THE MUNICIPAL WATER AND WASTEWATER DESIGN-BUILD HANDBOOK. Third Edition Expanded to Include Design-Build-Operate

Transcription

1 THE MUNICIPAL WATER AND WASTEWATER DESIGN-BUILD HANDBOOK Third Edition Expanded to Include Design-Build-Operate

2 ABOUT THE WATER DESIGN-BUILD COUNCIL The Water Design-Build Council seeks to advance the development and rehabilitation of all facets of the water and wastewater infrastructure by employing the use of design-build, construction management at-risk (CMAR), and design-build-operate delivery methods. We fulfill this mission by fostering a collaborative working environment with all stakeholders to define and disseminate those best practices that facilitate a productive and long-standing relationship between service providers and government officials. Above all, these best practices should enable owners who choose to use design-build, CMAR, or design-build-operate to realize the numerous benefits resulting from collaborative project delivery (CPD) for design and construction; innovation, speed, improved quality control, and single-point accountability. MEMBER COMPANIES If you have any questions or would like further assistance, please contact: Water Design-Build Council info@waterdesignbuild.org

3 THE MUNICIPAL WATER AND WASTEWATER DESIGN-BUILD HANDBOOK Third Edition

4 2014 Water Design-Build Council, Inc. All rights reserved. Original publishing date 2008 This guide provides an overview of important factors for you to consider in implementing water and wastewater capital projects using the design-build or the construction management at-risk (CMAR) methods of project delivery. It is not intended to substitute for sound advice from your own experts, persons experienced in design-build, and design-build firms themselves. Each community and each project will have its own needs and requirements and should be addressed by persons knowledgeable about your special circumstances.

5 foreword This Handbook provides an overview of important and essential factors to consider in implementing water and wastewater infrastructure projects using the various delivery methods of design-build (DB), construction management at-risk (CMAR) or design-build-operate (DBO). The contents of this Handbook are not intended to substitute for sound advice from your own experts, persons experienced in design-build, and the design-build firms themselves. Each community and each project will have its own needs and requirements and should be addressed by persons knowledgeable about your special circumstances. Produced by members of the Water Design-Build Council, the purpose of this Handbook is to educate and help policy officials, and owners of municipal water systems decide whether and how to embark on the use of design-build (DB), construction management at-risk (CMAR), or design-build-operate (DBO) as delivery methods for water and wastewater infrastructure projects. Its production embodies the years of experiences of the Water Design-Build Council (WDBC) members and the communities they serve. The 2013 update of this Handbook now includes a section on design-build-operate (DBO). Its goal is to inform owners about the pros and cons of this growing delivery method. Also new is a glossary of terms commonly used within this document and other educational materials. Its purpose is also to ensure that consistency exists throughout the industry about the terminology and their descriptions of the methods employed in this industry. As an example, the use of collaborative project delivery is now being used to minimize the confusion of terms with alternative delivery and integrated delivery. In addition, all of the updates in this Handbook are reflected in the new educational videos produced by the WDBC and are available on our website. Each Handbook chapter addresses a main step in a DB, CMAR, or DBO delivery for water and wastewater projects. And where appropriate, Best Practices are presented as further guidance for industry principles. Chapter 1 introduces the basic delivery methods and presents the spectrum of differences within the design-build options, CMAR, and design-build-operate. Chapter 2 presents the decision-making steps involved in considering which delivery method is the most appropriate for an owner s water or wastewater project. It also discusses regulatory constraints and how to determine which of the design-build delivery methods might best serve your needs.

6 Chapter 4 focuses on the important topic of risk allocation in design-build and CMAR projects and offers suggestions for applying, where appropriate, the basic principle of allocating risks to the party best able to control or finance them. Chapter 5 discusses management and oversight of design-build projects to ensure a successful outcome. Chapter 6 devotes attention to the specifics of working with and managing a construction management at-risk project. Chapter 7 addresses the final steps of a project s transition; from startup and commissioning, project acceptance, and transitioning to owner operations. Chapter 8 presents an important project delivery method, design-build-operate, which is becoming more commonly used. The Appendix includes award-winning projects that have been executed through either a design-build, CMAR, or DBO delivery. Additional case studies and projects are also available on the WDBC website (WaterDesignBuild.org).

