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4Background The traditional approach for procuring and managing design and construction services for public works has served the public well for most of the past century. This approach is based on a separation of the procurement of design and construction services. Under this system, construc- tion firms are selected through a competitive low-bid system; but when the agency outsources design, Design Professionals (DPs) are selected based on their qualifications. The foundation of this system, often called Design-Bid-Build (DBB), is the principle of selecting DPs based on qualifications (Brooks ActâPublic Law 92-582) and selecting construction contractors based on competitive sealed bids with award to the lowest responsive and responsible bidder, almost always based on 100% Plans Specifications and Estimate (PS&E). Over the decades, DBB has provided taxpayers with a large portfolio of functional, safe, and efficient transportation facilities at the lowest price that responsible, competitive bidders can offer. The Interstate system as well as almost all state and county roads have been delivered through this traditional approach. For the most part, DBB has effectively prevented favoritism in spend- ing public funds and has provided checks and balances through separate contracts with the DP and contractor while stimulating competition in the private sector. Under DBB, the agency has retained full control over Design Management (DM), often seen as an advantage of this approach. In the scope of this research, the researchers have defined DM as the approach used by agencies to organize and oversee the process of designing the transportation infrastructure. DBB, while adequate for most construction projects, has also demonstrated various drawbacks, including fostering adversarial relationships among the project parties, limiting innovation, and resulting in serious growth in project cost and duration. In addition, it may not necessarily provide the best value to the owner for all project circumstances or types. In recent years, this issue has become more pressing for highway agencies, as deteriorating infrastructure and increasing population create tremendous pressure to move critical projects quickly from the planning stage through design and into construction without a commensu- rate increase in available funding. Underlying these external budget and time pressures is the basic requirement of maintaining quality in all phases of the highway program. Thus, there is a continuing need for highway agencies to review and evaluate alternative procurement and contracting procedures that promote improved efficiency and quality. As a result, other approaches to procuring and delivering transportation projects have been introduced over the last twenty years. The wide range of options for project delivery methods available today is a relatively recent development for publicly funded highway projects in the United States. DBB was the only method in transportation until the C H a P T E r 1 Introduction . . . (T)here is a continuing need for highway agencies to review and evaluate alternative procurement and contracting procedures that promote improved efficiency and quality.
Introduction 5 introduction of D-B in the Intermodal Surface Transportation Efficiency Act of 1991. Another step was taken in 1996 when the Federal Acquisition Reform Act explicitly authorized the use of Design-Build (D-B) for federal projects. After that, the Transportation Equity Act for the 21st Century (TEA-21), Public Law 105-178, allowed the state DOTs to receive federal funding for D-B contracts if the enabling state-level legislation was in force (TEA-21 1998). Subsequent to the successful experience of using D-B on several projects, many states passed new legislation and codes to allow alternative project delivery methods such as D-B, Construction-Management- at-Risk (CMR), and Construction Manager/General Contractor (CM/GC). Many public agencies have implemented D-B to accelerate project delivery. While D-B has advantages, including single-point responsibility (combining the DP and builder under a single contract), accelerated delivery, collaboration, and incentivization for innovation, it also has certain disadvantages, including less agency control over design and a preference on the part of most DPs to work for the owner instead of a contractor. In fact, under D-B, design and con- struction services are provided by a single contractual entity, which often contracts out design services. Whether design is self performed by the Design-Builder or by a design consultant to the Design-Builder, the management of design services is substantially different from what agen- cies use under DBB. Whereas the agency is highly involved in design activities during the DBB, involvement is limited under D-B to contractually allocated responsibilities for Quality Control/ Quality Assurance (QC/QA). Any further involvement results in potential change orders to the initial D-B contract. Various scenarios can be used in the industry, including allocating design QC responsibilities to the Design-Builder and retaining QA responsibility for the agency; allocat- ing both QA and QC to the Design-Builder; or securing the services of an independent QA firm. More rarely, the agency retains full QC/QA responsibility, which increases its ability to closely check for the design quality but also increases inefficiencies, risk of disputes and may slow down the design review schedule. Under any approach, the line of communication between DPs and the agency goes through the Design-Builder that is often a contractor or a joint venture of contractors. Such