Guide for Design Management on Design-Build and Construction Manager/General Contractor Projects (2014)

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143 144 Case Study—Project: Mountain View Corridor Utah Department of Transportation (CM/GC) 158 Case Study—Program: Oregon Department of Transportation (CMR) 166 Case Study—Program: Osceola County, Florida (CMR and CM/GC) 187 Case Study—Program: City of Phoenix, Arizona (CMR) 197 Case Study—Program: Utah Department of Transportation (CMR) 210 Case Study—Program: Utah Transit Authority (CMR) a P P E n D I x B Construction Manager/General Contractor Full Case Studies

144 Background Project Description The Mountain View Corridor (MVC) is a 15-mile “planned” freeway in western Salt Lake County and northwestern Utah County servicing 13 municipalities. It is designated a “planned” freeway because in its current configuration, the MVC crosses intersecting roads at grade, necessi- tating traffic signals at each intersection. These intersections will be converted to interchanges built to Interstate standards in the future. In fact, the MVC currently widens at each intersection, with the extra lane in place to serve as the exit ramp when future construction transforms the at-grade intersections into freeway interchanges. The corridor currently extends from Redwood Road at 16000 South to 5400 South. Future construction will lengthen the road, as it will extend from S.R. 73 to I-80. The southernmost part of the current configuration contains two two-lane, one-way roads with wide medians. These roads are future frontage roads, as four limited access lanes will be built between them. Currently, there are no bicycle or walking trails or special lanes for buses, but these are planned for the future. Figures 42–44 show artist renderings of how the mainline, bicycle, and walking trails and bus lanes will look when constructed. The final section of the current version of the MVC was opened to traffic on December 15, 2012. The cost of the total project, including right-of-way (ROW) and construction will be a little more than $1 billion, including about $130 million for future construction. The MVC is designated as a Greenfield Project. Greenfield land is undeveloped land in a city or rural area that is built upon for the good of the community or left to nature. This land can be unfenced open fields, urban lots, or restricted closed properties kept off limits to the general pub- lic by a private or government entity. The Greenfield portion of the project is seen in Figure 45. Not all of the MVC is built on Greenfield land, and the non-Greenfield areas presented the usual challenges of new construction in urban and suburban areas. Figure 46 shows one of these areas during preconstruction. The need for the project was established by traffic projections showing that travel times between the two endpoints of the now-completed project would double by 2030. The decision to build the project was the result of a process typical of any modern transporta- tion agency’s decision making process for such a large project. The process timeline is illustrated in Table 25. The funds to build MVC came from the Critical Highway Needs Funds (CHNF) of Salt Lake County and Utah County, a large private land donation, the Utah Legislature, and the Utah Transportation Commission. The breakdown of the funds accumulation can be seen in Table 26. Case Study—Project: Mountain View Corridor Utah Department of Transportation (CM/GC)

Case Study—Project: mountain View Corridor utah Department of Transportation (Cm/GC) 145 Figure 42. Future bike path and walking trail (Credit: UDOT). Figure 43. Future look of mainline MVC (Credit: UDOT). Figure 44. Artist rendering of future bus lanes (Credit: UDOT).

146 Guide for Design management on Design-Build and Construction manager/General Contractor Projects Figure 45. Greenfield portion of the project before construction (Credit: UDOT). Figure 46. Urban and suburban portion of the project before construction (Credit: UDOT). Year Event(s) 2003 Growth Choices Workshops 2004 Talk Truck Meetings 2005 Alternatives Refinement Open Houses 2006 Town Hall Meetings 2007 DEIS Comment Period 2008 Record of Decision Table 25. Planning timeline. Year Amount Source 2008 $230,000,000 Salt Lake County CHNF 2008 $130,000,000 Utah County CHNF 2009 $45,000,000 Private Land Donation 2009 $500,000,000 Utah State Legislature Total $905,000,000 Table 26. Cost breakdown for Salt Lake County portion.

Case Study—Project: mountain View Corridor utah Department of Transportation (Cm/GC) 147 Why CMGC? Only the 15-mile stretch of highway in Salt Lake County was built using the construction- manager-as-general-contractor (CMGC) delivery system and thus will be the focus of this case study. A map of the entire project with the Salt Lake County portion highlighted can be seen in Figure 47. The budget for this part of the construction was $905 million. Before deciding which delivery system to use for each portion of the project, UDOT did its due diligence and analyzed each possibility. Its decision was to construct the vast majority of the project (the Salt Lake County portion) using the CMGC delivery system. The reasons published by UDOT for the decision for CMGC were as follows: 1. Contractor innovations 2. Expedited start 3. Many risk items difficult to allocate to the contractor 4. Flexibility allows co-procurement with another project (UDOT 2012) 5. Open-book pricing 6. Integrated ROW and construction schedule 7. Risk allocation discussion before pricing The Salt Lake County (CMGC) portion of the project included 6 million cubic yards of earth- work, 300,000 tons of asphalt, 300,000 square yards of Portland cement concrete, 170,000 lineal feet of storm sewer, 160,000 square feet of retaining wall, and 10 highway bridges (UDOT 2012). Project Goals The goals of the project, as published by UDOT, are the following: 1. Design and construct to budget. Utilize the CMGC delivery system to design and construct as much of the corridor as possible. This delivery system will allow UDOT to adjust the scope and limits of the project based on the funds available for design and construction. Build a professional and collaborative project team with the owner, program manager, designer, and contractor. Utilize the CMGC delivery system to select highly qualified professional designers and builders to form a single project team with UDOT to deliver the MVC project. 1. Optimize construction schedule to achieve high quality and maximum value. Allow the contractor the flexibility to adjust the construction schedule to minimize project cost and risk and maximize how much of the project can be constructed within budget. Develop a construction schedule that accommodates major utility relocation and maximizes benefits to UDOT and public stakeholders. 2. Provide maximum opportunity to utilize innovative design and construction practices. Build a unified project team and a collaborative work environment that fosters innovation, openness, transparency, and acceptance of change while maintaining quality and ensuring safety. 3. Maintain public trust and confidence. Fulfill the commitments made during the environ- mental process. Establish open communication through an effective and engaging public information campaign (UDOT 2012). Procurement of the Team Figure 48 shows the factors that went into selecting the CM along with their accompanying weights. Note that cost/price makes up 30% of the total and that the selection committee was more interested in how the cost/price was determined than it was in the cost/price itself. This was because UDOT was interested in the priorities of the candidates in terms of whether their

148 Guide for Design management on Design-Build and Construction manager/General Contractor Projects Figure 47. MVC map with CMGC portion highlighted (Credit: UDOT).

Case Study—Project: mountain View Corridor utah Department of Transportation (Cm/GC) 149 methods of pricing showed the kind of collaborative spirit for which UDOT was looking in a CM. What was possibly more important, however, was that UDOT was aiming to do something which no state transportation agency (STA) ever had done before. Its aim was to save money wherever possible and invest the money in the same project, allowing for project expansion. STAs often had tried to save money, and many had put the savings into building more projects in the future. However, UDOT was going to exploit the CMGC delivery system to take on more risk than was customary for an STA and, by taking on the risk, would be paid for it. If UDOT avoided the dangers inherent in the risk, it would not pocket the money to pay for another project but would use the money to buy more ROW, pipe, roadside ditches, and maybe even asphalt pavement or bridges, thus turning a 15-mile project into something longer. For this, the methods and priorities shown by some contractors in calculating their price/cost could well be more conducive to such a strategy and objective as UDOT had for this project. Therefore, UDOT was very interested in how the cost of the construction was handled by the contractor. However, even given this, the issue of money was worth less than one-third of the whole when CMGC was chosen to build the MVC. Based on the criteria in Figure 48, the CM chosen was a joint venture called Copper Hills Constructors. Copper Hills comprised heavy construction giants Granite and Kiewit along with Utah-based contractor W.W. Clyde. The design team selected was made up of Lochner, Baker, URS, and Horrocks. Those firms that joined UDOT to compose the PM team were national enti- ties HDR and Parsons-Brinckerhoff (see Figure 49). The timeline from conception—the point of receiving sufficient funding to start the process—through the time of construction startup is shown in Figure 50. Managing Post-Award Design Activities ROW, Permitting, and Utility Relocation On Mountain View, the utility coordination process was different because of some major cross-country transmission lines, natural gas lines, and power lines. There also were concerns about having the equipment on top of the gas lines and being able to have the contractor set the power cable while debating whether it needed to relocate the gas lines or go over the top of them. Figure 48. Procurement selection criteria (Credit: UDOT).

150 Guide for Design management on Design-Build and Construction manager/General Contractor Projects Having the contractor present to talk about specific equipment it would use, the weight of the equipment, what its process was for the construction, and how it would protect the utility in place allowed the team to actually leave some of the gas lines in place where plans previously had been to relocate them. It made a huge difference to have the people who were actually going to do the work sitting at the table as the solutions were being developed. The financial and time savings from this were huge. At UDOT, the utility coordination pro- cess generally has the same timing with CMGC as with DBB. On this project, that process started early in the design phase, the same as on a DBB job, to try to work out the solutions as early as possible. Construction started when utility issues still were being resolved. The contract was let knowing that there would be design changes because of the progression of the utilities. It allowed a little more time to work something out. ROW acquisition was handled in-house during both design and construction phases. ROW risk was handled by the owner and consultants via the program management contract. In order Figure 49. The team (Credit: UDOT). Figure 50. Project timeline from funding through commencement of construction (Credit: UDOT).

Case Study—Project: mountain View Corridor utah Department of Transportation (Cm/GC) 151 to minimize risk, utility companies and permitting agencies were made an important part of the design process. Regular meetings were held with utility companies to help progress the design and continued as the project moved into the construction phase. UDOT is very strong in the areas of utility, permitting, and ROW acquisition and would have developed the schedule for those things on its own; but since the contractor was on board, it developed its construction schedule at the same time. All of UDOT’s ROW, permitting, and utility issues were imbedded into the contractor’s schedule, and the parties entered into an iterative schedule development process. The process started at the time the contractor was hired for the CM portion of the work (preconstruction services). At the beginning of the process, no ROW had been acquired. Prioritization of properties was the main early aim of this effort. There were certain pieces of property that, for whatever reason, were deemed best to work on first. These were given the highest priority to obtain, get permits done, and have utilities moved. If there were a piece of property that looked as if it were going to be difficult to acquire or get permitted, a decision was made to buy the easier property first and work around the difficult properties. Work often went back and forth geographically according to ROW and utility issues. Utility and ROW were risks taken by the owner, so the whole ROW/permitting/utility process was coordinated on the ever-changing schedule. This process was repeated all the way through the preconstruction process. Scheduling utilities and design was part of an all-encompassing schedule. When the design was complete to the point at which the parties were comfortable enough to start working on a final price, a date for final pricing was set, as was a date to go to contract. The project went to contract (for the construction phase) with 90% of the plans imbedded in the schedule. The time at which any design details or design changes had to be in place was a function of when the con- tractor needed to be working at a certain location. Therefore, the entire process was very itera- tive. It allowed for a lot of flexibility in the process and more accurate prioritization as far as when to concentrate on what geographic areas. The goal was always to keep the contractor’s cost low so that more project could be built. When program managers (PMs) were hired and integrated into the team, ROW, utilities, and geotechnical engineering were done under the umbrella of the PM role, and DPs had all of that information provided to them. DPs actually produced the design, but the effort really was coordinated among the PM (consultant), DP, and contractor/CM, where the contractor/CM continued to perform constructability reviews and develop innovations while constructing the project until the end of the design phase. An integrated construction and ROW schedule was prepared during the design phase and was updated continually based on properties cleared and utility permits acquired. Float was considered a shared resource and was able to be used by the contractor or owner depending on the situation and the need. This required a high level of trust and coordination but resulted in delivery of the project with no delays to the schedule. Design and schedule coordination meetings were held weekly along with quarterly milestone meetings that consisted of design and constructability review, quantity reconciliation, pricing, and risk assessment. These meetings included the owner, PM (consultant), DP, and contractor. The willingness of the owner and the contractor to sit down with third parties to work on a solution allowed the team to overcome many challenges. One particular challenge was related to a 300-foot-wide utility transmission corridor. The ability to have the contractor at the table with the utility company allowed a discussion of construction methods and specific equipment. This led to the development of a protect-in-place scenario, which allowed the team to delay an $8 million relocation until future phases of the project, possibly 10–15 years in the future. The $8 million was able to be used to expand and progress current phases of the project.

152 Guide for Design management on Design-Build and Construction manager/General Contractor Projects Education/Training Educating the DP early in the process of a CMGC project to ensure collaborative effort is really important. On this project, a larger number of players were brought together in a very short time. The biggest challenge in the beginning is trying to get everybody to work collabora- tively from the start and trying to help everybody understand what his or her role is and is not. If the team could do it all over again, they would try to take time to educate everybody, not just “key” designers, because there is a need for strong communication. The level of coordination required on a CMGC project is much more than is required on a typical DBB contract. In fact, a more important factor than educational effort/formal training in transitioning the parties to the contract from the traditional DBB world to CMGC is the individuals’ and organizations’ commitment to work in a collaborative environment. Executive and middle management commitment is critical to the success of a CMGC project. UDOT’s executive and middle management gave very strong commitment to the CMGC pro- cess, and that really helped because the CMGC pricing process is not UDOT’s traditional pricing method. If the team does not have support at the right time and place, that can make it really difficult to deliver a project through CMGC. Therefore, it is vital that executive management be trained in the nuances of CMGC, as well as middle management. Managing Cost Estimates An engineer’s estimate was prepared by a former contractor and was set up like a contrac- tor’s estimate, with materials, labor, equipment, and overhead instead of using historical aver- age bid prices. There also was an independent cost estimate prepared by an independent cost estimator (ICE). The team then had three sets of estimates to which to refer when developing the appropriate pricing. Agency’s Best Practices in the Design Phase to Keep Down Costs in the Construction Phase There actually were three contracts on this project. There was a small one upfront that included early order items such as girders and some canal crossings that had to be done at certain times of the year. The CMGC process gives the flexibility to do such things. Eventually, the information available was enough for the development of a complete set of final plans, but that was deemed unnecessary since the project operated on a system of continuing pricing. Early in the design process, there seemed to be a large amount of pressure on the DP to get everything ready for construction because the contractor has a lot less patience for design than for construction. The whole time the contractor is working in the design phase, it is anxious to get started on the construction phase. Therefore, there is a lot of pressure on the DP and the owner to get the utility work into the design plans and schedule. The pressure on everyone in the preconstruction design phase is concentrated not only on getting the contractor going but also on keeping the contractor going in the construction phase. Pressure to get utilities moved remains in the construction phase; but at that point, more of the pressure is on the contractor to maintain its schedule. UDOT’s best design practice for keeping construction within budget is that when the team designed and priced the job, the contractor was at the table. Therefore, if there had been some- thing missing in the design plan, the contractor would have been as responsible as anybody else. The contractor was paid for a CM role, which made it responsible for reviewing the set of plans and giving its input.

Case Study—Project: mountain View Corridor utah Department of Transportation (Cm/GC) 153 The process for this project had four milestones for pricing—the first milestone with an approximately 30% set of plans, the second with an approximately 50% set of plans, the third at 75%, and then at 90%. In addition to the four milestones, the team conducted risk workshops. Each time a pricing was developed, a risk workshop was conducted along with it. The contrac- tor would review the set of plans, and the team agreed on quantities from the set of plans. The risk workshop was based on these quantities, and the team discussed every possible good or bad thing that could happen to change the pricing. Then a percentage was derived, based on the perceived probability that each possible occurrence might actually happen and what cost and schedule impact each occurrence would have. A risk register (in the form of a matrix) then was developed that listed each of these possible occurrences, good or bad. Some of them decreased the cost of the job; most increased the cost of the job. Finally, through Monte Carlo simulations, curves were developed to identify the probability of finishing the job at certain costs. It was important that the budget for the project was an amount that had a 90% probability of covering the project cost. Figure 51 shows an example of the curves where the project had a 50% probability of finish- ing with a cost of $307 million and a 90% probability of finishing with a cost of $350 million. Therefore, the budget for the project was set at $350 million, with a 90% confidence level of finishing the project within budget. The curves all were based on data. On this project, a cost was developed from all the data that the owner and DP thought were germane. A probability curve then was devel- oped using the process just described. Then the contractor was brought on board. The curve began to flatten as the contractor began to identify risks that had not theretofore been considered. The cost estimate began to climb accordingly as the contractor brought in all constructability issues. Figure 51. Curve after original risk register.

154 Guide for Design management on Design-Build and Construction manager/General Contractor Projects The next time the project was priced, the team had been able to retire several risks, and the contractor had led the team to numerous innovations. As the team got rid of those risks, the price began to fall, allowing the team to concentrate on the biggest risks and how to get them off the list or at least mitigate them or assign them to the contractor or owner, depending on who could best manage them. At this point, the team was carrying $50 million in contingency, based on what the contractor thought it could deliver. As the contractor got more confident, the contingency fund went from $50 million to $30 million. That money was reinvested forward in more ROW and then ulti- mately in extending the project. As the process of identifying, assigning, and eventually retiring risk continues, the curves are updated. Figure 52 shows the curves for the same project as shown in Figure 51 after subsequent quarterly reviews allowed the team to first identify more risks and then retire risks. This whole process happened four times within about a year until the design was completed, but the risk register was updated about quarterly through the whole job. As risk was retired, contingency was retired in kind. A 90% confidence level of delivery was always carried, but that amount kept falling as risks were retired. Also within the CMGC contract were provisional sums. The team would discuss every item and who should take the risk on it. Take for instance, untreated base. UDOT would tell the contractor that it (the contractor) was best to handle that risk. UDOT perhaps would not take tickets, so that if the contractor were not sloppy with its construction and did not spread the material out to the side further than needed, it would make out fine. UDOT would offer to pay based on plan quantity. So the contractor accepted plan quantity and priced accordingly. In this way, there should be no overruns unless there were changes in the design plans. Provisional sums Figure 52. Risk curves on the same contract as Figure 51 after four risk registers.

Case Study—Project: mountain View Corridor utah Department of Transportation (Cm/GC) 155 were deemed a shared risk. UDOT said that in 15 miles of new corridor, it is likely to have some soft spots that UDOT proposed to pay for instead of the contractor pricing for soft spots within its earthwork price. That way, there is no money changing hands if there are no soft spots. This was written up as a provisional sum and assigned a certain dollar amount for soft spots. The project ended up with very few and small soft spots. Those savings went back to the owner, even though they were in the contract. There were a number of things where the team agreed that if something were deemed 75% likely to happen, then a provisional sum would be assigned for it. It so happened that very few of the items assigned provisional sums were realized, and the money that came back to UDOT went into the fund that ended up allowing the purchase of the additional ROW and construction. This was not only a good move financially, but it also eliminated the need for renegotiation of the cost of any item. Another example was when the project’s ICE suggested that the contractor crush stone onsite, which would be much cheaper. The contractor replied that it did not want to take the risk of crushing onsite because one does not really know until the crushing operation has really gotten into the materials whether onsite crushing is feasible. UDOT then decided to take the risk on that. At that point, the contractor could price the job based on crushing onsite. If it had turned out that it could not crush onsite economically for the price given, then UDOT would consider a price increase for crushing onsite or for bringing in crushed stone from off- site, but not without agreeing on the price first. The parties agreed on the cost to haul in the material from offsite, and UDOT held the money. As it turned out, the contractor was able to crush all onsite and did not have to haul any materials to the site. This money also went toward expanding the project. ROW acquisition was all owners’ risk, so if ROW delivery was delayed, the team would fall back to a secondary plan. The things such as ROW delays that had the highest potential to delay the project had been identified, and prices had been negotiated for the contingency plan assigned for each. If the unwanted delay occurred, the assigned and appropriate contingency plan was executed and the previously negotiated prices paid. The DP’s responsibility for keeping costs within budget focused on monitoring its own budget and making sure the design budget was not overrun and delivering a responsible design that could be built within the budget. Coming up with the innovations to help make this happen was the role of the whole team. So the DP, as well as the contractor and owner, participated in a process called a decision analysis by ranking techniques (DART) decision. This software will determine what any change will cost in terms of design, construction sched- ule, and construction. Ultimately, DART tells the decision makers whether the change being considered will save money or whether the cost for designing, construction delays caused by the change, and the construction cost of the change will be less than or greater than the benefit derived from the change. Any innovation idea from a team member was run through DART. The DART process docu- mented $25 million in savings from things that team members brought into the process which were not part of the original plans for the project. All of this money was saved prior to construction. DART basically analyzed any innovation and rendered an opinion. It was a cost-benefit analysis, but it also required a series of signatures. Once DART rendered its recommenda- tion, the innovation made its way through a process. Sometimes, the innovations got stopped before they made their way completely through that process. Ultimately, for implementation, there was a management team which had to recommend that the innovation be implemented. If the recommendation was to implement, there was implementation; if not, the issue was filed away and usually forgotten. The same innovation should not be brought up over and over, and this rarely happened.

