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

Chapter: Chapter Five - Preconstruction Services

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Suggested Citation:"Chapter Five - Preconstruction Services." National Academies of Sciences, Engineering, and Medicine. 2010. Construction Manager-at-Risk Project Delivery for Highway Programs. Washington, DC: The National Academies Press. doi: 10.17226/14350.
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Suggested Citation:"Chapter Five - Preconstruction Services." National Academies of Sciences, Engineering, and Medicine. 2010. Construction Manager-at-Risk Project Delivery for Highway Programs. Washington, DC: The National Academies Press. doi: 10.17226/14350.
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Suggested Citation:"Chapter Five - Preconstruction Services." National Academies of Sciences, Engineering, and Medicine. 2010. Construction Manager-at-Risk Project Delivery for Highway Programs. Washington, DC: The National Academies Press. doi: 10.17226/14350.
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Suggested Citation:"Chapter Five - Preconstruction Services." National Academies of Sciences, Engineering, and Medicine. 2010. Construction Manager-at-Risk Project Delivery for Highway Programs. Washington, DC: The National Academies Press. doi: 10.17226/14350.
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Suggested Citation:"Chapter Five - Preconstruction Services." National Academies of Sciences, Engineering, and Medicine. 2010. Construction Manager-at-Risk Project Delivery for Highway Programs. Washington, DC: The National Academies Press. doi: 10.17226/14350.
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Suggested Citation:"Chapter Five - Preconstruction Services." National Academies of Sciences, Engineering, and Medicine. 2010. Construction Manager-at-Risk Project Delivery for Highway Programs. Washington, DC: The National Academies Press. doi: 10.17226/14350.
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Suggested Citation:"Chapter Five - Preconstruction Services." National Academies of Sciences, Engineering, and Medicine. 2010. Construction Manager-at-Risk Project Delivery for Highway Programs. Washington, DC: The National Academies Press. doi: 10.17226/14350.
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Suggested Citation:"Chapter Five - Preconstruction Services." National Academies of Sciences, Engineering, and Medicine. 2010. Construction Manager-at-Risk Project Delivery for Highway Programs. Washington, DC: The National Academies Press. doi: 10.17226/14350.
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Suggested Citation:"Chapter Five - Preconstruction Services." National Academies of Sciences, Engineering, and Medicine. 2010. Construction Manager-at-Risk Project Delivery for Highway Programs. Washington, DC: The National Academies Press. doi: 10.17226/14350.
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Suggested Citation:"Chapter Five - Preconstruction Services." National Academies of Sciences, Engineering, and Medicine. 2010. Construction Manager-at-Risk Project Delivery for Highway Programs. Washington, DC: The National Academies Press. doi: 10.17226/14350.
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Suggested Citation:"Chapter Five - Preconstruction Services." National Academies of Sciences, Engineering, and Medicine. 2010. Construction Manager-at-Risk Project Delivery for Highway Programs. Washington, DC: The National Academies Press. doi: 10.17226/14350.
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Suggested Citation:"Chapter Five - Preconstruction Services." National Academies of Sciences, Engineering, and Medicine. 2010. Construction Manager-at-Risk Project Delivery for Highway Programs. Washington, DC: The National Academies Press. doi: 10.17226/14350.
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Suggested Citation:"Chapter Five - Preconstruction Services." National Academies of Sciences, Engineering, and Medicine. 2010. Construction Manager-at-Risk Project Delivery for Highway Programs. Washington, DC: The National Academies Press. doi: 10.17226/14350.
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Suggested Citation:"Chapter Five - Preconstruction Services." National Academies of Sciences, Engineering, and Medicine. 2010. Construction Manager-at-Risk Project Delivery for Highway Programs. Washington, DC: The National Academies Press. doi: 10.17226/14350.
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51 INTRODUCTION Table 1 shows the most often cited advantage of CMR project delivery to be “CMR design input.” This directly links to the CMR’s collaboration with the designer through its pre- construction services contract. Although design input is but one aspect of preconstruction services, it is the one that dif- ferentiates CMR project delivery from the traditional DBB. Contractor design input may be another phrase for the term constructability. A comprehensive study of applying con- structability concepts specifically to highway projects was completed in 1997 and found that to be effective it had to be applied in the planning, design, and construction phases of a project (Anderson and Fisher 1997). The U.K. ECI method does just this (Anderson and Damnjanovic 2008). CMR project delivery gives an agency the opportunity to assign respon- sibility for the project’s constructability to the constructor during the design and construction phases. It also creates an opportunity for additional services that will not only improve the project’s construction but also facilitate the design process. Preconstruction services can include almost anything the agency desires from its CMR. The range of possibilities runs the gamut from the typical estimating and scheduling assistance to the innovative, such as managing public relations, to the nearly unthinkable, such as preparing and submitting envi- ronmental permits, to the unheard of, for instance developing a plan to relocate vagrants from under a bridge. Table 26 is a listing of every preconstruction task that was found in the literature, solicitation document content analysis, and case studies. It is not meant to be all inclusive but rather to show how agencies have used this tool to facilitate the successful execution of their projects. ODOT’s approach to preconstruction services appears to be typical based on the literature review and the case study output. It works on the principle that the CMR will collaborate with the agency and the designer to achieve the owner-defined project goals. ODOT lists the major preconstruction services as follows: • Cost estimates • Schedule analysis • Work sequence • Risk identification/mitigation/pricing • Constructability reviews • Develop work packages for bid • Develop a GMP that meets owner requirements and budget restraints (Lee 2008). This list of services is not all inclusive but is representa- tive of those generally found in typical CMR highway proj- ects. However, each project has different goals as well as unique requirements. Therefore, most agencies modify the preconstruction services contract to fit the specific require- ments of each project. Synthesizing the available information and data leads to the idea that preconstruction services can be grouped into the four categories shown in Table 26. An agency can build both its design and preconstruction services contracts around each requirement to ensure collaborative effort and the achievement of project goals. DESIGN-RELATED PRECONSTRUCTION SERVICES One issue found in this study regarding the implementation of CMR project delivery has nothing to do with the agency or the contractor; it is concerned with the willingness of the designer to actively and willingly participate in realizing the method’s potential benefits for the owner. Perhaps the most significant lesson learned in this study is the agency’s need to ensure that the designer has an opportunity to appropriately price its work by modifying the design contract to reflect the change in effort that CMR project delivery entails (Memphis case study). This is not to say that the study found that design costs increase with this form of project delivery method. Indeed, the finding is just the opposite (Utah case study; Uhlik and Eller 1999; Alder 2007). The difference is that the design process proceeds in a different manner than in a DBB contract (Kuhn 2007). One case study interviewee likened it to a tennis match where the designer and the builder take turns evaluating and improving the design. One content analysis document stated it like this: “the CMR will function as one of three key team members.” A second difference is the need to directly correlate the design packages with the subcontractor bid packages (Utah, Pinal County, and Oregon case studies), especially if the project will be fast-tracked or if early bid packages are desir- able to mitigate escalation risk. Thus, the designer evaluates a sequence of work that is different from the one it normally follows. To bring a bridge design to a level where the CMR can order the structural steel as soon as possible may necessitate CHAPTER FIVE PRECONSTRUCTION SERVICES