7 contents Chapter 1: Understanding the Basics...1 Chapter 2: Deciding on the Project Delivery Method...19 Chapter 3: Conducting the Procurement Process...33 Chapter 4: Managing Risk and Liability...45 Chapter 5: Managing the Design-Build Project...67 Chapter 6: Managing the Construction Management at-risk Project...79 Chapter 7: Transitioning to Owner Operations...85 Chapter 8: Design-Build-Operate for Water and Wastewater Infrastructure Projects...89 Appendix: Case Studies...99

8 CHAPTER 1 The team operated as one, and everyone understood and acted in accordance with the common goals. As a direct result of our close collaboration, we were able to take advantage of emerging opportunities and modify project components to achieve cost savings and maximize value. Larry Wyeno, Longmont Construction Manager Longmont, Colorado

9 Understanding the Basics With the increasing use of collaborative projectdelivery methods for water and wastewater infrastructure projects, more and more owners are reporting that these methods achieve quality projects within budget and on schedule. To support the water and wastewater industry s use of these collaborative methods, the WDBC provides numerous products that respond to the industry s needs for information and for educational resources. WDBC s objective in producing The Municipal Water and Wastewater Design- Build Handbook (now in its third edition) is to continue helping decision-makers and owners of public and private water or wastewater systems determine which collaborative delivery method is the best one for their particular project, and how to procure and use it effectively. 1 The delivery methods described in this Handbook are not intended as hard-and-fast prescriptions. Flexibility is an attribute of these methods that is key to providing an effective solution that meets owners needs. Owners are encouraged to select the most appropriate method that achieves their project objectives. This first chapter describes the most frequently used collaborative project-delivery methods construction management at-risk (CMAR), design-build (DB), and designbuild-operate (DBO), a variation on DB that extends to encompass operation and maintenance (O&M). It describes the benefits of each and compares them with the basic design-bid-build (DBB) method. Chapters 2 through 8 further describe the core components of the design-build and CMAR delivery methods. They provide guidance in choosing the most appropriate one and conducting the procurement process; managing risk and liability; and managing CMAR and DB contracts. For projects that do not extend to O&M, the Handbook includes a chapter on transitioning the finished project to owner operation and maintenance. The Glossary of Terms (see page 2), is another step toward WDBC s goal of providing industry members with consistent terminology and information about collaborative delivery methods. PROJECT DELIVERY Owners can choose among a number of delivery methods to meet their project objectives and priorities. Each method described in this Handbook offers specific benefits for an owner to consider in determining which is most appropriate to the overall success of the project. Figure 1-1 illustrates the primary and WDBC s recognized and defined collaborative delivery methods. Along with describing the contractual arrangements and working relationships of these methods, the accompanying figures further illustrate and explain the distinctions of each one. 1 Additional information and a more detailed evaluation of collaborative project-delivery methods is available in our publications and resources at WaterDesignBuild.org, and offered through our video training series. THE WATER DESIGN-BUILD HANDBOOK / 1