156 Guide for Design management on Design-Build and Construction manager/General Contractor Projects The contractor was retained for the CM (preconstruction services) portion of the job when the design plans were roughly 30% complete. Approximately one year was spent interactively producing the design plans, doing constructability reviews, adding innovations, and pricing the job. Once the team was satisfied that they had a good, constructible set of plans and appropri- ate pricing, they entered into a construction contract with the contractor. The owner, PM, DP and contractor (CM) all participated in bringing innovations and constructability to the project during the design phase. After all was said and done, the process to review risks every quarter that included risk registers, DART, risk assignment, and risk retirement allowed UDOT to save and set aside about $117 mil- lion. All of this money was used to extend the contract. Table 27 identifies specific reinvestment of MVC funds beyond originally scoped construction limits (north of 5400 South). These items were added gradually over time as risks were reduced and contingency could be reinvested. Constructability/Value Engineering Constructability reviews and value engineering were much different on MVC under CMGC than under previous projects using DBB. On DBB projects, it was a constant struggle to get constructability reviews because contractors do not want to talk as a group. Even if they can be isolated for a private discussion, they still do not want to divulge anything that they might want to implement after the contract is signed. This is a big frustration for UDOT and the project DP. Also, trying to evaluate a VE study without involving of the contractor that is going to build the project in the process is more difficult. The preconstruction team does not get the full benefit of the process without having the person who is actually going to build the project at the table. With CMGC, the constructability reviews and value engineering are just part of the contrac- tor’s CM (preconstruction services) contract. Also, instead of savings being split between owner and contractor—or all retained by UDOT as happens with DBB projects—the savings of these processes on MVC went toward buying additional ROW and building additional highway. Other Issues That May Affect or Be Affected By Design Management Paying the Contractor The contractor was paid unit price. The unit price sometimes changed based on whether or not UDOT wanted to take the risk on an item or give that to the contractors, so there was that kind of back-and-forth. The standard bit items used in a DBB contract were not always used; Reinvestment Reinvestment Amount Golf Course Reconstruction $18m Kern River Gas Relocation $18m Residential Relocation (150) $40m Kennecott Rail Line Relocation $11m Rocky Mtn. Power Relocate $20m Water Tank Relocation $4m Additional Earthwork $6m Table 27. Reinvestment of MVC funds beyond original construction limits.

Case Study—Project: mountain View Corridor utah Department of Transportation (Cm/GC) 157 the actual pay items were chosen based on which party ended up with the risk. Payments to the contractor were based on a cost/resource-loaded schedule produced by Primavera. There was some resistance to basing payment on the schedule early on, but it proved effective and accurate once the project had gone through the whole process one time. A schedule update would be completed before each payment was made to the contractor; the schedule had to be approved before the payment was made. Of course, this made for more detailed questions that had to be answered every month by various team members, which led to more effort to find the answers. In the end, this only made the parties to the contract more familiar with the details of the project and the contract, which strengthened the team and added to cohesive- ness. All in all, the practice of paying from the cost and resource-loaded schedule ended up being a powerful and valuable tool that allowed the team to determine how much work had been done, how much remained to be done, and whether payments for work were completed at the right times.

158 Case Study—Program: Oregon Department of Transportation (CMR) Introduction The Oregon Department of Transportation (ODOT) has executed approximately three proj- ects with the construction-manager-as-general-contractor (CMGC) construction project deliv- ery system since 2011. Program Description ODOT employs several methods of managing post-award design activities when using the CMGC project delivery system. The agency’s process allows designers to adjust their plans with “real-time” information provided by the CM firm. There are written standard operating procedures for the design of CMGC projects, and the agency utilizes program management contracts. While the agency has worked on only one project under a management contract, it did work well with CMGC. The function of the project management is “absolutely” different from that of a typical design- bid-build (DBB) project in that they are not entirely used to value engineering and allowing the CM contractor to take the lead. There is a completely different mindset under CMGC than in low-bid, and release of control was the biggest problem. The ODOT design project called for multiple “mini” GMPs—in retrospect, perhaps too many. The typical design milestones utilized in a CMGC contract are traditional percentage complete phase submittals (e.g., 30%, 60%, 90%) followed by a final PS&E. The designer is required to assume less risk on a CMGC project, and steps are taken to man- age risk during design and to share risk among the owner, designer, and CM. During the design phase, the designer is designated as the owner’s representative; in fact, ODOT has an agency project manager that oversees design. The designer also assists in choosing the CM firm. The approach for managing post-award design activities for CMGC was similar to those used with DBB activities. While there were some differences, overall the two are very similar. RFIs and shop drawings on CMGC projects are managed by a lead for the design firm. Pri- mary lead in coordinating design changes (with designers) during the design and construction phases is accomplished by the CM manager working with the agency’s representative. The design firm is responsible for covering design errors and omissions during design and construction. With respect to goals and objectives that were set for this particular CMGC design project, ODOT ranks political input as the first goal, time second, and cost as the third. As the project entailed a major Interstate highway, a dense political climate and the inclusion of community involvement were high on their list of objectives.

Case Study—Program: Oregon Department of Transportation (Cmr) 159 During the design and construction phases, certain communication channels were employed. Among them were agency representatives as well as required co-location among the CM, design firm, and owner’s representative. During construction, the designer’s role was that of handling design changes, contract modifications, and other responsibilities for the EOR. In fact, due to numerous site condition changes, the designer was as active during construction as it was with design. Regarding how the agency’s post-award design management affects project performance in terms or cost, schedule, and quality, the design standards and specifications are no different under CMGC from those used on a typical DBB project. The role of the CEI is the same as that of one under a DBB contract. The CEI is not involved during the design phase—it is involved once actual construction has commenced—and the coordination between the designer and the CEI is different than under DBB. CMGC designs typically come under budget, and factors that most significantly contributed toward this result include constructability reviews provided by the CM. The CM participated early in design, and its constructability input saved ODOT considerable money. Additional fees are not included for the designers for coordination with the CM (and vice versa). Approximately 11–15% of the construction cost is typical for the design fee, and this percentage is higher than what is typically experienced on DBB projects. Concerning the use of multiple GMPs, the total cumulative project costs are calculated dur- ing the design process as opposed to being calculated up front. Design schedules typically have similar durations to those of DBB projects. The responsibility for creating and monitoring the design, construction, and overall project schedules is a collaborative effort between the designer and CM. On average, CMGC provided a 25% time reduction in project delivery. However, it should be noted that this was not an accurate average calculation but rather an approximation for only one project. For ODOT, the owner’s representative manages design changes as they relate to potential impacts to the schedule, budget, and overall GMP. This is primarily because it affects both the designer and CM. The Independent Cost Estimate process entailed the use of a third party firm (located out of state) along with both the designer’s and CMGC’s estimates. Having three esti- mates to compare worked well in identifying several cost savings options, and the agency would certainly use the process again in the future. Generating traffic control plans is presumed to be the designer’s responsibility, with input from the CM; however, there was noted uncertainty in this response. There were no reported steps for the client to take in minimizing problems during construction. The quality control (QC) process for design used during the design phase differs slightly from that used in the construction phase. Notably, QC shifted during construction to have the CEI oversight firm handle QC responsibilities. As a means to communicate the owner’s expectations for how design quality assurance (QA) and QC are to be ensured throughout design development under CMGC project delivery, ODOT employs design QC templates, plan templates, and expressed expectations in the A&E contract; and all are requirements for those proposing. Interviews Interviews were conducted with eight individuals who have worked with ODOT. These inter- viewees included three owners (or agents of the owner), two designers, and three contractors.

160 Guide for Design management on Design-Build and Construction manager/General Contractor Projects Approach for Managing Post-Award Design Activities When asked about the utility coordination process on a CMGC project, seven interviewees described the process as different from that of a typical DBB contract; however, one individual said that it was the same. Coincidentally, seven individuals commented on early involvement by the CM (relating to how things are placed and/or constructed), and one interviewee remarked about earlier involvement in the process by the entire team. Seven interviewees said that the coordination process started earlier on a CMGC project than on a DBB project, and one interviewee said that the utility process started at the same time. The one singular individual also remarked that the design firm is responsible for determining utility conflicts and coordination during the early design stage. When asked if the traditional duties of the design team (e.g., permitting, project management, utility coordination, overall project schedules, and owner’s representative duties) are different on a CMGC project compared to a typical DBB project, seven respondents said that they were different, while one said that the traditional duties are the same. Additionally, the individual made the following remarks: 1. The team works on all these issues with the designer being the lead (2 said this). 2. It’s a more concerted effort and requires considerable teamwork and coordination. 3. The process was more involved and time consuming relating to the designer’s role. 4. The CM helps the owner satisfy the completion date, ensuring high quality plans and early work amendments. 5. There was input from all team members versus segmented design and construction. 6. The expectation is that design by the A&E firm would mirror that by the agency’s design team with minor differences (e.g., collaboration with the CMGC, independent cost estimates). 7. All eight individuals said that the process employed by ODOT enables the team to permit and design the project in small “mini” phases and that the design process is tailored to begin construction early rather than at the traditional final plans stage. Furthermore, they made the following comments: 8. The work was started early and planned to be phased with early work packages (2 said this). 9. Early work packages are part of ODOT’s CMGC procurement process. 10. This was critical to moving forward with the project. 11. Starting the project early was vital, politically, and was the number one priority. When asked how important it is to educate the designers early in the process to ensure a col- laborative effort, a few of the respondents said that it was extremely important. Two respondents also mentioned that co-housing was critical and/or a major key to the success of the project. Additional comments include those found in Table 28. Statement Respondents Education is extremely important. 4 Co-housing is critical / one of the major keys to success. 2 Independent estimates should be performed using contractors/entities with direct local construction bidding experience. 2 The three-team approach (i.e., planning, design, and construction) in CMGC is different from what A&E design firms are used to. 2 It is vital to start early work packages with designers to take them off the critical path and on to other design packages. 1 The CM’s estimate must be part of the contract documents. 1 Assumptions and clarifications must be part of the contract documents. 1 Owners must be at the table from the very beginning. 1 Table 28. Importance of educating designers.

Case Study—Program: Oregon Department of Transportation (Cmr) 161 Interviewees were asked to compare the challenges typically encountered during the design phase to the challenges faced during the construction phase. Notably, several individuals mentioned that the managing of personalities was a major concern. Also, ensuring individu- als are informed throughout all stages of the project permeated the interviews. Additional responses are found in Table 29. When asked what level of executive and middle management commitment is required to suc- cessfully execute a CMGC project, more than half of the respondents mentioned only “decision makers.” Others mentioned the need for significant management and commitment at all levels. Additional responses are listed in Table 30. When asked what role the CM plays in the overall design process, several interviewees com- mented on the active and collaborative role they must have with all other members of the team. Further remarks are included in Table 31. Money Matters—Cost, Budget, Payments, Benefits Interviewees were asked what their agency’s best practices were to ensure that the construction costs are kept within the budget. Among the responses were suggestions to include innovation and early estimates. Involvement by key personnel—and exclusion of non-essential stakeholders—also was a recurring trend. Other responses are found in Table 32. When asked who is responsible for monitoring the project budget (including design, inspection, permitting, right-of-way, utilities, construction, etc.), seven of the respon- dents said that the owner was. The eighth respondent said that the agency is responsible for monitoring the design budget and the CM is responsible for monitoring all construction- related costs. Statement Respondents Managing of personalities and agendas is a huge challenge. 3 Designer, owner, and CM must understand their mutual goals. 2 Construction team personnel need to be assigned at the beginning of design to ensure commitments and budgets are known during construction. 1 Estimating throughout design and construction are different processes. 1 Auditors were not necessarily used to the CMGC method, versus low-bid. 1 The construction phase brought challenges of savings justification (i.e., methods were discussed during design and incorporated during construction, but the risks encountered by the CMs were overlooked). 1 Every CMGC project is typically a new owner, and the training process starts all over again. 1 Owners and designers are not used to negotiating numbers directly with the CM. 1 Design is very time consuming and continues through construction. 1 Table 29. Comparing challenges encountered in the design and construction phases. Statement Respondents Only decision makers are required. 5 High level of management is needed. 2 Commitment by all levels is essential to the success of a CMGC project. 1 Clear understanding of the CMGC concepts is important. 1 The PM staff should be secondary (to the decision makers). 1 Without the “right people,” project intent, pricing, and schedule can be compromised. 1 Table 30. Level of executive and middle management commitment.

162 Guide for Design management on Design-Build and Construction manager/General Contractor Projects When asked what the designer’s role was in the CMGC process, the interviewees referenced involved responsibilities with both the design and cost estimate of the project. Established rela- tionships with the CMs and owners also were highlighted, especially with regard to making scope-involved decisions. Additional responses are found in Table 33. Several payment tools have emerged across the nation for progress payments on CMGC proj- ects, including unit price, lump sum, and cost-reimbursable. The interviewees were asked to describe the ones they have used as well as the advantages and disadvantages. Their answers are listed in Table 34. When asked which contract type best describes the CMGC process as their agency administers it, eight individuals said unit price, five stated lump sum, and four mentioned cost-reimbursable. In the instances where the respondents mentioned use of lump sum and cost-reimbursable, they were subsequently asked how they paid the CM and designer on federally funded projects. While three individuals were excluded from the questioning (as their responses from the previ- ous question were specifically “unit price”), three made mention of a combination of unit price and lump sum. The full responses are seen in Table 35. Statement Respondents Play an active role to capture the benefits of the CMGC process. 3 Play a team role. 2 Be an active advisor to the designer and owner. 2 Develop detailed cost estimates. 2 Provide constructability review services. 2 Provide alternative methods for construction. 1 Provide risk analysis and assessment. 1 Develop and update project schedules throughout preconstruction. 1 Collaborate with the agency and A&E in the development of early work packages. 1 Table 31. Role CMGC plays in the overall design process. Statement Respondents Innovations and modifications (i.e., more efficient means and methods). 3 Detailed/early estimates and understanding what makes up the overall budget. 2 Control owners from allowing external stakeholders (i.e., citizens’ groups, politicians, etc.) to make demands. 2 Early contractor involvement. 1 Keep tabs on architectural features / keep the job design basic. 1 Discuss budgets initially with project team / phase the project to design and build within budget. 1 Review of cost estimates by an independent cost estimator (ODOT’s current process is to assume all risk in pricing in order to manage cost). 1 Table 32. Best practices to ensure that construction costs are kept within budget. Statement Respondents Work with the CM and owner to bring costs under budget. 2 Come up with alternate designs and possibilities for the CM to price and propose modifications to. 2 Guide the owner in selecting design options. 2 Estimate the design as it is being completed. 2 Ensure that the scope is within the true market value. 1 Estimators working as program managers must have local experience. 1 Table 33. Designer’s role in the CMGC process.

Case Study—Program: Oregon Department of Transportation (Cmr) 163 Interviewees were then asked if their method of paying the principals and their record of pay- ment documentation satisfy FHWA auditors. All eight responded “Yes.” Notable comments to these responses are as follows 1. Though satisfying FHWA, internal DOTs and their auditors were not satisfied (3 said this). 2. Independent audits are not proceeding well. (Does not involve FHWA, but were requested by the owner as part of the CM process) (2 said this). 3. DOJ auditors have had some issues with how the project was paid. Asked how constructability reviews and value engineering are managed versus a typical DBB project, a large majority of the respondents mentioned that weekly meetings were conducted with the lead and that all the team discussed design steps (see Table 36). It was also noted that ODOT performs value engineering on select projects only and that value engineering and con- structability reviews are ongoing throughout the project and rely heavily on the CM. All eight respondents said that the design, construction phasing, and materials are selected and modified/substituted during the design process in an effort to bring projects in under budget. Among the responses, the interviewees made the following supplemental comments: 1. The team worked closely together, in real time (5 said this). 2. Bringing in other municipalities and stakeholders was an advantage. 3. ODOT has a “Changes to the Work” article allowing adjustments to the GMP. Statement Respondents Production risk should stay with the contractor. 3 Owner should not micromanage the costs by the contractor and should stay away from making a low-bid project. 2 Preferably, all three methods should be used. 1 Unit price, overall, with elements of lump sum and reimbursements should be applied. 1 CM should reap the savings (i.e., if there is an overage, the CM is responsible for it). 1 CM should have input as to which payment method is best for the CMGC process and the project. 1 Payment should be a different process and not a low-bid process of pricing. 1 For preconstruction, the CM is paid on a monthly basis based on hours per task. Construction services are paid on a lump sum basis, prorated monthly (ODOT also withholds 2.5% retainage for each monthly progress estimate). 1 Table 34. Payment tools used, advantages, and disadvantages. Statement Respondents N/A – (previous responses for payment type was “unit price”) 3 Combination of unit price and lump sum (subs are bid by the CMs using unit prices and they convert them to lump sum if needed) 3 Preferably, a combination of unit price, lump sum, and cost-reimbursable 1 For preconstruction, the CM is paid on a monthly basis based on hours per task. Construction services are paid on a lump sum basis, prorated monthly (ODOT also withholds 2.5% retainage for each monthly progress estimate) 1 Table 35. Payment for CM and designer on federally funded projects. Statement Respondents Weekly meetings were conducted with all the leads. 7 All the team was present to discuss design steps. 6 ODOT performs value engineering during design, but only on select projects / VE and constructability are ongoing and rely heavily on the CM. 1 Table 36. Management of constructability reviews and value engineering.

164 Guide for Design management on Design-Build and Construction manager/General Contractor Projects Issues Affecting or Affected by Design Management The engineer’s estimate, when using CMGC versus a typical DBB project, functions as a com- parison tool for most of the respondents. Seven respondents mentioned how the engineer’s estimate was used as a baseline, ensuring that the costs from the CM are fair and reasonable and forcing the CM to adhere to the estimate prices. Notably, the eighth interviewee said that engi- neer’s estimates are not typically created for CMGC; the A&E design firm, CMGC, and agency all provide cost estimates, which are compared to develop the final cost estimate. Seven respondents said that the engineer’s estimate was less important. The reasoning for this was described by the following comments: 1. Engineer’s estimates are taken out of context of the real work and what the team is doing in relation to the risks and challenges (4 said this). 2. Engineer’s estimate did not reflect the true cost of work where the work was being performed. When asked what steps could be taken during the design phase to minimize or eliminate potential remobilization-related cost and schedule impacts resulting from delays in right-of- way acquisition, permitting utility relocation, or other unanticipated delays, a few individuals suggested bidding mobilization in the original package. Further suggestions were to coordinate up front, mobilize only when needed, and discuss phasing up front to prevent mobilization (see Table 37). According to seven respondents, the entire project team should be involved in coordination meetings (during the design phase). Furthermore, according to five respondents, the owner typi- cally leads the meetings with the designer taking a very active role. One respondent mentioned that the designer initially ran the meetings, and the owner and CM were both active. However, one respondent mentioned not being involved in the meetings. Seven respondents stated that the level of coordination required for a CMGC project is more than that required on a typical DBB contract. When asked what educational effort/training was required for the owner’s staff, design con- sultants, contractors, and CM firms to transition from the traditional DBB world to CMGC, there was a variety of responses (see Table 38). Statement Respondents Bid mobilization in the original package and only add in individual early work packages. 3 Coordinate up front. 1 Discuss phasing up front. 1 Mobilization was only needed one time, and the CM was prepared to build the project in phases. 1 No fees were charged for mobilization as part of the contract. 1 Table 37. Design steps taken to minimize remobilization. Statement Respondents Project must not be treated as a low-bid process (it detracts from the CMGC advantages). 3 Intense partnering meetings were required up front. 1 Overall mentality must be changed from a low-bid to more of a DB mentality. 1 Understanding pricing and sharing how subcontracting is done is critical. 1 There must be a project-first mentality versus a low-bid or company mentality. 1 Training should have been available. 1 Table 38. Training required to transition from DBB to CMGC.

Case Study—Program: Oregon Department of Transportation (Cmr) 165 Changes in culture and philosophy needed by the contractors and designers (versus tradi- tional DBB) include mostly selfless attitudes and trust. Specifically, the respondents made the comments seen in Table 39. When asked about the level of industry collaboration and support required to successfully execute a CMGC project, many respondents said that a high level of both are needed. Further support should come in the form of stakeholder involvement and previous experience (see Table 40). Interviewees were asked how right-of-way acquisitions and permitting were handled. One individual said that they were handled in-house during the design and construction phase. Four said that the right-of-way was managed by the owner’s PM and in-house ODOT departments. Three others said that right-of-way was managed by the program management firm. Regarding how utility companies and permitting agencies fit into the project team and design process, seven individuals specified that meetings were held to include them in the process as early as possible. When asked how they ensure value-added guarantees in their CMGC contracts, most of the interviewees mention early involvement. Additional responses are included in Table 41. Statement Respondents There cannot be individuals who are out for themselves and impede teamwork or progress. 4 There cannot be mistrust within the team concerning costs. 2 Get away from the mindset of DBB. 1 Agency staff versed in alternative contracting are few. 1 Table 39. Changes in culture and philosophy required of contractors and designers. Statement Respondents Extremely high level of collaboration/support. 6 Stakeholder involvement was important. 1 Industry personnel with previous experience in CMGC were heavily relied upon. 1 Table 40. Level of industry collaboration and support. Statement Respondents Early CM involvement in the design and budget 4 Teamwork to ensure VE is performed and innovation is implemented 2 Team required to co-locate and work on the project daily 1 Table 41. Ensuring value-added guarantees in CMGC contracts.