52 Preconstruction Service Case Study Number Table 1 Reference Number or Literature Cited No. in Content Analysis Design-Related Preconstruction Services Validate agency/consultant design 1,2,5,6,7,8 (Carlisle 2006) 1 Assist/input to agency/consultant design 1,2,3,4,5,8,9,10 1,2,4,5,6,7,8,9,10,11,12,15 (ìCM/GC . . . ” 2003); (Operating Manual . . . 2006) 15 Design reviews 10 (Shadan et al. 2006) 26 Design charrettes 4,6,9,10 11,14 (Carlisle 2006) 6 Constructability reviews 1,2,3,4,5,6,7,8,9,10 1,2,4,5,6,7,8,9,10,11,12,15 35 Operability reviews 2,4,5,6,8,10 (Carlisle 2006) Regulatory reviews 2,4,5,9,10 (Brinkman 2007); (Spata and Kutilek 2006) Market surveys for design decisions 5,8,10 (Brinkman 2007); (Uhlik and Eller 1999) Verify/take-off quantities 8 (“CM/GC . . .” 2003); (Van Winkle 2007) 4 Assistance shaping scope of work 2,5 (“CM/GC . . .” 2003); (Touran 2006) 10 Feasibility studies 6 (Carlisle 2006) Cost-Related Preconstruction Services Validate agency/consultant estimates 1,2,6,7 (Carlisle 2006); (Lee 2008) 6 Prepare project estimates 1,2,3,4,5,6,8,9,10 4,6,7,8,9,10,11,13,14,15 36 Cost engineering reviews 2,3,4,5,6,8,9,10 4,6,7,8,9,10,11,13,14,15 0 Early award of critical bid packages 2,4,5,6,8,9 1,3,4,5,6,8,9,10,11,15 11 Life-cycle cost analysis 2,6,10 (DeWitt et al. 2005); (Carlisle 2006) 2 Value analysis/engineering 1,2,3,4,5,7,8,9,10 3,4,7,15 (Kwak and Bushey 2000) 29 Material cost forecasting 5 (Brinkman 2007) 1 Cost risk analysis 4 (Carlisle 2006); (Lee 2008) 3 Cash flow projections/Cost control (Carlisle 2006); (Trauner 2007) 3 Schedule-Related Preconstruction Services Validate agency/consultant schedules 1,2,6 (Carlisle 2006); (Brinkman 2007) 2 Prepare project schedules 1,2,3,4,5,6,7,8,9,10 1,2,4,5,6,7,9,11,12,15 34 Develop sequence of design work 4,5 1,5,6,7,9,15 (Brinkman 2007) 9 Construction phasing 1,2,3,4,5,6,7,8,9,10 1,4,11 (Van Winkle 2008) 10 Schedule risk analysis/control 2 (Carlisle 2006); (Lee 2008) 10 Administrative Preconstruction Services Coordinate contract documents 1 Coordinate with third-party stakeholders 1,2,4,5,6,7,8,9,10 1,10,11 (Migliaccio et al. 2008) 11 Public information/public relations 6,8,9 6 1 1 (Trauner 2007) 2 Attend public meetings 4,8 4,9,13 (Carlisle 2006) 2 Biddability reviews 2,3,4,5,6,8,9,10 14 Subcontractor bid packaging 2,4,5,6,8,9,10 1,3,5,6,8,9,10,14 (Kwak and Bushey 2000); (Brinkman 2007); (Lee 2008) 9 Prequalifying subcontractors 1,2,4,5,6,7,8 11,14 (Septelka and Goldblatt 2005) 18 Assist in right-of-way acquisition 5,8 (Carlisle 2006); (Trauner 2007) 2 Assist in permitting actions 4,5,8,10 10 (Brinkman 2007); (Trauner 2007); (Van Winkle 2007) 14 Study labor availability/conditions (Jergeas and Van der Put 2001) 1 Prepare sustainability certification application 10 (Carlisle 2006) 1 TABLE 26 PRECONSTRUCTION SERVICES FOUND IN THE RESEARCH

53 assigning the consultant’s most senior structural engineers early in the design, which may create conflicts with other design projects the firm has underway that are following its standard work flow. It might also require the consultant to assign more engineers to the steel design to complete it as quickly as possible. Finally, early bid packages can often require engineering disciplines not directly involved with a specific package to accelerate their work in order to furnish supporting information. Design Contract Modifications The solution is to modify the design contract to facilitate CMR project delivery. Intuitively, this could force the agency to make a project delivery method decision before advertising the design contract to avoid having to modify it after the fact. The case study interviews revealed that two of five highway agencies and two of three non-highway agencies selected CMR project delivery before bringing a designer on board. Those that did not reported they made the decision before achieving 30% design completion. However, when asked if their DBB design contracts were changed to accommodate CMR project delivery, five of seven highway agencies and all the non-highway agencies answered affirmatively. The two agencies that used the same design contract in both DBB and CMR were the Utah and Michigan DOTs. During the interview, Utah stated that they inform the design consultant of the project delivery methods the department is consider- ing for a given project and expect the consultant to account for the possibilities in their proposals. Given that UDOT has institutionalized CMR project delivery and routinely uses it on a variety of projects (Alder 2007), the consulting community has no doubt adjusted its proposal preparation process to account for the eventualities. Michigan is over- seeing its first CMR project for another agency and has no programmatic requirement to address this issue in its design contracts. Table 27 shows typical changes to design contracts found in the case study projects and their frequency of use by the eight agencies that reported them. By inspection, the top four modifications are all concerned with coordinating the efforts of the designer and the CMR during preconstruction. The coordination of the design and construction work packages introduces efficiency to the joint work effort and ensures that the bids received from subcontractors are as accurate as pos- sible by largely reducing the scope risk for the subcontractor. A well-coordinated package will give the subcontractor all the technical information it needs to furnish a competitive price and eliminates the risk of having missed some scope that is displayed elsewhere in the construction documents as happens in DBB (Martinez et al. 2007). The Boston Harbor Project used 133 coordinated design and construction packages as detailed here: This breakdown [of work packages] was intended to maximize competition among local construction firms by orienting pack- ages within the limits of the bonding capacity of local firms. . . . . The combination of effective packaging and timely bidding. . . . resulted in construction bids that were, on average, 10.4 percent below the engineers’ estimates and yielded savings of $225 million (Armstrong and Wallace 2001). The second contract modification, joint coordination with third parties, also addresses risk: the risk that the design will not accurately reflect the scope of work necessary to satisfy DBB Design Contract Modification Number (out of 8) Coordination of design packages with construction bid packages 6 Joint coordination with third parties during design 6 Facilitate CMR design reviews 5 Joint value engineering with CMR 5 Design milestones specified to match preconstruction services 4 Mandatory budget review points 3 Requirement to respond to CMR comments and incorporate as appropriate 2 Requirement to notify CMR of major design changes 2 Allow the CMR to assist in material selection decisions based on market surveys 2 Design in accordance with CMR designated means and methods 2 Pass design changes through CMR for cost/schedule impact validation 1 Over-the-shoulder review of construction submittals with trade subs 1 Expedited review of construction submittals at CMR’s request 1 Design fee at risk for design quality 1 Collaborate with CMR on cost model development 1 Participate in joint scheduling conference 1 Collaborate with CMR to define required right-of-way 1 Provide CMR design products to facilitate CMR-obtained permitting 1 Furnish graphic design support to CMR public relations effort 1 Joint planning and participation in public outreach meetings 1 TABLE 27 DESIGN CONTRACT MODIFICATIONS TO ACCOMMODATE CMR PROJECT DELIVERY

