Cities, towns, and special districts across the country are faced with the unenviable task of delivering capital projects with budgets that are not always in line with the project requirements.
As a result, these organizations are looking for new, more innovative means of project delivery, such as design-build, to deliver their capital needs. One approach being considered is termed “progressive design-build.”
The use of progressive design-build is exemplified in a recent CH2M HILL assignment with the Wemlinger Water Treatment Plant in Aurora, CO. The City of Aurora was faced with a severe drought compounded by the need to upgrade and expand its main water treatment plant. The client was a bit unfamiliar with design-build, but chose the “progressive” variant because a single firm would be responsible for the design, procurement, and construction of the new facility. Other project factors included the need to be delivered in a very narrow time frame, operating within a set schedule for system shutdown with specific performance requirements — all while ensuring the City could meet its water quality and quantity needs during peak production periods.
In this case and others, time is a driver and a single point of accountability is critical. Organizations are often required to be heavily involved in the scope development; hence the use of progressive design-build. Keeping your business ahead of the curve and in tune with this and other variations of design-build used to meet capital project needs is critical.
The following are tips to consider when suggesting a design-build solution to a client.
DO define the approach your organization wants to take for the delivery of your project. Clients should understand that there are many different variations in delivering projects using design-build delivery.
DON’T undertake design-build delivery unless you are comfortable with it. Design-build affords an owner a different level of involvement and control over scope, means, methods, quality and schedule.
DO focus on the outcome you want from the project. Define the performance requirements and the quality of the facility to be delivered.
DON’T attempt to push unrealistic risks to the practitioner as he/she will manage those risks with money. Practitioners may not continue project work when money cannot reasonably overcome specific concerns related to project risks.
DO identify owner preferences to understand what an owner truly wants in its project. Preferences could include equipment types, specific vendors, acceptable sub-contractors, building materials and aesthetics.
DO identify the risks each party is expected to bear for any particular project. Once this information is known to the industry, practitioners can make an intelligent business decision on specific project opportunities.
DON’T direct means and methods to a design-build contractor, as the owner may forgo innovation and will assume unwanted risk on delivery, resulting in disputes and misunderstandings that delay the completion of a project.
DO make that risks should be borne by the party best able to manage same. For example, raw water quality should be defined and borne by an owner, as the owner has the right take water from a specific source and the desire to protect that source for use as drinking water. Conversely, the practitioner should bear the risk for the treated water quality that will be delivered from the facility it designed and built.
DO give enough time to respond to a RFP as owners want to make sure that proposers respond with a quality and competitive offering. If the timing is too short, proposers will have to make assumptions that likely will not deliver their best proposal for the specific project.
DON’T be overly prescriptive in an RFP as an owner should be looking to the practitioner to put the best solution forward for the project using an innovative design and construction plan.
DO clearly communicate your selection process, selection criteria and weighting to potential proposers, as it will enhance the likelihood that an owner will get responsive, competitive proposals.
DON’T use design-build for a project with an uncertain outcome as pricing will not be well defined. The owner will certainly spend more than its intended budget as defined in the price component of a design-build contract.
DO make realistic assumptions about what should be expected from the delivery approach selected for a specific project.
DO understand the level of project oversight an owner wants and needs, so that the practitioner and the owner can each perform their duties within the context of a design build arrangement.
DON’T ask proposers to provide information that won’t affect your selection decision. Minimize proposal requirements as practitioners are always weighing their investments against potential return.
DON’T require proposers to hold prices for an extended period of time in a volatile construction market.
DO understand and define what you want to buy. A good statement of work will most certainly lead to a project closeout when both parties know what is expected of the other when the project is completed.
DO incentivize the practitioner for great performance rather than focus only penalties for unsatisfactory performance on DB contracts. Positive incentives go a long way to further motivate project teams to achieve exemplary performance.
DON’T use penalties alone to incentivize practitioner performance without equal incentives for excellent performance. Performance rewards should be balanced equally with performance penalties.
DO reach out to surety companies to understand current market requirements. Surety firms are taking much less risk and will have great influence over what will be acceptable terms and conditions in a prime contract and bond/guarantee requirements.
DO attempt to define the duration of price confirmation in a proposal and always try to provide realistic protection for escalation of materials and labor given the volatility of the marketplace.
DON’T assume that a vague Statement of Work will suffice for definition of the expected project outcome. Specificity is key when defining project tasks and deliverables.
Ultimately, the progressive design-build delivery process allowed CH2M HILL to better understand the client and their expectations by working together with a cohesive group of experts progressing toward a unified goal, resulting in a more successful and satisfying water treatment project for all.
There are many variations of design-build that may be applied by organizations to meet their capital project needs. Clients, however, must choose what is best for them. Their organizational culture and flexibility will lead them to the best solution for their needs.
INFO: CH2M HILL (www.ch2m.com)