10 CHAPTER 1 Glossary of Terms Builder or Constructor. The entity responsible for performing construction on a design-build project. Collaborative project delivery (CPD). A comprehensive term encompassing various forms of design-build (DB) projectdelivery methods including construction management at-risk (CMAR) that fosters a cooperative relationship among the owner, the designer, and the builder in an integrated design and construction process. Construction management at-risk (CMAR). A delivery method in which the project design is the responsibility of an engineering firm retained by the owner. Construction is the responsibility of a separate contractor, also retained by the owner, who also performs pre-construction services during design development. The engineering firm and contractor typically work together during design development to address issues (such as constructability, scheduling and value engineering) and to mitigate risk during construction. Construction manager at-risk. See Construction manager/general contractor (CM/GC). Construction manager/general contractor (CM/GC). The entity under a construction management at-risk contract that is responsible for providing input to the designer during the design process on constructability and other issues, and then managing the construction and delivery of the finished project. In some states, this entity is referred to as the construction manager-at-risk. Contractor. The entity providing construction-only services usually on a low-bid basis to a project under the designbid-build (DBB) delivery method. DBO entity. The organization or company under a design-build-operate (DBO) contract that is responsible for providing design, construction, and O&M services. Design-bid-build (DBB). A delivery method, most commonly found in public procurement statutes, in which an owner first contracts with a designer to prepare detailed plans and specifications for a project, and then enters into a separate agreement with a contractor often on a low-bid basis to construct the project based on the designer s plans and specifications. Design-build (DB). A delivery method, now permitted in most states for water and wastewater infrastructure, in which an owner enters into a single contract for the design, construction and commissioning of a project. DB delivery methods can be either fixed-price (FPDB) or progressive (PDB), and they may be extended to encompass operations and maintenance (O&M) and financing. Design-builder. The entity, in a designbuild contract, that will provide design, construction and commissioning services for a project. Design-build-operate (DBO). An extension of design-build (DB) delivery, in which an owner enters into a single contract for the design, construction and operation of a project, based primarily on performance criteria specified by the owner. In a DBO contract, the owner provides financing, retains ownership of the project and controls operating revenues. The owner pays the DBO entity a fixed price for design and construction services, followed by a combination of fixed and variable fees for operation and maintenance (O&M) during the specified O&M period, typically 15 or 20 years. As the context may require, DBO can also mean design-build-operator. Design-build-operate-finance (DBOF). An extension of design-build-operate (DBO) delivery, in which an owner enters into a single contract that includes financing of the project, as well as design, construction, and operation. The owner typically retains control of project revenues and pays the DBOF entity a combination of fixed (capital and operating) and variable fees during for the O&M period. The DBOF entity arranges for financing and usually owns the project during the O&M period, typically on land leased from the owner. Designer. The engineer or architect-ofrecord for the project. Fixed-price design-build (FPDB). A type of design-build delivery in which a stipulated dollar amount (which may include allowances) for design and construction is established by the owner when the designbuild contract is signed, based on a defined scope, requirements and schedule for the project. Guaranteed maximum price (GMP). A pricing method found in progressive designbuild and construction management at-risk projects in which an owner pays the designbuilder or CMAR firm on a defined costreimbursable basis subject to a maximum limit, above which owner is not obligated to pay for services within the original scope. A GMP is often accompanied by a sharedsavings provision that encourages the design-builder or CMAR firm to complete the project for less than the GMP amount. Joint venture. An organization of two firms created specifically for the project, which in the case of a partnership would entail jointand-several liability to the owner. Performance-based contract. A form of contract in which the owner has specified the influent water or wastewater to be treated by the facility and the desired outcomes in terms of treated water or effluent quality and volume, residuals quality, energy and chemical consumption, maintainability, and other outcomes, but has left the choice of layout, processes and process units, materials, and equipment to the design-builder, subject to performance testing to demonstrate that the completed facility meets the specified performance outcomes. Prescriptive contract. A form of contract in which the owner has specified in significant detail the layout, processes and process units, sizes, capacity, materials, and equipment to be used by the design-builder in the design and delivery of the completed facility. Process-performance criteria. The detailed operational and technical performance requirements including all influent and other input criteria, permitting, owner s O&M requirements, and other considerations that are used as the basis for a project s design. Progressive design-build (PDB). A oneor two phased delivery method in which design, cost-estimating, and final pricing of the project are performed during the first phase. And, if the owner and design-builder reach agreement on the final pricing and schedule, then final design, construction, and commissioning are completed during the second phase. Final pricing with this method is often based on a guaranteed maximum price (GMP). Project delivery. The entire process of designing, constructing, and testing a facility in order to turn over the completed facility to the owner. Service provider. A generic term for either the DB or DBO entity, or the construction manager/general contractor, as indicated by context.

11 Understanding the Basics FIGURE 1-1. Project Delivery Methods Design-Bid-Build (DBB) Construction Management at- Risk (CMAR) Fixed-Price Design-Build (FPDB) Progressive Design-Build (PDB) Design-Build- Operate (DBO) OWNER OWNER OWNER OWNER OWNER DESIGNER CONTRACTOR DESIGNER CONSTRUCTION MANAGER DESIGN-BUILDER DESIGN- BUILDER DESIGN- BUILDER/ OPERATOR Contractual relationship Collaborative relationship SUBCONTRACTOR Basic Project Delivery Collaborative Project Delivery While the benefits of using a collaborative delivery method are substantial, the transition process from DBB can be challenging, especially if an owner is embarking for the first time on a new projectdelivery method. Therefore, this chapter not only defines the differences between basic DBB on the one hand, it addresses DB and CMAR on the other. Available resources providing a more in-depth understanding of these collaborative delivery methods are also described and listed. Design-Bid-Build DELIVERY DBB is a delivery method in which an owner enters into one contract with a designer to prepare detailed plans and specifications for a project; and then enters into a second agreement with a contractor to construct the project based on the plans and specifications completed by the designer. (See Figure 1-2.) DBB Distinguishing Features DBB has been widely used and legally tested in the public sector. Two sequential contracts first for design, then for construction: o Select designer, usually based on qualifications, who completes design. o Select contractor, usually on low-bid basis. Owner is both buyer and project integrator. Contractor is responsible for following the design details provided by the owner not for the overall performance of the plant or project. Owner is liable to contractor for extra costs related to deficiencies or flaws in the design. THE WATER DESIGN-BUILD HANDBOOK / 3

