Construction Manager-at-Risk Project Delivery for Highway Programs (2010)

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11 INTRODUCTION This synthesis involves the investigation of the use of CMR by DOTs. This is accomplished through a review of literature to understand what CMR is and followed by a study method- ology that includes several different information collection approaches including CMR project case studies. LITERATURE SUMMARY The literature on CMR generally falls into one of two major categories. The first group encompasses journal papers and documents that report on a comparative analysis of two or more project delivery methods. The second category comprises information on the mechanics of implementing CMR as well as lessons learned from completed CMR projects. The first category is valuable in that it helps define the salient differ- ences between CMR and other project delivery methods at the operational level. Comparative Analysis of Project Delivery Method Performance The most often cited example from the first category is the paper by Konchar and Sanvido (1998) that compared dif- ferent project delivery methods (i.e., DB, DBB, and CMR) in 351 building projects with a standard set of performance criteria. The criteria were both objective and measurable. One of the results of the comparison is: “when all other variables were held constant, the effects of project delivery system indicated design/build projects to be at least 5.2% less than construction management at risk and 12.6% less than design/ bid/build projects on average in terms of cost growth” (Konchar and Sanvido 1998). The authors have divided the projects into six different groups (e.g., as light industrial, complex office, and heavy industrial) to get a more robust result about the trends in each group. The paper’s main conclusion is that CMR and DB projects tended to perform better in most mea- sured criteria than traditional DBB projects. Additionally, a recent NCHRP study of best value contracting (Scott et al. 2006) furnished direct comparison of transportation project performance between delivery methods. Although that study did not include CMR projects, it did include DBB projects awarded on a best value basis where the contractors’ qualifi- cations and past performance were factored into the selection process. This parallels the CMR delivery method. The study found that DB projects had 4.7% less cost growth and 9.3% less time growth. Best value projects had 2.0% less cost growth and 18.5% less time growth. One study in this category was specifically directed at owner perceptions of the various delivery methods (Doren et al. 2005). This was a joint effort between FMI Consulting and the Construction Management Association of America (CMAA). This study had a plethora of interesting findings that will be reported as appropriate throughout the synthesis. The one most directly related to the performance of CMR project delivery versus other delivery methods is summed up as follows: . . . when we asked which method was used most frequently, which is design-bid-build at 66% of all responses followed by CM-at-risk at only 19%. However, when asked which method delivers the best value, both CM-at-risk (35%) and design-build (29%) rated higher than design-bid-build (23%) (Doren et al. 2005; italics added). Thus, although DBB was used three times as often as CMR, CMR was perceived as the project delivery method that fur- nished the most value to the owner. The study went on to dis- cuss project delivery methods in the public sector. Changing the delivery methods used, in the case of these [public] organizations, will often require changing laws and politics, but that is happening, too, because the public is best served when it gets the best value for its tax dollars. . . . CM-at-risk will likely become the more dominant delivery method for this group (Doren et al. 2005; italics added). An article in the CMAA’s CM eJournal summarizes the issues discussed previously: The great advantage to CM-at-Risk for most public Owners is that their governing bodies accept it . . . Most Owners see having a GMP as equivalent to having a Stipulated Sum Cost, and on that basis are willing to enter the experiment . . . The choice then for most public Owners is between CM-at-Risk and the traditional [DBB] system. If they do not want to use the traditional method because of past poor results, and are not bold enough to try Design- Build, they are encouraged in this direction (Strang 2002). Construction Manager-at-Risk Implementation Experience The literature on implementing CMR contracting is reasonably rich and contains the lessons learned by public agencies in all transportation sectors. Rather than attempt to exhaustively relate all the successes and failures, the report will concentrate CHAPTER TWO LITERATURE, METHODOLOGY, AND CASE STUDIES

on those factors of CMR that were cited repetitively by a diverse group of authors and agencies. The ones that were found to be most important to understanding the aspects that impact successful CMR project delivery will be discussed in detail. Tables 1 and 2 summarize the advantages and dis- advantages found in the literature. If two or more authors specifically cited a specific factor as an advantage, it was recorded in Table 1. Then the disadvantages cited by the authors shown in Table 2 were tabulated to show their complete experience regardless of how many times an item was cited. The first thing that one can see in the tables is that the infor- mation is very current. Ten of the 15 citations were published between 2005 and 2009. This provides confirmation of the applicability of these experiences to transportation agencies that may be contemplating the use of CMR and are looking for information that will assist them in matching the project delivery method with their project requirements. The next general observation is that the authors appear to have more positive than negative information about CMR. Four of the 15 papers did not list any disadvantages, and there were 17 advantages cited that were offset by 13 disadvantages. Additionally, there are 4 advantages that were cited by at least 10 of the papers (two-thirds of the population), whereas all but one disadvantage was cited by one-third or less of the 12 sample. This appears to infer that the experience with CMR project delivery has generally been positive. It also provides confirmation to the results of the comparison of CMR with other delivery methods discussed in the previous section. From Table 1, the top five advantages based on frequency of citation in the literature are: 1. The ability of the constructor to make substantive/ beneficial input to the design. 2. The enhanced ability to accelerate the project’s delivery schedule. 3. Enhanced cost certainty at an earlier point in design than DBB. 4. The ability to bid early work packages as a means to mitigate the risk of construction price volatility and accelerate the schedule. 5. Owner control over the details of the design. Table 2 shows that the four most frequently cited dis- advantages are: 1. Reconciling the conflict between the primary motivations of the CMR and the designer (i.e., cost control versus conservative design to reduce design liability). Advantages (ref. no.) Times Cited of 15 Cita- tions Alder 2007 (1) Ander- son & Damn- janovic 2008 (2) Arm- strong & Wallace 2001 (3) Gam- batese et al. 2002 (4) Kop- pinen 2004 (5) Kwa k & Bushey 2000 (6 ) Ladino et al. 2008 (7) Lee 2008 (8) Mahdi & Al- & Lah- denperä reshaid 2005 (9 ) Mar- tinez et al. 2007 (10) Rojas & Kell 2008 (11) Scott 2007 (12) Strang 2002 (13) Thom- sen 2006 (14) Uhlik & Eller 2005 (15) CMR design input 12 X X X X X X X X X X X X Ability to fast-track 10 X X X X X X X X X X Early knowledge of costs 10 X X X X X X X X X X Ability to bid early work packages 10 X X X X X X X X X X Owner control of design 8 X X X X X X X X GMP creates cost control incentive 6 X X X X X X Reduces design costs 5 X X X X X Select GC on qualifications 4 X X X X Open books contingency accounting 4 X X X X Focus on quality and value 4 X X X X Flexibility during design/construction 4 X X X X Spirit of trust 4 X X X X Competitive bidding possible 4 X X X X CMR is ownerís advocate during design 3 X X X Third-party coord- ination facilitated 3 X X X Less radical change from DBB than DB 2 X X Risk transfer 2 X X GC = general contractor. TABLE 1 CMR ADVANTAGES SUMMARY