concerns have caused some transportation agencies to seek alternatives to DBB and D-B for project delivery. A promising alternative that has generated interest in the highway sector, CM/GC may offer some of the same advantages as D-B related to expediting projects while allowing the agency to retain control of design (through a separate contract with the DP). Previous studies have found that adding CM/GC to a DOTâs delivery toolbox provides sev- eral benefits (NCHRP 2009, Gransberg and Shane 2010). First, CM/GC provides DOTs with a conservative option when D-B and DBB are not able to satisfy contrasting project objectives. CM/GC is an integrated team approach applying professional management during the planning, design, and construction of a project. The team consists of the owner, the architect/engineer (DP), the Construction Manager (CM), and subcontractors. As in the case of DBB, the owner contracts separately for design and construction services. However, the CM may be retained about the same time as the DP, typically through a qualifications-based or best-value selection process. During preconstruction, the CM acts as an advisor, providing professional services to the owner. A CM performs constructability reviews, cost estimates, construction phasing and schedules, and budget recommendations to determine the best options for the owner based on the project budget. The CM also may perform duties not typically performed by contractors, such as assisting in securing financing or selecting or helping in the selection of DPs. When the CM is âat risk,â it becomes the General Contractor (GC) during the construction phase. The CM awards sub- contracts in either a fixed price, cost-reimbursable, or Guaranteed Maximum Price (GMP) contract. When a CM is bound to a GMP, the most fundamental character of the relationship is changed. In addition to acting in the ownerâs interest, the CM must manage and control construction costs to not exceed the GMP (AIA-MBA Joint Committee 2014). CM/GC has a long history in both public and private sectors, particularly for vertical construc- tion, federal sector projects, and related construction projects. While there are potential differences
6 Guide for Design management on Design-Build and Construction manager/General Contractor Projects in how CM/GC is implemented for vertical construction, some of the same fundamental charac- teristics apply to highway or multi-modal transportation projects. Among the perceived advan- tages of CM/GC, the emphasis on teamwork and the fact that a CM can be involved in the design and decision making process early in the project distinguish it from traditional DBB. Generally speaking, the three biggest advantages of using CM/GC are (1) Freedom to innovate design and construction practices; (2) Flexibility to allocate risk, and then to re-allocate risk and continue to re-allocate risk throughout the life of the project; (3) Potential for great cost savings through innova- tion and optimum risk allocation. Other noted advantages involving design include: ⢠Innovation and constructability recommendations early in the design phase ⢠Agency retention of significant control over design ⢠Potential for time savings by fast-tracking early components of construction prior to complete design in phased packages ⢠Ability for the DP to develop a more accurate cost estimate earlier ⢠Allowance for the design to be accomplished in the priority order that the phases are needed for construction and budget constraints. Problem Statement Once an agency has decided to pursue the implementation of a D-B or CM/GC program, there are certain broad concepts that must be understood by all parties involved. Successful implemen- tation of a D-B or CM/GC program in many cases requires a significant and aggressive change in the culture and philosophies of the parties involved from that of traditional DBB projects. In terms of DM, the standard design methods, schedules, and plans review stages frequently used in designing DBB projects may prove inadequate or insufficiently accelerated to realize the advantages of these alternative delivery methods, making the task more challenging for DPs and agency staff. Under D-B, DPs lack a contractual relationship with the agency. With few exceptions, DPs usually are consultants to the Design-Builder even if the agency often contracts with a separate DP for preparing the conceptual design to be included in the Request for Proposal (RFP). Similarly to CM/GC, they are required to take a much more active role in working with the constructor (almost always the leading D-B entity), but their ability to communicate directly with the agency is limited when compared to DBB and CM/GC. This is particularly true when the D-B contract was awarded on a lump sum where the D-B tied the price to certain design assumptions and may tend to be defensive regarding these assumptions. Under these circumstances, agencies still may be able to implement effective DM by setting certain boundaries in the specifications and through an appropriate and clear approach to design QA and QC. However, these approaches need to be identified early and conveyed to proposers during the proposal preparation phase. Often, proposersâ specific approaches to quality management for both design and construction are used as a component of the best-value evaluation. Under CM/GC, DPs still have a contractual relationship with the agency. However, they are required to take a much more active role in working with the owner and contractor (or CM) throughout the entire design process, including early and continuous Value Engineering (VE) (though CM/GC contracts rarely have a VE clause), Right-of-Way (ROW), real-time pricing, increased coordination meetings, and accelerated design. DPs must budget additional funding and management personnel for frequent team meetings and binding decisions while working with both the owner and contractor (CM). DPs need to be educated in the process of receiving real-time input from the constructor as well as being flexible in modifying standard items such as traffic control plans to best fit the chosen approach to construction. Overall, the fast-track nature of both alternative delivery methods leads to a short-term need for increased plan production rates. This places additional requirements on the DPs, such as