12 CHAPTER 1 FIGURE 1-2. Design-Bid-Build OWNER OWNER DESIGNER CONTRACTOR DESIGNER Plan Project CONTRACTOR Oversee Design Bid Design and Engineering Oversee Construction Operations Services During Construction Construction Design Engineer Selected Traditionally Issue Design Documents for Price Bids Selection typically based on lowest price COLLABORATIVE DELIVERY Collaborative project delivery differs from the DBB approach in two major ways: 1. Construction personnel are integrated into the design and construction process early. 2. The contractor is selected based on qualifications, cost, and other non-price factors. Construction personnel are involved early in the design phase. In both DB and CMAR project-delivery methods, the builder works hand-in-hand with the engineer during the design phase to proactively identify and resolve potential constructability, schedule, and other issues prior to beginning fieldwork. With DB, the designers and constructors work together as part of a single contractual team from the very beginning, minimizing the likelihood of constructability problems or design disputes and deriving the Construction Awarded and Proceeds to Construction Completion Warranty benefits of collaboration from project award to closeout. With CMAR, separate firms are responsible for design and for construction, but the construction manager has substantial input into the design. (In DBB, however, since the owner first engages a designer to produce a finished design and then engages the contractor to build the project according to that design, there is no opportunity for value-added contractor input to the owner s design prior to contract award.) Selection of the contractor is generally based on best value, rather than lowest bid. In both DB and CMAR, the owner can specify a range of criteria in addition to price when awarding the contract. These criteria can include such factors as service provider and key personnel experience with similar projects, project approach, innovative design ideas for meeting project objectives, schedule, commissioning plan, and the 4 / T H E WAT E R D E S I G N - B U I L D H A N D B O O K

13 Understanding the Basics ability and willingness of the service provider to work as part of a team with the owner s staff. In DBB, by contrast, the contractor is typically selected solely on the basis of price. owner s construction manager during design, as well as general contractor during construction (see Figure 1-3). Moreover, in a CMAR procurement process, the construction manager/ general contractor (CM/GC) is typically selected based on qualifications rather than price, which is the standard criterion for selecting a builder in DBB procurement. Construction Management At-Risk (CMAR) CMAR is contractually similar to DBB delivery in two regards, though there are significant differences. In both DBB and CMAR delivery, design is the responsibility of an engineering firm and construction is the responsibility of a separate contractor. Unlike DBB, however, the contractor in a CMAR delivery can function as the In both DBB and CMAR delivery, the owner retains significant design risk. Unlike DBB delivery, however, the CM/ GC is involved in the design process, which increases budget certainty and decreases design risk associated with constructability considerations. FIGURE 1-3. Construction Management at-risk (CMAR) OWNER Contractual relationship Collaborative relationship OWNER DESIGNER DESIGNER CONSTRUCTION MANAGER CONSTRUCTION MANAGER SUBCONTRACTOR SUBCONTRACTOR Plan Project Develop Design Concept Design and Engineering Verify Design / Oversee Construction Operations Services CM Services During Design Construction Design Engineer Selected Traditionally Selection typically based on qualifications Issue RFP for CMAR Selection typically based on qualifications and fee percentage Construction Warranty GMP Defined Prior to Construction T H E WAT E R D E S I G N - B U I L D H A N D B O O K / 5