166 Case Study—Program: Osceola County, Florida (CMR and CM/GC) Introduction In 2007, a newly appointed team assembled in Osceola County, Florida, was faced with a unique and daunting challenge. Three previous county administrations and their staffs had been removed by the Board of County Commissioners for failing to deliver an aggressive impact fee-funded road- way program totaling approximately $1 billion. The program required the concurrent construction of nine to 11 major roadway projects with an additional seven being completed in design each cal- endar year, beginning in the first year of the newly adopted impact fee ordinance. This ordinance had set some of the highest impact fees in the nation, which discouraged construction activity and resulted in very few projects being attempted. Based on the requirements set forth, the county was eighteen projects behind schedule, totaling more than $400 million in design and construction. Less than seven years into the program, there were $5 million in change orders for which nothing had been accounted. Designs were as much as 200% over budget, in some cases remaining at the 30% design phase for more than eight years. One project had taken 18 years from start of design to completion of construction. Lack of solid leadership by the county staff and administration resulted in 18 different projects at various stages of design with none being truly ready for construction. Design and construction consultants were frustrated by the lack of clear direction from county staff and the numerous inconsistent and costly changes. Initially, when looking into construction-manager-at-risk (CMR), very few design professionals (DP) were strong advocates of using the system for such a large program (18 major roadways). In their opinion, the county did not need to add yet another layer of management to an already overburdened, costly, slow, and bureaucratic system. Furthermore, they believed that CMR was an unproven method for roadway construction and that the outcome could be catastrophic. Many design firms believed that the proposed constructability reviews overlapped those being covered under existing design contracts. Several firms had existing PM contracts with the county, which they believed per- formed the same services as a CM firm. Another concern was that involving a CM firm at such a late point in the design stage would increase the design budgets, which already were spent in many cases. They also believed that coor- dinating with the CM firms would be very costly in terms of time, which they could not afford to lose in such a challenged market. These all were valid concerns but proved to be incorrect. Program Description The CMR program in Osceola County largely has been disassembled through the efforts of those within the county government who opposed the use of CMR from the start and led to the firing of the County Administrator in May 2010. The Public Works Director and Assistant

Case Study—Program: Osceola County, Florida (Cmr and Cm/GC) 167 Director resigned immediately thereafter, thus ending a program that had brought national recognition to the county and the three leaders of the administration. In order to begin this program, a tremendous training effort was initiated, which focused first on the design community. The program internally was working against a group of county commissioners and a county legal department who were against the implementation of CMR, the skeptical design and construction consulting communities, and the local road building contractors. CMR differs from construction-manager-as-general-contractor (CMGC) mainly in the area of self-performance by the CM. CMR, as practiced in Osceola County, prohibited the CM from self-performing any work. This is similar to the CMR program operated by Florida Department of Transportation (FDOT), which prohibits the CM from self-performing any work unless the CM outbids potential subcontractors for major items of work. These policies contrast with those of the CMGC programs of the western U.S., where the CM—referred to there as “the contractor”—is compelled to self-perform 40% or more of the work. However, from the design aspect, there should be very little discernible difference, if any, between the two delivery sys- tems; therefore, through the rest of this case study, the program will be called CMGC. This will allow for more consistency with the rest of the report. During the life of the Osceola County CMGC program (defined as from the time of imple- mentation to the time when the political enemies of the program had their way and began to dismantle it), the program executed nine CMGC projects, beginning with the first in 2008. Due to the fact that the administration inherited a program in disarray, CMs were brought in at all phases of plans completion, depending on the point in the design process at which the decision was made to deliver the project using CMGC. It was determined that using CMGC and bringing in the CM improves the projects immensely, regardless of how much of the project has been completed. Having seen the results of bringing in the CM at all stages of plans completion, the conclusion of the administration is that, if given an opportunity, the best time to bring in the CM is simultaneously with the DP. Doing this requires limited CM staff to be brought in (with limited hours) as the budget can be affected significantly if right-of-way (ROW), survey, permits, etc., are just beginning. The results of the administration’s experience of the subject were that bringing in a CM, regardless of the timing, significantly reduces changes, delays, constructabil- ity issues, and schedule challenges, as well as increasing ease of contracting and procurement. In many cases, the program called for the establishment of a guaranteed maximum price (GMP) prior to preliminary plans for early work items, materials ordering, additional geotech- nical work, etc., based on only a description of the scope required. In addition, GMPs were priced at the 0%, 30%, 60%, and 90% plans stages. The final GMP typically came at between 90% and 100% plans. ROW acquisition began at the earliest point possible in an effort to efficiently and wisely design projects and minimize the ROW required. This also assisted in wise choices of ROW based on market conditions and friendly takes rather than eminent domain. Previously, ROW acquisition did not start until 100% plans using DBB, which delayed projects 18 months or more. When it was not possible to start the ROW early—as in the case when the administra- tion inherited plans sets already complete or nearing completion—the CM process allowed for adjustments in construction and working around the ROW issues rather than having to wait until all issues were resolved prior to starting construction. Quantity take-offs, computation books, and bid summary sheets (as a requirement of the DP) were eliminated, which significantly reduces the risks taken by the DPs. These items were the responsibility of the CM as part of the GMP. Quantities were the responsibility of the CM,

168 Guide for Design management on Design-Build and Construction manager/General Contractor Projects which enabled the DP strictly to design instead of being concerned with plan matrices, quan- tity take-offs, etc. This practice also reduces the DP’s scope and cost of design and converts the design plans to construction plans rather than bid plans. Streamlining the plans and scopes is a key principle in keeping costs of CM under control as administratively it can be much more expensive if not controlled with de-scoping items such as above. Fees were inserted that contractually required the CM to coordinate (throughout the design) and attend all weekly and daily design meetings. This is essential to coming up with value engi- neering (VE) options and designing smartly to reduce overall project costs and make up for coordination costs and the CM’s overall fees. CM meeting attendance also is crucial to obtaining the benefits of CMGC pertaining to reduced project costs; without this, the advantage of bringing CMs on board is reduced significantly if not eliminated altogether. Innovation was required to complete all projects under budget. During initial partnering meetings, the team agreed to the cost reductions required to meet the aggressive budgets. This is a critical principle in making CMGC successful; the team, upfront and prior to the beginning of the project, must buy in to the fact that significant cost reductions are essential. In Osceola County, the owner and the CMs realized the cost savings; but in reality, it should have been split proportionately among the team to be fair and to incentivize the team to push for cost savings. The cost-cutting goal must be a clearly defined number in order to make the targeted budget. The difference in the design process between CMGC and DBB is that with CMGC, projects are designed basically around a table during weekly project meetings with the entire team present rather than in a design office with little or no active involvement from the team. Plans also were streamlined from bid sets to construction sets, which is a completely different process than that of DBB. The purpose of the design is to provide the most innovative, cost efficient, and light set of plans possible—versus a heavy design effort—to give the CM just the right information to bid the project. The intensity of the design effort is in the planning—not in plans production. Though there was no specific training program for proposal evaluators, the administration was extremely selective about who was put on the panels. Panel membership was restricted to senior leaders who had major PM experience and had intimate and clear understanding of the project challenges as well as the CM and design team required to meet the project goals and objectives successfully. The head of the panel was the Project Leader (PL) for the entire $1 billion program, which was essential for the guidance of the entire panel. In addition, the administra- tion used consultants as advisors to the panel to assist them in making the best choice to meet the stringent project requirements. Design PMs (internal to the department) would review the plans and ensure that they met the intent of the owner. Consultants and full-time staff who worked as design and construction PMs were hired to review design submittals for compliance with standards/criteria and to oversee the project for the owner. These were co-housed to avoid distinction between internal staff and consultants. Also, the whole team was involved in the RFP development process, including the CMs and DPs; and the administration asked CMs to provide examples of RFPs that had been used in the past as part of market research prior to releasing RFPs and contracts. Initially, the typical design review submittal phases were required; but as the administration evolved, it reduced formal submittals significantly. The goal of CMGC was to review the plans during the weekly design/production meetings and produce construction-ready drawings rather than bid sets. This increased significantly production rates for design and all but eliminated lengthy owner review phases. This process also avoided touching plans twice, as the plans review is done in real time and, once put in ink, has been approved by the team. Reviews are conducted only to ensure that these decisions made it onto the construction sets.

Case Study—Program: Osceola County, Florida (Cmr and Cm/GC) 169 Each of the DP, contractor, and owner is the best at what it does; as such, each is a specialist on the team that cannot be replaced. Each is highly valued by the other team members and has an equal seat at the table. No one member dominates the team. The following steps can help make this possible. 1. Require the PL to be in all production meetings to maintain cohesiveness and teamwork. There is no substitute in CMGC for top-down leadership. 2. Bring all players to the table early in the scoping and budgeting process and include sub- contractors. 3. Have an upfront partnering retreat to introduce each member and build positive relation- ships. The partnering meetings also can be used to train team members in the nuances unique to CMGC, such as communication. The surveyor and geotechnical engineer should be at both the preliminary scoping and bud- geting meetings. This is essential to having effective overall plans for the project as well as for constructability and design issues. They should have an equal seat at the table. In Osceola County, the entire team was responsible for public involvement during design. This is very different from the process in DBB. The CM and the entire team are intimately involved and aware of all issues, goals, and objectives relating to public involvement, so utilizing them for that purpose only makes sense. Tremendous money, time, and changes are saved when the CM firms and the DPs work together to produce the plans and phasings for the projects. Utility relocation preferably was handled with the entire team during the production meetings, with the relevant utility compa- nies present during the early scoping of the project. This is essential to keeping a CMGC project within budget and schedule. Failure to do this effectively can lead to a GMP that is neither valid nor accurate and a project that cannot be constructed within the schedule and GMP. Interviews Interviews were conducted with the Public Works Director and Assistant Public Works Direc- tor from Osceola County. These men, along with the County Administrator, built the CMGC program from nothing in a matter of months. Approach for Managing Post-Award Design Activities Successful implementation of CMGC in many cases requires a significant and aggressive change in the culture and philosophies of the DPs from that of traditional DBB design projects. The standard design methods, schedules, and plans review stages frequently used in designing DBB projects may prove to be inadequate or insufficiently accelerated to realize the aforemen- tioned advantages of CMGC. DPs are required to take a much more active role in working with the owner and CM for early and continuous VE, ROW phasing, real-time pricing, increased coordination meetings, accelerated designs, etc., during the early stages as well as throughout the entire design process. DPs must budget additional funding and management personnel for frequent team meetings and binding decisions while working with both owner and CM. The Osceola County program allowed the designers to adjust their plans at any time using real-time information provided by the CM. The CM and DP met weekly to go over design and construction operations from the beginning of the design phase until the end of the project. This process works both ways, as the weekly detailed meetings allow for the CMs to adjust their construction phasing and methods and the DPs to adjust their designs based on myriad factors

170 Guide for Design management on Design-Build and Construction manager/General Contractor Projects such as real-time costs, materials, permits available, ROW available for construction, and specifications called out. A complete set of standard operating procedures (SOP) were developed by the county. Ini- tially, the program deadlines were too fast to develop them prior to starting. Limited SOPs were developed prior to beginning the first project, which was critical to the program’s success. These were discussed and reiterated during weekly meetings. Converting to CMGC enabled the county to convert the existing project management contracts into project management contracts, saving hundreds of thousands of dollars. The CMGC process eliminates the need for the PM as the CM manages each individual project and one CM is brought in per project, enabling a large number of projects to be run concurrently without a PM. Having both a CM and a PM was a duplication of effort and a waste of money and resources. The role of the PM is to enable multiple projects to be run concurrently with little internal staff, which is the same thing that CMGC accomplishes. The traditional (DBB) project management system needed to be modified. In the CMGC process, the owner’s project managers (PM) are managing the DP and the CM rather than the DP and the contractor as in DBB projects. It is the CM’s responsibility to manage the contractors and subcontractors. The owner’s PMs also must be trained highly in overall senior project management, as they are required to make binding, real-time decisions with little time to consider their options; to keep up with the aggressive schedules; and speak for the owner at the weekly project meetings. Osceola County required two PMs per project—one for all design issues and one for all con- struction issues—so that there would be two people at all times who knew the project well and one who completely and intimately understood design and construction principles. This was a critical element to the success of all CMGC projects. Osceola County CMGC projects all were designed using small mini-phases in lieu of the traditional single large project style. The multiple GMPs were based on beginning construction as quickly as possible on any area within the entire project length; i.e., a pond section or areas where permits were not required or were already obtained or where the county already owned the ROW. This reduces significantly the overall construction and design times, as each segment is constructed as soon as it is available rather than waiting for the entire project to be designed, approved, and permitted and for all ROW to be obtained. The elimination of design reviews was another factor in the program’s success. This enabled some projects to be started as early as two weeks after bringing the CM on board. This also enables design mini-sections to be completed, which saves the DPs time and money. The 30%, 60%, and 90% submittal and review process did not allow for necessary cost savings in every area (design, mini-phasing, construction, ROW acquisition), as it is a relic of the more traditional DBB process, for which it works well. The traditional submittal and plans percent- age system was modified significantly into the initial permit packages, i.e., construction sets submitted to the permitting agencies (in an effort to start the permitting process early). Permit- ting often ends up on the critical path. These plans also were used for an initial GMP and rough bidding as well as for identifying ROW needs. Further modifications then were made, working toward the bid sets in order to bid and determine the true cost of the work. From this point, modifications were made based on numerous changing variables such as mandated permit con- ditions, ROW procurement status and availability, utilities and easements, VE, and subcontrac- tor constructability involvement. These variables led to developing the final construction plan sets, which then would be signed and sealed just prior to construction starting. Eliminating the

Case Study—Program: Osceola County, Florida (Cmr and Cm/GC) 171 traditional 30-60-90 allowed for innovation, increased plans production speed, reduction in the level of detail required for the designs, real-time adjustment in the plans, and elimination of time consuming reviews. The required and suggested plans modifications were reviewed in the weekly meetings, thereby eliminating the requirement for formal submittals to the owner. The DP was required, in concept, to share more risks with the owner and CM due to its role as an equal partner on the CM team. This risk was spread as evenly as possible among the owner, CM, and DP. The elimination of the formal plans reviews by the owner put additional pressure on the DP, as they no longer had a traditional, “in writing,” formal sign-off/approval of plans on which to fall back. The level of detail required of the plans also was reduced significantly, and in many cases the CM designated standard technical specifi- cations and handled the utility coordination typically conducted by the DP. More reliance was based on the actual performance of the CM and DOT standard practices. However, with increased risks, there also were measurable reduced risks in areas of quantities, phasing, specifications, TCPs, etc. In addition, due to the more aggressive and innovative designs, project allowances were budgeted to account for potential impacts of lighter and faster plans rather than falling back on errors and omissions. If an error was made, the team accounted for it within the overall project budget. The CM and the owner were required to share part of the risks that were placed on the DP in order (in some cases) to help the DPs feel comfortable being more aggressive on schedules and a reduced level of design details as well as using an increased number of cutting edge designs and innovative ideas, i.e., more aggressive designs in plan sets. Making this shared risk work requires a strong owner and constant assurance that the owner will stand behind its word in sharing the risks and not blame the DP if there are problems during the project. Initially, it was challenging to convince the CM and DP that neither was the prime owner’s representative, i.e., one did not answer to the other. In reality, both parties were owner’s rep- resentatives, and the project was led by the owner. Although the CM was responsible for the overall project schedule, success, and budget, each team member shared this responsibility in a collaborative effort where the ultimate say and responsibility for everything was the owner. This process needs an active owner—one that will stand behind its decisions and hold each party accountable—to meet deliverables and agreements. This same argument also was applicable to construction engineering and inspection (CEI) firms, who were used to being the sole owner’s representatives on projects. In the case of Osceola County, all DPs already were selected and the majority of designs were well underway when the new administration took over; so they had some input into choosing several of the CMs. If the administration had been seated prior to starting the designs, the prefer- ence would have been that both parties have equal input into the selections, i.e., CMs on board for other concurrent projects could have helped with the DP selections for new projects and vice versa. Ultimately, the deciding factor should be the owner, which in the end is responsible for the overall success of the projects. The additional costs incurred by these coordination efforts should be returned through the savings realized in the VE process and the reduced level of detail required in producing plans and specifications. DPs may need to be educated in the process of receiving real-time input from the CM as well as being flexible in modifying standard items such as traffic control plans to best fit the CM’s approach to construction. Plan production rates increase as well, placing additional requirements on the DPs, such as extended work hours, to keep pace with the acceleration and VE changes being proposed by the CM. Successful implementation often requires also that a project be broken into additional mini-phases, enabling the CM to start work early in areas where ROW and permits have been obtained and/or utilities relocations have been completed.

172 Guide for Design management on Design-Build and Construction manager/General Contractor Projects Early work packages can be broken into such items as retention ponds, partial clearing and grubbing, and constructing on friendly parcel (ROW) takes, which requires more design effort than traditional “station-to-station” designs. Standard items under the DP’s oversight, such as utility coordination during design, partially transfer to the CM due to the need to accelerate utility relocations, advance-order long lead items, maintain one point of contact with the util- ity companies, etc. These shifts in responsibility often are required for the CM to assume and maintain responsibility for the overall project schedule and budget. Additionally, CMGC often results in an increased risk to the DP as plans are streamlined and often are not taken to the level of design detail to which DPs are accustomed. This requires an extreme level of trust within the team due to the CM distributing the risks of the project more equally among the owner, DP, and CM. Overall project risks are reduced significantly in comparison to DBB due to the extensive constructability reviews and cost estimating performed with CMGC. As with the DPs, the majority of project management firms initially were not convinced that using CMGC for roadways would work. Many of these firms currently performed what they classified as design and construction management and therefore believed that there was a clear conflict between what they already provided and what the CM was going to provide. In reality, this was not the case. The county had been using a failed system of project management whereby three firms conducted the PM for the entire impact fee program. These firms were tasked with managing the design and construction, and the county was tasked with managing the PMs. As noted earlier, the existing program had failed miserably with hundreds of thousands of dollars being spent on project management with little or no construction to show for it. In addition, design budgets were overrun and construction was well behind schedule and over budget. In order to begin this program, a training effort similar to the one aimed at the design community was initiated with the project management community. The following advantages of CMGC were explained to the DPs that were or desired to be involved in the program: 1. Enables the DP to work daily/weekly with the CM firm to review designs as they are conceived and drawn rather than at 30%, 60%, and 90% plans stages, for constructability, budget, and VE 2. Allows the DPs to adjust their plans using real-time information and costs rather than wait- ing for a project to be bid or an estimator to review the plans in their entirety 3. Removes the requirement to have 100 percent signed and sealed drawings to bid the work— plans need only to be at a level of completion that allows contractors to estimate the work. The designs still are taken to 100% signed and sealed drawings after reviews and estimates are completed 4. Enables maintenance-of-traffic (MOT) to be designed with the CM actively participating rather than having to change the MOT plans during construction 5. Saves (potentially large sums of) money, as the DP and CM are able to phase construction and permitting in an effort to cut costs and tie the MOT directly to the parcels that currently are owned and permitted 6. Allows the team to permit the project in small mini-phases, allowing construction to begin prior to all design being complete and up to year sooner 7. Allows work to be designed only in the phases needed at the time by the CM rather than having to be completed in the traditional station-to-station manner 8. Guarantees that the estimate from the DP is the actual cost to construct the work rather than having to wait for bid opening or for the construction to be complete 9. Enables the owner to put more designs on the street (due to having a CM staff that works with the DPs on each project) rather than having to individually manage each one with county staff—DPs can compete for one project every five years using DBB or 18 projects in 18 months with CMGC (one project per month)

Case Study—Program: Osceola County, Florida (Cmr and Cm/GC) 173 10. Reduces design fees and scopes due to detailed plans and specifications not being needed— the CM is responsible for all quantities and putting together specifications for the county 11. Enables the DP to be a “true” owner’s representative, whereas in D-B the design firm con- tracts directly with the contractor and thus is potentially loyal and tied to the contractor The following advantages then were explained to the (construction) PMs that were or desired to be involved in the program: 1. Enables the county to reduce significantly the positions dedicated to internal oversight of the private DPs, thereby potentially reducing up to 40% of the internal overhead 2. Eliminates PM contracts, potentially saving millions of dollars over the life of the impact fee ordinance 3. Assigns two PMs to each project—one for design and one for construction—thereby reduc- ing significantly staff positions and legacy costs; once the projects were completed, these PMs would return to their firms. This allows for program ramp-up during busy times and program draw-down during slow times 4. Enables the PMs to work directly with the CM firms early on, focusing strictly on project management fundamentals such as budget and schedule 5. Allows PMs to work more closely with DPs rather than spending copious time preparing bid and specification packages 6. Enables the PMs to stay clear of the debilitating details of each project and therefore more effectively oversee and lead each project 7. Allows the county to recruit highly trained PMs who specialize in either design or construc- tion rather than being generalists in both The utility coordination process is different from that of a typical DBB contract. The CM is lead and is over all utility coordination efforts instead of the DP. The DP is responsible strictly for placing utilities on plan sets and coordinating relocations and design details with the CM and the owner. This enables the designers to focus strictly on design rather than coordination efforts with utilities. Utility companies are included very early in the plan development as joint ventures. The utility work is included in many cases under one contract with the CM rather than being subbed out directly by the utilities. This allows for one construction contract, one schedule, and one point of responsibility. It also allows economy of scale with inspection resources. The utility relocation process starts much sooner in CMGC than DBB as the utilities have direct say in the plan development without being forced to relocate. The CMGC contracts are formed with the utilities up front, enabling better pricing, consolidation of work, efficiencies, and coordination. The duties of the design team—such as permitting, project management, utility coordination, overall project schedules, and owner’s representative duties—are different from those on a typi- cal DBB project. The process is much more of an upfront team effort with CMGC rather than a linear effort in segmented specialties such as design, ROW, bidding, and construction. Tra- ditional duties are redistributed among the team, not being handed off after the above distinct phases are complete. The CM takes over much of the administration of the project up front and through construction, and many of the duties that would be led and handled by the DP (such as utility coordination) are redistributed to the team. Project management also is quite different, as the PMs are working with all professional firms (DP, CM, CEI firm, surveyor, geotechnical engineer) rather than a low-bid contractor. It is critical to the success of this system that the PM be a senior facilitator and decision maker. This also requires much greater experience on the part of the PMs. Permitting becomes a collaborative effort as well, with greater involvement by the CM, team, and owner to meet the fast-track design-build schedules. In addition, the CM and the team—not the DP—are responsible for developing the project schedule, with the owner having active input to the overall schedule and budget.