third parties such as utilities and permitting offices. By bring- ing the contractor in during design, the agency can assign the responsibility for quantifying the third-party impact to a project by locating and coordinating with the third parties and assisting the designer in furnishing solutions to meet their requirements. Third-party issues can be project stoppers and as a result are typically addressed as soon as they are identified. The UDOT case study interview indicated that permitting agencies are more willing to expedite their process if they are dealing with a contractor, because they believe the chance of significant design changes has passed when a contractor has been selected (Alder 2007). The ODOT interview confirmed this when they indicated that the CMR was able to obtain a permit in 3 months that historically took a consultant a year. One author believed that the construction manager was better suited than either the consultant or the owner to deal with permitting agencies, utilities, railroads, and other third parties simply because it is a daily part of their work, and they have organized themselves to efficiently satisfy these entities (Van Winkle 2007). The next four items in Table 27 deal with activities under- taken to keep the project on budget throughout the design phase or to bring it back into budget if it strays. This requires a spirit of collaboration and partnering that can be enhanced through clear direction to the designer in its contract. The designer produces the design products necessary for the CMR to undertake the different types of reviews it is required to do in its preconstruction services contract and the design contract specifies the schedule on which these are to be completed. These range from purely design reviews to checking con- structability or offering possible material substitutions based on a market survey to administrative reviews of biddability. This clause is typically linked with a compatible clause in the CMR’s preconstruction services contract so that the contractual requirement to “work friendly” runs both directions. Often the budget review points are scheduled to fall at the same time as the design milestones. The purpose of both of these clauses is to impose a scheduling discipline on both the designer and the CMR. Often the CMR is assigned the responsibility to establish the preconstruction sequence of work for the team and identify opportunities to reduce risk by locking in material and subcontractor pricing through early work package awards (UDOT and Memphis case studies). Thus, the budget review points may be better set to fall after the pricing is fixed. This then allows the team to evaluate its impact on the project’s contingency pool and invoke value engineering if necessary or release pricing contingency to the owner to enhance the project’s design. The remaining design contract modifications in Table 27 are essentially “work friendly” clauses that seek to codify the behavior of the design consultant in a manner that makes it a contributing rather than reluctant member of the CMR project delivery team. The ODOT interviewee stated “I want them [the engineer and the CMR] to be friends but not close friends. Creative tension between the two enhances the 54 project’s quality.” The Memphis case study found that the consultant initially viewed the CMR reviews as unwelcome and unnecessary interference by an unqualified entity and as a result was less than cooperative in facilitating design and constructability reviews by the CMR. The agency modified the design contract for the next phase of the project to put 10% of the design fee at risk for the final quality of the construction documents (5% for design quality and 5% for construction issues resulting from design quality problems), as well as codified design milestones, budget review points, a require- ment to coordinate the design work with the construction work packages, and mandated joint coordination with third parties. This created a different environment where the consultant saw the CMR reviews as another layer of design QC and the cooperation required to successfully complete the CMR proj- ect happened. A portion of the CMR design contract design quality clause follows: The “Milestone QA” services will be earned following each milestone submittal for the construction documents. The value of the “Milestone QA” is set at five percent (5%) of the lump sum design fee for each Task [design package] . . . The “Milestone QA” . . . will not be payable until the written review comments on each milestone submittal have been resolved by the ENGINEER following the guidelines in the Quality Assurance Plan. The amount of the invoice that is approved for payment will be based on the . . . thoroughness of the Engineer’s responses [to review comments] and the effective resolution of the review comments (Memphis case study). A similar clause is included that rates the outcome and resolution of construction problems, such as change orders and delays that result from poor design QC. Memphis has since adopted this clause for all its CMR projects and believes its real value is not in the penalty it imposes on the designer but on the collaboration that it encourages between designer and builder. This arrangement creates pain and gain for both parties and an incentive to mutually contribute to the design QC program. A good example of a CMR design contract clause that is designed to require mutual collaboration is used by Arizona State University. The cogent aspect of this clause is the way it includes the CMR’s product as a part of the designer’s product and asks the designer and builder to present the design submission as a joint product. The Design Professional shall submit to the Owner all required Design Submission Documents to describe the Project’s essential elements. . . . . The CMAR shall submit to the Owner detailed Construction Cost Estimates as part of each design submission. At the time of each scheduled submission, the CMAR, Design Professional, and Owner shall meet and confer about the sub- mission. During the meeting, the CMAR and Design Professional shall identify, among other things, the evolution of the design and any significant changes or deviations from previously sub- mitted Design Submission Documents and any changes in the CMAR’s Construction Cost Estimate (Operating Manual . . . 2006; italics added). UDOT uses the concept for identifying the amount of required design effort as an “appropriate design.” UDOT’s definition of design appropriateness is one that is taken to a

55 point where the CMR can confidently generate a GMP. To achieve this requires the CMR to be heavily involved in the design process and again highlights the need for rich collab- oration. Essentially, UDOT asks the CMR to track design progress and literally tells the designer when it has enough design detail to adequately develop subcontractor bid pack- ages and to be able to commit to a GMP for a given feature of work. UDOT also uses a progressive GMP to further facil- itate this process and allows the department to negotiate the allocation of risks on a package-by-package basis before the GMP is established. Design Validation Versus Design Review Design validation is a term that came out of CMR project delivery in the building sector (Carlisle 2006). The content analysis found one document that referred to “validating” the design and four that required “verifying” the design. It differs in purpose from design review, in that design validation does not imply making substantive input to the design as a part of the process. Design validation’s purpose is to have the con- structor evaluate the design as it is originally intended and compare the scope of work with both the required budget and schedule to determine if the scope can be executed within those constraints. Ultimately, if the CMR finds the design to be valid, it could conceivably have no further preconstruction design review responsibilities. Thus, a validated design is one that can be constructed within the budget and schedule constraints of the project. Design validation also takes on a constructability review flavor when availability of materials, means, and methods are checked. For example, a given design could be built within the budget and schedule if all the necessary resources are avail- able. If a critical resource cannot be obtained in a timely man- ner, the design would not be validated, and the CMR would inform the designer and owner as to the nature of the issue. For example, the design for a major bridge that requires marine equipment of a size that is available but must be booked months in advance of the need could only be validated if the lead time on the equipment fell within the project’s schedule constraints. If it did not, then the owner and designer would be made aware of the issue and given potential alternatives for resolution. Design review, on the other hand, is done to identify errors, omissions, ambiguities, and with an eye to improving the constructability and economy of the design submittal. One author describes the process as “more than simply support/ assistance . . . [it is done to] manage design-to-cost iterations” (Van Winkle 2007). The content analysis found 6 docu- ments that required “assistance/input to the design,” whereas, 26 termed the CMR’s role “design review,” and 3 stated the CMR should “find design errors.” These reviews take on multipurpose forms with the CMR using its most experienced personnel to identify and resolve issues that are found in the design submittal. “The ability of the CM to input constructabil- ity reviews, construction 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 identifi- cation of these elements early in the design phase instead of the construction phase” (Kwak and Bushey 2000). With design review comes the issue of design liability and how it is applied to the CMR’s comments and proposed solu- tions. This issue remains unclear with respect to the output of preconstruction design reviews. Martinez et al. (2007) offers the best solution: “Specific language in the pre-construction agreement is developed to address this issue and create a bright-line separation of responsibilities.” The “bright-line separation” is often a clause in the design contract to the effect that the engineer-of-record remains responsible for the performance of the design and that whereas he/she actively considers recommendations made by the CMR, the CMR also evaluates those recommendations and finds them to be sound before incorporating them into the design itself. The CMR also has a responsibility to recognize its limitations and assist the engineer by the way it approaches these reviews. The construction manager is not the design professional and should be careful to limit its role to making suggestions that can be either approved or rejected by the A/E [architect/engineer] and owner. When VE [value engineering] includes a significant modification to the design, the construction manager should insist that these changes be reflected in the A/E’s construction documents. The construction manager . . . should avoid comments in the constructability reports that would more properly be included in a peer review by design professionals. Problems noted by the construction manager in the design can instead be geared toward industry standards, previous construction experience with similar designs, and previous experience related to re-work or warranty issues (Martinez et al. 2007). To summarize, it is up to the owner to draw the line in the contracts that it authors, and owners draw the line in a manner that keeps the liability for the entire design squarely on the shoulders of the qualified design professional. Cost Modeling Joint development of a cost model that can be used through- out the design process is a preconstruction service that is not well-understood by owners and designers. One author stressed the importance of doing this before design starts when it stated: “cost model then design” (Ladino et al. 2008). A preconstruction cost model is a breakdown of the project’s scope of work in dollar terms. Its purpose is to “validate the owner’s budget” (Ladino et al. 2008) and to be able to price various alternatives during design in a manner that directly reflects how and when they will be built (Van Winkle 2007). Additionally, the model evolves as the design progresses and is used to support required preconstruction cost estimates at design milestones and budget review points (“Contract for Construction Manager at Risk Design Phase Services” 2007).