14 CHAPTER 1 The decision to use CMAR should be made and the GC/CM selected and integrated into the project team as early as possible, but no later than when the design is 30% complete. In the early stages of design development, the use of CMAR delivery can contribute invaluable input to the site work, site layout, constructability, and general arrangements regarding structure and process. Much beyond the 30% design level, opportunities for major constructability impacts may be reduced or lost. Because it is relatively new, owners lack of familiarity with CMAR project delivery as well as legislative restrictions in states where it has not yet been approved has limited its use to date. CMAR Distinguishing Features Two independent contracts: design and construction. Two-phase construction contract: o Preconstruction services during design. o Construction. CM/GC selected early when design is no more than 30% complete: o Selection based primarily on qualifications, with the option to consider a fee proposal. o CM/GC provides guaranteed maximum price (GMP) and schedule when design is approximately 60% (or more) complete. o Owner may choose to reject GMP offer and proceed with DBB. o CM/GC becomes actively involved in review of design process once selected. Owner is both buyer and project integrator. CM/GC responsible only for following the design detail; not for overall plant performance. Risk for plant performance is determined between the owner and the designer. The CM/GC provides input for constructability improvement purposes, not for design, structural, or process effectiveness. Design-Build What distinguishes DB delivery from both DBB and CMAR is single-point accountability for both design and construction. Rather than requiring two separate contracts one for design and one for construction DB delivery entails only one contract, between the owner and the design-builder. Within the design-build umbrella, there are two core variations: fixed-price design-build and progressive design-build. Fixed-Price Design-Build (FPDB) FPDB is used when an owner has defined the project requirements and scope of work sufficiently for the design-build proposer to establish the project cost early in the procurement process (see Figure 1-4). The design-builder agrees to design and construct the project for a fixed price and schedule, based either on the owner s description of the project requirements or on a conceptual design provided in the procurement documents. Due to the complexity of many municipal water and wastewater projects, owners 6 / THE WATER DESIGN-BUILD HANDBOOK

15 Understanding the Basics FIGURE 1-4. Fixed-Price Design-Build OWNER Contractual relationship Collaborative relationship OWNER DESIGN-BUILDER DESIGN-BUILDER Plan Project RFQ Period Design Concept / RFP RFQ - Quals Solicit Qualified Teams Typically, a short list of the three most qualified teams is selected RFP Period Verify Design RFP Clarifications Project Support Proposers Design Approach and Price Prepare and Issue RFP Define project performance criteria and proposal evaluation factors using FPDB sometimes will incorporate both a conceptual design and detailed project requirements into the procurement documents. When this is the case, however, it can be more costly for the owner. This FPDB procurement approach would be more expensive to the owner because of the resources required to prepare more detailed procurement documents, and may increase the owner s cost of construction by limiting design-builder design flexibility. Request for qualifications (RFQ). o Operations Warranty Technical package developed by owner includes: o Project scope. o Design and performance criteria. o Construction quality requirements. DB firm selection is typically based on best value combined weighted score of technical approach/solution and price which can be weighted heavily toward total project value, technical approach, qualifications, anticipated life-cycle costs, or other criteria based on the owner s perception of best value. Successful DB proposer is awarded the contract and proceeds with design, permitting, construction, testing and acceptance, close-out, and warranty services. DB provides single-point accountability for overall project performance. Short list of best-qualified proposers (typically three). Request for proposal (RFP) provides technical package and project criteria, and also identifies evaluation criteria/ selection method. Ongoing Select Design-Build Firm Award DB Contact Selection based on best value (technical + price) FPDB Distinguishing Features Design, Build, Startup Operations T H E WAT E R D E S I G N - B U I L D H A N D B O O K / 7

16 CHAPTER 1 PDB Distinguishing Features Progressive Design-Build (PDB) PDB involves a different contract structure than that of fixed-price DB (Figure 1-5). In this approach, qualifications, rather than price, are generally the key selection factor of the design-build firm. Through a highly collaborative relationship between the owner and the DB team, the owner is able to evaluate a broad spectrum of project solutions. Due to its straightforward procurement process that can be completed in a relatively short period of time, PDB can offer substantial time savings in the overall project-delivery process as well as reduce the owner s cost of procurement.2 Selection is based largely on qualifications. One DB contract with two phases: o Phase One The design-builder works with the owner to develop project scope, design, initial permits, schedule, and guaranteed maximum price (GMP) for owner approval. o Phase Two After agreement on price, the design-builder proceeds to complete design, obtain permits, and perform construction, testing and acceptance, and close-out. Design-builder has single-point accountability for overall project performance. FIGURE 1-5. Progressive Design-Build OWNER Contractual relationship ONESTEP PROCESS TWOSTEP PROCESS Collaborative relationship OWNER DESIGN-BUILDER DESIGNBUILDER Plan Project RFQ Define Performance Criteria Tech Support Quals RFQ Defines qualifications criteria; short-lists qualified firms Permits/ 60% Design Verify GMP Verify Performance Agree on GMP Based on collaborative scope and design; pricing may be verified by third party 2The Ongoing Services During Construction Concept/Design/Develop GMP Detail Design / Construction Select from qualified firms Selection based on qualifications; may include overhead and fee criteria O&M Warranty Operations Warranty Owners Procurement Guide and Model Documents for Progressive Design-Build Delivery is now available from the Water Design-Build Council. See the WDBC website for access (WaterDesignBuild.org). 8 / T H E WAT E R D E S I G N - B U I L D H A N D B O O K