174 Guide for Design management on Design-Build and Construction manager/General Contractor Projects It is critical that the designers be educated about CMGC early in the process to ensure a col- laborative effort. The entire team needs to be educated early in the process for this system to be the most efficient and to end up with a successful project. Partnering and detailed scoping and visioning meetings were held (CM, DP, geotechnical engineer, surveyor, permitting, ROW, bud- geting, owner, utilities, joint municipalities, contractors and subcontractors, CEI firm, PMs, etc.) to ensure that everyone on the team had equal input to the inception and creation of the projects as well as the management roles and responsibilities. Failure to do this results in increased costs and lost production as well as extreme tension among the team members. A strong owner is needed to facilitate these meetings and ensure that the process is executed and led correctly. Continual communication and collaboration are required to run these meetings effectively. An emphasis on tracking the budget and schedules continually also is required to keep all parties on task and accountable. Designing in mini-phases captures the true benefits of CMGC as the projects can start very early, sometimes one to two years ahead of schedule. This allows the designs to be broken into three to seven permitting and construction phases, which then can be broken into small bid packages (per trade—flatwork, piping, etc.), eliminating the prime contractor’s markups up to 30% on some projects and enabling the phases to be permitted individually, which speeds up permitting time as much as 50 percent. Design should begin early when using this process in order to save design fees without having to break an existing design into mini-phases once it is completed. Permitting phases also need to be designed and split apart, specifically taking into account such concerns as different drainage basins and permits in existence, in order to speed up the permit approvals. In addition, mini-phases need to be broken into ROW parcels that already are owned and then in progression of the next ones to be acquired. Starting construction early also reduces the overall length of the projects, which reduces overhead costs for the entire project team. CMGC requires a much greater and more upfront investment into the project than DBB. This is due to preliminary permitting and ROW acquisition in addition to design. CMGC also takes a tremendous amount of time through meetings, risk considerations, innovations, communica- tion, and time for all team members to brainstorm and solve every issue imaginable that might occur prior to the construction phase. The process, if run correctly, makes the actual construc- tion a simple exercise of putting the highly orchestrated plan into action whereas on a traditional DBB project, construction typically is the heavy (investment) end of the project. Specific and individual leaders—both at the executive and middle management levels—were recruited heavily into the Osceola County program to take charge of each individual area of design, permitting, inspection, ROW, utilities, geotechnical, environmental, and construction. Without strong top-level leadership, this system can become extremely ineffective for many reasons. CMGC cannot be run effectively on a consistent basis at staff level. In order to work successfully, CMGC must be based on strong executive and middle management leadership (by every entity). The CMGC process further requires that the owner take an active lead as the PL with the CM assigned as the primary contractual “at-risk” manager for the project. In addition, the owner must commit to be present at all major weekly project meetings in order to expedite decisions at all levels. Plans reviews, budget approvals, ROW acquisitions, etc., must be expedited in order for the system to work efficiently and effectively. Osceola County’s program mandated con- tractually that all principles of the companies—i.e., executive leaders—be present at all major weekly meetings with binding, decision making authority for all consultants, all contractors, the owner, and the CMs in order to ensure top-down leadership and buy-in on the project deci- sions, schedules, budgets, and activities. This process would not have been as effective with only the typical lower level management PMs being present to represent the different entities such as

Case Study—Program: Osceola County, Florida (Cmr and Cm/GC) 175 design PMs, CM PMs, and owner PMs. All representatives were required to have signature and binding, decision making authority for their company. The CM is an active participant in the design process, meetings, and design decisions as well as the contractual “at-risk” manager for the entire project. All decisions are joint decisions with the DP, CM, and the project team. This point is critical to capturing the benefits of CM and ensur- ing that the designs are constructible, within the allowable budget, and on schedule. CMs were required to be engaged actively in this process. One of the primary reasons for this requirement is that CMs were obligated to return the CM fees (in VE savings), thus requiring innovations and cost reductions as part of the design process. In addition, the CMs were required to take over quantity estimates and matrices, so computa- tion books are no longer required of the DP. The quantities are the CM’s responsibility, which takes tremendous risk away from the DPs. Traffic control and construction phasing also are joint efforts between the DP and CM, thereby removing the DPs from the sole responsibility of attempting to phase and control the construction portion of the project. Engineering estimates also are turned over to the CM, removing that responsibility from the DP. These are, in turn, con- verted into direct construction estimates as they are created with direct input from contractors and subs. The CM also works with the DPs to ensure that what they are designing is within the allowable budget. Therefore, designs constantly are fine-tuned and adjusted to ensure that they fit the budget. As DPs are coming up with design options, the CM is pricing and reviewing them to ensure that they will work prior to proceeding with the design efforts. Money Matters—Cost, Budget, Payments, Benefits In order to experience the benefits of the CMGC process, the team needed the ability in most cases to modify significantly the standards and specifications typically used for DBB projects. In these cases, the project team would determine the standards and specifications required on a project-by-project basis, taking into consideration the schedule and budget as well as VE and constructability ideas and requirements. In many cases, the specifications were developed late in the process—after the project and budget issues were resolved—based on what was affordable for the project as well as acceptable to the traveling public and outside agencies such as DOTs, environmental agencies, etc. This was required in many cases to bring the costs down and avoid problems related to overdesign for the sake of reduced risk to the DP and the owner. Improved risk allocation resulted in lowered costs to all parties. There are several key differences between CMGC and DBB in this area. Standards and speci- fications are developed by the team using CMGC instead of being inserted by the DP or from the owner’s standard manuals prior to bid. In the CMGC process, nothing is finalized as far as what is required or acceptable until the team discusses everything item by item. This was a very fluid and flexible process compared to DBB. In Osceola County, the CM was responsible for inserting many of the standards and specifications into the bids as well as the quantities. As an example, the consultant providing CEI developed with the team’s input some of the standards and specifications relating to asphalt, and then the CM inserted them into the plans prior to bid. This was a much simpler process than having a canned bid package prior to bid. The CEI in many cases was brought into the project very early in the design phase to provide input to the process and was an integral part of the project and design team. In addition, the CEI duties are reduced significantly, resulting in costs savings in some cases of 5% to 7%. In CMGC, the CEI firm is able to be more involved in constructability reviews during design, proj- ect specification, schedule development, and QA/QC for design plans and construction opera- tions. Many of the owner’s representative duties are reduced significantly or eliminated due to the CM being the overall owner’s representative and managing the contractors instead of the CEI

176 Guide for Design management on Design-Build and Construction manager/General Contractor Projects firm needing to manage the contractors as well as be an agent of the owner. The overhead also can be reduced significantly by sharing field trailers, etc., during construction. The CEI firm is brought as early as possible into the design to help with constructability, reduced costs, and QA/QC on the plans. This also involves the CEI firm on the team early, thus avoiding situations where it comes in later as a potential outsider looking in. On standard DBB projects, the CEI firm reviews the final design for errors, omissions, and constructability issues just prior to and/or during construction. In the CMGC process, the CEI firm comes alongside the DP early to assist in producing an overall better product and stream- lining many of the sometimes tedious and unnecessarily stringent specifications, including proposed alternative materials for construction. Additionally, the CEI firm provides real-time QA/QC rather than waiting on traditional 30, 60, and 90% plans reviews, thereby saving design fees. By the inception of construction, the CEI firm and the DPs are a tight-knit team working closely on all issues relating to the project. If the process is managed correctly, CMGC most often reduces significantly the level of design needed and the time spent in design. Approvals are obtained weekly, thereby eliminating redun- dancy and waiting on sometimes lengthy reviews, direction, and possible redesigns. Scopes are defined clearly up front and adjusted in real time, which reduces significantly the design produc- tion hours necessary. Another major factor is that the costs of the design are known very early due to the team participating in pricing; therefore, designs do not need to be modified late in the process to reduce the costs or meet the budget. In addition, the engineer’s estimate becomes the contractor’s estimate and therefore typically is constructible for the costs estimated. The factors most significant in affecting this outcome are strong owner leadership, direc- tion, and guidance; strict adherence and real-time adjustments to the design and construction schedules; and early team involvement by all parties—i.e., CM, CEI firm, owner, geotechni- cal engineer, surveyor, ROW agent, utility companies, environmental agencies, etc. Other sig- nificant factors include requirements for CMs to provide cost savings as well as innovative and cost-cutting ideas to the designers and team, reduced design plan detail, reduced specification development by the DPs, reduced utility coordination by the DPs, reduced schedule develop- ment by the DPs, and weekly team meetings from the onset of design attended by all stakeholders and decision makers. Additional fees are added for “daily and weekly coordination” with the CM firm as well as additional plans revision time for modifications, VE, and/or innovations. Overall, the design budget is reduced but the DPs are paid to work with the CMs, ensuring that coordination will take place and the DPs will be making money while participating in the coordination rather than potentially viewing this coordination as a waste of time and resources. In some cases, additional design fees also are added to ultimately reduce the cost of construction, i.e., if a VE proposal is approved that is a significant redesign, the reduction in construction cost justifies the additional fees, and the budget still benefits although the design budget may end up being higher than originally budgeted due to this change. Additional fees are not based on a percentage of the design fee or any other formula. They are based on the complexity and length of the project. The hours are estimated on the number of weekly meetings and the number of potential innovations for each particular job, as each one differs. There is no “typical” percentage of construction cost for the design fee. The percentage varies on a project-by-project basis between the aforementioned ranges. The further along one gets into streamlining the process using CMGC, the lower the design fees due to reduced design efforts and limited plans and specifications. The same results were accomplished on CEI costs.

Case Study—Program: Osceola County, Florida (Cmr and Cm/GC) 177 Once the program was up and running, the team began fine-tuning the individual team tasks, which before had significantly overlapped in many cases. Initially, CMGC actually added costs to the existing designs due the contract documents being well underway and designed for DBB. The team had to immediately add coordination fees and redesign fees. On the new design contracts, CMGC eventually resulted in reduced design times and fees. It also resulted in significantly fewer design change orders from the owner, due in part to the scopes being so well laid out and understood by the entire project team. The total cumulative project costs (if multiple GMPs are used) sometimes were calculated up front and sometimes during the design process. Initially, when quickly breaking ground was a priority, a mini GMP could be planned and designed to get the project moving. Once this was accomplished, the GMPs for the project would be planned out during design and compiled to ensure that the sum of all GMPs, including the first one, did not exceed the budget or the overall targeted GMP for the project. This critical step also ensured that each GMP fit together like a puzzle, completing the entire project in a logical and constructible sequence. Initially all designs were accelerated regardless of the delivery method in an effort to reduce the overall project lengths. The CMGC process enabled this already-accelerated design process to be met more easily. The key to this sped-up design was the ability to design in mini-phases. The mini-phases could be designed quickly, as less detail and effort were required, producing lean and fast mini-phases rather than one big design that often can be cumbersome to break into smaller bodies of work for the designer and the contractor. The owner ultimately was responsible for the construction start and finish dates as well as ensuring that the schedules were met. However, the CMGC contractually was responsible to ensure that the overall project schedule was met, including the design, permitting, ROW, utility, and construction schedules. The process used called for the owner to set the major milestone dates prior to advertising the project and then for the team to work collaboratively in deter- mining how to meet the project schedule. Every team member was responsible for keeping the project on schedule in all the above areas. Due to the fact that the CM cannot control all areas of work above, it is not feasible to hold it solely responsible for the schedules as the DPs, utility companies, and ROW agents do not work under its contract. Each of the entities ultimately is responsible to meet its individual schedule as well as assist in the other entities meeting theirs. On average, project durations were shortened by 30 to 50% through the use of CMGC in the Osceola County program. Construction times were not necessarily reduced significantly but started much earlier in the process and finished on schedule, reducing the overall times. Design times were reduced due to the fact that construction mini-phases could start before designs were completed, thereby accelerating the design process. Construction did not have to wait until design completion. Design times also were reduced due to the lower level of detail required in the plans as well as the DPs not having to prepare final bid packages and quantities. In the Osceola County program, the PL—i.e., the owner’s design PM—was responsible for design changes with potential impacts to the schedule, budget, and overall GMP and actively led the process. The CM technically and contractually managed and accounted for the potential impacts. The project team ultimately was responsible and took an active role in managing and tentatively approving all design changes. The final decision making authority on all of these impacts was the owner. Fundamentally this was simple, as all projects were required by the County Commission to finish on schedule and under budget. The program in Osceola County did not hire independent cost estimating firms or estima- tors to verify the CM’s costs. Internally, highly trained and experienced design and construction staff were hired who worked intimately with the CMs to negotiate and approve all costs and

178 Guide for Design management on Design-Build and Construction manager/General Contractor Projects estimates. The overall project team looked at all project costs in an effort to ensure that the overall project came in 30 percent under the approved budgets. Improvements to the Osceola County program could have been affected by the following requirements: 1. During the RFP process for the CMs, inform the proposing firms that all fees, costs, and estimates will be reviewed thoroughly in detail prior to acceptance, and standard CM prac- tices and overhead rates by the CMs will not be approved cart blanche. In addition, failure to negotiate will result in the owner going to the next selected firm. 2. Hire an independent firm to estimate, in addition to the highly trained staff. 3. Require in the RFP that all costs be itemized in detail from office overhead rates to field trailer rates, profit, contractor bids, etc. 4. Disallow up front in the RFP certain fees such as raises, vehicles, vacation allowances, etc. 5. Require the prospective CM to agree to the owner’s CM allowable costs up front, prior to submitting on the RFP. The project team and the CM were the lead and were responsible for generating traffic control plans (TCP), as opposed to the traditional method in which they are determined by the design- ers. Initially, the majority of TCPs had to be modified or deleted due to designs already being well underway prior to the team and the CM coming on board. On the new designs or designs that were not as far along, the DPs were asked to not prepare the TCPs and instead work directly with the CMs and the project team to develop them. The team broke the traditional TCP phases into multiple mini-phases to match these in the roadway plans, thereby rendering most traditional TCPs irrelevant. In some cases, the CM developed the TCPs and proposed them to the project team, thus saving design costs. This enabled the TCPs to be constructible and phased according to how the phases actually were going to be constructed in the field. If the owner makes sure to involve the project team and the CM very early in the process prior to designs being underway, problems in the construction phase will be minimized. This will reduce significantly or eliminate the traditional or systematic problems so often seen during construction. This also will help the design process. It is important to bring on the team prior to establishing the project schedules and budgets, because these become tough to meet when they are unrealistic or put together incorrectly or by the wrong groups or individuals. All things being equal, it always helps if the builder of the project helps design the project. There were no major differences in how the quality control process for design used during the design phase was different from those used in the construction phase. The system was established, and the entire project team remained intact throughout the entire design and construction phases. No templates were used for describing the owners’ expectations for how design QA and QC were to be ensured throughout design development under CMGC. The QA/QC plans were developed by the project team and reviewed during the weekly progress meetings. Among Osceola County’s best practices to ensure that the construction cost was kept within budget were monthly reports turned in along with the invoices for the CM. These gave detailed information on all costs to date and were compared to the schedule of values that had been approved for the project. Also, actual costs were provided during each step of the preliminary designs, which eliminated the traditional procedure of waiting for bids to come in once the entire project is designed to completion or preparing a final engineer’s estimate, as in DBB. Commitments were given by the contractors and subs to the CM to perform the work, as roughly outlined, for the costs provided. VE was performed intensively by the team during the conception of the project to ensure that the cost for construction and design was under budget.

Case Study—Program: Osceola County, Florida (Cmr and Cm/GC) 179 This procedure is the reverse of some DBB processes. In CM, the intent of the project, the sched- ule, and the budget are targeted first, and then the design scope and details are formed around those three primary priorities. This is the case in some DBB projects, but they do not have the benefit of having direct pricing and scoping from the contractors and subs. It ultimately was the owner’s responsibility to monitor the project budget, including design, inspection, permitting, ROW, utilities, and construction, as the owner is the designated PL. However, the CM contractually is responsible to monitor these items and ensure that they are completed within schedule and budget. In addition, the intensive collaboration, which is started very early in the scoping of the project, makes the entire team responsible to ensure that all of these items are successfully monitored and tracked. This is why collaboration and communica- tion are so important to the success of this process. There are too many players involved to ulti- mately hold any one group completely responsible, so the owner has to take the lead and ensure that these are monitored correctly by the entire team. The designer has a vital role in monitoring the above items as well—keeping the design on schedule while constantly creating VE options to accelerate all processes and reduce the overall budgets. The designer must be involved actively and creatively in the process and preferably should be senior level design principals with experience and authority to generate and review cutting edge ideas from the team and to comfortably accept significant risk in designing and, in some cases, going against standard protocol, specifications, and design details. Overall, the contracts were lump sum, with a total not to exceed GMP, along with a standard buyout for savings produced during the project and/or unspent money, units, allowances, or contingencies. In negotiating and approving actual costs bid and billed monthly, a combination of lump sum, unit price, cost-reimbursable and allowance was used. The payment depended on the type of work, ranging from reimbursables to unit price items, lump sum items, allow- ance items, and contingencies. Progress payments for certain lump sum items were made from an approved and negotiated schedule of values, and all types of payment measures used were tracked. It is advantageous to use several methods and vary them depending on the project. Certain items such as asphalt were bid specifically as unit price. This was based on politics, as the county needed to justify what they had paid per ton and square yards of asphalt. The prices then potentially could be converted to lump sum, depending on the condition of the roadway and how much risk the team was taking. In some cases, better pricing resulted from sticking to unit prices with allowances for overage. Any savings then would be passed to the owner rather than the CM. One disadvantage to lump sum is that the CM receives the entire savings, not the owner. In the CMGC process, constructability reviews and VE are managed using a team effort from the earliest stage possible in design. The CM firms and all team members review the conceptual design plans and run the ideas by the contractors and subcontractors. This produces instant feedback as to the viability of the VE plans, as well as whether or not the plans are construct- ible and within the budget as designed. This process occurs very early in CMGC rather than at final plans or bidding stage as often occurs on DBB projects. If the process starts soon enough and the team is brought on early enough, plans sets will not be finalized until the reviews and VE are brainstormed, performed, and verified by contractors. Many factors are reviewed by the team such as permitting issues, ROW available, environmental issues, timing, budget, material delivery, and equipment available. The CM firm, designers, geotechnical engineers, surveyor, permitting, ROW agents, budget- ing personnel, utilities, owner, contractors and subcontractors, joint municipalities, environ- mental agencies, CEI firm, PMs, etc., are involved in constructability reviews and VE. Benefits are maximized by early involvement and frequent and design production meetings. A critical step to maximizing the benefits is to have the contractors and subcontractors present at the meetings at the earliest stages possible. This is essential to generating VE plans that actually are

180 Guide for Design management on Design-Build and Construction manager/General Contractor Projects viable and can be built within the allowable budgets and schedules. Failure to do this early can jeopardize the efficiency of these meetings. If the CMGC process is run correctly and the CM does not act as just a “broker”—but is actively engaged in the design effort and involves its contractors and subcontractors early in the process—designs, construction phasing, and materials may be selected, modified, and sub- stituted during the design phase in an effort to bring projects in under budget. This requires a strong and active owner and can be a major downside to CMGC if not led and monitored carefully. The CM fees need to be made up as well, or the projects potentially can come in over budget by an amount equal to the CM fee and overhead. In the end, the cost will be compared against that of similar DBB contracts and thus must be presented as a challenge up front for the project team to meet. Issues Affecting or Affected by Design Management Engineer’s estimates become the responsibility of the CM and are converted to preliminary GMPs using actual bids. If an engineer’s estimate already was prepared by the DP, it is used only as a comparison and a negotiating tool with the CMs. Typically, the engineer’s estimates are eliminated if the CM is brought in early enough, as real-time pricing by subcontractors and contractors make them almost irrelevant. This is one of the big advantages of CMGC versus DBB, as engineer’s estimates in most cases are only as good as the data used to calculate them and the estimator deriving them. They also are often not based on actual bids but averages derived from DOT bid data. Eliminating engineer’s estimates saves the DPs time, money, and the risk associated with hav- ing to bring the bids in under the estimate. It also enables the DPs to focus strictly on their spe- cialty instead of getting involved directly in the estimating or having to sub out the estimating to a professional estimating firm. It also potentially eliminates the need for time consuming com- putation books and pay item matrices and tables typically listed in plan sheets for DBB projects. Plan sets are designed and constructed in mini-phases, which have resolved or will resolve issues such as potential remobilization-related cost and schedule impacts resulting from delays in ROW acquisition, permitting, utility relocation, or other unanticipated delays. This enables construction to begin much sooner while the above issues are being resolved in other mini- phases. Bidding these mini-sections of work eliminates remobilization or demobilization fees associated with the overall project. In addition, the CM places a clause in all contractor and sub- contractor contracts that no remobilization fees will be charged on the projects for delays due to the aforementioned items. In addition, there are no delay claims on CMGC contracts due to the CM taking the risk for finishing on time and under budget. Any delay claims should be handled by the CM, not passed on to the owner. Another important factor is that the contractors are chosen not by low-bid but by best value; therefore, any claims placed would hinder their ability to bid on future mini-phases as well as future projects with the CMs. Most projects had three frequent, periodic project meetings—one with the standard team (weekly), one with adjacent municipalities (bi-weekly), and one with the utilities (bi-weekly/ monthly depending on fast-track schedule). This enabled segmentation of the meetings, which helped ensure that everyone’s time was spent wisely on issues that did not involve other parties. This especially was the case in the utility and municipal meetings. The level of coordination required is much more than on a typical DBB contract because CMGC is a partnering process with fast-track schedules that moves very quickly and needs com- plex decisions made daily by top-level decision makers. Failure to coordinate correctly removes many of the benefits gained by CMGC and potentially turns it into an expensive process with the CM acting only as a broker that adds 5% to 7% in fees on top of the costs of a low-bid system.