Introduction 7 extended work hours, to keep pace with the acceleration and changes proposed by the con- structor. Successful implementation also often requires that a project be broken into additional multiple âminiâ phases, enabling the constructor to start work early in areas where ROW and permits have been obtained and/or utilities relocations have been completed. Early work pack- ages can be broken down into such items as retention ponds, partial clearing and grubbing, constructing on friendly parcel takes, etc., which requires more design effort than traditional âstation-to-stationâ designs. Standard items under the DPâs oversight, such as utility coordination during design, partially transfer to the constructor to accelerate utility relocations, advance-order long lead items, have one âpointâ of responsibility with the utility companies, etc. These shifts in responsibilities are often required for the constructor to take responsibility for the overall project schedule and budget. Research Objectives The motivation behind NCHRP Project 15-46 is that a comprehensive delivery toolbox which includes the D-B and CM/GC methods would require the utilization of new practices for DM than does DBB. Therefore, the main research objective was to develop a guidebook that will aid DOTs in the successful implementation of effective DM for owners using CM/GC or D-B project delivery. The guidebook will include separate chapters to specifically address each delivery method. In addition, this guide includes the following elements: ⢠A review and synthesis of ownersâ recent experience in design services management under CM/GC and D-B, conveyed through case studies ⢠Critical assessments of the relative merits of alternative approaches to managing key aspects of the design that affect project scope, quality, and cost ⢠Lessons learned from DM under CM/GC and D-B that may be applied effectively under these and other project delivery methods. Research Approach Initially, the research team contacted, by telephone, every state DOT in the country (52 including Puerto Rico and the District of Columbia), plus 13 non-DOT public transporta- tion agencies, and conducted an initial round of phone interviews with the personnel identified by the agency as the individuals most knowledgeable about that agencyâs design process, as well as experiences with CM/GC and D-B. This first round of interviews (i.e., Level 1) was performed using a structured questionnaire that included strategic, exploratory questions regarding the agencyâs recent experience with design services under CM/GC and D-B. Not all DOTs have expe- rience with either system, but an organization potentially may have sound and effective design practices in place that could serve as building blocks for other strategies incorporated into the final products of this research. The agencies with the most experience and information to offer were identified and asked to participate in a second round of in-depth interviews (i.e., Level 2). Agencies participating in the second round took part in a second telephone interview and were asked additional (supplemental) questions by email. Level 2 participants were asked to provide answers to more in-depth questions, as well as for data from their projects and documents. Eighteen agencies took part in Level 2. From the in-depth questions, critical assessments were made regarding the relative merits of alternative approaches to managing key aspects of the design that affect implementation, project scope, quality, and cost. The results of these Level 1 and Level 2 surveys guided the selection of case study programs and projects that were selected to provide an in-depth diverse portfolio of sample implementations
8 Guide for Design management on Design-Build and Construction manager/General Contractor Projects of DM procedures. Agencies chosen for case studies were visited by one or two team members. During these visits, the team conducted detailed interviews and gathered specific information from various parties, including agency staff and consultants, DPs, and contractors. Between 6 and 20 individuals were interviewed at each of 10 programs visited. This Guidebook includes synopses of many case studies that were conducted. Detailed narration of these case studies is also included in the Appendices. Overview of Guidebook Content This guidebook is organized into five chapters and includes a set of appendices containing case studies. Chapter 2 provides a general framework to implement a change in delivery by adding D-B and CM/GC. Chapters 3 and 4 include a review and synthesis as well as a critical assessment of alternative approaches to managing key aspects of design as they may affect project scope, qual- ity and cost. These chapters utilize short versions of the case studies to convey these approaches. In addition, detailed implementation templates for the two delivery methods are provided. Chapter 5 concludes the guidebook by providing a set of key lessons learned for design services management under CM/GC and D-B and discussing general implementation issues.
