Techniques for Effective Highway Construction Projects in Congested Urban Areas (2011)

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The survey of transportation agencies solicited information about the characteristics of their respective capital programs. This information serves as a backdrop to the other data obtained and provides insights into the nature of each program in terms of dollars and other attributes. Figure 5 shows how the states responded when asked about capital program size. Thirteen states, or more than half of the responding states with urban areas of more than 1 million people, have capital programs of more than $1 billion per year. Another six identi- fied expenditures of between $500 million and $1 billion. It is no surprise that states constructing projects in highly congested corridors have large programs. Note that San Francisco County and Chicago have substantial programs in their own right. Further examination of project types revealed a number of important trends. Responses to the question about what typical projects are constructed in urban corridors included all of the following: • Improvements on urban arterial streets with minimal access control, • Improvements on urban arterial streets with aggressive access control, and • Improvements on controlled access highways. Each of the states reported having all three project types. The uniformity of project type allows for greater correlation of the data found in the rest of this report. Understanding trends in typical project size among respond- ing transportation agencies is useful. Note in Figure 6 that when agencies reported on size trend for urban projects, the majority of the projects were under $100 million. This indicates that the typical project would not be considered a “mega-project” and shows that the strategies identified in this report can be applied to a significant size range of urban projects—not only the very largest. Arizona, Missouri, San Francisco County, and Texas reported more frequent use of projects valued in excess of $100 million. Recognizing the challenges and uniqueness of these urban projects, the agencies all responded that they take special measures to address these circumstances. When queried about whether the measures were implemented on a project-by- project basis or the programmatic level, 42% indicated a project-specific approach and 48% reported that they employ 10 measures at both project and programmatic levels, as shown in Figure 7. When asked if they used special measures to deal with urban projects, the most common one mentioned was managing traffic either through a traffic operations center, work hour restrictions, or other management strategies to mitigate the impacts of high volumes of vehicles. Seeking further clarification about these measures, the survey asked respondents to specifically identify those they employed, with the results shown in Table 1. On this and other questions in this section of the survey the agencies mentioned aggressive management of lane closures and night work, the use of Context Sensitive Design and the use of ITS. Examination of Table 1 reveals an interesting phenomenon. The five most commonly identified actions are: • Coordination with local communities • Different contracting methods • Work hour modifications • Context Sensitive Design or Context Sensitive Solutions • More use of consultants. The contrast between the most common and the least often utilized strategies is noteworthy. The least-mentioned actions included training employees, offering pay differentials for specialized work hours, and staffing changes. Each of these would reflect an investment in the agency in-house staff. Conversely, the top five listed previously do not represent such a strategy. This is a clear message that actions employed to address these complex construction projects center more on external and physical actions and not on employees or organi- zational actions that might be part of successful solutions. For many years states used the standard design-bid-build (DBB) approach to project delivery for virtually all projects. With DBB the owner designs or hires a consultant to design the project, then procures a contractor for actual construction. Typical benefits of using DBB include: • A simple process that is well understood by all partic- ipants, • Risk and rewards that are clear, • A high level of public acceptance, and • A process that is considered fair (32). CHAPTER THREE PROGRAM OVERVIEW

11 FIGURE 5 Size of state’s annual capital improvement program (see Question 9). FIGURE 6 Trends in urban project size most prevalent in states (see Question 11). FIGURE 7 Special measures taken as individual projects or programmatic (see Question 13). Since the 1990s, transportation agencies have also used the design-build (DB) process. With this approach the owner hires a team that includes a contractor and a designer; together they are responsible for the finished project. Attributes of DB include: • A single contractor and designer team that provides for more effective coordination; • Projects that are typically priced in a lump sum format, allowing for a level of price certainty not present with DBB; • More innovation that often results from the combined contractor/designer team; and • Owners that frequently specify project deliverables as opposed to means and methods. The selection of DB as a delivery method is based on a number of desired outcomes. They include in order of priority: • Shorten duration • Establish cost • Reduce cost