Case Study—Program: Osceola County, Florida (Cmr and Cm/GC) 181 Changes in culture and philosophy are required for all three major parties to the contract (owner, DP, CM). The primary paradigm shift is that this is not a low-bid project but a best- value project. In addition, the relationships must be modified significantly from adversarial to partnering. Each entity is hired as “professional services” and has equal say at the table. All par- ties are looking to make the project successful. This also relates to inspection requirements in the field. The inspectors are no longer the owner’s exclusive representatives during construction but are part of the overall team and are involved early in the design process primarily to ensure that the entire project team delivers a quality product that will hold up—not to verify quantities and contractors’ adherence to plans and specifications. A high level of industry collaboration and support is required to execute a CMGC project successfully. Upfront and early stakeholder buy-in must be secured from outside the team—i.e., cities, counties, subs, suppliers, etc. Failure to do this could cause a project to fail, as all of these entities are required to make the project successful. In addition, early and detailed buy-in to every facet of the project is required from these groups in order to meet the schedules, approve and fund the budgets, contract directly or under the general contract with the CM in order to organize everything under one project leader, etc. ROW acquisition and environmental permitting were handled in a variety of ways according to the situation. Because plans at all levels of completion were inherited, each project varied. However, one of the elements that made the projects inherited nearly impossible to complete on schedule was the fact that the ROW was not under the control of the project team. The pro- curement was performed by an outside governmental department. Lessons learned would be to have the ROW acquisition directly under the team and preferably handled by someone hired by the CM firm. Early involvement by utility companies and permitting agencies in design is critical to the suc- cess of a project. They must be included to ensure that the designs are viable and can meet the desired budgets and schedules. When possible, they were included early in the project meetings to ensure buy-in and determine whether the proposed scope of work and schedules have been budgeted and approved. Rapid acceleration of the permitting process was required to keep the project and the team moving. Typical permitting schedules were not viable for these projects. In addition, typical utility relocation schedules and construction contracting methods would not work on this set of projects. In many cases, the utility work was combined under the CM’s contract to ensure that one entity was in control of the construction schedule. Controlling all critical path items under the CM is important for success. In addition to making up their fees in savings, the CMs were required to come up with 30% sav- ings on all projects. The project team also was tasked with value-added innovations as part of their scopes. The entire team is run in an effort to maximize savings in both dollars and time. This is essential to running a successful CMGC project. It also is essential in delivering the projects under budget, as CMGC will add five to seven percent to the cost of a project if savings are not guaranteed. The approach for managing post-award design activities can be similar to D-B as the design is underway well into construction and in some cases is not complete until the last mini-phase is underway. Therefore, the DPs stay engaged in the construction up until the last GMP is under- way. This method allows for harvesting the benefits of the CMGC process. Plans also are chang- ing constantly, in some cases during construction, in an effort to adjust to permits becoming available, ROW acquisition changes, etc. In addition, the plans are lighter in nature and the DPs therefore are more involved in the product actually constructed in the field. The processing for requests for information (RFI) was managed overall by the CM. However, the owner and overall project team took a much more active and aggressive role as decisions often were needed daily or weekly at the team level. Therefore, RFIs had to be run through the

182 Guide for Design management on Design-Build and Construction manager/General Contractor Projects owner as well as the project team. Plans and specifications were much more fluid, and the entire team needed to buy in to all changes, modifications, material substitutions, etc., as one change had the potential to affect the entire project (permits, ROW, etc.). The owner ultimately was responsible for the scope of the project, the budget, and the sched- ule. This process required a much more active owner than a DBB project. The project team budgeted for and covered the majority of all errors and omissions, which took a strong commitment from the team as well as the owners. This also required the design- ers to redesign with no additional fees and finish the designs regardless of the design budgets remaining. When each of the specialty line item budgets was met, the team was required to work without additional fees being accrued. However, if money was left at the end of the projects, it could be distributed accordingly to make up for additional services needed for project success. The goal was for the entire team to make money on the projects if at all possible, but the primary goal was to finish the projects on schedule and under budget. The communication channels used during the design and construction phases were a func- tion of the way the project team was set up. From the inception of any project, specialized project teams were established, and mandatory, weekly project meetings began for the entire team. Each team member was required to have binding, decision making authority for its area of expertise. The owner led the meetings as the PL, and the CMs acted as managers of the overall project. The owner had highly trained project managers assigned to both design and construc- tion. There was not one project manager covering both areas but one specific project manager for construction and one for design during the entire project length. Also required in the meet- ings were specialty areas such as permitting, design, survey, ROW, geotechnical engineering, traffic engineering, budgeting, and legal. The DP’s role during the construction phase was such that the designs still were underway actively during construction. Most projects were being designed in mini-phases, each of which had different construction start dates. As one design mini-phase was completed, another started while the one before it went to construction. Therefore, DPs and the team remained intact almost through the end of the final construction mini-phase. In addition, the designs were not to the level of detail typically required and therefore needed real-time input from the DPs while in the construction phase. There were no distinct, separate design and construction phases as in more traditional delivery methods. The designers also were required to be actively engaged in RFIs and shop drawing reviews during construction; the CEI firm handles these responsibilities in other systems. Miscellaneous Statements The following sections are based on interviews from the case study of the CMGC program administered by Osceola County, Florida. Some of these discussions fit well within the context of the research topic, while others range into aspects of CMGC dealing only indirectly with issues discussed previously. Goals and Objectives of a CMGC Design The following 11 goals and objectives were the ideal for which each project team was bound to strive, as instructed by the leadership of the Department of Public Works, Osceola County, Florida. It was believed by the leadership that a majority of these goals and objectives were met to a satisfactory level on every project. The projects that came the closest to perfection in these areas were the projects on which the CM was retained earliest.

Case Study—Program: Osceola County, Florida (Cmr and Cm/GC) 183 1. Finish the projects successfully and on time. 2. Return all CM fees to the owner. 3. Finish the projects 30% under budget. 4. Build one of the most highly technical and trained design teams in the nation. 5. Employ mostly local DPs. 6. Reduce overall project times by two to five years, depending on project size. 7. Be accountable and transparent in all operations. 8. Involve and engage the project teams from the conception of the projects. 9. Start projects prior to having all ROW, designs, permits, and utilities. 10. Develop and incorporate hybrid and streamlined specifications, permits, plans, and inspection. 11. Continually improve the overall project delivery system and each of its components. Accomplishments of the Osceola County CMGC Program This program has been highlighted as the largest and most rapidly deployed, innovative, and successful roadway construction program in the nation to date with CMGC as its sole delivery method. Documented accomplishments of the program are summarized below. • Had eleven major roadway segments ready to begin construction in one year, thus achieving 55 times the production rate of the previous five years • Returned all CM fees and preconstruction fees in savings to the owner • Achieved 75% local participation and helped keep numerous local contractors from going out of business • Saved millions in construction due to VE and breaking bid packages into specialty items of work, returning $36 million in savings to the county • Returned $80 million to the local community through local contractors in the first four months of construction, not including what was paid to the local design community • Finished 20% under budget for all projects including design, permitting, mitigation, and construction Factors Critical to the Success of a CMGC Project During the Design Phase 1. “Fast-Tracking”—Have the agency pass a fast-tracked resolution with all stakeholders com- mitting to place these CMGC projects as top priority over all other agency projects in all areas—procurement, contract and RFP approvals, legal review, council and commissioner approvals/dockets, municipalities, utilities, governing and review boards, permitting agen- cies, citizens’ groups, etc. 2. “Brainstorming”—Assemble potential DPs, CMs, and CEI firm prior to writing the actual RFPs and contracts to discuss scoping, schedules, budgets, etc.—What is the intention of all of the projects within the program? 3. “Buy-In”—Discuss with all stakeholders prior to kicking off the program the purpose of CMGC and the goals and objectives that have to be met to be considered successful— utility companies, ROW agents, permitting agencies, subcontractors, CEI firm, municipali- ties, owners, internal departments, procurement, contractors, subcontractors, engineers, citi- zens’ groups, press, surveyors, attorneys, political figures, upper administration, CMs, and (most importantly) internal owner staff, leadership, and subordinates. 4. “Up-Front Scoping”—Determine the project budgets up front and require the profes- sionals to agree to them—what will be the design fees, CM fees, CEI fees, geotechnical fees, survey fees, overhead, and construction costs, as well as the overall project budget

184 Guide for Design management on Design-Build and Construction manager/General Contractor Projects and schedules specifically broken into design, construction, survey, permitting, and ROW. Identify clearly all targets. All of these items need be included in the RFPs for design, CEI, consultants, and CMs, including such additional critical professional services such as geotechnical, survey, etc. 5. “Cutting Time and Overhead”—Streamline the scopes of the design contracts to produce construction plans, rather than bid sets, and require the bulk of the design team and all other professionals to be present during the weekly design production meetings. 6. “Top-Down Leadership”—Require the principals of the design firms and all other consul- tants to lead their teams in the weekly design production meetings. This is across the board for all professional services. 7. “Leadership Presence”—Require that the owner’s senior leadership—i.e., the ones with binding, decision making authority for their companies—be present and lead all design production meetings. Other PMs and subordinate staff also should be required to be there. 8. “Building the ‘A’ Team”—Require the “best in the industry”—senior leaders and senior PMs for all professional services, i.e., the CM, DP, geotechnical engineering, etc.—who have proven and successful experience leading major D-B projects and/or CMGC projects. The learning curve is too sharp to go from DBB to CMGC under an accelerated and new CMGC program. Each team member should be the best at what it does—a specialist that cannot be replaced. Each is highly valued by the other team members and has an equal seat at the table. No one member dominates over the team. 9. “Not a Training Ground”—Bring in only proven, seasoned construction, design, contract- ing, and subcontracting consultants who have a burning desire to see that CMGC is suc- cessful regardless of the circumstances and who have an absolute “program first” and “team sacrifice” mentality rather than a typical DP, owner, or contractor mentality. 10. “Budget and Schedule”—The guiding factors and targets that the team must live by are “budget and schedule” at all costs in order to bring a CMGC project in under budget and on time. Costs cannot exceed the agreed-upon budget for all GMPs combined, regardless of the circumstances and problems encountered. 11. “Communication and Leadership Planning”—Weekly production meetings are required by all top leadership from the beginning of the scoping of the projects to the completion of construction. This requires a tremendous effort and investment for all parties concerned. These costs also must be made up through schedule and innovations. 12. “Team Building and Networking”—Co-house the entire team of professionals starting at the inception of the project, and require all senior leaders and PMs to work out of the same office space. 13. “Upfront Cost Control”—Lay out the cost of all cumulative GMPs prior to starting early work packages or mini-GMPs. 14. “Buying and Developing the Vision”—Include CEI, survey, geotechnical engineering, sub- contractors, contractors, etc., on the production team early to review the scope and specifi- cation requirements for all projects as well as constructability issues. 15. “Influencers in the Room”—Require that all contractors and subcontractors be part of the mandatory project team meetings from the inception of the projects and, at a minimum, always be present when their areas of work are being discussed as well as during scoping, scheduling, and budgeting. 16. “Sense of Urgency”—Require the entire team—i.e., owner, contractor, CM, subs, DPs, pro- fessional services, etc.—to commit to a “sense of urgency” and to place these projects above all other items and projects on their slates. This also applies to procurement agents, com- missioners, governing officials, permitting agencies, utilities, etc. 17. “Schedule and Budget Drive the Project, Not Vice Versa”—This principle is critical to con- trolling costs on a CMGC project as the administrative overhead is most expensive among the three primary delivery methods and if not controlled will cause the project to fail. A

Case Study—Program: Osceola County, Florida (Cmr and Cm/GC) 185 detailed CPM schedule and budget with all required critical path items must be completed prior to releasing the first RFP. 18. “A Good Plan Violently Executed Now Is Better Than a Perfect Plan Executed Next Week”—The entire team must make timely, difficult, and binding decisions within the scheduled time available. Hesitation will kill the project’s momentum, schedule, and budget and will cause the team members to lose interest and move on to other urgent projects. 19. “Innovation and VE Are Mandatory”—The project team must innovate in order to make up all CM fees as well as the additional fees required by the design team, consultants, sub- contractors, etc. Otherwise, costs will spin out of control. Contractual requirements should be in place for the team to target a certain amount in cost savings. 20. “Lead by Example”—Owners must be willing to make a significant investment—more than with any other delivery method—in leading these projects to ensure success at all costs. This is not a passive delivery method, and poor engagement by the owner leads to poor results. The owner must be the hardest-working member of the team. Owners must act as PL and run all production meetings. 21. “Effective Resource Loading”—Due to the high overhead on CMGC projects, the program must be resource-loaded up front, determining how many staff to bring on, how many hours they need to work during the entire project, and when they need to cut back on their hours to ensure that budgets and staffing requirements are met. This needs to be understood clearly by all members of the team to avoid causing any friction in expectations. 22. “Zero Tolerance for Change Orders”—The entire project team must agree to a zero change order policy, starting with the owner and proceeding to the consultants, CMs, contractors, CEI firm, subcontractors, etc. Once change orders begin, the GMP process essentially is useless. When the budget is exhausted, the team works pro bono. Innovation is required to ensure that there are no change orders and that the extra work is zeroed out. 23. “Budget for Contingencies and Allowances”—Contingencies and allowances are required to successfully cover the design-build aspect of the project and to accelerate the entire process. Contingencies are the difference between success and failure on a CMGC project as they enable real-time decisions to be made and paid for and the project to move forward rapidly. 24. “Contracts That Specifically Match the CMGC Delivery Method”—Well thought out and finely crafted specialized and highbred contracts—i.e., with the CM, DPs, consul- tants, etc.—must match perfectly the goals and objectives of the program/projects. The contracts must require aggressive delivery, streamlined plans, VE mandatory goal percent- ages, advanced coordination, sufficient time for production meetings, principal involve- ment, strict adherence to the schedules and budgets, coordination, etc. Failure to put it up front in the contracts will require asking for volunteer participation, which is much more challenging. 25. “Attitudes, Team Players Only, and Sacrificial Service to the Team and CMGC Program”— It is critical to have strong desire and relentless pursuit toward project success, regardless of the challenges faced. Any member that does not embrace this principle must be removed from the team quickly and permanently, as its presence will damage the CMGC process irreversibly. Require this commitment during the RFP process and select only professionals who completely buy in to these requirements. 26. “Cost Estimates Are Bid Prices, Not Engineer’s and CM’s Estimates”—It is critical to have the contractors and subcontractors who perform the work formulate the rough and final GMPs based on real bids, not estimates by the DPs and/or CM firms. Getting real costs at the earliest possible rough concept phases of scoping and rough plans is essential to coming in under budget and generating constructible projects within schedule and budget.

186 Guide for Design management on Design-Build and Construction manager/General Contractor Projects Summary In 2007, the Osceola County, Florida, Department of Public Works was faced with a unique and daunting challenge. The three previous County Administrations had been removed by the Board of County Commissioners for failing to deliver an aggressive impact fee-funded road- way program totaling approximately $1 billion. The program required that the recently hired County Administrator and his staff put nine to 11 major roadway projects under construction by the end of their first year and to have an additional seven under contract each calendar year, beginning from the first year of the newly adopted impact fee ordinance. The new impact fee ordinance had been assessing some of the highest impact fees in the nation, negatively affecting development with very few roadways constructed. Based on these requirements, the county was 18 projects behind schedule, totaling more than $400 million in design and construction when the new team was hired. Initially, when looking into CMCG, very few DPs were strong advocates of the system for such a large program. In their opinion, the county did not need to add yet another layer of manage- ment to an already overburdened, costly, slow, and extremely bureaucratic system. In addi- tion, they believed that CMGC was an unproven method for roadway construction and that the outcome could be catastrophic. Many design firms believed that the proposed constructability reviews overlapped the constructability reviews being paid for under the existing design con- tracts. Several firms had existing PM contracts with the county, which they believed performed the same services as a CM firm. Another concern was that involving a CM firm at such a late point in the design stage would increase the design budgets, which already were spent in many cases. They also believed that coordinating with the CM firms would be very costly in terms of time, which they could not afford to lose in such a challenged market. The CMGC system was installed despite overwhelming, wide-ranging protest from the con- tracting, design, and CEI communities in the local area. The results were that within a year, 11 major roadway segments were ready to begin construction, thus achieving 55 times the production rate of the previous five years. All CMGC fees and preconstruction fees in savings were returned to the owner. The local participation rate, the strongest of the myriad objections voiced, stood at 75% and helped keep numerous local contractors from going out of business. Millions of dollars were saved in construction costs due to the built-in VE process and bid pack- ages broken into specialty items of work. The total returned to the county in the first year was $36 million. Another $80 million was returned to the local community through local contractors in the first four months of construction. This does not include what was paid to the local design community. The portfolio of projects finished 20% under budget in the first year for all projects including design, permitting, mitigation, and construction. After only one year, the members of the administration team began to gain recognition nationwide. Articles were written about the program in Engineering News Record (ENR), Public Works, and Construction Today magazines in 2009 and 2010. The Osceola County Public Works Administrator, the driving force behind the CMGC program, was named one of the “Top 25 Newsmakers for 2009” by ENR.

187 Case Study—Program: City of Phoenix, Arizona (CMR) Introduction The City of Phoenix has built more than 200 projects using what they call a Construction- Manager-at-Risk (CMR) construction project delivery system since initiating the system in 2000. Only recently has the city commenced using CMR for horizontal construction, totaling 12 horizontal CMR projects since their first project, let in 2008. The fact that Phoenix calls its program CMR is a sign of the infancy of the delivery system’s use in the U.S.. The most basic terms are not set, and some are used interchangeably. Such is the case here with “CMR” and “CMGC.” One of the reasons for the existence of the Construction Manager/General Contractor (CMGC) delivery system is the fact that the construction manager (CM) is not required to self-perform any of the work. In fact, as can be seen in the Case Studies or descriptions of other CMR programs, this typically is the case. The CM on the largest CMR project ever funded by the Federal Highway Administration (FHWA) could self-perform work only if it quoted a price for performing a certain item of work against the subcontractors on that same work item, and their quote was the lowest. This mega-project is the Miami Intermodal Center let by the Florida Department of Transportation. In the very successful CMR program in Osceola County, Florida, the CMs were forbidden to perform any of the work with their own forces under any circumstances. Another characteristic of a CMR project is that it can be cost-reimbursable or lump sum, as well as unit price, often using a combination of the three on the same contract. Finally, the constructor on a CM project always has been referred to as “the CM.” The City of Phoenix goes against all of these tenets, requiring that their “contractor” self-perform at least 40% of the work and using a straight unit price system for paying the contractor. Contractor advocacy groups stood against CMR mainly because of the requirements for the CMs, or prime contractors, to not self-perform any of the work. In this context, the City of Phoe- nix can be said to have operated under what is now referred to as the CMGC delivery system, just now coming into popularity with the Every Day Counts initiative of the Federal Highway Administration. Program Description When using the CMGC delivery system, the City of Phoenix typically procures the design professional (DP) before procuring the CM. The City has separate contracts with the DP and with the CM. They report that federally funded projects generally do not allow procurement of the CM earlier than the 30% plans stage. Locally funded projects likely would allow such pro- curement at 60% plans or later, but could range from 0% to 90% plans, depending on project

188 Guide for Design management on Design-Build and Construction manager/General Contractor Projects complexity. Specialty team members such as surveyors and geotechnical engineers work with both the DP and the CM at different times and work phases. The design process using CMGC is different than that of a typical DBB project, but only after the CM has been selected and is part of the team. The CM actively participates during the design phase in producing the traffic control and construction phasing plans. The DP works to customize the construction documents to the contractor’s needs and works on more finite cost proposals to assist with a final GMP. Furthermore, quantity take-offs, computation books, and bid summary sheets are handled with more collaboration and earlier in the process on CMGC projects versus DBB. During the design phase, the CM is contractually obligated to coordinate with the DP on esti- mating, Value Engineering, construction phasing, schedule, and GMP preparations. The first GMP generally is developed and submitted about 90% plans, although simple phases or plan packages could be completed earlier. Right-of-way (ROW) acquisition begins about the same time, although ROW acquisition can begin as early as 30% with environmental clearance. This is earlier than the City gets started on these items when using the DBB delivery system. Utility relocation coordination may be completed in-house prior to bid or handled in-house during design and construction phase. Innovation is encouraged in the design process through Value Engineering and construction phasing and methods. No incentives exist for designers to control costs other than maintaining a strong reputation in the industry. The City of Phoenix does not currently have a specific program for the training proposal evalua- tors. However, they are planning to conduct training sessions for that purpose to be completed by the end of March 2013. The City has internal staff available to review design submittals for compli- ance with standards/criteria. This is achieved through a combination of reviews by the Procure- ment Section and Project Management staff. To assure familiarity with the projects and uniformity in the process, the City typically involves review staff in the RFP package development. Typically, four design review submittals are required, at the 30%, 60%, 90%, and final plans stages. The City believes that contractor input on major structural items/elements during the design phase is critical to the success of a CMGC project, as is contractor input on scheduling and cost estimating. To help with this, certain members of the team take advantage of a communication and training program customized for the use of CMGC offered locally by a nonprofit group affiliated with a local university. The City believes that public relations is important on any project that might have a negative impact on the traveling public. Depending on the scale of the project, the CM may get involved with this effort. However, this typically is handled by the City with DP support. A contracted third party (public relations firm) also is typically used on major projects. Interviews Interviews were conducted with six individuals who work within the City of Phoenix horizon- tal construction program. One of the interviewees was non-responsive to most of the questions posed but made many interesting statements. Several of his comments are included in a following section. The interviewees included two city personnel, two DPs, and two contractors/CMs. Approach for Managing Post-Award Design Activities Two interviewees described the utility coordination process as different from that of a typi- cal DBB contract, but three said it was the same. One said that utility coordination was started earlier in the process on a CMR project than on a DBB project, but four said that the utility