13 2. That the owner must still administer/coordinate both a design and a construction contract. 3. The final actual cost is not known until the GMP is established. 4. Agency personnel are trained to properly implement CMR project delivery. Project Delivery Concepts Figure 5 is taken from a textbook on alternative project delivery and graphically illustrates the “three legs of a fair and stable contract” (Gransberg et al. 2006). The five primary advantages cover the three legs of the project delivery process: cost, schedule, and quality. On the other hand, the previously mentioned four disadvantages are basically linked to the con- tract administration process associated with implementing CMR. This is an interesting dichotomy that will be explored in detail in the following sections. Looking at the three major project delivery methods allows the comparison of how each of the three legs is fixed in each method to create a fair and stable contract. In DBB, the quality and schedule legs are fixed by the contract completion date and the construction documents on which the contractors bid. Therefore, cost is the variable leg with the bids showing how much it will cost to deliver the specified quality within the specified time. In DB, the schedule remains fixed by contract and the cost leg is fixed by the design-builder’s lump sum proposal. Therefore, quality is the variable leg in the stool and as a result the owner no longer controls the details of design. In CMR, the contractor is brought to the project during design and helps optimize all three legs of the stool before they are fixed. Thus, CMR holds potential for developing the high degree of collaboration necessary to maximize quality within the project’s time and cost constraints without the interference of the contracts. Quality Aspects of Implementing CMR Two of the major cited advantages deal with quality: con- structor design input and owner design control. Through the preconstruction services contract with the CMR, the Disadvantages* Times Cited of 15 Cita- tions Alder 2007 Anderson & Damn- janovic 2008 Doren et al. 2005 Gam- batese et al. 2002 Ladino et al. 2008 Mahdi & Alreshaid 2005 Martinez et al. 2007 Scott 2007 Storm 2007 Strang 2002 Uhlik & Eller 2005 CMR and designer have different agendas 7 X X X X X X X Still have two contracts to manage 5 X X X X X Actual cost not known until GMP is set 5 X X X X X Training required for agency personnel 4 X X X X Picks CMR early in process 3 X X X Requires different procurement culture 3 X X X Designer not obligated to use CMR input 2 X X CMR can unintentionally assume design liability via review comments 2 X X Contingencies difficult to allocate 2 X X Lack of clear leadership during design 2 X X CMR underestimates cost of preconstruction services 1 X Reduced competition among subs 1 X CMR doesn’t control the design schedule 1 X *Armstrong and Wallace (2001), Koppinen and Lahdenperä (2004), Kwak and Bushey (2000), Rojas and Kell (2008), and Thomsen (2006) did not cite specific disadvantages. TABLE 2 CMR DISADVANTAGES SUMMARY Fair & Stable Qu al ity (D es ig n ) Sc he du le Co st FIGURE 5 Project delivery concept (Gransberg et al. 2006).