It is also used to benchmark cost savings for value engineering alternatives found during design. UDOT routinely uses cost modeling in its CMR program (R. Alder, “CM/GC Pricing Questions,” personal communi- cation, July 1, 2009). The interview revealed that this process allows it to make both design and contingency allocation decisions. One of the contractors who had completed CMR projects with more than one agency mentioned that it offers this up as a preconstruction service whether or not it is specified in their preconstruction services contract. Additionally both the UTA and its contractor emphasized the value of getting the cost model built before major design decisions are made. UTA also includes a clause in the design contract requiring joint development of the preconstruction cost model as an early task. Constructability Reviews The literature is rich with information on constructability reviews and their value to highway projects (Constructability: A Primer 1986; Gibson et al. 1996; Anderson and Fisher 1997; Jergeas and Van der Put 2001; Dunston et al. 2002; Ford et al. 2004; Carlisle 2006). Essentially, constructability in CMR projects is a review of the capability of the industry to deter- mine if the required level of tools, methods, techniques, and technology are available to permit a competent and qualified construction contractor to build the project feature in question to the level of quality required by the contract. The con- structability review also entails an evaluation of the ability of the industry to understand the required level of quality and accurately estimate the cost of providing it. Thus, the level of project risk resulting from subcontractor or supplier misinter- pretation inherent to a set of plans and specifications is min- imized. When a formal constructability review is combined with a thorough cost analysis, the final design is greatly enhanced and less susceptible to cost and time growth result- ing from change orders and claims (Kwak and Bushey 2000). A survey taken in Canada also found many of the previously cited benefits (Jergeas and Van der Put 2001). Additionally, this study found that “the areas that survey respondents indicated have the greatest potential to yield the benefits are achieved by implementing the following: • Up-front (early) involvement of construction personnel • Use of construction-sensitive schedules • Use of designs that facilitate construction efficiency” (Jergeas and Van der Put 2001). Thus, CMR project delivery creates the opportunity for agencies to use this powerful tool to improve their projects. A total of 35 of 54 solicitations in the content analysis explicitly cited constructability reviews as one of the required preconstruction services. Normally, other specific tasks such as regulatory review, operability review, and surveys of the market to verify availability and current cost of materials are 56 undertaken at the same time. The other reviews may not use the same personnel on the CMR’s staff, but they contribute their findings to the preconstruction deliverables that are due the owner (Van Winkle 2007). A regulatory review is merely a check to verify that the design complies with current codes and will not have difficulty obtaining the necessary permits. Operability reviews are much less common. They involve bringing in the agency’s operations and maintenance personnel and providing them with an opportunity to make suggestions that will improve the operations and maintenance of the completed project. Market surveys are undertaken to furnish designers with alternative materials or equipment along with current pricing data and availability to assist them in making informed design decisions early in the process to reduce the need to change the design late in the process resulting from budget or schedule considerations (Martinez et al. 2007). COST-RELATED PRECONSTRUCTION SERVICES Early knowledge of project costs was cited by 10 of the 15 papers in Table 1 as an advantage found in CMR project delivery. The advantage is realized through three categories of cost-related services: • Cost estimating, • Cost analysis, and • Cost–risk identification and mitigation. Cost Estimating in Preconstruction The major reason for selecting CMR project delivery is to gain access to the contractor’s real-time construction pricing data and to have it available throughout the design process to assist in making cost-driven design decisions on the basis of the best possible information rather than on the basis of the engineer or owner’s conjecture (Van Winkle 2007). Cost- estimating accuracy is a function of the level of design detail at the time of the estimate (Cost Estimating Guide 1997). Early estimates will have parts that run from detailed estimates on those features where quantities can be surveyed to plug numbers or allowances that act as place holders in the estimate until they can be improved. The final portion of the estimate is a contingency, which is discussed in detail in chapter six. The contingency reflects the probable cost of the unknowns at the time of the estimate and will be expected to decline as more design detail becomes available. Often the CMR is asked to validate the project’s budget and agency or consultant cost estimates. Six of the solicitation documents require budget validation as a preconstruction service. Again, as with design validation, budget validation is done for the purpose of deter- mining if the available funding is sufficient to cover the scope of work. This requires a much different level of effort on the CMR’s part than preparing a project estimate. It essentially consists of comparing the agency/consultant numbers for each feature of work with historical parametric cost factors and identifying those features that appear to be either under-