17 Understanding the Basics Lee County Utilities, Fort Myers, Florida: 3 MGD Pinewoods Water Treatment Plant Reverse Osmosis Expansion, Design-Build Lee County Utilities faced increased demands for potable water and had limited fresh-water resources. County officials determined they needed to rehabilitate and expand the existing water treatment plant. To ensure a high-quality rehabilitation and expansion of the plant, Lee County selected the design-build team based on qualifications. The Pinewoods Treatment Plant remained fully operational during the project schedule. Differences Between Fixed-Price and Progressive Design-Build For a FPDB project, the design-builder agrees, during the procurement period, to design and construct the project for a fixed price based on either the owner s description of the project requirements or a conceptual design provided in the procurement documents or both. In PDB, the owner selects the design-builder based primarily or entirely on qualifications. The owner then works with the designbuilder to develop the project s design to an approximate 60% 80% level of completion. The design-builder provides an openbook cost estimating process as the design progresses and a guaranteed maximum price proposal when design development is complete (Phase One). If the price proposal is accepted by the owner, then the designbuilder is authorized by owner to complete the design and perform construction and commissioning/acceptance testing (Phase Two). Design-Build-Operate (DBO) Whether fixed-price or progressive, DB project-delivery methods may be extended to encompass operation and maintenance (O&M) of the completed project. A further extension of DBO design-build-operatefinance (DBOF) is currently not widely used for U.S. municipal water or wastewater projects and therefore is not described here in detail. It is, however, defined in the Glossary on page 2. DBO comprises all the components of DB including design, permitting, procurement, construction, and testing and also includes operation and maintenance (O&M) of the com pleted facility (see Figure 1-6). Thus, the delivery of the project and services provided to the owner does not end at final acceptance; it continues through a defined operational term. THE WATER DESIGN-BUILD HANDBOOK / 9

18 CHAPTER 1 FIGURE 1-6. Design-Build-Operate OWNER OWNER DESIGN-BUILDER/OPERATOR DESIGN- BUILDER/ OPERATOR Plan Project RFQ Period RFP Period Verify Design Monitors Operations RFQ - Quals Proposers Design Approach and Price Design, Build, Startup Ongoing Operations Warranty Construction Warranty Operates Plant Ongoing DBO is particularly suited for use in specific circumstances. For example: When a project will incorporate new or emerging water or wastewater technology. When an owner s staff resources are limited. When an owner seeks to transfer operational performance risk to a third party. When an owner seeks an efficient delivery method that encompasses both the capital and O&M components of a new project. DBO Distinguishing Features Public owners generally need to consider local policy issues related to whether the facility should be operated by an outside contractor (DBO) or its own employees, as well as take into consideration other factors. Only certain contractors may have the appropriate qualifications due to the need to add the operation function to the design-build team. The best-value selection approach emphasizes the project s entire life-cycle cost. The DBO entity not the owner assumes risk for performance, commissioning and acceptance testing, regulatory permit compliance, treatment capacity, repair and replacement, and handover condition at conclusion of the O&M contract. Labor considerations may also impact the decision-making process. 10 / THE WATER DESIGN-BUILD HANDBOOK

19 Understanding the Basics Advantages of COLLABORATIVE Project- DELIVERY Methods Owners using collaborative project-delivery methods consistently report an improved and positive project experience. When properly planned and executed, both DB and CMAR delivery offer numerous advantages over DBB, most of which result from the involvement of construction personnel in the design phase and the integration of design and construction. 3 Because the designer and the engineer work closely beginning early in the design phase, they are able to proactively identify and resolve potential constructability, schedule, and quality issues prior to beginning field work. With DBB, in contrast, the contractor typically has no involvement in the design development phase, and consequently may face costly schedule, quality, or constructability issues during construction. Because the contractor in collaborative delivery methods is involved in the design phase, it is often possible to begin major equipment procurement and construction before the design is completed. This increases opportunities to compress the project schedule and potentially take advantage of lower costs; a shorter schedule generally reduces overhead and lowers project cost. With DBB, however, the owner must review and adopt a fully completed design before entering into a contract with a construction firm. Because there is no overlap or collaboration between design and construction with DBB, there is no 3 See the WDBC 2012 Customer Satisfaction Survey highlights at the end this chapter and obtain the full Executive Summary from the WDBC website (WaterDesignBuild.org). City of Valdosta, Georgia: Design-build came in under budget City officials of Valdosta, Georgia, realized they needed to increase the capacity of the city s water treatment plant to keep pace with an expanding population. Maintaining the delivery of high-quality drinking water to city residents during expansion was essential. Using progressive design-build delivery, the expansion was completed on time and under budget. Now, with increased capacity, the residents can expect safe, high-quality drinking water for the foreseeable future. As Valdosta mayor John J. Fretti explained, This expansion to our water treatment plant solved our supply challenges using the best available treatment systems and technology to ensure the residents and businesses within our city have safe, clean water. The city continues to provide our citizens the best water quality ISO class 1 rating at the lowest cost. Further, Larry Hanson, Valdosta city manager, stated, These upgrades were successfully implemented while maintaining existing plant services in a manner that our customers never realized construction was under way. THE WATER DESIGN-BUILD HANDBOOK / 11