Case Study—Program: City of Phoenix, arizona (Cmr) 189 process started at the same time, regardless of the delivery system. Four said that the traditional duties of the design team, such as permitting, project management, utility coordination, overall project schedules, owner’s representative duties, etc., are different when using CMR versus a typical DBB project, while one said that the traditional duties are the same. Four respondents said that the CMR process utilized by the City of Phoenix enables the team to permit and design the project in small “mini” phases and that the design process is tailored to begin construction early versus at the traditional final plans stage. One respondent disagreed on both points. When asked about the importance of educating the DP early in the process to ensure a collaborative effort, the interviewees responded with the following comments: • It is critical/very important to educate the DP early in the process. • Everyone must understand the meaning of partnership and Partnering. • We use experience with CMR as a deciding factor when hiring DPs. • Designers are naturally collaborative. • We had to educate the contractors (as opposed to DPs). • With CMR, there is more of a team atmosphere. When asked to compare the challenges typically encountered during the design phase to the challenges typically encountered during the construction phase, the interviewees responded with the following comments: • Design: Some poor CMs do not do a good Constructability Review • Design: A major challenge is to stay within budget and address 100% of the scope • Design: Getting GMP negotiated • Design: Dealing with unknowns, but unknowns still come up in construction phase • Design: Meeting DBE goals • Design: It is easier to design a project that meets the budget in CMR • Construction: Same challenges as DBB, but fewer • Construction: Less of an adversarial relationship When asked what level of commitment is required of executive and middle management to successfully execute a CMGC project, the interviewees responded with the following comments: • You must educate local politicians (city, county, etc.) on how CMR works and get their buy-in. (2 said this) • Most highway projects require at least middle management support. • Executive decisions should be made long before the project. Executives are brought in only for big decisions. • Whoever has the purse strings and whoever makes the final decisions have to be on board. • There has to be an understanding that price does not equal cost. • Managers must be educated to the very top. • Middle management must be consulted daily. • Middle management must be allowed to make decisions. • Executives must support middle management and be available. When asked what role the CM plays in the overall design process, the interviewees responded with the following comments: • The contractors (CMs) get a lot more involved with the design than with DBB • Depends on when (how early) they are brought on board • Material reviews • Cost reviews/preliminary cost estimating (not engineer’s estimate) (2 said this) • Means and methods • Constructability (3 said this)

190 Guide for Design management on Design-Build and Construction manager/General Contractor Projects • Bidability (3 said this) • Value Engineering • Review of plans • They coordinate the relationship between the designer and the owner • CMs are better schedulers than owners or DPs Money Matters—Cost, Budget, Payments, Benefits The six interviewees disagreed on what type of basic construction contract best describes a CMR project the way the City of Phoenix administers the contract. Three said that unit price was the contract type that best describes how the City of Phoenix administers the contract, and two said that cost-reimbursable best describes it. One interviewee stated that when the FHWA audited his project, the agency was satisfied with the method of payment, while the other five indicated that they never had been associated with a project that had undergone an FHWA audit. When asked to identify the City’s best practices to ensure that construction cost is kept within the budget, the interviewees responded with the following answers: • They (City personnel) are involved on a daily basis in the field. • We (the City) manage all construction activity. • Contractors must submit their prices at each contractual milestone. • CM uses sub quotes to formulate its GMP. • All work is done in unit price. • If we are not within budget at any time, the CM is not doing its job. • They (City personnel) always should keep the CM and DP appraised of any potential obstacles. • We (the City) bring the CM and DP on board at the same time—same advertisement, same selection panel—and negotiate contracts at the same time. When asked to identify what steps are taken during the design phase to manage the construc- tion cost, the interviewees offered the following responses: • They depend on the CM to come up with ideas to make project phasing as efficient as possible. • Before the CM is on board, we (the City) validate everything with our own design people. • Once the CM is on board, it joins in the validation and negotiates the GMP. (2 said this). • We (the City) bring in a contractor for plan review and constructability review to get unit cost projections and engineer’s estimate. • CM does its own geotechnical investigation as part of the preconstruction services contract. • The CM gets the prices from the subs, so there are no surprises when the work is actually accomplished. • We (the City) perform constant plans reviews—30, 60, 90%. • Contractors are better estimators than engineers. • If the GMP comes in over budget, the CM has not done its job. When asked to identify who is responsible for monitoring the project budget, including design, inspection, permitting, ROW, utilities, construction, etc., the interviewees responded with the following answers: • The owner. The agency. (2 said this) • Whoever owns the funds. • The CM cannot even spend its contingency funds without permission from the owner. • During design phase, the Lead Design PM monitors the project budget. • During construction, the CM monitors the project budget. • The agency monitors against the project budget. • The CM monitors against the GMP.

Case Study—Program: City of Phoenix, arizona (Cmr) 191 When asked to identify the DP’s role in monitoring and controlling cost, the interviewees had a hard time thinking of any but offered the following responses: • Providing a third party estimate. That’s it, unless they have a contract for CEI. • They have almost none. • They have to complete a design that can be built for the money budgeted. • They have to approve all CM pay requests. When asked to identify the payment tools used by the City to pay the contractor, only three said that they knew the answer, and all three of these said that the City used straight unit price exclusively, whether the project is federally funded or not. When asked to identify how constructability reviews and Value Engineering are managed in a Phoenix CMR project versus a typical Phoenix DBB project, the interviewees responded with the following comments: • The City of Phoenix has no VE clause in a CMR or DBB contract. • They are done the same way on both delivery systems. • Constructability reviews: CM does them on a CMR contract. On DBB, we (the City) hire a contractor. • Both are considered part of the fee the CM gets for preconstruction services. When asked to identify what parties are involved in the VE and constructability review process, two of the interviewees identified a DP executive, two answered the CM, and one said the owner. When asked if the City would allow the designs, construction phasing, and materials to be selected, modified, or substituted during the design phase in an effort to bring projects in under budget—even if it was late in the design phase—the interviewees all responded in the affirma- tive, although one qualified his answer by saying that this would be done only if the change(s) did not undermine the integrity of the contract. Issues Affecting or Affected by Design Management No respondent thought that a DBB project takes more of a coordination effort than a CMR project. Three interviewees believed that CMR takes more of an effort to coordinate, all citing the speed with which everything is happening and the higher number of parties involved in the project. One interviewee saw no difference in the effort required. The engineer’s estimate (EE) is a very important item on a DBB project. Bidders know that their bid must be within 10% of the EE, so they use the EE as a guide and the owner uses the EE to budget the project. The question was posed to those interviewed as to whether the EE was as important to a CMR project let by the City of Phoenix as it is to a DBB project. One respondent said that the EE is more important in a CMR project since more things are compared to it. One respondent said that the importance of the EE is the same regardless of the delivery system, and two said that the EE is less important on a CMR project. Both of these people cited the fact that on a CMR project, the CM generates and negotiates a GMP with the owner that uses real prices, not estimates based on history, and which the owner can use to budget the project, thus rendering the EE less important. When asked about the function of the EE in a CMR project versus a DBB project, two described the EE as “another check.” Other comments on the question were as follows: • Any CM is going to believe that he can generate a better estimate than an engineer. • Generating an EE should be easier with CMR, with less risk for the DP. • On a DBB project, the EE helps the owner budget for the project.

192 Guide for Design management on Design-Build and Construction manager/General Contractor Projects When asked how ROW acquisitions and permitting are handled in a City of Phoenix CMR project, all answered that the owner handled those issues in-house. However, one said that they are handled prior to bid and the other said that they are handled during the design and construction phases. When asked to identify what steps can be taken during the design phase to minimize or eliminate potential remobilization-related cost and schedule impacts resulting from delays in ROW acquisition, permitting, utility relocation, or other unanticipated delays, the interviewees responded with the following comments: • Identify challenges early. • Bring in necessary people early. • Public involvement is huge. • Coordination with appropriate people and stakeholders is very important. • Move the utilities during the design phase. • Locate GMPs in the most advantageous order to mitigate mobilization costs. When asked to identify what parties routinely are involved in coordination meetings (during the design phase), who takes lead at the meetings, and how frequently they are conducted, three interviewees identified the owner as being involved, three identified the DP, and three identi- fied the CM. Two identified the utility company(ies), and one just gave the broader answer of “stakeholders.” Other comments were as follows: • The meeting leader is the Lead Design PM. • Meetings occur bi-weekly or monthly. • Meetings are conducted as needed. No one interviewed thought that educating and training the owner’s staff, design consul- tants, contractors, and CM firms to transition from the traditional DBB world to CMGC was particularly important. One said that these people must understand the CMR process already or should not get involved. Another said that senior management (executive) buy-in is essential. Most of the interviewees did, however, think that an attitude change, paradigm shift, or change in culture was essential when coming from the DBB culture to the CMR culture. Some of the comments on this subject were as follows: • People need to realize that it’s all about long-term relationships. • Everyone needs to let their guard down and recognize the value that each party brings. • Everyone must drop the adversarial attitude. (2 said this) • Instead of competing for the owner’s favor like in DBB, the CM and DP need to realize that they can help each other find favor in the owner’s eyes. • Everyone must work together more. • More cooperation (is needed) between the DP and the CM. When asked what level of industry collaboration and support is required to successfully execute a CMGC project, the interviewees responded with the following comments: • Educate local subs, suppliers, city politicians, and county politicians. (2 said this) • Everyone has to buy in. • A lot more communication is necessary (for CMR). • CMR helps facilitate communication. • The first time is hard. • A local CM should be chosen for the first job. When asked how utility companies and permitting agencies fit into the project team and design process, the interviewees responded with the following comments:

Case Study—Program: City of Phoenix, arizona (Cmr) 193 • They are full partners—fully integrated. • They are included in the design. • Face-to-face (personal relationships) facilitates a higher level of cooperation and makes things go faster. (3 said this) • Utilities are coordinated by the owner. • Design phase: Permitting coordinated by the DP. • Environmental permits are handled by the CM. When asked how the City of Phoenix ensures value-added guarantees in their D/B (CMGC) contracts, one interviewee said that if something is part of a DP or CM proposal, the City will review and will put an innovation into the contract. Another said that if it is something tangible, the City would put it in the contract Miscellaneous Statements The following sections are based on interviews from the Case Study of the CMR program administered by the City of Phoenix. Some of these discussions fit well within the context of the research topic, while others range into aspects of CMR dealing only indirectly with the pre- award design process. Uniqueness of the Phoenix Model In its CMR program, the City of Phoenix focuses on most qualified (there is no price compo- nent), and, for the most part, CMs are hired based on past performance with the understanding that they will move forward and help the DP and the owner design the best project construct- ible, work through the risks, and agree on a fair price. It was described by one interviewee as “a shotgun wedding of sorts.” It is more of a shotgun wedding than a typical CMGC project with a price component because there is an owner who, “99.9% of the time,” has already selected a designer and now is trying to pick a contractor that will marry well with that designer due to the high level of contact between the DP and the CM. This contractual relationship allows for free flow. The owner is not usually present or privy to most conversations between the CM and DP, even though it could be if it wanted to be. That flow of information is as free as the owner wants it to be. The City can control as much or as little as it wants. That (the lack of any price component) is what makes the Phoenix model so unique. Importance of Quality-Based Selection Every owner is different in its methods once the process arrives at the point of price negotia- tion. In many scenarios, owners tend to fall back to the old familiar competitive bid paradigm. The City of Phoenix hires based on qualifications. Other owners like to say that they do the same, but once hired, they want the contractor to solicit subcontractor quotes, which the prime contractor must then beat in order to self-perform certain, or any, work. In those programs, Phoenix contractors see it as “going from all this great best-value stuff back to the old low-bid, low quality, but we can do the cheapest kind of way.” Field Problems Versus Design Services A contractor’s money is made and lost in the field. Unless it is a particularly large or com- plicated project, contractors give their project managers multiple projects. If a project manager has a field problem on one project and a service responsibility on another project, the project manager will address the field problem. Only when the field problem is solved will he turn to

194 Guide for Design management on Design-Build and Construction manager/General Contractor Projects address the service responsibility. This also is true on a large project where the project manager has only that one project. The field problems always will take precedent. Some CMs claim to not make money on design phase services, but only cover their costs. This practice clearly adds to the CM’s proclivity of taking care of field problems first. Most CMGC programs require a cost component. One contractor interviewed claimed to “do design phase services for a quarter of a percent, knowing that it’s going to cost me a percent and half. But I will get (my money back).” The preconstruction services are such a small part of the work, relative to the actual construction of the project, that contractors can make a great impression on the owner during negotiations by coming in with a really low services contract and then make it up by adding a relative pittance to the construction contract. Any good CM is going to perform the same preconstruction services, and also pretty much the same construction services, anyway. The cost for all the work is going to be “in there somewhere.” One of the contractors making this assertion said, “Our cost is our cost. It’s auditable.” This situation actually is much like a DBB contractor submitting an unbalanced bid; but in this case, it all is negotiated after award. Shortening the Planning and Design Phases One of the many advantages of having the CM on board as early as possible is the fact that the CM brings energy to the team. The CM, in a City of Phoenix contract, is nothing but a con- tractor providing preconstruction services. Any contractor is anxious to get out of the planning and design phases and into the construction phase. Construction is what they do, it is what they enjoy, and it is how they make their money. To execute the duties in their preconstruction ser- vices contract, contractors structure themselves to be a professional services firm. They structure themselves so that their project manager applies his knowledge in leading a team consisting of the contractor’s superintendent, their estimators, their general supervision, etc., to provide those services and the responsiveness necessary to stay on track. Staying on track often means driving the other parts of the design team to a point outside their comfort zone. Sometimes this results in strained relations with the DP, but these feelings are usually only temporary when the DP sees the results. Many owners profess to need and want that help; they want the CM to push the DP, push the permitting agency, push those responsible for ROW, and especially to push the utility companies to move their utility lines. Increasing Construction Budget Through Use of CMR The City of Chandler, AZ, was a great example of how the proper application of CMR can mean more highway construction let in a shorter amount of time, thus increasing the agency’s construction budget. That city went from a $60 million program in one year to $750 million by switching from strictly competitive low-bid (DBB) lettings to a program relying mostly on CMR. Just as significant is the fact that they were able to manage the $750 million CMR budget using the same number of people with which they were managing the $60 million DBB budget due to the reduction in paperwork, inspections, etc. Expectations in a Diverse Culture The implementation of the CMR delivery system in the City of Phoenix has rendered unexpected benefits. One such benefit reported by those interviewed is the fact that the expecta- tion for civil discourse and cooperation as part of the CMR process has, by some sort of social osmosis, found its way into the Design-Build (D-B) and DBB highway construction programs administered by the City. Since many of the same City officials are involved in all three pro- grams, contractors have noted that contractors that present themselves as cantankerous entities

Case Study—Program: City of Phoenix, arizona (Cmr) 195 characterized by adversarial attitudes and behavior on a DBB project are not often found on short lists for CMR projects. This phenomenon is probably enhanced by the fact that the Arizona Department of Transportation (ADOT) utilizes all three delivery systems in their highway and bridge construction program. One contractor commented: “Whether I like it or dislike it, if I get a hard bid job for an owner that I do CMR or Job-Order-Contractor-D-B for, the expectation of the owner is that I am going to treat him the same way I treat him on a DBB job as on a CMR job. It is a fact that I won’t get future work in CMR (if I am a jerk on a DBB project). I’ve got to constantly try to find win-win solutions. But that’s why it works for us so well. That’s the way we manage our own business.” Self-Work Requirement ADOT has a 45% minimum self-perform requirement for CMR on horizontal construction; the City of Phoenix requires 40%. “If we didn’t have that,” the local industry in Phoenix would have fought the introduction of CMR because “you’d have the out of state big boys do the CM briefcase thing and come in and just take it all away from the local guys.” Summary The City of Phoenix has a CMR program that has executed more than 200 CMR projects since 2000, but only 12 of those are horizontal construction, all built since 2009. Six individuals (two City officials, two CMs/contractors, and two DPs) were interviewed to gain data and insight into the CMR program in Phoenix. When one analyzes the Phoenix CMR program, it is quickly apparent that the system used is not like other CMR systems and better fits the description of CMCG. This is due to the fact that the constructor is referred to as the “contractor” instead of the “CM,” the contractor is required to self-perform 40% of the work, and its contracts are designed as strictly unit price for the construction stage. The DP usually is brought in first, and the contractor can be procured anywhere between the 0–90% plans stage, depending on the perceived need, but it cannot be procured before the 30% plans review on federally funded projects. Once the contractor comes on board, the design process becomes different that that used in the DBB delivery system. The contractor is contrac- tually obligated to coordinate with the DP on cost estimating, Value Engineering, construction phasing, schedule, and GMP preparations. The first GMP generally is developed and submitted about 90% plans, although simple phases or plan packages could be completed earlier. ROW acquisition begins about the same time, although ROW acquisition can begin as early as 30% with environmental clearance. This is earlier than the City gets started on these items when using the DBB delivery system. Utility relocation coordination always is completed in-house, either prior to bid or during design and construction phases. In the design process, there is no incentive for the DPs to control costs other than to retain their good name in the community. This makes contractor input even more essential. Especially sought is contractor input on major structural items/elements, scheduling, and cost estimating, specifically, cost reviews and preliminary cost estimating, constructability reviews, and bidability reviews. The utility coordination and the effort to have utility lines moved out of the way starts about the same time on Phoenix’s CMR projects as on its DBB projects. The CMR process utilized by the City of Phoenix enables the team to permit and design the project in small “mini” phases, and the design process is tailored to begin construction early rather than at the traditional final

196 Guide for Design management on Design-Build and Construction manager/General Contractor Projects plans stage. All interviewed agreed that it is important to educate the DP, local politicians, local subcontractors, specialty contractors, and suppliers early in the process on how CMR works to ensure a collaborative effort, but there seems to be no consensus on the main challenges facing the DP in the design phase or the construction phase. The City’s best design practices for controlling construction costs include requiring contrac- tors to submit their prices at each predetermined milestone, requiring that all work be done using the unit price contracting method, using actual subcontractor quotes to generate the GMP, and, when possible, bringing the contractor and DP onboard at the same time—same advertisement, same selection panel—and negotiate contracts at the same time. The final best practice is that once the contractor is brought in, they join in the validation and negotiate the GMP. Contractor input is given great weight in the design. If the contractor identifies a potential problem in the design, the CMR system allows the designs, construction phasing, and materials selected to be modified or substituted during the design phase in an effort to bring projects in under budget—even if it was late in the design phase. CMR takes more of an effort to coordinate in the design phase than a DBB project due to the speed with which everything is happening and the higher number of parties involved in the project. The owner (the City) handles ROW acquisition and permitting in-house, either prior to bid or during the design and construction phases, though the preference definitely is to get these and other things done as early as possible. Besides ROW and permitting, four things were identified as particularly needing early attention in the design phase: (1) identifying challenges, (2) bringing in the necessary people, (3) procuring permits, and (4) moving utilities. As for moving utilities, the City has found that two things really help in getting utility lines moved earlier: (1) get the contrac- tor on board early and (2) assign someone the responsibility to initiate and develop a personal relationship with at least one person at each utility company (and each permitting agency). Those interviewed have found that it is harder for the utility company (or permitting agency) to refuse to assist someone they know than a nameless, faceless entity. Once the construction begins, it is mainly the owner’s (City’s) role to monitor and control the construction cost. The DP has no role past its work in the design phase except approving the contractor’s pay requests.

197 Case Study—Program: Utah Department of Transportation (CMR) Introduction The Utah Department of Transportation (UDOT) has a long history of innovation in highway and bridge construction contracting. It successfully executed the largest (up to that time) design- build (D-B) project in the history of the U.S. The I-15 reconstruction project, built to prepare Salt Lake City for the 2002 Winter Olympics, was also “the largest project ever undertaken by the state of Utah. This $1.59 billion project would involve reconstruction of over 156 miles of Interstate mainline and the addition of new general purpose and High Occupancy Vehicle (HOV) lanes, construction and reconstruction of more than 130 bridges, the reconstruction of seven urban interchanges, reconstruction of three major junctions with other Interstate routes including I-80 and I-215, [and] construction of an extensive region wide Advanced Traffic Management Services (ATMS) component” (UDOT 2012). The success of this high-visibility project gave UDOT the reputation as one of the nation’s most innovative public transportation agencies. It also gave other such agencies the confidence that they also could successfully execute a transportation construction project of this magnitude. Finally, it showed other agencies the reality that highway and bridge construction projects could be successfully completed using a delivery system other than design-bid-build (DBB). With this project, UDOT and its partner, the Utah Transit Authority (UTA), led public trans- portation agencies into a new era of innovative transportation construction contracting. During the succeeding decade, UDOT has continued to be a leader in innovative contracting. Having proven the viability of D-B, UDOT turned its sights on developing a new construction delivery system that could provide to contracted parties the benefits of D-B along with the benefits of DBB. The result was the construction-manager-as-general-contractor (CMGC) delivery sys- tem. UDOT now has built more than 25 projects with the CMGC construction project delivery system since 2005. Program Description When using the CMGC project delivery system, UDOT employs several methods of manag- ing post-award design activities. The agency’s process allows designers to adjust their plans with “real-time” information provided by the CMGC firm. The process is deemed very involved with the designers because the CM is hired soon after the designers are brought on board. There are no standard operating procedures for the design of CMGC projects, but the agency does utilize program management contracts that work well with CMGC. The function of the project management is different from that of a typical DBB project in that project managers have a more prominent role in decision making and leading the projects.