57 estimated or significantly overestimated. The CMR would then make recommendations as to possible resolution of the issues identified. It makes sense to have the CMR prepare project cost estimates once it has been hired. Thirty-six solicitation doc- uments included this. Not only does the CMR have a trained and experienced staff along with a current cost database, but it also has experience with working for a variety of owners, executing a variety of design consultants’ designs. Therefore, it can furnish the critical reality check that is often missing in DBB projects until the bids are opened. Next, although the CMR wants to keep the owner happy to be competitive for the next project, its motivation is fundamentally different from the designers’ in that it builds the project for the amount it committed to in the GMP. Not only does it fear that the owner may cancel the design project and hence the designer’s planned revenue if it cannot afford the construction, but the designer’s professional reputation will suffer, which might be reflected in the next design contract for which it competes. Therefore, assigning the task of preparing project estimates not only gives the job to the best-qualified and most experi- enced member of the team, but also relieves the designer of the estimating responsibility so that it can focus on what it does best. Cost Analysis in Preconstruction Estimating and analyzing cost data are two different functions. The estimate merely quantifies the scope of work in dollar terms. Cost analysis takes many forms but all are focused on determining if the scope, as reflected in the estimate, is economical. The first type of cost analysis is the cost engi- neering review. As its title suggests, cost engineering goes beyond merely quantity surveying and unit pricing. The cost engineer is normally a professional engineer who also has construction experience. This review includes not only the aspects of pricing but more importantly focuses on the “time equals money” features in the design. For example, a compo- nent that has several possible options is normally selected by picking the option that costs the least. If all options were equally available and equally constructable, then this is the most appropriate design decision. However, if each option takes different amounts of time to procure and install, the cost engi- neer will identify the option that best suits budget and schedule as well as technical requirements. During the case study owner interviews, owners were asked to rate the value of various preconstruction services. They rated value analysis as the most valuable among the cost- related services. So, value analysis is an important aspect of preconstruction services. The Department of Energy (DOE) value engineering definition (1997) includes the third form of preconstruction cost analysis, life-cycle cost analysis, which was cited in two of the solicitation documents. When the case study interviewees were asked to rate the value of various preconstruction services, they rated life-cycle cost analysis as the least valuable among the cost-related services, indicating that life-cycle cost analysis does not appear to play a signifi- cant part in decisions made on CMR projects. The focus is on achieving the current budget rather than the longer-term costs of operations and maintenance. Cost–Risk Identification and Mitigation ODOT uses the CMR to furnish cost–risk analysis preconstruc- tion services (Lee 2008). Three of the solicitation documents also asked for this preconstruction service. This primarily entails furnishing the agency with information regarding those cost items that have the greatest probability of being exceeded. This can come from volatility of construction materials prices or the potential need to work overtime to complete weather- sensitive features if unusually severe weather is encountered. Pinal County, Arizona, asked its CMR to forecast material pricing and uses that information to establish contingencies to mitigate volatility and to rearrange the work sequence to lock down the cost of the critical materials as early as possible. Finally, the use of early work packages is also a cost–risk mitigation tool. The ability to bid early work packages and hence lock in the cost of the materials and services associated with those packages was cited by 10 of the 15 authors listed in Table 1. This ability was also cited as “of highest value” by all but one case study project owner and all the interviewed contractors. Therefore, it appears that CMR projects would benefit if they use this cost–risk mitigation tool wherever it is appropriate. SCHEDULE-RELATED PRECONSTRUCTION SERVICES Scheduling is another field where the agency can play to one of the contractor’s strengths. No team member is better qualified to develop and control the sequence of work than the constructor. “Contractor experience and expertise can aid the design team in preparing more cost effective traffic control plans, construction staging plans, and perhaps more realistic construction schedules” (Anderson and Damnjanovic 2008). Scheduling involves integrating the design, procurement, and construction schedules into a seamless product that identifies key relationships and accounts for both the administrative and logistics task completion to permit the production tasks to begin. The importance is shown because the owners inter- viewed on the case study projects rated “schedule validation” as the second most valuable preconstruction service after “value analysis.” Nine solicitation documents gave the respon- sibility for project scheduling to the CMR with clauses such as these two: “Develop an overall management plan and critical path method management schedule of critical design and construction dates in order to accomplish the stated objec- tive” and “Advise city of ways to gain efficiencies in project delivery.”

Design Scheduling “The construction manager is responsible for coordinating and updating the design schedule . . . the construction manager may be asked to perform quick estimates to be used as part of a [design] decision-making process in selecting systems” (Martinez et al. 2007). Developing a realistic and detailed schedule for all design, approval, estimating, and purchasing activities to support the start of construction activities is the primary objective of the preconstruction scheduling (Kuhn 2007). Highway projects such as the ones studied for this report all had the potential to create enormous impacts on the traveling public during construction. Therefore, it is always the unstated goal of a DOT to complete the construction in as short a time as possible and find ways to minimize public impact during construction. The objective of the design schedule is to ensure that design activities are integrated with procurement and construction activities in a manner that facilitates project work flow. The project schedule “must reflect 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. . . . 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). “The construction manager should review the overall project schedule and conduct coordination meetings with the design professionals to make sure the remaining design activities are in compliance with and integrated into the construction schedule” (Martinez et al. 2007). A comprehensive integrated project schedule also “provides for flexibility in the imple- mentation of design changes late in the design process without impacting construction schedules and final delivery dates” (Kwak and Bushey 2000). Construction Scheduling The construction schedule developed in preconstruction is a living document and cannot be expected to be as detailed as would be found in a DBB construction schedule. It is better termed a “preliminary construction schedule” (Martinez et al. 2007) because it will grow and become more detailed as the design progresses and more information about the constructed product is known. The focus in preconstruction is the coordination of activities that impact the construction period of performance. For example, the Washington State study identified one benefit of conducting preliminary con- struction scheduling during preconstruction and that was the ability to manage impact on third-party stakeholders. “The preconstruction [scheduling] process allows discussions between Owner and GC/CM [CMR] to schedule and stage work to minimize the construction impact to our program” (Septelka and Goldblatt 2005). The content analysis counted ten occurrences of the CMR being asked to develop project 58 phasing plans. Two examples of how this was expressed are as follows: • “Provide a detailed construction phasing plan to possibly accelerate construction and/or potentially reduce associ- ated costs for the street improvements and corresponding infrastructure.” • “Identify construction-phasing issues and educate the designers.” The idea is to plan everything that is known as it becomes known, at a time where changes to the plan will not affect the project delivery period. It is also to furnish schedule analysis for the owner to assist in decision making on aspects that interfere with traffic or cause disruption to affected property owners. It also allows time to evaluate safety requirements and ensure that the schedule supports the safe completion of the project. This theory extends into the quality realm to ensure that the project QA program has been allocated suf- ficient time to ensure the project’s quality. Thus, the CMR involves the project’s safety and QA/QC personnel in the development of the preliminary construction schedule. Schedule Risk Analysis The same comments about cost–risk analysis in the previous section apply to schedule risk analysis. With schedule valida- tion sitting number two on the owner’s list of valued services, identifying and mitigating threats to the schedule necessarily ranks alongside schedule validation. Here the “time equals money” factor comes to play once again. “Traditionally, risk assessments have concentrated on either cost or schedule. While schedule risk assessment can be performed without regards to cost in most cases, calculation of risk costs has to be tied to schedule” (Touran 2006). Thus, the schedule risk analysis also feeds back into the cost–risk analysis. The same author refutes the idea that it is the owner’s responsibility to manage risk analysis: The CM is the entity who should be performing the risk analysis. The owner can benefit from an experienced construction man- ager that is present in the project since the beginning and under- stands the implications of various decisions regarding scope, budget, and schedule . . . Because of the CM’s involvement dur- ing project development, he may have to conduct the analysis at various stages, e.g., at the end of conceptual design, at the end of preliminary engineering, at the time of the bid, and during construction phase (Touran 2006). Once schedule risks are identified, the CMR looks for means to mitigate them. “Where there are construction materials and equipment that have relatively long delivery requirements, the construction manager may be asked to purchase or assist the owner in purchasing long lead items” (Martinez et al. 2007). This is an example of mitigating a potential schedule risk. Another example is the allocation of an available float in a manner that creates a time cushion for those activities that need it the most. Regardless, the CMR and its team will have

