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Advantages and Disadvantages of Each Project Delivery Method 33 DB The DB process can help move third-party agreements to consummation early in the project delivery process, often before the design is complete. Airports need to get all the important inputs from stakeholders before issuing an RFP because changes in the project after award are disrup- tive and potentially costly. Airports have experienced both benefits and drawbacks from having the DB contractor on the team before all third-party agreements are in place. As design and con- struction are awarded in one contract, the time available to develop agreements with other par- ties can be compressed. Additionally, these agreements must often be written in performance terms because the design is not completed at the time of award. However, the designers and con- structors on a DB team often have long-standing relationships with third-party stakeholders that they can leverage for the benefit of the project. Constructors have different approaches to nego- tiating agreements with third parties than owners, and these approaches can often be very effec- tive (Touran et al. 2009). Additionally, the airport can require the DB contractor to include a public information and outreach program in the project to facilitate stakeholder input during design and construction. A caution is that any third-party change after the award of a fixed price or negotiation of a GMP in a DB delivery method can be costly or difficult to negotiate. Airport-Level Issue Summary Airport-level issues directly impact an airport's operations and its project delivery staff. Some of these issues, such as the experience and capability of airport staff, play an important role if a switch is being made from the traditional DBB project delivery method to alternative delivery methods such as CMR and DB. Many airports prefer to use DBB unless their goals cannot be readily achieved by this traditional project delivery method. Other issues presented in this section are specific to airport projects. For example, "control of impact on passengers and operations" mainly concerns the flexibility of each delivery method in relation to project phasing and rescheduling to mini- mize construction impacts on regular activities of an airport. "Security" is another example of an airport-specific issue. Security codes, tight controls, and background checks decrease competi- tion, complicate project scheduling, and increase project cost. However, when considering airport- level issues in the process of selecting a project delivery method, the most important areas to consider are the owner's control over the project and flexibility in the design phase. In all cases, the airport's ability to articulate well-defined project objectives and a clear scope using the given deliv- ery method is the key to success. Public Policy/Regulatory Issues This section examines the choice of project delivery method in relation to public policy and regulatory issues such as existing laws, mandated social programs, labor unions, and other fac- tors that establish the legal environment in which a project must be delivered. Issue 14: Competition and Local Talent Each delivery method may affect the level of competition. In many cases, airports are operat- ing under a legal requirement that requires "free and open" competition; for example, Port Columbus International Airport is required by state law to bid out any project more than $25,000. Owners benefit from a competitive market mainly because of the reduction in bid prices. If choosing a certain project delivery method reduces the level of competition among bid- ders (or reduces the number of qualified bidders), this would be considered a disadvantage. Air- side design and construction projects normally have less competition than landside projects because of specialized knowledge, skills, and experience [Logan International Airport].

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34 A Guidebook for Selecting Airport Capital Project Delivery Methods Currently, the volatility of bid prices in transportation projects is a major concern for the own- ers of airport projects. Additionally, alternative project delivery methods may inadvertently lead an airport to package projects in sizes that can effectively reduce competition. Local talent can be an advantage or disadvantage of each delivery method depending on the available capacity of local companies. For example, availability of general contractors with DB experience in the area where the airport project is executed should be considered an advantage of DB. On the other hand, some airports may be located in areas where there are relatively few firms familiar with CMR or DB con- tracting, making the use of alternative delivery methods a disadvantage in those areas. In the following paragraphs, the ability of each delivery method to facilitate competition and employ local talent is evaluated. DBB Compared to other delivery methods, the availability of a relatively large pool of potentially qualified bidders ensures a high level of competition (AGC 2004, Walewski et al. 2001). The owner can benefit from this market competition and get a low bid for its project. This approach also enables the owner to divide the project into smaller packages and bid them out separately to further increase competition. The drawback to the multiprime approach is that the coordina- tion between various contracts may prove difficult. CMR Using RFP procedures and taking into consideration qualifications-based factors when eval- uating the bidders can help the owners weed out unqualified proposers. The issue in this method is that the selected CMR constructor becomes the de facto winner of the construction contract, giving the owner less competitive leverage when pricing the construction (Irwin 2003). This can be alleviated to some degree by requiring that the project components be bid out competitively among various trade subcontractors. The potentially negative effect of this requirement is that the CM may be reluctant to set a GMP until all the sub-bids are in. The owner can reserve the right to go to regular bidding if it cannot agree on a GMP with the CMR, although that decision may entail some extra cost and schedule delay. DB The RFP or qualifications-based procurement process can weed out unqualified DB entities. Nonetheless, the size of the bid package, the experience required to lead a DB team, and the bid preparation costs may reduce the number of qualified bidders (AGC 2004). Issue 15: Disadvantaged Business Enterprise (DBE)/ Small Business Impacts The law imposes requirements and provides guidelines for DBE participation on federally funded airport projects [Hartsfield-Jackson Atlanta International Airport, Port Columbus Inter- national Airport, Colorado Springs Airport, Denver International Airport]. Project delivery methods may facilitate fair competition for DBEs for airport contracts and reduce burdens on small businesses. The effect of each project delivery method on promoting participation by dis- advantaged businesses is discussed below. DBB In DBB, the owner has the chance to include requirements for DBE participation in both design and construction contracts. For example, in the RFP for soliciting design services, the owner may stipulate the nature and extent of DBE participation as part of the design team. In the same way, the owner may require that the general contractor perform a preset percentage of construction using DBE subcontractors. Usually, the minimum level (as well as the desired target level) of