constructor is formally included in the design process: “Con- tractor experience and expertise can aid the design team in preparing more cost-effective traffic control plans, construc- tion staging plans, and perhaps more realistic construction schedules” (Anderson and Damnjanovic 2008). Chapter five of this report will discuss preconstruction services in detail. Two of the services performed by the CMR during the design phase are constructability reviews and design validation. Con- structability is defined by the Construction Industry Institute as “the integration of construction knowledge and experience in planning, design, procurement, and construction phases of projects consistent with the overall project objectives” (“Proj- ect Delivery Systems . . .” 1997). One of the papers cited in Tables 1 and 2 provides useful advice for appropriately timing reviews: Constructability is achieved through the effective and timely integration of construction input into planning and design as well as field operations. For maximum effect, it should be initiated early in the design process and performed at predefined points during the design process in accordance with a well thought-out plan (Martinez et al. 2007). This quote argues for selecting the CMR early in the design process to gain the “maximum effect” or benefit from the constructors’ knowledge and experience before design effort is wasted developing potential alternatives that need to be changed as a result of the budget and constructability reviews. Another paper that reports on a successful CMR stormwater drainage project in Florida confirms this assertion and goes on to describe the benefits: The ability of the CM to input constructability reviews, construc- tion phasing, material availability, and cost estimating throughout the design process reduces the probable occurrences of change orders, project construction delays, and increased project costs due to contractor identification of these elements in the design phase instead of the construction phase (Kwak and Bushey 2000). The above discussion leads to the idea that the constructabil- ity process adds value to the project by enhancing the quality of the design and driving it to produce a buildable project (Jeargas and Van der Put 2001; Dunston et al. 2002). An NCHRP study (Russell et al. 2002) found that one of the major research issues in the transportation sector was implementing a constructability review program in the planning and design phases that focuses specifically on “deficiencies in quality and clarity of construction plans.” It went on to recommend research on how to leverage constructability reviews as a means to increase the speed of construction. “The constructability review process, therefore, is recommended as an indispensable means toward achieving quality in the delivery of transporta- tion projects” (Dunston et al. 2002; italics added). Design validation is not a technical peer review of the design by the constructor. One author stated: “[t]he con- struction manager is not the licensed architect or engineer for the project and should avoid comments in the constructability reports that would more properly be included in a peer review 14 by design professionals” (Martinez et al. 2007). That paper goes on to recommend that design validation reviews by the CMR be limited to “. . . industry standards, previous con- struction experience with similar designs, and previous expe- rience related to re-work or warranty issues.” Thus, design validation becomes the process of reviewing the design prod- ucts to confirm that they can indeed be built as depicted and that they conform to available means, methods, and materials. A complex tunnel project in Portland, Oregon, was delivered by CMR and the owner reported measurable benefits as a result of the “contractor’s early involvement with design review, value engineering, and risk analysis prior to design completion . . . which contributed to significant cost and schedule savings” (Gribbon et al. 2003). The benefits of design validation reviews are confirmed by another paper that reported that CMR project delivery “provides for flexibility in the implementation of design changes late in the design process without impacting construction schedules and final delivery dates” (Kwak and Bushey 2000). The bottom line is that “[q]uality [construction] documents facilitate quality construc- tion and good relations with the construction industry, and projects delivered cost-effectively without extended duration greatly enhance public image for the STA [state transportation agency]” (Dunston et al. 2002). To accrue these potential advantages, the owner can develop a process that manages the greatest disadvantage reported in the literature. This is the reconciling of the differing agendas of the CMR and the designer during design. By con- tract, the CMR is cost-focused during the design phase because the primary reason for an owner to select CMR project delivery is to have access to real-time cost estimating capability that exists only in the construction industry (Martinez et al. 2007). Thus, the owner’s primary charge to the CMR is to ensure that the project does not exceed the budget. On the other hand, the owner charges the designer with ensuring that the project design details conform to all applicable codes, laws, and regulations while at the same time furnishing the desired technical capabilities and capacities. If the project does not meet these requirements, then the designer is liable to cor- rect the problem. Additionally, the designer’s liability for a structural failure in the project tends to last longer than the builder’s. As a result of this issue, designers tend to be con- servative in their designs, which can cause the construction cost to push against budget limits. Doren et al. (2005) pro- vides a list of quality imperatives to be satisfied to reconcile the competing agendas: • Need to pay more attention to controlling scope; • A/Es [designers] need to be more conscious of the cost to build their designs; • More coordination/collaboration among team members; • There needs to be a thorough review of the technical design details; • Need to bring contractors, subcontractors, and suppliers on board in the design phase; and • Need quality reviews from CMs (Doren et al. 2005).

15 To accomplish this task it is necessary that both the CMR preconstruction services contract and the engineering design contract have language that makes “coordination/collaboration among team members” an explicit contractual requirement. The Memphis Shelby County International Airport solved the problem of conflicting agendas by adding a clause in their design contract that puts 10% of the design fee at risk for the quality of the construction documents (measured by the number of design changes made during construction owing to errors and omissions). It stated that this effectively changed the engineers’ attitude from seeing the CMR constructability and design validation reviews as unwanted criticism to seeing the reviews as a valuable component of the design quality management program (Touran et al. 2009a). This also under- scores the need to modify the design contract to facilitate the preconstruction services provided by the CMR. Although chapter seven will discuss the quality manage- ment process in detail, it can be seen from this discussion that CMR provides a mechanism to enhance the quality of the design that necessarily translates into better construction quality owing to increased constructability (Dunston et al. 2002). This is confirmed by four of the papers cited in Table 1 that reported that CMR created a “focus on quality and value” rather than minimizing cost. This is nicely expressed by Dunston et al. when they state: “[t]he message is conveyed that the standard for top performance is measured by quality in terms of biddability, buildability, and maintainability in the project rather than by merely meeting a predetermined schedule” (Dunston et al. 2002). And this leads to the dis- cussion of schedule issues in CMR project delivery. Schedule Aspects of Implementing CMR The second major advantage of CMR project delivery was cited by 10 of the authors reviewed for this report and it deals with the enhanced ability to accelerate the schedule. As with DB, CMR projects do not have to wait for the design to be complete. A careful reading of the literature shows the “construction process” defined to include the procurement activities that a contractor undertakes once it has a signed contract to arrange for materials and subcontractors (Alder 2007; Gambatese et al. 2002). The primary benefit comes from the ability to arrange the work in bid packages that correlate directly with design packages. This permits the CMR to bid out those packages as soon as each package’s design is ready. This also allows the construction to begin before the entire design is finished without burdening the budget with unnecessary contingencies for possible design scope creep. These budget benefits will be discussed in the next section. To effectively accelerate the delivery period, the owner forms both the design and the construction contracts with this goal in mind. It cannot assume that the two can run independently and achieve this mutual goal. “The construction manager should review the overall project schedule and conduct coordination meetings with the design professionals to make sure the design activities are in compliance with and integrated into the construction sched- ule” (Martinez et al. 2007). This issue speaks to the second most often cited disadvantage, which is the owner’s need to properly coordinate and administer two contracts as opposed to the single contract in a DB project. It also advocates con- tractually assigning both design and construction scheduling responsibilities to the CMR. Doing so would ameliorate the cited disadvantage of “lack of clear leadership during design” by requiring the engineer to coordinate its efforts through the CMR for the best interests of the overall project’s schedule. If the design contract does not have this type of language, the owner regresses to dealing with the major disadvantage of refereeing the different agendas of the designer and the builder. Managing schedule risk is always significant in transporta- tion projects and especially so when the project will disrupt the traveling public for significant periods of time. Trans- portation agencies are always looking for ways to reduce design and construction schedules (Ford et al. 2004). One way to manage this risk is to begin design and construction activities as soon as they can technically be started and to maximize the number of parallel activities that occur in the schedule (Touran 2006). As the CMR ultimately is at risk for delivering the completed project on time, it makes sense to involve it in the risk analysis. Touran puts it this way “. . . the CM is the entity who should be performing the risk analysis. The owner can benefit from an experienced construction manager that is present in the project since the beginning and understands the implications of various decisions regarding scope, budget, and schedule . . .” Thus, it appears to be impor- tant that the CMR’s preconstruction services contract be spe- cific about its roles and responsibilities for scheduling during design. Kuhn puts it this way: Preconstruction phase schedule management is one of the key roles of the [CMR’s] preconstruction manager. Creating a real- istic and detailed schedule for all design, approval, estimating, and purchasing activities to ensure that construction activities begin on schedule is the primary objective of the preconstruction schedule. The preconstruction schedule reflects what is expected of the design team, CM, and owner so that packaging and scoping of the work can be accomplished through documents that address required information at each stage of the design process. For this reason, it is critical that the preconstruction manager be involved in the project as early as possible to coordinate deliverables and expectations with the design team (Kuhn 2007). UDOT’s CMR implementation experience confirms that the schedule advantages found in the literature can be realized in the field. This agency cites a number of reasons why they believe that CMR project delivery allowed them to accelerate project schedules but warns that this advantage does not come to the owner risk free: The CMGC [CMR] process has reduced the schedule for most projects. Part of the reason for this is the time saved in the design effort. The contractor’s participation helps to identify solutions quickly and speeds up the design process. Their participation also reduces the detail that must be communicated to the contactor

