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Alternate Project Delivery Systems
By: Gary L. Aller
Most public construction has traditionally used the Design
Bid Build (DBB) method of project delivery. This is the familiar
process in which the public entity hires an architect/engineer
to design the required facility. The fully designed project
is then put out for bid and the lowest bidder is awarded the
contract for construction.
Not only is the DBB project delivery method familiar; equally
familiar are the common occurrences of schedule delays, disputes
over quality, budget over-runs, and claims.
These failings of the DBB method are particularly problematic
for public facilities because time is usually critical and
budgets tight. Since safety and durability are primary concerns
in public works construction, quality becomes a major issue
as well.
Although used in the private sector for decades, Alternate
Project Delivery Methods
(APDM) were first used in the public sector by the federal
government. Over the last decade, these methods have been
used for large public projects such as highways and have seen
extensive use in the military sector.
Facilitated by legislation passed primarily within the last
five years, public entities have made increasing use of several
Alternate Project Delivery Methods. At this time, 46 states
allow some form of construction procurement other than DBB.
Research has shown that projects completed using alternate
delivery methods have achieved decreased times to occupancy,
facilities of equal or better quality, and reduced construction
costs. One of the major barriers to the increased use of these
alternate methods is lack of awareness and understanding of
the processes involved and the benefits available through
their use.
With the growing need to build new public facilities and to
replace or renovate aging ones, the goal is to furnish public
works officials with the information they need to construct
high quality facilities quickly and economically.
The legal characteristics of project delivery methods vary
from state to state, but the three alternate methods introduced
here represent general models that summarize the basic approaches
available. Two of the methods, Construction Manager at Risk
and Design Build, are typically used for large projects involving
construction of new facilities or major additions. The third
method, Job Order Contracting, is mainly used for renovations,
maintenance, or small new projects.
Construction Manager at Risk
The Construction Manager at Risk (CMAR, or CM/GC) method of
procurement is the alternate method that is most like the
DBB method and is the most easily understood.
Using this method, the public entity hires an architect/engineer
and a contractor/builder using separate contracts, just as
in the DBB method.
However, these two services are hired nearly simultaneously,
as soon as the project is approved. Using this system, the
CMAR firm gives input during the design of the facility, providing
constructibility reviews, value engineering, and estimating
and scheduling support, helping public owners ensure that
economically efficient construction practices are used and
value is maximized. Minor design alterations can often result
in major savings during the construction phase.
Additionally, significant time is saved through phased construction,
which allows the contractor to begin building before the final
design details are in place.
Another difference in CMAR is the list of criteria by which
the prospective builders are evaluated. Using the DBB method,
all construction firms are assumed to be equally capable and
are judged only by price. In contrast, the CMAR method recognizes
that each construction firm has unique skills and experience;
factors that can be critical to the success of the project,
and selects the builder by the same procedure used to select
the architect, Qualifications Based Selection (QBS). Because
the design phase is not yet complete when the contract is
executed, establishment of a firm final price is accomplished
later in the design phase. The CMAR method gives owners the
flexibility to choose appropriate criteria by which to evaluate
prospective construction and A/E firms.
One of the keys to success in using the CMAR method is to
hire the construction firm very early in the process, so that
maximum input can be offered in the design phase.
An important advantage offered by the CMAR method is that
the CMAR firm and the architect/engineer form a working relationship
during the design phase, which, when continued throughout
the construction phase, provides a valuable check and balance
system. Equally important to project success is the formation
of a communicative, positive working relationship among the
public entity, the design firm, and the CMAR firm. The public
works owner must take an active role in the project to assure
success.
Design Build
Another alternative method is referred to as Design Build
(DB). Using this method, public owners hire one firm to handle
both the design and construction of the project. Of course,
the public entity must provide information on functional requirements,
site restrictions, performance specifications, and any other
nonnegotiable issues relevant to each project. In some states,
a one-step process is used to select a Design Builder by Qualifications
Based Selection (QBS). The QBS method allows public owners to
form a list of criteria by which to evaluate prospective firms.
These criteria, many of which are related to the integrity,
past performance, and unique capabilities of each firm, are
often more relevant to the success of the project than final
price. Other states require some form of price or design competition
as a second step in the procurement process. Design competition
is a key strength of the Design Build process, and allows each
competing firm to propose unique and innovative designs in addition
to submitting a price.
Once a contract is awarded, the efficiency of having the
entire project controlled by one firm can lead to much shorter
completion times, with design and construction proceeding
simultaneously. Potential adversarial relationships between
designers and builders are avoided with the DB method, another
advantage of having one locus of control. The Design Build
method is an important tool for public works owners because
it typically delivers the fastest schedule without sacrificing
quality.