59 experience from past projects and be able to apply appropriate mitigation strategies. ADMINISTRATIVE PRECONSTRUCTION SERVICES The final category from Table 26, “Administrative Pre- construction Services,” can be separated into three categories: • External coordination and information, • GMP internal procurement, and • Owner/designer assistance. External Coordination and Information External coordination is typically with two groups that are involved or impacted by the CMR project. The first group is third-party stakeholders such as utility companies, railroads, and impacted land owners. Seven solicitation documents indicated the need to coordinate with third parties and four specially mentioned utility coordination. The case study proj- ect owners rated coordination of this nature as the third most valuable preconstruction service and the contractors rated it second. Only FDOT did not include this as a required pre- construction service. Coordination with third parties is in itself a form of schedule risk mitigation. By effecting this coordination early in the design process, the CMR effectively reduces the risk that a third-party concern will delay the project. One of the best examples of the positive impact of CMR coordination comes from UDOT: One project began before the railroad right of way issues were cleared and was able to complete a year early. By careful con- struction 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 solutions when they know the contractor they will be working with (Alder 2007; italics added). A second example from Utah is the UTA’s Weber County Commuter Line project. “On the Weber County Commuter Rail project, UTA was faced with a potential nightmare of third-party coordination on a project that passed through ten communities and needed to share right-of-way and track with the Union Pacific Santa Fe Railroad. UTA selected CMR project delivery because it allowed them to retain control over the design while engaging the construction contractor in both design development and early coordination with third- party stakeholders” (Touran et al. 2009b). The third-party coordination efforts of the CMR resulted in the project finish- ing 6 months early without delays resulting from third-party issues. The second external group is the general public. The Utah and Oregon DOTs specifically cited public relations/ information as critical to the success of their CMR projects. Both projects involved Interstate highway bridges and had to be built while maintaining the flow of traffic. The Utah project involved accelerated bridge construction techniques, which required I-80 to be blocked for periods of time when the preassembled bridge was rolled into its final position. This was done multiple times. As there were a number of oppor- tunities to negatively affect the public, UDOT assigned the CMR the task of developing a public information and rela- tions plan and then executing it to first minimize the impact on the traveling public and then ensure that they knew when and for how long the unavoidable impacts were. UDOT’s expectations were expressed in this manner in the solicitation for the project. The public has been heavily involved in this project for several years. A high level of public satisfaction is expected to continue through the design and construction phases of this project . . . The contractor shall participate in public involvement efforts during preconstruction and construction activities. The contractor will be required to coordinate, provide information, and attend all public meetings during the preconstruction phase (Alder 2007). ODOT’s public relations requirements took a different tone. The Willamette River Bridge on I-5 was located at Eugene. The Willamette River is an important fishery and the community was rightly concerned about the impact of pile driving in the river on the fishery. Additionally, there was also a “community” of homeless that had established a “people’s park” under the existing bridge with the tacit approval of the residents of Eugene, who needed to be relocated to safely complete the project. Therefore, the CMR’s public relations plan had to be extremely sensitive to the political consequences of disturbing the Eugene community’s sense of environmental and social responsibility. As a result, the CMR implemented a public information plan that is being broadcast to the com- munity through a number of different media to keep it abreast of the potential impacts as the design progresses. The lesson learned from both projects is that assigning the responsibility to interact with the public to the CMR makes it become “the face of the project” and allows it to build relationships with external parties that pay dividends during construction. Guaranteed Maximum Price Internal Procurement The next administrative preconstruction services are the tasks required for the CMR to advertise and award the subcontractor work packages. These consist primarily of breaking down the project scope of work into bid packages and reviewing the design documents that go with each package to ensure that sufficient information is contained in them to draw competitive pricing (Martinez et al. 2007). Eleven solicitation documents required the procurement of long-lead items. Additionally, many CMR contracts shift the risk of problems inherent to the subcontractors to the CMR as shown in the following contract clause in use by “Request for Proposal, Model, and Guidelines . . .” (2007). “Costs incurred due to conflicts, ambiguities, or inadequate coordination in the trade contrac- tors’ bid packages, or due to any other problems arising from trade contractors, in excess of the contingency shall be borne by the CM at Risk.”

As previously mentioned the bid packages are often coordinated with the design work packages. This makes the biddability review more efficient and reduces the risk to the subcontractors because they are given the specific design product they need for their bids; not just told to find their work inside the full set of construction documents. Nine solicitations required the CMR to develop the subcontractor bid pack- ages. An example of how this was articulated is as follows: “Recommend divisions of work to facilitate bidding and award of trade contracts, considering such factors as minimizing disruptions to existing facilities, improving or accelerating construction completion, minimizing trade jurisdiction disputes and other related issues.” Before subcontractors are invited to bid, the CMR usually prequalifies the subcontractors that can submit bids. Seven of the ten case study project owners allowed the CMR to manage this process without constraints, as did nine solic- itation documents. The other three case study project owners and another nine solicitation documents required that the CMR award to the lowest responsible bidder in a public or semi-public bid opening. Establishing the subcontractor pre- qualification criteria can be a joint effort with the owner or completely performed by the CMR. If the owner participates, it will often contribute evaluation criteria that it believes will reduce the performance risk for critical trades over the long term. For example, on a bridge seismic retrofit project, the owner required that the subcontractor show past experience in installing the type of retrofit equipment that it proposed to use. If the CMR sets the criteria, it will usually emphasize past business relationships over specific technical experience. For the constructor, the ability to trust its subcontractors is a premium worth paying. Either way, it is important for the agency to decide how much control its wants over subcontrac- tor qualifications before it awards the CMR contract. Owner and Designer Assistance The final category of preconstruction services involves those actions that are typically completed by the owner or the designer in most projects. The two primary areas that have been shifted to preconstruction services in CMR are assisting in the acquisition of right-of-way and obtaining permits. Two solicitation documents included right-of-way acquisition and five included permits. The literature on project delivery appears to advise that right-of-way acquisition not be delegated to a contractor (Molenaar 2005). This sentiment is based on the premise that the condemnation process available to public entities can create substantial delays if it becomes politically controversial, and the owner will be required to compensate the contractor for those delays. In CMR, the contractor usually is not asked to actually purchase the right-of-way, but rather is asked to assist the owner/designer during the acquisition period. In the UTA Weber County CMR project (Touran et al. 2009b), the CMR actually identified available right-of-way and negotiated a land trade with the railroad that 60 permitted a substantial cost savings that was identified in a preconstruction value engineering proposal by the CMR. The project’s solicitation indicated: “The design team will work with the Contractor to determine critical parcels required for their phasing and approach.” The CMR in this project also assisted UTA in obtaining early permits from the 10 munici- palities that the project crossed. The main point here is that UTA paid the CMR through its preconstruction services fees for the assistance. Thus, the risk of project delay owing to the inability to obtain right-of-way or permits was entirely on the agency. As a result, UTA received the entire savings generated by the value engineering proposal that was made viable by the CMR’s right-of-way swap with the railroad. Therefore, the practice in the CMR does not appear to be contrary to the recommendations voiced in the literature. The construction “cost meter” does not start until a construction notice to proceed is issued. In the UTA project, if the agency had been unable to obtain the necessary right-of-way or permits in a reasonable amount of time it would have merely closed out the preconstruction services and design contracts and halted the project until the requisites for the third parties were satisfied. In other words, UTA had quantified its risk as only the cost of design and preconstruction contracts because it had not yet committed to the construction contract. The last preconstruction service shown in Table 26 is the preparation and submittal of an application to obtain a national certification of sustainability. This was only found in the Lanier Law Center CMR project, which was required to be certi- fied by the U.S. Green Building Council’s LEED® program. Nevertheless, the subject of sustainability was raised in every case study interview and, almost without exception, the inter- viewees agreed that although certifying the sustainability of transportation projects is not yet required, the mood in the nation indicates that it will probably be in the near future. Therefore, those agencies that are considering implement- ing CMR project delivery may consider a provision in their regulations/enabling legislation to accommodate a future requirement to certify a project’s sustainability. PRECONSTRUCTION FEES AND DESIGN COST IMPACT The first question most upper managers in transportation agencies ask when considering a change to their procurement program is: How much is it going cost? CMR project delivery adds a fee for preconstruction services. Both the literature and the case study interviews reported that those services reaped savings in both design and construction costs. The next sections will discuss these important facets of CMR project delivery. Preconstruction Service Fees Although CMR project delivery is increasing throughout the United States, there is no standard method to estimate the cost of the preconstruction service fees that are associated