in drawings and specifications. CMGC in general allows a project to begin at risk. One project began before the railroad right of way issues were cleared . . . By careful construction planning the railroad work was saved for last and right of way issues were cleared in time to complete the project on schedule. Choosing a contractor in the design process also helps to clear utility issues. Utility companies move more quickly to plan and execute solu- tions when they know the contractor they will be working with. Phasing helps to reduce schedule time. Long lead items were purchased during design that would be used later in construction. This is not without some risk (Alder 2007; italics added). The old cliché that time equals money operates in this project delivery method. The risk of not finishing on time almost always results in additional hard costs to the agency and increased user costs to the traveling public. “While sched- ule risk assessment can be performed without regards to cost in most cases, calculation of cost risks has to be tied to schedule” (Touran 2006). This leads to the subject of the next section. Cost Aspects of Implementing CMR Two of the top five CMR advantages were directly related to cost. First, the owner is able to achieve cost certainty earlier in CMR than DBB because the constructor is furnishing esti- mates during design, as well as a GMP before 100% design completion. Additionally, the owner can choose to use a pro- gressive GMP where the CMR commits to incremental bid package GMPs as design packages are complete and finalizes the project GMP when the majority of the work has been bid out to trade subcontractors and material suppliers. This reduces the risk to the constructor and the amount of contingency that the CMR maintains against the cost risks of material price escalation, subcontractor availability, and scope creep during design. The second advantage deals with the role of the GMP as an incentive to control costs. That the CMR is allowed to provide design input and then prepares progress estimates based on that input creates “buy-in” to the final design by the CMR. “If the CM At-Risk has been on board all along, [it] will find asking for changes because of ambiguities in the plans as difficult as ever” (Strang 2002). These benefits are offset in the literature by the require- ment to select the CMR early in the project development process and then wait until the design progresses to the point where a GMP can be established without excessive contin- gencies before the actual total cost is known to the owner. Although this is earlier than in DBB, a lump sum DB project fixes the design and construction costs at award. One of the other cited disadvantages is that the designer is not obligated to incorporate the CMR’s design recommendations into the final design. SYNTHESIS METHODOLOGY The methodology was designed to analyze the output from multiple study instruments to identify intersections between the literature, information found in the case studies, points 16 derived from the structured interviews of agencies, a survey of state DOTs, and the content analysis of CMR solicitation documents. Finally, structured interviews with contractors who have completed the case study CMR projects were con- ducted to validate the conclusions. The conclusions reported in the final chapter are the result of triangulation between three or more of those sources. Effective practices and lessons learned discussed at the end of each chapter are drawn from the intersection of the literature and one of the other study instruments. Thus, the rationale for developing conclusions and effective practices is to be able to map them back to two or three sources that all agree and further validate them by indicated construction industry confirmation. Information for synthesis development was collected using the following study instruments: 1. Review of the current literature; 2. Surveys using a web-based questionnaire to state high- way agencies and other transportation agencies to identify those with CMR experience; 3. Structured interviews with DOTs and other public trans- portation agencies with CMR experience; 4. Content analysis of RFQs/RFPs for CMR transportation projects; 5. Case studies of DOTs and other public transportation agencies that have implemented CMR; 6. Case studies from the transit, airport, and building sectors; and 7. Structured interviews with members of the construction industry. Literature Review All relevant literature was reviewed. Special attention was paid to national and international experience as it may apply to state-level projects. The literature review was used to prepare the survey of state DOTs to ascertain which agencies have actual CMR experience. Additionally, the literature was used as a basis to prepare the case study structured interview questionnaires. The industry structured interview question- naire was also prepared based on information found in the literature review. Finally, the review also looked for parallel case studies from the architectural sector to permit a com- parison of vertical building projects with horizontal transporta- tion projects. These were used to compare the information gained from DOTs that reserve CMR for the delivery of projects with a strong vertical component such as multi-modal centers, airport terminals, and rest areas (i.e., Alaska and Florida). National Survey A short survey was uploaded to a commercial Internet sur- vey site (see Appendix A for details). The consultants then

