Implementing Alternative Technical Concepts in All Types of Highway Project Delivery Methods (2020)

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1 Summary This document consists of the Final Research Report for NCHRP Project 08-112, “A Guidebook for Implementing Alternative Technical Concepts into Project Delivery Methods”. It comprises the alternative technical concepts (ATC) Benchmark Report and the results of the Phase 2 Work Plan. An outline for the final Guidebook is included in the report. The Guidebook itself is published as NCHRP Research Report 937 and is available on the TRB website by searching “NCHRP Research Report 937”. The business case for extending the use of ATC into all forms of project delivery can be summed up in the following quotation: “There is an emerging view in the construction industry that better performance or better value for money can be achieved by integrating teamwork for planning, design and construction of projects” (Forgues and Koskela 2008 emphasis added). Integration can be achieved in several different ways, but in the final analysis an “integrated” construction project includes the construction contractor in the design process in some meaningful manner. By that definition, traditional Design-Bid-Build (DBB) contracts are not integrated; whereas, most alternative contracting methods (ACM) are. For example, Design-Build (DB) project delivery is the most common method used for developing an integrated approach to design and construction in the highway industry. The Construction Manager/General Contractor (CMGC) method also creates integration by bringing the construction contractor into the design process via a preconstruction services contract. Public-Private Partnerships (P3) take integration to a higher level by including private financing and in many cases, post-construction operations and maintenance (O&M). The Guidebook produced as the primary deliverable of this project uses a more focused working definition for ATCs than the one proffered by the Federal Highway Administration (FHWA) in 2012 in conjunction with its Every Day Counts initiative (See Chapter 1), which is shown below. An ATC is a proposed modification to a contract requirement in a manner that is equal to or better than the baseline articulated in the project’s solicitation. The Guidebook presents effective practices for establishing and implementing ATCs in different project delivery methods. The research found that ATCs are used by at least 31 state departments of transportation (DOT). The research survey found that ATCs are thought to stimulate innovative approaches to delivering a project that were not considered by the agency during the baseline planning and design process. Nearly all states that use ATCs apply them to DB projects and when enabling legislation is in place, to P3 projects as well. As a result, the Guidebook is heavily oriented on these two project delivery methods. Caltrans recorded the following benefit-cost data on the 16 projects in its DB Demonstration Program. • $3.23 million paid in stipends • $502.8 million approved ATCs • $142.5 million ATC incorporated into final projects • B-C ratio = $156 savings/$1 of stipend (Tritt 2016)

2 Implementing ATCs requires the agency to conduct careful evaluation of project requirements in all ACMs and determine whether the potential benefits offset the time and resources needed to accept, review, and approve ATC submittals. At least three states have used ATC process to obtain early contractor design input on traditional low bid DBB projects. Limited scope DBB ATCs appear to be the most promising with competing contractors proposing concepts for temporary construction works associated with alternative means and methods as well as construction administration tasks such as maintenance of traffic and work sequencing plans. Applying ATCs in CMGC projects is not generally accepted; however, at least three states reported that they include ATCs as part of their CMGC procurement process. Similarly, the use of ATCs on projects using an emerging variant of DB called progressive design-build (PDB) would likely fall in the same category. In PDB, the design-builder is selected on a basis of qualifications, and the project price is then negotiated during the preconstruction phase of the PDB contract in much the same manner as CMGC. The issue of whether ATCs are appropriate in both methods revolves around the fact that there is no quantified baseline design at the time of award. Additionally, both processes are designed to involve the contractor in assisting the agency and the designer to evaluate potential technical alternatives as part of the preconstruction contract. Thus, the ATC component becomes a matter of evaluating potential alternatives identified by competing contractors during the selection process, which is typically termed evaluating “proposed innovations.” NCHRP Synthesis 455: Alternative Technical Concepts for Contract Delivery Methods (2014) found that confidentiality must be guaranteed so that competing contractors can build a viable competitive advantage with their ATCs. The legal and contractual issues, like confidentiality, associated with ATC implementation are quite diverse and may create challenges for both the procuring agency and those entities responding to the procurement. Nevertheless, they have been consistently surmounted by a thoughtful approach to understanding possible local constraints and through active outreach to the design and construction industry. The Guidebook does not advocate the use of ATCs for specific project delivery methods but rather chooses to continue the philosophy espoused in the FHWA EDC program that ATCs are merely another tool proven to be useful in an agency’s procurement toolbox. As with all ACMs, the utility of ATCs are directly related to unique highway project characteristics and requirements. Thus, the Guidebook’s underlying recommendation is that each project, regardless of delivery method, be individually assessed to determine if including ATCs in the procurement process will add value to the final constructed project. The project also developed an ATC implementation toolkit that includes tools for evaluating the ATC potential of a given project as well as tools to assist the agency in evaluating proposed ATCs and assessing the benefits accrued by ATCs after the project is completed. The Guidebook and toolkit were tested by the Minnesota DOT, which has extensive ATC experience, and the Alabama DOT, who had only used ATCs once. Both DOTs found the guide and toolkit to be valuable. Alabama commented that it would have been of great help if they had access to it before their first ATC project. “Confidentiality in the ATC process is very important for the success of the ATC process.” (Hitt 2012)

3 Lastly, it is important to note that implementing ATCs with any ACM is a process of creating potential improvement rather than one of generating alternatives. The baseline design articulated in the project’s solicitation documents will range from a complete set of construction documents in DBB to a set of performance requirements in P3. Hence, the essence of successful ACM procurement is to develop a solicitation that does not exclude value-adding ATCs rather than one that actively stimulates ATC submittals. Put another way, an ACM project procurement should not be deemed unsuccessful if no ATCs are generated because that means that the technical content of the baseline design is probably optimized within the constraints of project requirements and available construction means and methods. Thus, the inclusion of ATCs can be viewed as an enhancement to the agency’s process for achieving value for money during procurement rather than as merely a mechanism to cut costs.