61 with this delivery method (Carlisle 2006). The DBB project delivery method does not typically involve the construction contractor until the design is complete. Therefore, contractors who are competing for CMR contracts for the first time are not accustomed to estimating this type of fee and are trying to use traditional practices for a nontraditional delivery method that has no published standards. Contractor Rationale The interviews with experienced CMR contractors indicated that they use a method that is very similar to that used by a consulting engineer to estimate its design fee. Most of the interviewees attempt to estimate the number of hours that preconstruction staff of various pay grades and disciplines will spend on the preconstruction services. These are compiled along with the estimated direct expenses (travel, printing, communications, etc.) to arrive at a total cost. Next, they com- pare the estimated cost to the size of the project and make a business decision as to what fee would appear to be reason- able. This is particularly important on projects that are being procured using an RFP, where the proposed preconstruction service fee is required as part of a competitive proposal. Interestingly, all the contractors that were interviewed indi- cated that they do not mark this fee up for profit. Every one of them stated that they intend to earn their profit on the construction itself. This statement about profit is confirmed in the literature by the following quote: Construction managers are in the business of construction . . . As a result, consulting services during pre-construction frequently are provided at cost without a fee for profit. If the construction manager believes the proposed construction project could be financially attractive, the direct costs actually incurred by the construction manager [in preconstruction] may have no relation to the compensation [preconstruction fee] (Martinez et al. 2007; italics added). The winning CMR for the UTA Weber County Commuter Rail project proposed a fee that was less than one-third of the next lowest proposed fee (Touran et al. 2009b). When inter- viewed, the CMR stated that the firm believed that the value of being able to participate in the design process more than made up for the need to self-finance the preconstruction ser- vices contract. The CMR indicated that because the project was completed early owing to the CMR’s preconstruction efforts, it had more than made up for any losses it incurred on the preconstruction fee by additional profit gained from being able to demobilize several months early. The final point learned from the contractor interviews was that they can offer the lowest possible fees to those owners that do a good job of informing them exactly what is required for preconstruction services in the RFP. One contractor made the comment that it had dealt with owners new to CMR who assumed there was an industry standard for preconstruction services scope and that meant anything the contractor was asked to do was covered by its preconstruction fee. The best policy is to treat this like any other contract and describe the scope of work for preconstruction services before executing a contract. “The construction manager’s role during the pre- construction phase will vary in accordance with the scope of the services that the owner requests and the construction man- ager agrees to provide” (Martinez et al. 2007). In other words, what is shown in the contract can be enforced. Services not covered by the contract become discretionary for the CMR. Preconstruction Fee Status Actual and estimated preconstruction services fees were obtained from all the interviewees and from examples in the literature. The solicitation documents were silent except to require a proposed fee as part of the CMR proposal. Table 28 shows the information found on this topic. It can be seen that the range runs from 0.0% to 2.84% of construction costs. The mathematical average of the fees in the table is 0.70%. The average preconstruction services fee for each sector is also shown. Of the figures in the table, the ones found by Septelka and Goldbatt come from the largest population, 108 public proj- ects. Uhlik and Eller and Carlisle’s figures are for populations that range from 17 to 74 public and private projects. The remaining figures are for a single project only. The trend is clear; preconstruction services fees appear to run less than 1% of the project’s construction cost. There is no explanation available as to why the airport projects are half the fee of the other sectors. However, the paper by Carlisle may shed some light on the possible reason. Carlisle’s study (2006) specifically sought to determine how to estimate preconstruction services in the building sector. It collected information from both public and private CMR proj- ects and attempted to differentiate between them statistically. The study’s important finding had little to do with the cost of preconstruction in the public versus private sectors, but rather Carlisle’s methodology also included looking to see if the point in design development where the CMR was selected affected the value of the preconstruction service fee. Figure 17 was developed from Carlisle’s raw data and does not come from his paper. It combined both types of projects into a single population. As shown, preconstruction service fees decrease as the percentage of design completion at which the CMR is procured increases. This makes sense in that there is less that the CMR can do to influence the ultimate shape of the project and functionally less time in which it can add value. Therefore, in general, these fees range from a high of 0.75% of construction costs when the CMR is retained at the same time as the designer to a low of 0.05% when the CMR is retained immediately before the design is complete.

Looking at the magnitude of the average values, preconstruc- tion services at 0% design are more than twice the amount at 90% design completion. Preconstruction Impact on Design Costs Five Table 1 authors cited reduced design cost as an advantage of CMR project delivery. “Reduced design costs, construction, and construction engineering inspection costs” (Anderson and Damnjanovic 2008) is typical of the way authors in the liter- ature described the advantages of implementing CMR. Addi- tionally, several of the case study project owners confirmed what was found in the literature. A UDOT progress report on its CMR program described the reasons it was paying less for design like this: 62 The CMGC 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 draw- ings and specifications (Alder 2007; italics added). The interview with UDOT indicated that since the 2007 report the trend of design cost savings continued and appeared to be near 40% savings to date. The question then becomes: Where are those savings found? The previous quotation identifies two design cost saving areas found by UDOT. The first is in time saved during design. Engineering consultants typically develop their fees based on billable hours and multipliers applied to total billable hours (Carr and Beyor 2005). Thus, the less time it takes to arrive 0.75% 0.73% 0.50% 0.30% 0.15% 0.09% 0.10% 0.05% 0.36% 0.27% 0.17% 0.41% 0.00% 0.20% 0.40% 0.60% 0.80% 0% 30% 60% 90% Percentage of Design Completion When CMR Selected Pr ec on st ru ct io n Fe e (% of Co ns tr uc tio n Co st ) FIGURE 17 Carlisle study (2006) preconstruction fee trends (entire population). Bars show high, average, and low values at each design milestone. Project Location and Type Source of Information Cited Preconstruction Service (% of GMP) Washington State—Building, Water/Waste Water, Local Roads Septelka and Goldbatt (2005) 0.00% to 2.84%; Mean = 0.89% Nationwide Federal Projects— Medical Buildings Uhlik and Eller (1999) 1.0% to 2.0% Mean = 1.49% Oklahoma, Texas—Buildings Carlisle (2006) 0.15% to 0.50% Mean = 0.44% Texas—Buildings Lanier Center Case Study Project 0.33% Building Average 0.79% Arizona—Highway Sundt Construction (2008)* 0.80% Arizona—Highway Pinal County Case Study Project 0.60% Arizona—Highway City of Glendale Case Study Project 1.10% Utah—Highway I-80 Case Study Project 0.10% Arizona—Highway Kiewit Phoenix District (2008)* 0.70% Oregon—Highway Willamette River Bridge Case Study 1.50% Highway Average 0.80% Alaska—Airport Fairbanks Airport Case Study Project 0.25% Tennessee—Airport Memphis Airport Case Study Project 0.35% Rhode Island—Airport Rhode Island Airport Corporation 2008 0.29% Airport Average 0.30% Michigan—Seaport Passenger Ship Terminal Case Study 0.50% Utah—Rail Transit Weber County Case Study Project 0.21% Washington—Utility * “Arizona CM/GC Highway Projects,” interview, Nov. 11, 2008. Seattle Public Utility Project 1.70% Overall Average 0.70% TABLE 28 PRECONSTRUCTION FEE HISTORY