17 e-mailed the state construction and design engineers for each DOT and requested that they visit the link on the survey and complete the survey. The purpose was to identify those state DOTs with CMR experience. Figure 6 shows the response rate and the results in a graphic manner. One can see in Figure 6 that five states have some experi- ence with CMR project delivery. The Rhode Island DOT is overseeing a CMR project for the Rhode Island Airport Corporation under the auspices of Special Experimental Proj- ects Number 14 (SEP-14). The Michigan DOT (MDOT) is also overseeing a CMR project to construct a passenger ship terminal for Detroit Wayne County Port Authority. Neither of these DOTs has attempted to procure a typical highway project using the method. The survey response from Rhode Island indicated that the DOT did not have CMR contracting authority, and this is interpreted to mean that it can only use the method via the SEP-14 authorization. Michigan is different in that it does have the ability use the method, but the structured interview with the MDOT project manager indicated that the agency had not yet found a traditional highway project where CMR project delivery made sense. Of the states shown in black in Figure 6, Arizona, Florida, and Utah have the most experience. The Florida DOT (FDOT) has largely used the method to procure transporta- tion projects with a strong component of vertical/building construction, including a $1.3 billion multi-modal center in Miami. The Arizona experience is largely at the county and municipal level, where the local agencies in and around the Phoenix metroplex have a robust and long-standing CMR project delivery program. Arizona DOT has awarded two CMR projects that are underway at the time of this writing. UDOT has the nation’s greatest experience in using CMR (termed CMGC in the literature from Utah) project delivery for typical road and bridge projects. UDOT has a memoran- dum of understanding with FHWA for 24 CMR projects authorized for federal funding with additional CMR proj- ects planned to be funded solely by the state. Of that group, 13 are completed and another 16 are underway. Given this breadth and depth of experience with projects that are of prime interest to this synthesis, the Utah input from the various study instruments is given the most weight in the analysis. A member, UDOT, expressed the opinion stated here. However, UDOT has not adopted this as its policy and continues to select project delivery methods on a project- by-project basis. Use CMGC [CMR] as the primary delivery method unless sched- ule is the principle driver. When a shortened delivery schedule is the primary motivation design build should be used. If the [CMGC] contractor cannot deliver the project for a fair price then the fall back position is [Design] Bid Build. I make this recommendation because we should always want the contractor’s input to reduce risk, cost, and construction time (Alder 2007; italics added). The remaining two states, Alaska and Oregon, have limited experience. The Alaska DOT experience is much like FDOT’s in that it has completed two airport terminal expansion projects and both had a large proportion of vertical construction. The interview with the project manager in Alaska indicated that the agency is looking to expand the use of CMR to road and FIGURE 6 National survey of DOTs’ results (note: unshaded states did not respond).

bridge projects, but will first deal with policy and procurement culture issues. ODOT is using CMR to deliver a major inter- state bridge project with thorny environmental issues, and plans to continue its use of the method based on the positive experience with the first project. Of the states that have authority but have not tried CMR, Nevada and Washington State, are actively pursuing the nec- essary tasks to implement it on a pilot basis. As with Michigan, Washington has not yet found a project that it believed would make a decent pilot project. Nevada received its authority in 2008 and has just embarked on the development of its pro- gram policy and procedures. Colorado and Wyoming both answered the survey by indicating that they had not yet had a project where CMR project delivery made sense. Texas stated that it did not believe that CMR project delivery was appro- priate for horizontal projects. Structured Interviews The primary input to the case studies was gathered through structured interviews with the agencies that had implemented CMR project delivery. The structured interview outlines were developed on lines similar to the method prescribed by the U.S. Government Accounting Office (“Using Struc- 18 tured Interviewing Techniques” 1991). The agency method states that structured interviews can be used where “infor- mation must be obtained from program participants or mem- bers of a comparison group . . . or when essentially the same information must be obtained from numerous people for a multiple case-study evaluation” (“Using Structured Interviewing Techniques” 1991). Both of these conditions apply to this synthesis; therefore, the tool is appropriate for the study. Agency Interviews The structured interviews of the agencies with CMR experi- ence were centered on a single case study project. However, the interview was broadened to include a more general set of policy, procedure, and effective practices for those agencies that had completed several CMR projects. A total of 10 agen- cies were interviewed either face-to-face or telephonically, depending on their availability. The total value of the case study CMR projects associated with these agencies is $2.3 billion. Table 3 shows the salient details on each agency interviewed. This list constitutes most of the DOTs with some sort of CMR experience. It also includes two non-state transporta- tion agencies with significant CMR experience. The list also covers a wide range of project sizes, from a low of $10 mil- Agency CMR Experience (no. projects) Case Study Project Location Size ($) Primary Type Alaska DOT&PF 2 Fairbanks Intl. Airport Expansion Fairbanks, AK $99.0 million Building Florida DOT 9 Miami Intermodal Center Miami, FL $1.3 billion Building, Rail, Road, Bridge City of Glendale 18 Glendale Pedestrian Improvements Glendale, AZ $16.2 million Road, Utilities Michigan DOT 1* Passenger Ship Terminal Port of Detroit, MI $10.0 million Building, Marine, Utilities Oregon DOT 1 I-5 Willamette River Bridge Eugene, OR $150.0 million Road, Bridge Pinal County Public Works 5 Ironwood– Gantzel Road (U.S. 60) Improvements Florence, AZ $63.7 million Road, Bridge Utah DOT 13 I-80 State St. to 1300 East. Reconstruction Salt Lake City, UT $130.0 million Road, Bridge Non-Highway Case Study Agencies Memphis Airport Authority 25 Whole Base Relocation Memphis, TN $245.0 million Runway, Building Utah Transit Authority 4 Weber County Commuter Rail Salt Lake City, UT $241.0 million Rail, Road, Bridge, Building Texas Tech University 40+ Lanier Law School Center Lubbock, TX $13.7 million Building *Oversight on behalf of another agency responsibility only. TABLE 3 AGENCY STRUCTURED INTERVIEWS