198 Guide for Design management on Design-Build and Construction manager/General Contractor Projects UDOT designs projects that call for multiple “mini” GMPs. Although these GMPs vary per project, there typically are three to five GMPs based on early procurement items as well as early work items. The typical design milestones utilized in a GMP contract are traditional percentage complete phase submittals (i.e., 30%, 60%, 90%, etc.) followed by a final PS&E. UDOT also employs GMPs that are in line with the phased submittals; but they can be iterated per project to be tailored individually to the needs of the project. The designer is required to take less risk on a CMGC project. Designs are taken to “105%” in the sense that more up-front work is put into the design to ensure that the prices and plan are correct. Over time, UDOT has learned that the design effort must be intensified on CMGC projects to reduce cost. Plans are very detailed, and projects are not as schedule-driven as they are design-driven, intensifying the effort to thorough completion. Steps are taken to manage risk during design and to share risk among the owner, designer, and CM. UDOT operates on the premise that the entity most capable of taking the risk should do so. A full risk assessment is completed in detail for every project, and 100% of the savings goes to the owner. Both the designer and CM are designated as the owner’s representative; during the design phase it is the designer, and during the construction phase it is the CM. In actuality, the projects are driven by the owner’s PM, who is responsible for managing the project during both design and construc- tion. UDOT uses two PMs—one for design and one for construction. Furthermore, these are the owner’s PMs in addition to the PM for the designer and the PM for the construction manager. The designer assists in choosing the CM firm for the project, acting as an advisor for the selec- tion committee. Additionally, the selection committee consists of a representative from AGC and AEC for both the contractors and design associations. The approach for managing post-award design activities (i.e., activities during construction) for CMGC is no different from that used with DBB activities. More money is budgeted for the up- front design effort in order to minimize design during construction. Also, more money is budgeted for high-risk projects, and items are added on these projects for contingencies and redesign effort. RFIs are reduced significantly on CMGC projects, and the CM is responsible for managing them with owner oversight and approval. A shared database is used to track and monitor all RFIs. During the design and construction phases, the owner takes primary lead in coordinating with designers any necessary design changes, and project contingencies are used in dealing with design errors and omissions. All communications go through UDOT’s design PM during the design phase; after NTP, all communications go through the construction PM. Coordination meetings are held with all parties from the inception of design through construction. The designer’s role during construction is minimal due to the intensive up-front effort invested during the design phase. Monthly executive partnering meetings, held during both design and con- struction phases, ensure that projects are going well. All upper management are in attendance for these meetings with the exception of high-risk projects. In addition, weekly and bi-weekly design and construction meetings are held throughout both phases. Overall, UDOT sets the following goals and objectives for CMGC design projects: (1) efficient design, (2) efficient schedule for con- struction, (3) efficient use of taxpayer dollars, and (4) keeping the stakeholders happy. When looking at how UDOT’s post-award design management affects project performance in terms of cost, schedule, and quality, several key issues were brought to light. The design stan- dards and specifications for CMGC projects are the same as for typical DBB projects. In fact, UDOT uses the same standards and specifications for all projects. However, if there are innova- tive ideas that involve streamlining, UDOT is open to modification. The role of the CEI in a CMGC project differs from that in a DBB contract. The CEI enters in the design process early and has a seat at the table. Additionally, the CEI often is on the selection

Case Study—Program: utah Department of Transportation (Cmr) 199 panel. The CEI is involved during the design phase, is actively engaged in reviewing the plan sets during plan review, and attends all design meetings. Designs typically come in at or over budget, and as more design effort is placed into CMGC projects, design is taken to approximately “110%.” Factors most significant in controlling this outcome include the fact that design fee estimates are done up-front by UDOT’s PMs, prior to starting design; that more experienced PMs used in CMGC produce better design estimates; and that different processes and hours are needed for the project. Coordination between designers and CM does not necessarily require the inclusion of addi- tional fees. Instead, additional overall design hours are needed to complete CMGC projects, and the fees are based on the individual UDOT PM’s experience. Approximately 6–8% of the construction cost is typical for the design fee, and this percentage is higher than what typically is experienced on DBB projects. However, the percentage varies by project, and more design is required with UDOT’s process for CMGC. Total cumulative project costs are calculated up front during the design process, 90% of the time, and they always have a targeted maximum price. Design schedules have both shorter and longer durations compared to typical DBB projects. The design process is longer, overall, for CMGC projects due to the complexity of the detailed design; however, the construction starts sooner in the design process due to early work packages. Responsibility for creating and monitoring the design, construction, and overall project sched- ules is a collaborative effort. Nonetheless, the owner is responsible in the end and establishes all schedules up front in the planning phase. As the design schedules are much longer for CMGC projects, the overall design is not accelerated. On average, when using CMGC, construction time is reduced by one construction season. UDOT’s internal design PM manages design changes as they relate to potential impacts to the schedule, budget, and overall GMP. The independent cost estimate (ICE) process on CMGC projects entail pricing at 30%, 60%, 90%, and final completion of plans. Furthermore, there is a 10% red light/green light process wherein the PM has the power to authorize a project if costs are within 10% of the ICE. The CM primarily is responsible for generating traffic control plans. The quality control process for design used during the design phase does not differ from that used in the construction phase. In fact, the same process is used for all other project delivery methods. Moreover, the owner’s expectations for how design QA and QC are ensured throughout design development is expressed by means of a detailed process including three key checklists— one internal to UDOT, the designer’s, and the inspector’s. In order for the client to minimize problems during the construction phase, UDOT identifies the following factors: (1) very detailed plans; (2) detailed communication and understanding of all proj- ect assumptions; (3) clearly defined risks and assigned costs; and (4) openness as a team on all issues. Interviews Interviews were conducted with 25 individuals who have worked with UDOT. The interviewees included 14 owners (or agents of the owner), five designers, and six contractors. Approach for Managing Post-Award Design Activities Twenty-one interviewees described the utility coordination process on a CMGC project as differ- ent from that of a typical DBB contract, but two individuals said it was the same. Nine interviewees said that the coordination process started earlier on a CMGC project than on a DBB project, and one interviewee said that the process started later; however, 13 said that the utility process started at

200 Guide for Design management on Design-Build and Construction manager/General Contractor Projects the same time. Twenty respondents said the traditional duties of the design team (e.g., permitting, project management, utility coordination, overall project schedules, owner’s representative duties) are different on a CMGC project from a typical DBB project, while four said that the traditional duties are the same. All 25 individuals said that the process employed by UDOT enables the team to permit and design the project in small “mini” phases and that the design process is tailored to begin construction early versus during the traditional final plans stage. When asked about the importance of educating the designers early in the process to ensure a collaborative effort, a majority of the respondents said that it was either critical or very impor- tant. Table 42 summarizes the responses provided regarding the education of designers. Other notable comments include the following: • Designers naturally are collaborative. • Anyone that has not gone through the process is a potential problem. Interviewees were asked to compare the challenges typically encountered during the design phase to the challenges faced during the construction phase. Notably, several individuals men- tioned that during the design phase they try to “avoid” problems while during the construc- tion phase they try to “solve” problems. Particular to the design phase, several respondents mentioned bringing the CM on board earlier in the process as a means of building trust and teamwork. Specific to the construction phase, several mentioned that the challenges for a CMGC project were similar to those encountered on a DBB project. Additional responses provided are summarized in Table 43. Other comments include: • Design: Get people out of their rigorous mindset. Understand those who make decisions. Know which processes can be changed and which ones cannot be changed. • Construction: Some issues that were related to design manifested in the construction phase. • Construction: The pressure is on the contractor to meet his construction schedule. Statement Respondents Education is critical/very important. 15 Designers must understand the meaning of partnership. 8 Designers are defensive/resist change. 3 Designers need to know what your ideas/expectations are. 2 DPs need to understand what is going on. 2 A clear definition of the roles is needed, and all members of the team must understand their roles. 2 Table 42. Importance of educating designers. Statement Respondents Design: Bring the CM in earlier so the challenges revolve around building a team, coming together, building trust, etc. 4 Design: The CM is not really in it until the end. 3 Design: A lot of pressure is on design, and the CM wants to get started. 3 Design: The DP would not listen to the RE and CM. The CM and DP need to take each other seriously. 2 Construction: The same challenges exist as in DBB. 4 During design we try to avoid problems, and during construction we try to solve problems. 5 There are problems with scheduling issues. 3 There are problems with unknown conditions. 3 Table 43. Comparing challenges encountered in the design and construction phases.

Case Study—Program: utah Department of Transportation (Cmr) 201 • Construction: Problems occur involving utilities and ROW. • Construction: There are fewer problems than on a DBB project because we are more involved in the design. When asked what level of executive and middle management commitment is required to successfully execute a CMGC project, all the respondents thought commitment was required in some form from either level. Specifics as to their thoughts varied slightly, but most thought it crucial that the executive level must support middle management during project execution. Additional responses include those listed in Table 44. When asked what role the CM plays in the overall design process, a large portion of the respondents mentioned cost reviews, constructability, and minimizing risk as the top tasks per- formed by the CM. A slightly smaller portion cited scheduling, implementing innovations, and plan reviews as equally important tasks. Additional comments mentioned by the individuals are listed in Table 45. Other comments include: • Sharing insight into the design • CM more involved with design than on DBB Money Matters—Cost, Budget, Payments, Benefits Eighteen interviewees indicated that the unit price contract type best describes how UDOT administers the CMGC process. Ten of the interviewees responded with lump sum, and ten considered cost-reimbursable to best describe how the CMGC process is adminis- tered by UDOT. Except for one interviewee, who stated that it was an occasional problem when the FHWA audited his project, thirteen respondents said that the agency was satisfied with the method of payment. This was not applicable to the other two interviewees. Eight interviewees said that either unit price or lump sum method of payment was employed in the construction phase on a federally funded project. Eight interviewees reported that cost- reimbursable was utilized in the preconstruction phase. Three answered that the unit price method of payment was used just like DBB on a federally funded project. When asked to identify UDOT’s best practices to ensure that construction cost is kept within the budget, the interviewees responded with the answers in Table 46. Statement Respondents Executives must support middle management and be readily available. 10 Support of CM is consistent at all levels of the project. 9 A high level of commitment is needed from middle management. 6 Middle management has to be immersed in the project. 3 Executive commitment is crucial. 2 Table 44. Level of executive and middle management commitment. Statement Respondents Cost review/preliminary cost estimating (excluding the EE) 13 Constructability 13 Minimizing risk 12 Scheduling 8 Implementing innovations 8 Reviewing plans 7 Table 45. Role CM plays in the overall design process.

202 Guide for Design management on Design-Build and Construction manager/General Contractor Projects Other comments include: • As part of RFP, owner asking for the cost of a handful of bid items • UDOT expecting a cost-loaded schedule, which is reviewed monthly • Innovation tracking • Owner doing “blind bids,” which are like practice bids on key items • Limiting change orders • Cost/resource schedule by bid items • Baseline CPM with regular updates • Early cost model from the CM • All work done in unit price • Innovative material selection • Owner remaining open with what the budget is and expecting the CM to be equally open When asked to identify the steps taken during the design phase to manage the construction cost, the interviewees offered the responses found in Table 47. Others comments include: • As the design progresses, we (contractor) produce cost estimates at 30%, 60%, 90%, and 100%. • Early packages lock in prices for materials and equipment. • DARTs looked for improvements to save money. • Optimize the schedule to reduce the overhead cost. • The designer (agent of the owner) should get input from the CM and the ICE and look at dif- ferent options to see how they affect schedule and cost. • ICE and the CM both produced an estimate, and the estimates were opened at the same time. • We (owner) broke up the cost estimate analysis and took immediate steps. When asked to identify who is responsible for monitoring the project budget—including design, inspection, permitting, ROW, utilities, construction, etc.—the interviewees responded with the answers summarized in Table 48. Statement Respondents Eliminating risk/risk mitigation 7 Cost estimate (usually based on milestones) 4 Having contingency funds for several risky items 4 Bringing in ICE 4 Analysis of cost and scope, keeping the project within budget by reducing scope or innovation 3 Monitoring the budget/cost on a regular basis 3 Using engineer’s estimate 3 The GMP 2 Using an opinion of probable construction cost during design 2 Table 46. Best practices to ensure that cost is kept within the budget. Statement Respondents Risk management 4 “Blind bid” at different stages 4 Innovations 3 Constructability reviews 2 Open-book process 2 Table 47. Steps taken to manage construction cost.

Case Study—Program: utah Department of Transportation (Cmr) 203 Other comments include: • The CM controls this cost with the contract—lump sum. When asked to identify the DP’s role in monitoring and controlling cost, the interviewees offered the responses found in Table 49. Other comments include: • Providing input into the EE • DP gets assigned the lead for some of the items on the risk register • Keeping any future inspection cost/budget within project budget • Participating in many value engineering exercises • Providing information or technical options so that costs can be determined for the GMP • Reviewing things, but not so much the budget When asked to identify the payment tools used by UDOT to pay the contractor, the interviewees provided the comments in Table 50. Other comments include: • If quantities are known, lump sum; otherwise, unit price • CM phase: an hourly rate with a multiplier When asked to identify how constructability reviews and value engineering are managed in a UDOT CMGC project versus a typical UDOT DBB project, the interviewees responded with the comments in Table 51. Statement Respondents Owner/agency 2 The agency’s PM 17 Lead design PM 3 Everyone involved with the job 3 Table 48. The person who is responsible for monitoring the project budget. Statement Respondents Producing the EE 6 Completing a design that can be built for the money budgeted 12 Taking input from CM with a thorough understanding of the quantities on the project 2 Almost none 2 Table 49. The DP’s role in monitoring and controlling cost. Statement Respondents Preconstruction phase: CM is paid as a consultant—cost plus fee 3 Construction phase: CM is paid just like DBB—unit price 3 Straight unit price 9 A unit price on risky items with a contingency fund connected to each risky item 2 Unit price with some lump sum items 3 Percent complete/proportionally paid as project progresses 2 A cost-loaded schedule 5 Table 50. The payment tools used by UDOT.

204 Guide for Design management on Design-Build and Construction manager/General Contractor Projects Other comments include: • VE is not applicable in CMGC. There was no VE clause. • VE is started even in our proposal. • CM does VE and CR on a CMGC contract; on DBB, a contractor is hired. • CM does CR if CM is involved early; VE is done in design phase. In DBB, everything is done afterward. • In CMGC, VE and CR are done by ICE; in DBB, they are done internally. When asked to identify the parties involved in the VE and constructability review process, four interviewees said that the CM was involved, two identified a DP, four indicated that all par- ties are involved, and two said the owner. ICE and utilities were identified by one interviewee. One responded that it was beneficial to have the end user, the one required to meet the standard (DP), and the one that has to build it all involved. When asked if UDOT would allow the designs, construction phasing, and materials selected to be modified or substituted during the design phase in an effort to complete projects under budget, all twenty respondents answered in the affirmative. It is noteworthy that four of them said that this was just part of the CMGC process. One stated that there was a high degree of openness and willingness to engage new or innovative ideas. One pointed out that it requires UDOT to understand the additional cost for redesign versus increased savings in construction cost—sometimes an order of magnitude. Issues Affecting or Affected by Design Management No respondent thought that a DBB project takes more of a coordination effort than a CMGC project. Twenty-one interviewees believed that CMGC takes more of an effort to coordinate, with eight ascribing this to the higher number of parties involved in the project and three citing the speed with which everything is happening and the time that takes to manage. Two interviewees saw no difference in the effort required. The engineer’s estimate (EE) is a very important item on a DBB project. Bidders know that their bids must be within 10% of the EE, so they use the EE as a guide and the owner uses the EE to budget the project. The question was posed to those interviewed as to whether the EE was as important to a CMGC project let by UDOT as it is to a DBB project. Three respondents said that the EE is more important in a CMGC project. Four respondents said that the importance of the EE is the same regardless of the delivery system, and four said that the EE is less important on a CMGC project, citing the use of independent cost estimate (ICE). When asked about the function of the EE in a CMGC project versus a DBB project, nine inter- viewees indicated that the EE is used the same in each delivery system. Three responded directly that in CMGC, the function of the EE was somewhat diminished by the ICE, while fourteen Statement Respondents Contractor is involved in the constructability review in CMGC, but not in DBB. 4 Constructability review was incorporated into regular meetings done by the CM. 2 In DBB, the owner will do the CR and VE during design phase. 3 CR and VE are considered part of the fee the CM gets for preconstruction services. 9 CMGC is an ongoing process, whereas DBB is a one-shot deal. 2 Table 51. How constructability reviews and value engineering are managed.

Case Study—Program: utah Department of Transportation (Cmr) 205 interviewees said that ICE was used in a CMGC project and eight mentioned the use of the CM’s estimate. Other comments on the question were as follows: • The engineer gets more input (officially or unofficially) in CMGC, so the EE might be a little twisted. • With CMGC, we (owner) use EE and ICE and compare the GMP to both. • In DBB, the low-bid is compared to the EE. • In DBB, EE is a target that we have to shoot for as our project budget. When asked how ROW acquisitions and permitting are handled in a UDOT CMGC project, seventeen answered that the owner handled those issues in-house during design and construc- tion. However, fourteen said that they are handled prior to bid and four said that they are handled by the CM firm during the design and construction phases. When asked to identify what steps can be taken during the design phase to minimize or eliminate potential remobilization-related cost and schedule impacts resulting from delays in ROW acquisition, permitting, utility relocation, or other unanticipated delays, the interviewees responded with the comments found in Table 52. When asked to identify the parties routinely involved in coordination meetings (during the design phase), who takes lead at the meetings, and how frequently they are conducted, the respondents answered as seen in Tables 53 and 54. Other comments include: • PM • CMGC coordinator (person tracking and innovation) • ICE Statement Respondents Identify challenges early. 2 Optimize staging and phasing to work around ROW or utility property problems. 5 Use risk register. 6 Schedule development related to ROW and utilities. 8 Table 52. Steps taken to minimize potential remobilization-related cost and schedule issues. Statement Respondents Agency’s PM 6 Owner 7 DP 13 CM 14 RE (resident engineer) 2 Utilities 2 Other stakeholders 6 Table 53. Parties routinely involved in coordination meetings. Statement Respondents Whoever had the most to say 2 Lead design PM 12 Owner’s PM 7 Meetings occur weekly or bi-weekly 7 Depends on the phase of the project 4 Table 54. Lead and frequency of the meetings.

206 Guide for Design management on Design-Build and Construction manager/General Contractor Projects Other comments include: • Owner • Contractor When asked about the educational effort/training required for the owner’s staff, design con- sultants, contractors, and CM firms to transition from the traditional DBB world to CMGC, the interviewees said that experience/on-the-job is better than any formal training, that experience is key, but partnering training helps (can lead to a shift of attitude). Other comments include: • SCAN tour would be good. • For DP, it is about learning to work together; CM needs to know the standards and specifica- tions the DP is using and must adhere to. • The DP needs to be trained in what the law requires to make things work out, in the process of CMGC, and in how the contractor thinks and places cost. • The important thing is UDOT’s openness to and of the process. • Contractors need to be educated on how to transition from being a contractor to a CM. • Owners need to educate themselves on how a contractor estimates a project. When asked what changes in culture and philosophy are required of the contractors and design- ers versus traditional DBB, most of the interviewees did think that an attitude change or a change in culture was essential when coming from DBB into CMGC. Fourteen interviewees thought that everyone must work together more; five responded that everyone needs to let their guard down and increase their trust. One suggested that more cooperation is needed between DP and CM. When asked what level of industry collaboration and support is required to successfully exe- cute a CMGC project, nine interviewees thought a high level of collaboration and support was needed and four said that everyone has to buy in. Other comments were as follows: • Subs and suppliers play such a major role. They really need to understand the process. • AGC does training of local contractors. • Every player needs to understand the process. • Get everyone on board as early possible, and let all know exactly what you need from them and when you need it. • You (owner) have to educate the staff of the city/county commissions’ staff people more than the actual manager/commissioners. • We (owner) should have had more subs on the CM contract in order to hear from the specialties. • The DPs and subs must have trust. When asked how utility companies and permitting agencies fit into the project team and design process, the interviewees responded with the comments found in Table 55. Other comments include: • Make them the team members, and treat them like members. • Utilities were brought in for global work issues that covered all projects. Statement Respondents They should be brought in early. 6 Utilities were invited to all project meetings. 9 Utilities/permitting agencies were not part of the team. 5 Table 55. How utility companies and permitting agencies fit into the project team.