20 CHAPTER 1 opportunity to realize the time, quality, and cost efficiencies that are possible with DB and CMAR. Collaborative project-delivery methods also offer a high degree of flexibility in risk allocation, in level of information to include in the RFP, and in determining at what stage to require a fixed price or GMP. DB and DBO delivery methods make it possible to allocate each risk to the party owner or service provider best equipped to manage it. Both methods enable owners to determine at which stage the design process should require the DB or CMAR firm to provide a fixed or guaranteed price; and DB also enables owners to decide on the appropriate level of design and permit development to include in the RFP. Time and cost savings. Both DB and CMAR delivery have proven to be particularly effective for water and Cost savings can be achieved through the early integration of design and construction wastewater projects with tight schedule constraints, because construction often can begin before the design is complete. With DB, use of a single procurement for the combined designer and builder helps save time. With CMAR, selecting the General Contractor who also serves as the owner s Construction Manager during design early in the design phase helps save time. In addition, there is the potential to reduce project costs through early procurement, a compressed schedule, and the early integration of design and construction, resulting in reduced overhead and improved constructability. Early knowledge of total costs. Although cost is generally not the main selection factor in DB or CMAR procurement, these water and wastewater projects are typically delivered under fixed-price or guaranteedmaximum-price (GMP) contracts. (For DB projects, the price includes both design and construction; for CMAR projects, the fixed price or GMP is for construction only.) In CMAR delivery, the construction manager at-risk only has responsibility for the construction component of the project and not for the design. In both DB and CMAR projects, the contract price is agreed on at an early or intermediate stage of the design effort (often when the design is 60% to 80% complete), avoiding the potential pitfall of DBB projects in which a design that is 100% complete can be constructed only at an unexpected cost. Single point of accountability/team responsibility. Although CMAR delivery does not provide single-point accountability (as does DB delivery), it does necessitate collaboration between the general contractor/construction manager and the design firm early in the design process. This collaboration can help mitigate potential constructability 12 / THE WATER DESIGN-BUILD HANDBOOK

21 Understanding the Basics Collaboration between designers, constructors, and owners yields successful design-build projects issues, guide design decisions to meet the owner s budget constraints, and reduce cost creep. Should a problem or dispute arise on a design-build project, however, having a single point of accountability enables the owner to hold the design-builder responsible to resolve it effectively. In contrast, the separate and sequential contracts involved in DBB can create an arms-length, sometimes adversarial, relationship between designer and builder, placing ultimate responsibility on the owner and resulting in claims that can significantly increase the as-delivered price beyond the as-bid price. Critical Differences between Collaborative Project Delivery Methods and DBB What Owners Need to Know Upfront Success with a collaborative method depends on the owner s readiness and determination to approach the project differently than DBB right from the outset, particularly in terms of attitude toward service providers and openness to using a different procurement method. Owners and service providers attitude toward the project and each other is central to the success of collaborative delivery. For example, realizing the benefits of a compressed schedule requires that owners as well as service providers respect the importance of timeliness during various aspects of the project. These include schedule updating, detailed up-front planning, prompt review of work products, and an efficient decision-making process during both design and construction. Teamwork, collaboration, integrity, mutual trust, and respect rather than control or adversarial relations, which can mar DBB projects are critical to success in every phase of a collaborative project. The procurement processes for DB and CMAR project-delivery methods also differ from those for DBB. In DBB procurements, the designer is typically selected based mainly on qualifications; because of procurement laws in many states, however, the construction contract must often be awarded to the lowest-cost, responsible and responsive bidder. Although selection based simply on the lowest bid can be appropriate in the purchase of facilities with standard designs, most water and wastewater THE WATER DESIGN-BUILD HANDBOOK / 13