19 lion to a high of $1.3 billion. It also covers nearly all modes of transportation. Contractor Interviews It is extremely important for this study to gauge the perception of the construction industry on this particular topic. These stakeholders are directly affected by any change to the require- ments for bidding on public works contracts. The contractors who won the CMR contracts on the case study projects were interviewed (see Table 4 for details). They represented both large and small companies as well as local, regional, and national areas of operation. Three of the contractors had CMR experience with more than one highway agency. All the con- tractors interviewed expressed a strong positive perception regarding their experience with CMR. This included one national contractor that had won the first two CMR projects that were advertised by a given DOT. Solicitation Document Content Analysis The content analyses of public transportation solicitation doc- uments was conducted to create a basis for identifying CMR effective practices and to quantify the state of the practice regarding the procurement phase of CMR projects. The con- tent analysis consisted of gathering and reviewing solicitation documents and searching for the requirements for qualifica- tions that were outlined in the documents. The formal content analysis furnishes quantitative measurements of current DOT requirements for CMR selection factors. They are found by counting the number of times that specific terms of interest are required to be submitted by contractors to be considered for the project. This type of analysis can be used to develop “valid inferences from a message, written or visual, using a set of procedures” (Neuendorf 2002). The primary approach is to develop a set of standard cate- gories into which words that appear in the text of a written document, in this case the structured interview questionnaire, can be placed and then the method uses the frequency of their appearance as a means to infer the content of the document (Weber 1985). This allowed an inference to be made regard- ing the given owner’s approach to CMR selection. When the results are accumulated for the entire population, trends can be identified and reported. The output from the content analysis can then be compared within the population to determine how CMR selection policy is being implemented in project-specific solicitation docu- ments. The output can also be compared with the responses from the survey and structured interviews to map respondents’ output against their respective agency policy and solicitation documents. There are three types of solicitation documents: Requests for LOI, RFQ, and RFP. LOIs are defined as documents that merely ask contractors to respond indicating their desire to compete for a CMR without requiring them to submit a list of specific qualifications or cost information. RFQs require contractors to submit their qualifications, past experience, and other evaluation factors, but do not require any cost or pricing information. RFPs require submission of cost or pricing information in addition to other evaluation factors such as qualifications, past project experience, and schedule. Figure 7 shows the geographic distribution of the content analysis. Table 5 is a summary of the content analysis popu- lation. A total of 25 documents related to a transportation Case Study Project Location Type Annual Volume CMR Experience with More than One Agency Fairbanks Intl. Airport Expansion Fairbanks, AK Regional General Contractor <$250 million No Glendale Pedestrian Improvements Glendale, AZ National General Contractor >$500 million Yes I-5 Willamette River Bridge Eugene, OR Regional General Contractor <$250 million Yes Ironwood–Gantzel Road (U.S. 60) Improvements Florence, AZ National General Contractor >$500 million Yes I-80 State St to 1300 East. Reconstruction Salt Lake City, UT Local Bridge Contractor <$250 million No Non-Highway Case Study Contractors Whole Base Relocation Memphis, TN Regional General Contractor >$500 million Yes Weber County Commuter Rail Salt Lake City, UT National General Contractor >$500 million Yes Lanier Law School Center Lubbock, TX Local Building Contractor <$250 million Yes TABLE 4 CONTRACTOR STRUCTURED INTERVIEW DETAILS

project from 8 different states were analyzed. Additionally, 29 documents from 12 states related to non-transportation projects were analyzed. The content analysis includes docu- ments from a wide range of monetary value, $2.25 million to $2.16 billion for transportation projects and $1.2 million to $114 million for non-transportation projects. Case Studies The primary source of information in this synthesis is the analysis of case studies. The analysis occurred on the follow- ing three levels: 1. Analysis of CMR highway road and bridge projects. 2. Analysis of corresponding public transportation agencies with CMR experience. 20 3. Analysis of case study projects from the airport, transit, and building sectors. The case studies were collected using Yin’s methodology for case study research data collection (Yin 1994). Therefore, the information gleaned from the case studies is coupled with information collected in the survey and the literature review to validate any conclusions drawn from the case studies. Note the case study information was gathered by both face-to-face and telephone interviews. CASE STUDY SUMMARY Case study data were collected based on the results of the literature review. The team proposed to identify and analyze at least four projects from across the spectrum of highway FIGURE 7 Locations of solicitation documents used in the content analysis. Project Type Transportation Non-transportation Type of Organization State DOT 15 N/A Other Public 10 29 Monetary Range Low $2.25 million $1.2 million High $2.16 billion $114 million Type of Procurement LOI 0 0 RFQ 10 9 RFP 15 12 RFQ + RFP 0 8 N/A = not available. TABLE 5 SOLICITATION DOCUMENT CONTENT ANALYSIS SUMMARY