Case Study—Program: utah Department of Transportation (Cmr) 207 • They coordinated with the DP to plan the moving of the utilities. • With CMGC, the contractor is another resource to call on to make the process work. • We (owner) will do a field review with them. • They were included in the design. • Separate meetings were held with utilities. When asked how UDOT ensures value-added guarantees in their D-B (CMGC) contracts, five interviewees stated that they include good ideas in the contract to ensure value-added guaran- tees. Two said that good ideas or innovation were put into plans, and three said that good ideas were put into specifications. Other comments were as follows: • Measure it from start to finish. • Any good idea put forward is going to be expected to be delivered; however, we (UDOT) have to be reasonable. • Ideas or sales pitches in their proposals are expected to be performed. If you do not do it (as a CM), you probably won’t be shortlisted next time. • Incorporate the ideas into the RFP and then into the construction documents. • Any innovation that we (contractor) or the DP comes up with is already in the contract documents. • In CMGC, CM’s proposals or the DP’s original ideas may be usurped by better ideas. But if a better idea is not found, an idea put forward by the CM in its proposal could very well be required of them by UDOT. • Ideas the CM comes up with in preconstruction get into the construction constructability. Summary Having achieved early successes with D-B, CMGC, and rapid bridge replacement, UDOT is now in its second decade as a leader in innovative thinking and execution among public trans- portation agencies. The agency has a CMGC program that has successfully completed more than 25 horizontal transportation construction projects using the CMGC delivery system since 2005. UDOT’s process allows designers to adjust their plans to “real-time” information when it is provided by the CM firm, no matter when the information comes to light. UDOT projects also are designed with multiple “mini” GMPs to allow for maximum flexibility in construction as well as design. Designs are taken to “105%” in the sense that there is more up-front work put into the design to ensure that the prices and plan are correct. Both the designer and CM are des- ignated as the owner’s representative; during the design phase it is the designer, and during the construction phase it is the CM. Projects actually are driven by the owner’s PM, who is respon- sible for managing the project during both design and construction. UDOT uses two PMs—one for design and one for construction. When the time comes to choose a CM and DP for a project, the selection committee con- sists of a representative from AGC and AEC, the contractor and DP advocacy associations. Once the project begins, the approach for managing post-award design activities (i.e., design activities during construction) in CMGC is no different from that used with DBB activities. The number of RFIs are reduced significantly on CMGC projects versus DBB projects, and the CM is responsible for managing them with owner oversight and approval. During the design and construction phases, the owner takes primary lead in coordinating with designers any necessary design changes, and project contingency funds are used in dealing with design errors and omissions. All communications go through UDOT’s design PM during the design phase; and after NTP, all communications go through the construction PM. All in all, the

208 Guide for Design management on Design-Build and Construction manager/General Contractor Projects designer’s role during construction is minimal due to the intensive up-front effort invested during the design phase. The design standards and specifications for CMGC projects are the same as for typical DBB projects, unless their contract documents do not cover a situation. In this case, they will handle the situation with project-specific specifications, just as they would with a DBB project. The role of the CEI in a CMGC project differs from that in a DBB contract. The CEI comes in early in the design process and immediately assumes a key role. Additionally, the CEI often is on the selection panel. Designs typically come in at or over budget. Since more design effort is placed into CMGC projects, design is taken to approximately “110%.” Therefore, additional overall design hours are needed to complete CMGC projects, and the fees are based on the individual UDOT PM’s experi- ence. Approximately 6–8% of the construction cost is typical for the design fee, and this percentage is higher than what typically is experienced on DBB projects. Design schedules have both shorter and longer durations compared to typical DBB projects. The design process is longer, overall, for CMGC projects due to the complexity of the detailed design; however, the construction starts sooner in the design process due to early work packages. Responsibility for creating and monitor- ing the design, construction, and overall project schedules is a collaborative effort. Nonetheless, the owner is responsible in the end and establishes all schedules up front in the planning phase. UDOT’s internal design PM manages design changes as they relate to potential impacts to the schedule, budget, and overall GMP. There is a 10% red light/green light process wherein the PM has the power to authorize a project if costs are within 10% of the ICE. The CM primarily is responsible for generating traffic control plans. The quality control process for design used during the design phase does not differ from the quality control process for design used in the construction phase. Twenty-five individuals were interviewed face-to-face about their experiences with projects let by UDOT. The comments of those interviewed were noted and stored in a spreadsheet. The answers to questions were tabulated, and to make sure all responses were properly categorized, key word searches were conducted to place every thought and idea expressed in its proper category. The comments were then tabulated. Most questions were open-ended, so it was sig- nificant when two individuals gave the same answer. The closed-ended questions were few, but they reveal important details about the UDOT CMGC program. Among these are as follows: • A majority (13) said that the utility moving process starts at the same time on a CMGC project as on a DBB project. Nine said that it started earlier, two had no opinion, and one said that it started later. • Twenty respondents said that the traditional duties of the design team (e.g., permitting, project management, utility coordination, overall project schedules, owner’s representative duties) are different on a CMGC project compared to a typical DBB project, while four said that the traditional duties are the same. One had no opinion. • All 25 individuals said that the process employed by UDOT enables the team to permit and design the project in small “mini” phases and that the design process is tailored to begin con- struction early versus during the traditional final plans stage. As for the open-ended questions, the comments made by at least five individuals are noted here: • It is very important/critical that DPs be educated regarding the CMGC process and culture prior to their involvement in a CMGC project. • DPs must understand the concept of partnership to be successful in the CMGC process.

Case Study—Program: utah Department of Transportation (Cmr) 209 • In comparing challenges faced in the design phase to those faced in the construction phase, during design the team is trying to avoid problems and during construction they are trying to solve problems. • Executives must support middle management and be readily available for CMGC to work. • Support of CMGC must be consistent at all levels of the project. • A high level of commitment is needed from middle management for CMGC to work. • During the design phase, the CM provides the following services: cost review/preliminary cost estimating (excluding the EE), constructability, minimizing risk, scheduling, implementing innovations, and reviewing plans. • The single best practice that UDOT does in the design phase to keep cost down in the construction phase is its process for eliminating risk and risk mitigation. • The person responsible for constantly monitoring costs related to budget is the UDOT project manager. • The DP’s largest contribution toward controlling project cost is to complete a design that can be built for the money budgeted. • The contractor payment tools used by UDOT are straight unit price and a cost-loaded schedule. • Constructability reviews and value engineering are considered part of the fee the CM gets for preconstruction services. • Steps taken by UDOT in the design phase to minimize potential problems with cost and schedule are to optimize staging and phasing to work around ROW or utility property problems, to use the risk register, and to develop the project schedule to include ROW and utility issues. • Parties routinely involved in coordination meetings are the agency’s project manager (the owner), the DP, and the CM. • The lead design PM or the owner’s PM usually leads the coordination meetings, which are held weekly or bi-weekly. • As far as the educational effort/training for the transition from DBB to CMGC, experience is best, but on-the-job training and training in partnering is helpful. • As for how utility companies and permitting agencies fit into the project team, both entities should be brought in as early as possible and invited to all project meetings. However, they are not really considered part of the design team.

210 Introduction The Utah Transit Authority (UTA) has worked on five major projects with the construction- manager-as-general-contractor (CMGC) construction project delivery system since 2002. At the time of the case study visits, it was confirmed that these five projects, totaling $2.5 billion, may be more than anyone else in the country. General observations include culture as a major issue. UTA has cultivated it and demands it from its contractors much like a parent expects good behavior from their children. Trust is a major issue. A lack of trust loses the benefits of the CMGC process. The level of cooperation is very high, and the partnership is very strong. There clearly is an advantage to not having federal funding or involvement in the project. Federal agencies are concerned about a variety of the processes involved with CMGC such as those involving payment. It seems that a lack of trust has prevented them from accepting or even understanding the whole CMGC process. UTA has conducted some experimental work in alliancing. After using alliancing on the North Temple Viaduct Project, it now has applied it to the Sugar House Line. It is unknown whether any other agency in the U.S. currently is using alliancing. UTA lacks even the most basic model for alliancing and seems to have gotten most of its inspiration from results of projects in Australia. Anecdotal evidence suggests that there is a greater level of CMGC buy-in with UTA than UDOT. UTA officials noted the higher cost of UTA, yet no other agency has been able to achieve commuter rail construction per mile for less than it has done. Program Description UTA performs CMGC because it allows more speed and a greater level of control vs. DBB. The delivery method also was reported to be a “good agency fit,” with a high level of trust developed among all persons involved. Trust is the key to success at UTA, which generally does not do business with people it does not trust. UTA performs general oversight while contractors do their own QC. This allows contrac- tors to take advantage of the owners if they so desire. There have been NCRs on five UTA projects totaling $2.5 billion. Contractors have written hundreds of NCRs. It takes time for the contractors to know and trust their partners, and they have to adjust to an owner with an open culture. Case Study—Program: Utah Transit Authority (CMR)

Case Study—Program: utah Transit authority (Cmr) 211 The contractor needs to buy in to the joint relationship and fix problems as soon as they are found. Issues are resolved in real time, saving money and helping the contractor in the long run. Early input by the contractor helps in the timeliness and speed of decision making. Interviews Interviews were conducted with eight individuals with prior experience working with UTA. These interviewees included five owners (or agents of the owner), two designers, and one con- tractor. From among the interviews, three case study questionnaires were completed and several individual question/answer discussions were conducted. For the responses that follow (detail- ing the questionnaire interviews), four individuals were queried in total; however, since two of these respondents were interviewed together, their joint answers have been combined as one interviewee response. Approach for Managing Post-Award Design Activities When asked about the utility coordination process on a CMGC project, all three interviewees described the process as different from that of a typical DBB contract. Two interviewees said the coordination process started earlier on a CMGC project than on a DBB project, one interviewee said the utility process started later, and one interviewee said the utility process started at the same time. When asked if the traditional duties of the design team (e.g., permitting, project management, utility coordination, overall project schedules, owner’s representative duties) are different on a CMGC project compared to a typical DBB project, two respondents said they were different while one said the traditional duties are the same. All three respondents said the process employed by UTA enables the team to permit and design the project in small “mini” phases and that the design process is tailored to begin con- struction early vs. at the traditional final plans stage. When asked about the importance of educating the designers early in the process to ensure a collaborative effort, the following remarks were made: • Designers were flexible with design and priorities. • Education is needed the first time around, after which it becomes easier. • Previous experience with either D-B or CMGC is helpful. • CMGC creates an environment where the owner can be more involved. Interviewees were asked to compare the challenges typically encountered during the design phase to the challenges faced during the construction phase. Notably, there was mention of com- munication in both the design and construction phases as well as general reference to the speed of the CMGC process. Below are the provided responses. • Design—more practical because of cost feedback and ongoing communication • Construction—more and frequent discussion of technical issues • Biggest challenge is more technical coordination with third parties • Overlap due to the speed of the process (CMGC contractors want to get going) Regarding the level of executive and middle management commitment required to execute a CMGC project successfully, one interviewee said culture in site organization is key as the con- tractors trust that they will not be taken for granted. Another interviewee stated that support of

212 Guide for Design management on Design-Build and Construction manager/General Contractor Projects CMGC should be consistent at all levels of the project, as it could pose a problem for agencies that cannot give up on traditional methods. The interviewees were asked what role the CMGC plays in the overall design process. The responses include being able to move forward with trust, the CMGC giving the owner the abil- ity to get what they want from the contractor and price items accordingly, and the CMGC being involved in the design constructability reviews. Money Matters—Cost, Budget, Payments, Benefits Interviewees were asked about their agencies’ best practices to ensure that the construction costs are kept within the budget. Among the responses was an early start due to the availability of equipment. Further comments include iterative estimating, having the owner adjust scope and budget toward the ultimate goal, certainty about the price, the contractor having a better handle on the real cost of the work (as opposed to the designer), and avoiding scope conflicts. When asked who is responsible for monitoring the project budget (including design, inspec- tion, permitting, right-of-way [ROW], utilities, construction), various responses were provided. • Contractor and owner worked together with the project owner. • The CM controls the cost within the contract. • The contractor owner sometimes encourages UTA to handle at a progressive level. • Designs are reviewed by UTA. Regarding the designer’s role in the CMGC process, one interviewee said they provide infor- mation or technical options so that costs can be determined for the GMP. Another noted that designers participated in many VE exercises. Finally, the third respondent said there was no role for the designer in the CMGC process. Several payment tools have emerged across the nation for progress payments on CMGC proj- ects, including unit price, lump sum, and cost-reimbursable. The interviewees were asked to describe the methods they have used as well as their advantages and disadvantages. • Progress payments were done proportionally. • There is a subjective review of percentage complete. • They agreed to be paid based on a cost-loaded schedule. • Prearranged increments helped with deciding on the percentages. • Schedule of value based on the GMP is not as complicated as a cost-loaded CPM. • Agreed-upon progress percentages (with the owner) are relatively easy to administer. Of the three contract types (unit price, lump sum, and cost-reimbursable), two individuals said lump sum best describes the CMGC process as their agency administers it. As a follow-up, regarding how they paid the CM and designer on federally funded projects, the following answers were provided: • The federal project was paid off schedule (vs. state projects, which were done by percentage complete). • The contractor would publish a revised payment forecast every quarter. • PTG was paid via normal UT methods. Interviewees were then asked if their method of paying the principals and their record of pay- ment documentation satisfy FHWA auditors. Not all respondents answered the question, and one said it was not applicable. When asked how constructability reviews and value engineering are managed vs. a typical DBB project, the respondents said reviews were integrated into the day-to-day production of design, reviews were iterative, and reviews were numerous.

Case Study—Program: utah Transit authority (Cmr) 213 When asked if the agency’s program has the flexibility required to change designs, construc- tion phasing, and materials selected if the design team (the CM, agency personnel, and design firm) discovers a better method than what is currently in the contract documents, even if it is late in the design phase, the following responses were given: • The process is very flexible. • The culture of UTA is very intuitive to new ideas. • Owners must resist carrying the design too far. • There is a high degree of openness and willingness to engage new or innovative ideas. • They would have summit meetings to review issues. Issues Affecting or Affected by Design Management When asked about the function of the engineer’s estimate using CMGC vs. that of a typical DBB project, the respondents had the following statements: • The most cost effective projects in the country hire outside expertise to produce an ICE. • One estimate was done at the PE state, and UTA hired its own estimator. • Estimates generally are in the ballpark thanks to the ongoing communication. • There was a lot of work up front that eliminated disputes on overhead fees. One respondent said the engineer’s estimate was more important while one said he did not know. When asked what steps could be taken during the design phase to minimize or elimi- nate potential remobilization-related cost and schedule impacts resulting from delays in ROW acquisition, permitting utility relocation, or other unanticipated delays, the interviewees made the following remarks: • UTA was in charge, dividing ROW and acquiring it in pools. • Problems encountered included the site not being permitted fully and going outside the approved boundaries unknowingly. When asked what parties are involved routinely in coordination meetings during design phase, who takes the lead at the meetings, and how frequently they are conducted, the following replies were given: • Separate meetings were held with the third party, and about 13 cities were involved. • The contractor leads the meetings; alliancing was used to work together and share the savings. All three respondents stated that the level of coordination required for a CMGC project is more than that required on a typical DBB contract. When asked about the educational effort/training required for the owner’s staff, design con- sultants, contractors, and CM firms to transition from the traditional DBB world to CMGC, one individual mentioned experience, while the other two cited on-the-job training. Changes in culture and philosophy needed by the contractors and designers (vs. traditional DBB) include trust, the belief that you will be treated fairly, and the understanding by contrac- tors of how things work. Interviewees were asked how ROW acquisitions and permitting were handled. One individual said they were completed in-house prior to bid. There was no response from the other two individuals. Regarding how utility companies and permitting agencies fit in to the project team and design process, one respondent said they held separate meetings with the utilities. Another mentioned bringing in utilities for global works to help prioritize.

214 Guide for Design management on Design-Build and Construction manager/General Contractor Projects When asked how they ensure value-added guarantees in their CMGC contracts, trust seemed to be a common theme. Among the responses are the following statements: • CMGC works well when you have a contractor that works well with the process. • Trusting that the contractor is not going to overcharge the owner is important. • Shared savings and leveraged relationships worked well. • Procure the contractor after the designer and owner start, but not too late. • ICE helps subcontract positions that have multiple and open bids. • On CMGC vs. DBB, changes are due to scope—like a lump sum, no excuse scenario. • UTA wants 40–70% of the work self performed (versus others wanting 30%). • The advantage is in having your own people. • The disadvantage is that you do not want to be really involved and subcontractor selection is handled by UTA, which does not like to meddle. • Reverse incentives were helpful. • Deferring 6% of billings over time to reduce cash flow requirements became contractor insurance. Interview with Mike Robertson Mike Robertson is a consultant who has worked with UTA for more than a decade. He has been involved intimately in their CMGC program and is one of the key “thought leaders” in advancing the process. He now consults around the country on large transit capital projects and alternative delivery methods in addition to his ongoing work at UTA. The Commuter Rail North project originally was not going to use CMGC. The UTA was think- ing it would use D-B. Stacy Witbeck came in and presented to UTA the benefits should the project be done using CMGC. After some discussion and review, UTA agreed on this delivery method. Mike made the point that the delivery method must be matched with the goals of the agency. The first decision is what the goals are and then the second is the delivery method that best achieves those goals. For the Commuter Rail North project, UTA had the following goals: • Early knowledge of the price (this facilitated their negotiations with the Federal Transit Administration regarding the amount of their full funding grant agreement (FFGA)) • Flexibility in the design even during the FFGA process • More involvement by UTA in the design process (than its past experience with D-B projects) • Issues addressed quickly with UPRR After reviewing the delivery methods available (D-B, DBB, CMGC), it was clear that CMGC was the only delivery method that would achieve these goals. Mike noted that, in his experience, too many owners choose the delivery method before deter- mining their goals. This may lead to selecting the wrong delivery method. The language in the existing statute was broad enough that UTA officials determined they did not need additional statutory authority to use CMGC. In actuality, the statute neither authorizes nor denies the use of CMGC. The UTA attorney advised that the lack of prohibition was grounds enough to proceed. UTA performed peer reviews to learn more about the CMGC process. UTA officials talked to people such as Rick Thorpe (Expo Authority in LA) and Don Irwin at Tri-Met. They were able to take what they learned to create a hybrid for their own CMGC process. Mike emphasized strongly that selection of personnel is one of the most important functions of an agency. A project cannot succeed if the wrong people are involved. In his past experiences, they have the personnel for each project; those who did not believe in CMGC or who seemed to

Case Study—Program: utah Transit authority (Cmr) 215 be stuck in old ideas were not allowed on the project. UTA felt that it actually could manage the project with fewer staff if it had the right people on the job. The focus of UTA was on collaboration, which allows the owner to make changes in a more timely fashion. One of the most important points regarding CMGC is that the real cost savings come via this collaboration. UTA was building this project adjacent to an active UPRR line with many interactions. It met with the UPRR in Omaha every six weeks to work through any issues. UTA took the contractor and designer along and was able to respond to issues that the UPRR brought up in a timely man- ner. UTA adopted a cooperative approach, and the UPRR responded well to this. This relation- ship proved beneficial for UTA during construction of the Commuter Rail South line. UTA’s open, up-front dealings with the contractor on the goals of the project helped in the discussions they had as they worked through the issues. Mike noted that Stacy Witbeck was characterized by important cultural and leadership aspects that made them an ideal firm to build the Commuter Rail North project. Picking the right firm for this method is very important. The estimating process for a CMGC project can be either very efficient or very time consum- ing. UTA used a local firm called Stanton, which comprised former contractor estimators, to do its independent cost estimates. The use of consulting engineers who lack experience in the field or in building up estimates by crew and activity is not sophisticated enough for CMGC. Using unit prices from previous projects also will not work. Using someone like Stanton allows the team to get to a number sooner. In their cost estimating and comparison process with the contractor, UTA would agree first on quantities. By dealing with this issue early and directly, a potential area of disagreement was taken off the table. UTA also used a software product called HCSS, which enabled it to reach agreement very quickly on all but 10–20 bid items. UTA then was able to focus on those 10–20 items and resolve them in short order. This is a much more efficient process than other agencies have used for CMGC cost estimating. After reaching an agreement on the line items, UTA would negotiate the soft costs. UTA allowed Stanton to engage the contractor’s estimators throughout this process. UDOT does not allow this under the assumption that it taints the independence of Stanton. UTA feels that by allowing the two parties to talk through their disagreements, the process becomes much more efficient. It does not see any potential conflict in these discussions. The fact is any differences have to be reconciled eventually, so why not let them sort it out directly. UTA decided that the way to reduce soft costs was to be more collaborative and thus encour- aged VE. The contractor’s team also needs the right people. A contractor’s representative who is unwilling to work with the team or contribute positively must be removed from the process as swiftly as possible. The tendency is to wait, but as time passes, that person can create numerous problems and inefficiencies in the process. Every agency must evaluate its culture realistically. Not every agency is suited for CMGC; it may be a good delivery method for certain projects, but an incompatible culture is capable of negating any potential benefits. Some agencies cannot evaluate their culture objectively and thus are oblivious that their culture is not suited for a particular delivery method. On the North Temple project, UTA approached the contractor and asked them to identify areas where UTA was costing them money. They were able to negotiate a savings amount that would be refunded to the agency (hard cash that was then put back into the project) if UTA changed whatever it was doing that was inefficient. This was a very successful process.

Abbreviations and acronyms used without definitions in TRB publications: A4A Airlines for America AAAE American Association of Airport Executives AASHO American Association of State Highway Officials AASHTO American Association of State Highway and Transportation Officials ACI–NA Airports Council International–North America ACRP Airport Cooperative Research Program ADA Americans with Disabilities Act APTA American Public Transportation Association ASCE American Society of Civil Engineers ASME American Society of Mechanical Engineers ASTM American Society for Testing and Materials ATA American Trucking Associations CTAA Community Transportation Association of America CTBSSP Commercial Truck and Bus Safety Synthesis Program DHS Department of Homeland Security DOE Department of Energy EPA Environmental Protection Agency FAA Federal Aviation Administration FHWA Federal Highway Administration FMCSA Federal Motor Carrier Safety Administration FRA Federal Railroad Administration FTA Federal Transit Administration HMCRP Hazardous Materials Cooperative Research Program IEEE Institute of Electrical and Electronics Engineers ISTEA Intermodal Surface Transportation Efficiency Act of 1991 ITE Institute of Transportation Engineers MAP-21 Moving Ahead for Progress in the 21st Century Act (2012) NASA National Aeronautics and Space Administration NASAO National Association of State Aviation Officials NCFRP National Cooperative Freight Research Program NCHRP National Cooperative Highway Research Program NHTSA National Highway Traffic Safety Administration NTSB National Transportation Safety Board PHMSA Pipeline and Hazardous Materials Safety Administration RITA Research and Innovative Technology Administration SAE Society of Automotive Engineers SAFETEA-LU Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (2005) TCRP Transit Cooperative Research Program TEA-21 Transportation Equity Act for the 21st Century (1998) TRB Transportation Research Board TSA Transportation Security Administration U.S.DOT United States Department of Transportation