• Constructability/innovation • Establish schedule (33). Some states (e.g., Arizona and Utah) are beginning to use Construction Manager/General Contractor (CM/GC) or Construction Manager at Risk. The name and attributes differ from state to state and their statutes will be different as well, but the basic process remains the same. The owner, contractor, and designer enter into an agreement where engineering and construction are completed in a collaborative environment and risks are shared in ways that result in project cost and time savings. Often, financial incentives are used that benefit all parties (34). Agencies also identified a common use of A + B contract- ing where price is one factor (A) and time (B) is the other. Massachusetts, Nevada, Pennsylvania, Tennessee, and Utah have all used this approach. 12 The most commonly used method was overwhelmingly DBB. The comfort contractors and owners still have with DBB, and the sheer number of projects using DBB, account for con- tinuing its use. Nevertheless, states such as Arizona, Florida, Utah, and Washington are using DB for a large number of urban projects. Even in states that lead in using alternative project delivery methods such as DB, the vast majority of work is still traditionally done using DBB. When asked why they used the preferred contracting method, the agencies offered the reasons found in Table 2. The rationale varies but the selected process, DBB, remains the same. In their narrative responses many agencies mentioned that legislative requirements often limited or controlled how they were able to use innovative delivery methods such as DB or CM/GC. Table 3 contains additional comments offered by the agencies. What are the reasons for choosing the method identified in Question 15? Reason for Choice % of state response Ease of contract administration on the part of your agency 48 Required by rule or law 43 Other 35 Price certainty (knowing what the final cost will be) 26 Shorter construction schedule 22 Improved management of stakeholder issues during construction 17 Opportunities for innovation on the part of designers 13 Improved management of traffic during construction 13 Opportunities for innovation on the part of contractors 9 Pressure or input from elected officials 4 Pressure or input from industry groups or associations 4 Owing to multiple choices percentages do not equal 100%. TABLE 2 REASONS FOR CHOOSING DESIGN-BID-BUILD What types of actions has your agency taken to address the issues associated with construction of projects in congested urban corridors? Actions Taken % of State Response Coordination with local communities 96 Different contracting methods 87 Work hour modifications 87 Context sensitive design or context sensitive solutions 83 More use of consultants 65 Organizational or structural changes in your agency 30 Changes in staffing 26 Other 22 New or different equipment 17 New or specialized training for employees 17 Pay differentials for employees working on these projects 13 No actions 4 Owing to multiple choices percentages do not equal 100%. TABLE 1 TYPES OF ACTIONS TO ADDRESS CONGESTION IN URBAN PROJECTS

What are the reason(s) for using incentives on your urban corridor projects? Reason for Choice % of state response Shortens the construction schedule 91 Finishes the project and opens it by a certain date 87 Reduces the impact of construction on the traveling public 83 Promises to the public or elected officials 57 Improves the overall quality of the project 26 Other 0 Owing to multiple choices percentages do not equal 100%. TABLE 4 REASONS FOR INCENTIVES ON URBAN CORRIDOR PROJECTS 13 The agencies were asked whether or not financial incentives were used to influence behavior and outcomes on urban con- struction projects and the majority answered in the affirmative. The basis for using incentives to influence the outcome of a project varied among the agencies, but several emerge as the primary motivators, as shown in Table 4. Notably, the top two reasons focused on an owner’s desire to influence the project schedule or overall completion. The third most noted response was to reduce the impact on the traveling public. Surprisingly, only 26% used financial incentives to achieve quality objectives. Based on the author’s experience, quality incentives are often used by agencies for work items such as asphalt pavement quality or smoothness of portland cement concrete pavement and less for other contract work. This most likely accounts for the low ranking shown in the survey results. All the agencies surveyed reported that they use financial disincentives to achieve certain objectives. Table 5 ranks responses to this question. For these agencies, motivation to use incentives follows the same order of priority as for the use of disincentives. Commonly, transportation agencies use incentives and disincentives in combination with one another and the survey instrument was designed to elicit information about this relationship. Figure 8 shows how the agencies responded to DBB is our standard practice; we use DB on a limited basis. Louisiana Traditional method for bulk of contracts. Alternatives being tested and considered. Massachusetts DBB is the traditional project delivery method used at CDOT. Colorado The reality is that the majority of work in our urban areas is approached through traditional methods. Washington It is our standard contracting method, thus it is used on most projects. Oregon Standard procedure. Michigan Our standard method used for many years. Nevada Low bid. Arizona TABLE 3 COMMENTS FOR QUESTION 16 What are the reason(s) for using disincentives on your urban corridor projects? Reason for Choice % of state response Finishes the project and opens it by a certain date 91 Shortens the construction schedule 87 Reduces the impact of construction on the traveling public 87 Promises to the public or elected officials 70 Improves the overall quality of the project 30 Other (see Table 6 in chapter three) 13 Owing to multiple choices percentages do not equal 100%. TABLE 5 REASONS FOR USING DISINCENTIVES

the question about whether or not they used financial incentives and disincentives on the same projects. Only one agency noted that it never combines these strategies. On the other hand, 61% use combined incentives and disincentives: “Often,” “Very Often,” or “Always.” This overview of projects and agency approaches to their delivery offers a glimpse into the circumstances under which they are constructing their work in urban corridors. The most common delivery method used is DBB, although some use of alternative methods such as DB and CM/GC were identified. 14 Urban projects are typically associated with the mega proj- ect label; however, these agencies reported that the trend is toward projects valued at $100 million or less. Incen- tives are used by the majority of the agencies to achieve schedule objectives and reduce the impact of the work on the public. In addition to the quantitative information gathered through the survey, agencies were also asked in many of the questions to provide qualitative information (see Table 6). The full account of these responses is found in Appendix B. Reduce the number of bidders with limited resources. Colorado Reduce bad press of an ongoing project. Pennsylvania Maintain contract work schedule to avoid special community events. Pennsylvania Liquidated damages are considered as disincentives. Oregon See comments for question 18. Utah Disincentives are in the construction contract as road users liquidated damages. Pennsylvania FDOT matches its incentives with equal disincentives. Florida TABLE 6 COMMENTS FOR QUESTION 20 FIGURE 8 Financial incentives and disincentives (see Question 21).