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10 CHAPTER TWO USE OF ALTERNATIVE DELIVERY METHODS BY STATE DEPARTMENTS OF TRANSPORTATION State transportation departments were contacted and existing information for state DOTs that have used design- build, CMAR/CMGC, and P3 alternative delivery meth- ods was reviewed. DESIGN-BUILD Many state transportation departments have made some use of design-build contracting methods for more than two decades (FHWA 2006). SEP-14 In 1990, FHWA established the Special Experimental Proj- ects Number 14 (SEP-14) program to evaluate innovative contracting practices undertaken by state DOTs. State DOTs were interested in using new methods for cost and time sav- ings and more efficient project delivery. The SEP process enables both federal and state transportation agencies to test and evaluate innovative contracting techniques that would otherwise be prohibited under current federal statutes and regulations. FHWA reports that between 1990 and 2002, about 300 projects representing $14 billion were proposed for design-build contracting under SEP-14 by transportation agencies (including state transit authorities, toll agencies, and local public agencies) in 32 states and the District of Columbia (FHWA 2006). Florida, Michigan, Ohio, and Pennsylvania had the larg- est number and dollar volume of design-build projects autho- rized under the SEP-14 program (FHWA 2006). 1998 TEA-21 and 2002 Final Rule After a decade of evaluation under the SEP-14 program, design-build was designated as an operational (i.e., non- experimental) technique. The 1998 Transportation Equity Act for the 21st Century (TEA-21) amended federal regula- tions to allow the use of design-build contracting methods and required U.S.DOT to issue regulations to allow design- build contracting for certain U.S.DOT-funded projects. In 2002, FHWA published a Final Rule regarding design-build contracting (FHWA 2002). State DOTs were allowed to use design-build at their option but were not required to do so. The rule established design-build contracting projects as eligible to receive federal aid without special consideration. The rule was amended in 2007 (FHWA 2007). At the time of this report, 45 states plus the District of Columbia and Puerto Rico have used design-build as a delivery method for state DOT projects (see Figure 2). As other researchers have found, this count is fluid and depends somewhat on oneâs definition of âusing design-build.â FIGURE 2 State DOTs that have used design-build or P3 as a delivery method (FHWA 2012b; Shakya 2013; Gransberg 2013b). Nebraska is prohibited from using design-build on road, street, and highway projects. In Oklahoma, design-build is not authorized without special approval. Iowa does not have legislation specifically authorizing the use of design-build for highway projects but can apply the method for emergency pro- curement. Wyoming and Arkansas have legislative authority to use design-build but have never used the method. A number of state DOTs, including New Jersey, North Dakota, Puerto Rico, and Wisconsin, have employed design- build methods in the past (especially under SEP-14) but have discontinued the use of design-build as a delivery method. (Puerto Rico reports that it may use design-build again.) PUBLIC-PRIVATE PARTNERSHIPS State transportation departments can select developers for public-private partnership projects using low bid methods, but P3 projects are considered to be in the family of design- build contracting methods, as they often involve design, construction, and eventual operation of a transportation
11 improvement. The evolution of federal regulations regard- ing P3 largely follows that of design-build contracting. For example, federal regulations concerning âpublic-private agreements,â such as FHWAâs 2007 Final Rule on Design- Build Contracting, are often included under those for design- build contracts (FHWA 2007). At the time of this report, legislation authorizing the use of P3 as a delivery method was identified for 33 states, Puerto Rico, and the District of Columbia through the in- depth interview and literature review process. Legislative authority for P3 includes broad enabling legislation and lim- ited (project-specific or authorization by regulation) legisla- tion (see Figure 3). FIGURE 3 State DOTs with legislative authority to use P3 (Rall 2013). CONSTRUCTION MANAGER AT RISK AND CONSTRUCTION MANAGER/GENERAL CONTRACTOR Construction manager at risk and construction manager/ general contractor are similar alternative delivery meth- ods that involve using a construction manager in the design stage that becomes the general contractor in the construction phase (see chapter one definitions). SEP-14 SEP-14 also allowed the use of CMAR and CMGC meth- ods. Until July 2012, when the Moving Ahead for Progress in the 21st Century Act (MAP-21) was signed into law, FHWA allowed state DOTs to use CMAR/CMGC delivery methods only under the SEP-14 program (FHWA 2014a; FHWA 2014d). MAP-21 Section C of MAP-21 is dedicated to the acceleration of project delivery. In order to develop the most effective prac- tices to accelerate project delivery and reduce costs, the law amended 23 U.S.C. 112(b), which regulates bidding on fed- eral highway projects, to allow the use of CMAR/CMGC (FHWA 2014a; FHWA 2014d). As shown in Figure 4, 35 states plus the District of Columbia and Puerto Rico have some legislative authority to use CMAR/ CMGC on state DOT projects (FHWA 2012a; Gransberg 2013a, Shakya 2013). Arizona, Colorado, Florida, Maine, Michigan, Minnesota, Nevada, Oregon, and Utah have CMAR/CMGC experience. At the time of this report, California was in the ini- tial phase of two CMGC projects. Massachusetts Bay Trans- portation Authority (a division of Massachusetts DOT) and Rhode Island DOT have used CMGC on rail projects. FIGURE 4 State DOTs with legislative authority to use CMAR/ CMGC (FHWA 2012a; Gransberg 2013a; Shakya 2013). CHAPTER SUMMARY Most states have experience with alternative delivery method projects. At the time of this report, 45 states plus the District of Columbia and Puerto Rico had used design-build as a delivery method for state DOT projects. Legislation authorizing the use of P3 as a delivery method was identi- fied for 33 states, Puerto Rico, and the District of Columbia through the in-depth interview and literature review pro- cesses. Thirty-five states plus the District of Columbia and Puerto Rico have some legislative authority to use CMAR/ CMGC on state DOT projects. The CMAR/CMGC experi- ence of nine state DOTs were reviewed.
