB option will be as effective as the CMR option, so DB = 6 (in this case). Step 4. Choose the Most Appropriate Project Delivery Method At this point, choosing the appropriate delivery method is simply a matter of reviewing the total scores and making the project delivery decision. Since the factor weighting and the scores are subjective, the owner should review the totals and confirm that they are logical and defensi- ble. If, upon further discussion, a factor weight or project delivery score appears to be incorrect or to overly influence the selection, it is acceptable to make changes and create a new total proj- ect score. The key is to document the reasons for each change. If the owner is not confident about a particular weight or score, the owner can conduct more research about a particular delivery method and revisit the scoring after gathering more information. If the owner is not confi- dent about the scoring method, the owner may choose to use one of the more rigorous scor- ing methods presented in Appendix F, available on the TRB website at http://trb.org/news/ blurb_detail.asp?id=10054. If, at this point, a “most appropriate” delivery method has not emerged, the owner should document the results of the Tier 2 analysis (see Step 5) and move to the Tier 3 approach (see Chapter 6). Step 5. Document Results As in Tier 1, documentation of the delivery decision is a key part of the process. Whether one delivery method clearly achieves the highest score or no dominant choice appears, documen- tation is a vital step. Documentation will assist in developing procurement and contracting strategies for the ultimate project delivery method. Documentation will also serve to commu- nicate the project delivery choice to interested stakeholders. Documentation of Tier 2 involves supplementing the Project Delivery Decision Report devel- oped in Tier 1. The Project Delivery Decision Report should contain the weighted matrix and a detailed documentation of the reasoning on which criterion weights and project delivery scores are based. Tier 2—Weighted-Matrix Delivery Decision Approach 85

Conclusion The Tier 2—Weighted-Matrix Delivery Decision Approach extends the Tier 1 approach by providing an examination of how project delivery methods align with project goals and perti- nent issues as these are consolidated into selection factors. The weighted ranking of project selection factors requires decision makers to define their priorities and more closely examine the attributes of the delivery methods remaining after the Tier 1 analysis. At the end of Step 4, there may be a single, clear, and logical choice for a project delivery method and the choice can be documented in the Project Delivery Decision Report. If a dominant choice does not appear, the agency should document the results and move to the Tier 3 approach, which focuses on how delivery methods relate to project risks. 86 A Guidebook for the Evaluation of Project Delivery Methods

Next: Chapter 6 - Tier 3 Optimal Risk-Based Approach »
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TRB’s Transit Cooperative Research Program (TCRP) Report 131: A Guidebook for the Evaluation of Project Delivery Methods examines various project delivery methods for major transit capital projects. The report also explores the impacts, advantages, and disadvantages of including operations and maintenance as a component of a contract for a project delivery method.

A companion publication to TCRP Report 131 isTCRP Web-Only Document 41: Evaluation of Project Delivery Methods, which explores pertinent literature and research findings related to various project delivery methods for transit projects. TCRP Web-Only Document 41 also includes definitions of project delivery methods and highlights the existing selection approaches commonly used by transit agencies.

Appendix A: References and Appendix B: Definitions were published as part of TCRP Report 131. Appendices C through H of the report are available online.

Appendix C: Forms for Project Description and Goals

Appendix D: Forms for the Analytical Delivery Decision Approach (Tier 1)

Appendix E: Forms for the Weighted-Matrix Delivery Decision Approach (Tier 2)

Appendix F: Procedures for Determining the Weights of Selection Factors in the Weighted-Matrix Delivery Decision Approach (Tier 2)

Appendix G: Form for the Optimal Risk-Based Approach (Tier 3)

Appendix H: Application of the Tier 1 and Tier 2 Approaches to a Hypothetical Project

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