Using the DB method, costs are generally lower as compared
to the DBB method.
Additionally, project cost can be established much earlier
in the process, allowing for more effective planning. One
possible disadvantage of the DB method stems from the same
source as its major advantages - single source responsibility
and speed. The disadvantage is that there is one firm controlling
the entire project and only one contract. This does not afford
a system of checks and balances, except through the involvement
of public works staff. Therefore, a good working relationship
between the public entity and the Design Build firm is crucial
to a successful outcome.
Job Order Contracting
The Job Order Contracting (JOC) delivery method is sometimes
known as Delivery Order.
Contracting (DOC) or IDIQ (Indefinite Delivery, Indefinite
Quantity). Because JOC is most advantageous when the work
is of a recurring nature, and delivery times, type of work,
and quantity of work are indefinite, the use of JOC is now
gaining popularity in the public arena, especially when facilities
need updating, renovation, and repair.
JOC is not used for major new construction (some states limit
its use to projects under $750,000), but is superior for minor
construction, alteration, renovation, and maintenance of facilities.
Using the Job Order Contracting method, a single contract
can be used to accomplish many different tasks, spanning several
years, without the need to bid each task; saving time, money,
and administrative effort. All public facilities have recurrent
needs, such as maintenance, upgrades, and renovations, which
are more efficiently and cost-effectively, accomplished using
JOC.
Most JOC contracts start with a one-year term with optional
extensions, usually two to four years, awarded for good performance.
The contract also includes guaranteed minimum and maximum
amounts of work to be performed under the contract. Using
the JOC method, even jobs that were not known to exist at
the time the contract was awarded can be handled quickly and
efficiently using a unit pricing system. This saves time by
preventing delays when unanticipated problems arise, a common
occurrence during renovations. Under a JOC contract, when
a need arises, the public agency consults with the contractor
to develop a statement of work, reviews the cost estimate
prepared by the contractor, and issues a notice to proceed.
Essentially, JOC provides public works organizations with
an on-call general contractor and pre-determined pricing,
preventing delays in repairs and upgrades, reducing facility
down time, and making it possible to reliably schedule jobs
to assure the least public inconvenience.
By using quality and performance based selection criteria
in combination with cost competition in the form of coefficients
applied to a Unit Price Book, public entities can ensure the
selection of a contractor who understands JOC operations,
can handle many diverse projects simultaneously, and provides
the best value over several years of a successful partnership.
Because this partnership will determine the success of the
JOC experience, involvement of public works personnel working
with the JOC contractor in a team-oriented environment is
essential.
Conclusions
To realize the benefits of using Alternative Project Delivery
Methods, public entities should begin by determining which
forms of procurement are legal in their states.
Once the options have been identified, contacting national
organizations will provide good general information on each
method. Information on CMAR is provided by The Construction
Management Association of America (CMAA, ).
For Design Build, the primary resource is the Design Build
Institute of America (DBIA, ). Professional information and
assistance with JOC is available through The Center for Job
Order Contracting Excellence (CJE, ) at Arizona State University.
Another valuable source of information is other public owners
in the same state that have used these methods. Their experience
can prevent many common errors in the procurement process.
As more public works projects turn to APDM, a valuable bank
of information will accumulate.
Public construction procurement is particularly well suited
to the use of these new alternate delivery methods, because
it is time and cost sensitive. Delays in new construction
create major problems, and down time for renovations are often
not possible because public facilities must continue to function.
The demonstrated superior speed of construction for projects
built using the new methods and the generally lower costs
of construction justify their use. The additional concern
of public works owners is that public facilities must be built
to last, because doing otherwise entails greater future costs
for maintenance and renovations. Therefore, value - a combination
of high quality and lowest long-term cost - is what public
owners need, and these new procurement methods consistently
deliver better value.
All of the new methods have been used successfully in the construction
and maintenance of public facilities. It must be emphasized
that the degree of success in using these methods is highly
dependent on the participation of public works personnel in
both the procurement and construction processes. Good communication
and cooperation are invariably fundamental elements of successful
projects. The goal of owners should be to form a mutually beneficial,
positive relationship with each partner on the project. The
rewards to the public sector are potentially huge in savings
of time and money and in increased quality of construction.
The new delivery methods not only provide significant benefits
for public agencies, A/Es, and contractors, but also result
in better facilities to serve the public that are ready when
needed.
Gary L. Aller is the Director
of the Alliance for Construction Excellence (ACE). ACE is
an outreach/inreach organization that is part of the Del E.
Webb School of Construction, the College of Engineering and
Applied Science at Arizona State University.
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