63 at final construction documents the lower the design fee. However, a survey by the CMAA (“Speed, Communication, and Commissioning Issues . . .” 2003) found that the “demand for increasing speed of project delivery is the top reason for decline in construction document quality.” The CMAA survey also reported that “In their responses to questions about the quality of construction documents, more than half of the owners surveyed responded that these documents often have significant amounts of missing information.” Specifi- cally, 45% of respondents indicated that construction docu- ments, although sufficient, still had “significant information needed,” whereas an additional 12% found that documents were “typically inadequate because of major information gaps” (“Speed, Communication, and Commissioning Issues . . .” 2003). Although the survey was primarily talking about DBB project construction documents, the concern is still valid for CMR projects. However, that the CMR reviews the documents before pricing them appears to provide a means to accelerate the project without a loss in design quality. “Design consultants preferred this method because UDOT controlled the design and innovations selected for the project, and this gave them a greater ability to develop a quality design” (Alder 2007; italics added). To realize the reduced design time, the CMR is typically given responsibility to manage the design schedule (Martinez et al. 2007). The Washington State study measured the impact of implementing CMR on cost and schedule. “Another perfor- mance measure is delivery speed, the rate at which the project team designed and built the facility. The higher the intensity of delivery indicates a better outcome in terms of cost and schedule . . . GC/CM projects outperformed DBB projects by 159%” (Septelka and Goldblatt 2005). The second place to find design costs savings is by reduc- ing the total amount of design detail that goes into a set of construction documents as cited by Alder (2007). During the case study project interviews, one of the owners stated that the engineer did not need to produce a full set of “biddable” construction documents. Elaborating on this statement, he indicated that the CMR controlled the level of detail required to get “biddable” subcontractor packages and that the sum of the total design effort was less than that required to produce a full set of construction documents for a DBB project. UDOT calls this developing an “appropriate design” rather than a “complete” design. UDOT’s definition is a design that is taken to a point where the CMR can confidently generate a GMP. An example of less detail was the use of a note to reference a standard detail rather than copying that detail into the con- struction plans. “The construction documents are intended to convey, in as much detail as necessary, the graphic and quantitative information required by the trade contractors to perform the construction work” (Martinez et al. 2007; italics added). One of the contractors seconded this notion by saying that CMR construction documents are “less messy” than DBB because they only contain the information needed to build the project. Having been involved in the design process by means of the review process, the CMR’s staff is more inti- mately familiar with the construction documents’ contents. A different owner stated that in its CMR projects the contractor “understood the design” much better than in DBB. All of the foregoing discussion goes to say that CMR project delivery’s impact on the design process appears to be positive. SUMMARY Based on the information gleaned from the literature and the case study projects, several conclusions and effective practices can be drawn. Conclusions The main conclusion is that preconstruction services are a distinct benefit to the project’s cost, schedule, and ultimate quality. “The City of Portland reported that the contractor’s early involvement with design review, value engineering, and risk analysis prior to design completion contributed to signif- icant cost and schedule savings on the West Willamette River project” (Gribbon et al. 2003). UDOT expressed the same sentiment in its report: The CMGC process gives the contractor more time to understand and improve the design and to learn new construction methods not used before. Constructability is continuously reviewed in the design phase so the design is optimized for construction and project costs are reduced. The contractor is able to inform the team what construction methods would simplify construction and reduce cost and schedule (Alder 2007). When the cost of preconstruction services is compared with the actual benefits that are cited in this chapter, it appears to be quite reasonable. This debunks the myth that adding another fee and another party to the design phase must cost more (A.M. Solochek, “CM-at-Risk Premium,” personal com- munication, Nov. 23, 2005). Although there is an additional fee and an additional contract to administer, it is an invest- ment to realize quantifiable benefits to the CMR project. Effective Practices A number of effective practices were also derived from this chapter’s analysis. • Detailing the specific preconstruction services an agency wants provided in the preconstruction services contract in the solicitation document is critical to getting a rea- sonable proposal if costs are included in the selection process. • Assigning the CMR the duties of scheduling for both design and construction during the preconstruction phase creates a point where collaboration is enhanced. This service was rated as the second most valuable

preconstruction service by both the case study agencies and contractors, and ability to fast track was cited by 10 of the 15 papers shown in Table 1. • Joint development of the preconstruction service cost model before commencing design allows the designer and the CMR to be able to leverage it to make design decisions and to benchmark value engineering savings. 64 • Furnishing a list of the cost categories to be used in the preconstruction cost model as well as articulating where the agency wants various costs, such as fees and con- tingencies to be accounted for in the CMR contract eliminates ambiguity and assists in all parties being able to understand the cost model output. Table 29 provides a typical format for these costs. TABLE 29 DIFFERENT GMP TIMING CLAUSES FOUND IN THE CONTENT ANALYSIS No. GMP Timing Clause Source 1 The CMR services will be performed in two phases with two separate contracts. Phase I and the first contract will include the preconstruction services and the preparation and submission of the GMP. Phase II and the second contract will include complete construction services for the construction project. Gilbert, AZ Road Project 2 At some point before construction, the CMR will assume the risk of delivering the project through a GMP contract. Glendale, AZ Case Study Project 3 At some point during the design phase the CMR will submit a complete proposal to assume the risk of delivering the project through a GMP contract. Casagrande, AZ Road Project 4 At the completion of design or at any earlier time as required by the town, the CMR will submit a construction GMP to town. Gilbert, AZ Road Project 5 At completion of design, or at any point in Phase I before construction, as may be required by the county, the CMR will be requested to provide a GMP. Pima County, AZ Road Project 6 GMP negotiations will occur sometime between the Design Team's completion of 60% and 90% design. Seattle, WA Utility Project 7 *The CM’s GMP may be submitted at any time after completion and approval of the design development phase, but in no case later than 10 days after the designer submits final review construction documents. Golden, CO Building Project 8 *GMP will be required at the completion of the Design Development phase. Boulder, CO Building Project 9 **The project team to be bound by the established estimate of construction costs derived by the CM/GC at schematic design level. Parker, CO Building Project 10 When design documents for the project have been developed in sufficient detail, the CM with the support and assistance of the architect will commit to a GMP for all construction and site development. Atlanta, GA Building Project *Completion of the “design development phase” in an architectural project equates to 40% to 50% design completion in a transportation project (Hess and Bales 2007). **Completion of the “schematic design level” in an architectural project equate to 15% to 30% design completion in a transportation project (Hess and Bales 2007).

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Construction Manager-at-Risk Project Delivery for Highway Programs Get This Book
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TRB’s National Cooperative Highway Research Program (NCHRP) Synthesis 402: Construction Manager-at-Risk Project Delivery for Highway Programs explores current methods in which state departments of transportation and other public engineering agencies are applying construction manager-at-risk (CMR) project delivery to their construction projects.

CMR project delivery is an integrated team approach to the planning, design, and construction of a highway project, to help control schedule and budget, and to help ensure quality for the project owner. The team consists of the owner; the designer, who might be an in-house engineer; and the at-risk construction manager. The goal of this project delivery method is to engage at-risk construction expertise early in the design process to enhance constructability, manage risk, and facilitate concurrent execution of design and construction without the owner relinquishing control over the details of design as it would in a design-build project.

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