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Advantages and Disadvantages of Each Project Delivery Method 35 participation is stipulated as a percentage of the contract price. On the other hand, the low-bid environment of DBB may force DBE subs to submit dangerously low prices, potentially harm- ing the future viability of these fledgling companies. CMR A constructor that submits a proposal for a CMR project is usually more sophisticated in deal- ing with a design team and understanding project objectives than a DBB general contractor. In QBS, the lack of experience of some DBEs can be a disadvantage. One method to ensure DBE participation is to require a preset minimum (and target) percentage of the GMP for DBE firms. DB Lack of experience and sufficient financial strength may prevent a DBE from becoming a lead contractor in DB, but small businesses and DBEs may participate as subcontractors of the design- builder. As the owner is not directly involved in selecting subcontractors and suppliers, require- ments for DBE participation as a percentage of the project budget should be included in a DB RFP and then in the contract. This percentage should be based on the number of DBEs associated with the various trades that will be required in the project. The design-builder then periodically reports on the actual payments to all the DBE subcontractors and suppliers. The use of fixed-price pro- curement early in the project development process will not facilitate the identification of DBE contractors as well as the use of a GMP negotiation later in the process. As the owner has less con- trol in this project delivery approach, the enforcement of DBE participation may be more diffi- cult than in DBB or CMR. Issue 16: Legal and Statutory Constraints Research done on federal laws shows that airports are allowed to use alternative project delivery methods (49 USC 47142). State and local codes may have their own restrictions. Some states man- date that airports go through several justification and approval steps before being allowed to use an alternative project delivery method. Additionally, there may be other legal issues. For example, labor union issues, environmental impact permits, and rules for the bidding process may conflict with the procedures of a project delivery method and make it difficult for the owner to use that delivery method. Also, a well-tested and streamlined procedure for a delivery method, achieved after many applications is considered an advantage for that delivery method. The interactions between each project delivery method and legal and statutory constraints are explored below. DBB DBB is accepted as a delivery method for an airport project by all state codes. Relevant procure- ment processes are well developed, and the details of DBB execution are available nationwide. In this delivery method, the contractor hires laborers directly or through a subcontractor. Union or non-union labor may be used in this method (unless local conditions and considerations limit a constructor's options), and there would be no fundamental opposition to DBB unless the contrac- tor failed to comply with the relevant rules and regulations. The open bid procedure does not con- flict with state codes and does not impose any ambiguity or difficulty for the airport if the project is awarded to the lowest bidder. Finally, the procedures are well established, with a long history of application. CMR The at-risk CM is usually selected through a qualifications-based process, and then the contract price is determined in a negotiation between the owner and the CMR. This may con- flict with state codes that require open bidding for any construction project. The construc- tor in this project delivery method plays a role similar to the general contractor in DBB, and

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36 A Guidebook for Selecting Airport Capital Project Delivery Methods there would be no fundamental issues between the unions and the constructor. If there are union issues in the project's location, the CMR's ability to guarantee the maximum price of the proj- ect will be at risk, and the CMR may not be willing to absorb the risks of the labor union issues. Unions may support alternative project delivery methods because these methods weight the importance of qualifications over the importance of cost, and unions assert that their members are more qualified than non-union labor (Bearup et al. 2007). DB Design-builder selection can be accomplished through best-value or qualifications-based procedures that typically include factors related to the qualifications of the bidder and the pro- posal. This approach to selection may conflict with traditional hard dollar bidding for some airports with no experience with these procedures. Also, the DB entities on large megaprojects (>$100 million) are usually joint ventures that dissolve after the end of the project, and this may make the process of dealing with unions a bit complicated as the joint venture entity may not be a signatory to the prevailing union agreements in the area. Awarding the design to a design- builder in places where public design engineers have their own unions (e.g., California) may cause public design engineers to view the use of DB as a threat to their job security. As with CMR, labor/craft unions may support alternative delivery methods in which qualification rather than cost is the basis of the award because unions assert that their members are more qualified than non-union labor (Bearup et al. 2007). Choice of procurement method may also affect the ability of some airports, as they may not be allowed to use a QBS procurement sys- tem [Hartsfield-Jackson Atlanta International Airport]. Also, sometimes environmental agen- cies may require a complete design before issuing the necessary permits. This will create an obstacle for the use of DB. Issue 17: Sustainability and LEED Certification Sustainable design and construction features are becoming more common and may become mandatory in the future for public infrastructure projects. Thus, it is important to gauge a proj- ect delivery method's ability to include these features in accordance with the owner's needs. The U.S. Green Building Council's Leadership in Energy and Environmental Design (LEED) cer- tification is often used by public agencies as a means to articulate their desire to design and build both energy-efficient and environmentally responsible projects. For example, Sacramento International Airport's preferred concept for the new Central Terminal B includes LEED cer- tification as an objective. Although LEED certification has not become a requirement in airport projects, how each delivery method functions with regard to this issue can be a benefit or a drawback. For example, one benefit of establishing LEED as a criterion is that it can be used as a metric to evaluate sustainable design and construction options regardless of whether LEED certification is sought for the project. LEED prerequisites (including selection of site and con- struction activity pollution prevention) can yield environmental benefits while reducing regu- latory risk. On the other hand, sustainability requirements may increase project costs because of extra technical features and documentation, as well as the requirement to have certified proj- ect personnel. One important fact to remember is that sustainability standards are evolving. The adoption of LEED criteria as a selection requirement may need to be phrased to indicate that the most current iteration of LEED criteria should be consulted rather than a particular, exist- ing standard. DBB With DBB, the owner has a clear opportunity to define sustainable design intent and shape social and environmental impact. This method presents opportunities to promote and enhance sustainable design criteria by allowing for materials research and the development of strategic