21 projects that had been delivered using the CMR project deliv- ery method. The team was able to identify and gain access to information on ten projects worth more than $2.5 billion from nine agencies that represent the cross section of variations on CMR delivery. It is important to note that, to the best of our knowledge and confirmed by the survey, every state DOT with some form of CMR experience was contacted. The projects ranged from a low of $10.0 million to a high of $1.35 billion. The project types spanned the upgrade of pedestrian/bicycle access on an urban thoroughfare to a green- field freeway to a billion dollar multi-modal terminal facility. Two different sets of contract responsibility were also found. The first is classic CMR delivery where the DOT holds both the design and the CMR contracts, and the second set involved the DOT in an oversight relationship on behalf of another agency that furnished the funds. Additionally, another enhance- ment to the original study plan was realized when the team was able to identify CMR projects where a state DOT actually delivered multi-modal facilities that interfaced with airports and seaports, as well as rail and light rail. Finally, case studies from the airport, rail transit, and building sectors are presented to allow the reader to compare and contrast the variations on CMR across these industry sectors with the cases from the highway sector. The depth and validity of each agency interview was enhanced, where possible, by an interview with the contrac- tor that held the CMR contract. This allowed the collection of information that compared and contrasted the owner’s per- ceived benefits and constraints with a parallel set of benefits and constraints perceived by the contractor on the same proj- ect. Table 6 is a summary of the case study projects that were sampled for this report. One can see that the projects span from coast to coast but tend to be concentrated in the south- western United States. Details of each case study project are contained in Appen- dix C. The following sections will summarize those details and compare the various projects in the major categories of information that was collected. Agency (case no.) No. CMR Projects (abbr.) Case Study Project (value/duration) Construction Type (location) Solicita- tion Type Contract Type Precon. Fee (% GMP) Full CMR Experience Alaska DOT & PF (1) 1–5 (ADOT) Fairbanks Airport Expansion ($99 million/24 mos.) Terminal, apron, parking, road (Fairbanks, AK) RFQ Lump sum GMP 0.25% City of Glendale, Arizona (2) >10 (CGA) Downtown Pedestrian Improvements ($16.2 million/10 mos.) Lighting, landscaping, sidewalk, curb/etc. (Glendale, AZ) RFQ Lump sum GMP 1.10% Florida DOT (3) >10 (FDOT) Miami Intermodal Center ($1.7 billion/60 mos.) Road, bridge, rail, vertical, etc. (Miami, FL) LOI Unit price/ progres- sive GMP 0.02% Oregon DOT (4) 1–5 (ODOT) Willamette River Bridge ($150 million/48 mos.) Bridge (Eugene, OR) RFP Lump sum GMP 0.15% Pinal County, Arizona (5) 1–5 (PCA) Ironwood ($63.7 million/36 mos.) Road and bridge (Florence, AZ) RFQ Progres- sive GMP 0.60% Utah DOT (6) >10 (UDOT) I-80/State St. to 13th ($130 million/18 mos.) Road and bridge (Salt Lake City, UT) RFQ + RFP Unit price GMP 0.10% CMR Oversight Experience for Another Agency Michigan DOT (7) 1–5 (MDOT) Passenger Ship Terminal ($10 million/12 mos.) Marine, pier, road (Detroit, MI) RFQ Lump sum GMP 0.50% Non-Highway Sector Case Study Projects Utah Transit Authority (8) 1–5 (UTA) Weber County Commuter Rail ($241 million/72 mos.) Rail, bridge, road (Salt Lake City, UT) RFQ Lump sum GMP 0.21% Memphis Shelby County Airport (9) 6–10 (MEM) Whole Base Relocation ($245 million/36 mos.) Vertical, apron, taxiways, utilities (Memphis, TN) RFQ + RFP Lump sum GMP 0.35% Texas Tech University (10) >10 (TTU) Lanier Law School Center ($13.7 million/18 mos.) Vertical, auditorium, offices (Lubbock, TX) RFQ Lump sum GMP 0.33% TABLE 6 SYNTHESIS CASE STUDY PROJECT SUMMARY

RATIONALE FOR CHOOSING CONSTRUCTION MANAGER-AT-RISK PROJECT DELIVERY The structured interviews asked each agency to explain their rationale for selecting CMR project delivery. First they were asked to identify the factors that they consider in making the project delivery selection decision and next they were asked to identify the reasons they selected CMR for the case study project. Tables 7 and 8 show the output from those questions. An analysis of Table 7 shows that the six major factors that are considered by at least eight agencies in their project delivery method decision are: 1. Monetary size 2. Budget control issues 3. Schedule issues 4. Technical complexity 5. Project type (typical agency project or nontypical agency project) 6. Project type (bridge/structure or road). 22 This shows that the agencies are considering alternative project delivery methods as a means to better grapple with the requirements of budget and schedule, as well as use project type and complexity as decision criteria when making the project delivery method decision. The table also shows that the main factors (at least five cites) that tend to drive that decision toward CMR are: 1. Schedule issues 2. Technical complexity 3. Third-party interface issues. The driving factors are interesting in that they indicate that agencies are looking for constructor assistance in meeting aggressive schedules for complex projects where third-party stakeholders such as utilities, railroads, and permitting agencies could have an impact on the project’s success. The reason why CMR was selected for each case study project shown in Table 8 confirm this observation. Highway Projects Non-Highway Project Factor ADOT CGA FDOT ODOT PCA UDOT MDOT UTA MEM TTU Monetary size X X X X X X X X Budget control issues X X X X X X X X Schedule issues X X X X X X X X Technical complexity X X X X X X X X Type (typical vs. non-typical) X X X X X X X X Type (bridge vs. road) X X X Technical content X X X X X X X Location (urban vs. rural) X X X X X X Environmental issues X X Third-party interface issues X X X X X Traffic control issues X X Quality assurance requirements X X X Life-cycle issues X X X Sustainability issues X X X Incentives for funding X X Generates revenues X X Staff review/ inspection reqts. X X X X Experience with delivery method X X X X X Staff availability X X X X X X Include specific innovation X X X Public interface X X X X X Note: Bold indicates a factor that drives the decision toward CMR. TABLE 7 PROJECT FACTORS CONSIDERED IN PROJECT DELIVERY METHOD SELECTION DECISION

23 CONSTRUCTION MANAGER-AT-RISK PROCUREMENT PROCEDURES The study found that three different models are in use for procuring CMR projects. These will be discussed in detail in chapter four. Table 9 illustrates the content of each case study project’s solicitation documents. The striking thing is the simplicity of most of the solicitations. This shows the major difference between CMR and the other project delivery methods. Because the total construction cost is not part of the selection process, this permits the content of the solicitation documents to be relatively straightforward. Four of the projects included preliminary plans and speci- fications. Three of the projects made do with only a narrative Highway Projects Non-Highway CMR Reasons ADOT CGA FDOT ODOT PCA UDOT MDOT UTA MEM TTU Accelerate delivery period X X X X X X X X X X Establish budget early X X X X X X X X Constrained budget X X X X X X X X Early contractor involvement X X X X X X X X X X Encourage innovation X X X X X Facilitate value engineering X X X X X X X X Encourage constructability X X X X X X X X X X Encourage price competition X X X Compete different design solutions X Redistribute risk X X X X X X X Complex project requirements X X X X X X X X Flexibility during construction X X X X X X X X Third-party issues X X X X X X X X X Reduce life-cycle costs X X Provide follow-on O&M X X Innovative financing X X X Encourage sustainability X Reduced staffing X X Reduced review/inspect. X Legal requirements X O&M = operations and maintenance. TABLE 8 REASONS FOR SELECTING CMR ON CASE STUDY PROJECT RFQ RFP RFQ/RFP RFQ/RFP content ADOT CGA FDOT MDOT PCA ODOT TTU UTA MEM UDOT Description of scope of work X X X X X X X X X Preliminary plans/specs. X X X X Quality mngt. roles and responsibilities X X X X X Design criteria X TABLE 9 CASE STUDY SOLICITATION DOCUMENT CONTENT

description of the project. Half the projects listed the roles and responsibilities of the CMR and the owner with regard to quality. To respond to the solicitation, each competing CMR pre- pares a submittal that incorporates all the information that the agency wishes to evaluate. As one moves from left to right in Table 10, the size of the proposal gets larger. The primary difference between the RFQ model and the other two models is the lack of cost information. Thus, in the RFQ model, the agency is selecting its CMR solely on a basis of qualifications and past performance. This is the way design professionals are typically selected. It is noted that there are no obvious differences between the highway and non-highway agency case study require- ments in the previous four tables. Therefore, it appears that highway agencies can use examples from other transporta- tion and building sectors in their states. Specifically, com- paring UDOT and Utah Transit Agency (UTA) shows that whereas there are differences in the content of their solic- itation documents and proposal submittal requirements, those differences are not skewed to or away from any single category. 24 Once the submittals are received, the CMR selection process begins. In all cases, it was composed of an evaluation of the written statement of qualifications (SOQ)/proposal and an interview/presentation made by the competing CMRs. Table 11 shows the difference between each case study agency’s selection process. It shows that most keep the pre- sentation focused on the CMR’s qualifications and experience. There is also strong preference to direct point scoring and weighted categories to determine the winner. Price was also used as a selection factor by four of the five RFP agencies. CONSTRUCTION MANAGER-AT-RISK PROJECT ADMINISTRATION The major element of CMR project administration is the decision to establish the GMP. This aspect will be discussed in detail in chapter six. Table 12 shows how each case study project compares with regard to the type of contract used, the timing of the GMP, and the way contingencies were handled. The progressive GMP system allows the CMR to price work and bid out work packages as soon as they are complete. This allows construction to begin before design is complete with- out forcing the CMR to include a large contingency for the undersigned features of work. The table shows that all cases RFQ RFP RFQ/RFP RFQ/RFP requirements ADOT CGA FDOT MDOT PCA ODOT TTU UTA MEM UDOT Organizational structure/chart X X X X X X Past CMR experience X X X X X X X X X Past related experience X X X X X X X References X X X X X X X X Qualifications Project Manager X X X X X X X X X Precon. Manager X X X General Superintendent X X X Quality Manager X X X PR person X X X X Quality plan X X X X X MOT plan X X X PR plan X X X Preliminary schedule X X X X X X Self-performed work X X X X Sub plan X X X X DBE plan X X Precon. fee X X X X X Construction fee X X X General conditions X X X X Rates for self- performed work X X Budget analysis X X X X X Precon. = preconstruction; DBE = Disadvantaged Business Enterprise. TABLE 10 CASE STUDY SUBMITTAL CONTENT

25 RFQ RFP RFQ/RFP ADOT CGA FDOT MDOT PCA ODOT TTU UTA MEM UDOT Presentation Corporate qualifications/ past projects X X X X X X X X X Qualifications/ key personnel X X Project-specific issues X X X X X Precon. services components X Public info. plan X Method to Identify the Winner Direct point scoring in unweighted X Direct point scoring in weighted X X X X X X X X Adjectival rating in unweighted X Price as criterion X X X X Price Factor Weight 0%–25% X X 26%–50% X TABLE 11 CASE STUDY SELECTION PROCESS CONTENT Highway Projects Non-Highway Contract Type ADOT CGA FDOT ODOT PCA UDOT MDOT UTA MEM TTU Lump sum GMP X X X X X X X X Unit Price GMP X X Unit Price no GMP X Preconstruction only hard bid X Point where GMP negotiated Before 100% design X X X X X X X X X After 100% design X Early as possible agency call X X X X Early as possible CMR call X X After sub bids X X X X Progressive GMP X X X Transparent contingencies X X X X X X X X X X Single X X X Owner and CMR X X X X X Management reserve + contingency X X TABLE 12 CASE STUDY GMP ASSEMBLY AND TIMING

had transparent contingencies and all but one set the GMP before 100% design. PRECONSTRUCTION SERVICES The ability to involve the contractor in the design phase occurs through the preconstruction services contract. This will be discussed in detail in chapter five. Table 13 shows how each case study agency configured the services it wanted from the CMR. The table shows that scheduling, estimating, and con- structability reviews are the most prevalent preconstruction 26 services. Additionally, value analysis and coordination with third-party stakeholders are also very common to these contracts. SUMMARY The salient aspects of each case study will be compared and contracted in the remaining chapters of this report. The infor- mation gleaned form the case study projects forms the foun- dation upon which the conclusions, effective practices, and lessons learned are based. Highway Projects Non-Highway Preconstruction Services Included ADOT CGA FDOT ODOT PCA UDOT MDOT UTA MEM TTU Validate agency estimates X X X X Validate agency schedules X X X Validate agency/consultant design X X X X X X Prepare project estimates X X X X X X X X X Prepare project schedules X X X X X X X X X X Input to agency/consultant design X X X X X X X X Constructability review X X X X X X X X X X Cost engineering reviews X X X X X X X X Value analysis X X X X X X X X X Market surveys X X X Coordinate with third party stakeholders X X X X X X X X X Assist in right-of- way acquisition X X Assist in permitting actions X X X Public information X X X TABLE 13 CASE STUDY PRECONSTRUCTION SERVICES