22 CHAPTER 1 projects are not standard. Each component is a process unit unique and inherently complex in terms of design, construction, and performance. Procurement for collaborative processes requires that owners clearly define the project needs prior to and during the procurement phase of the project. These are usually presented as the owner s project criteria but without being so prescriptive that they preclude the respondents from offering innovative, value-added solutions. For large, complex DB projects, some owners retain an owner s agent to assist in preparing the RFQ and RFP packages and statement of the owner s project criteria. An owner s agent is skilled at understanding project requirements and the collaborative project-delivery method being used, as well as translating these defining characteristics into performance objectives that provide the DB or CMAR firm with the appropriate flexibility and creative opportunity to meet them. The Role of Cost in Procurement for Collaborative Project-Delivery Methods Collaborative project delivery generally allows owners to define specific selection criteria in addition to construction costs, enabling them to select the DB or CMAR firm based on overall best value. Specific criteria can include quality, schedule, risk, cost factors, and the qualifications of design and construction firms and key personnel assigned to the project, and may also include considerations of plant operability and lifecycle cost. Although construction costs are never unimportant, realization of best value generally involves balancing capital cost, life-cycle costs, risk, schedule, sustainability, quality, ease of commissioning, plant performance requirements, and the qualifications of the design-builder. Some owners might expect that the administrative time and cost required for DB or CMAR would be less than for DBB. Conversely, others may be concerned that, with CMAR delivery, having the separate contractor and additional project oversight in the form of value engineering or constructability reviews will increase the scope of work and overall costs. Either of these may, or may not, be the case. Regardless of the delivery approach DB, CMAR, or traditional DBB owners need to allocate sufficient resources to provide effective management, participation, and oversight of the project. What Owners Say About Design-Build and CMAR In 2012, the Department of Civil & Environmental Engineering and Construction at the University of Nevada- Las Vegas conducted a survey to evaluate the level of satisfaction that owners experienced when using DB or CMAR delivery for their water and wastewater infrastructure projects. More than a third (34%) of the 455 individuals responded to the survey, including participants from 15 states, with responses provided from project managers, division managers, director level participants, and policy makers. A selection of key findings are listed below and in Figure The 2012 Customer Satisfaction Survey Executive Summary of key findings can be found on WDBC s website (WaterDesignBuild.org). 14 / THE WATER DESIGN-BUILD HANDBOOK

23 Understanding the Basics FIGURE 1-7. Two excerpted findings from the 2012 Owner Satisfaction Survey SURVEY FINDING: Water and wastewater projects using design-build and CMAR delivery methods were completed below owner s original and projected schedules and costs. Due to the economic conditions facing municipalities, owners must complete projects on or under budget and within compressed schedules. Design-build and CMAR delivery methods are gaining acceptance because they achieve these goals. Respondents quantified the cost and schedule savings from using DB and CMAR methods. Sixty-one percent reported that projects were completed in less time and at lower cost than their original projections. Percentage of Cost Saving Cost Schedule 50% 50% 42% 43% 40% 30% 20% 10% 0% (-15%) (-11%) 21% 15% 13% 4% (-10%) (-6%) (-5%) (0%) (1%) (5%) (6%) (10%) (11%) (15%) Percentage of Schedule Saving 40% 30% 25% 20% 16% 9% 10% 5% 5% 2% 0% (-15%) (-11%) (-10%) (-6%) (-5%) (0%) (1%) (5%) (6%) (10%) (11%) (15%) Distribution of Cost Saving Distribution of Schedule Saving Cost and schedule performance of projects that used DB and CMAR delivery. SURVEY FINDING: Water and wastewater projects using design-build and CMAR delivery methods had significantly fewer claims and changes orders. Because DB uses a single contractor to design and construct projects and because CMAR integrates the contractor into the design process, the overall extent of change orders during construction is reduced. More than three-quarters (77%) of respondents stated that projects using DB and CMAR delivery resulted in significantly fewer change orders than projects using traditional DBB delivery. In addition, a large majority (82%) agreed that DB and CMAR delivery results in fewer claims and disputes during construction. The mean level of respondents agreement that DB and CMAR delivery resulted in fewer change orders and fewer claims and disputes are 4.0 and 4.2, respectively, on a 5-point scale. GLOSSARY OF TERMS Lower claims and disputes 4.2 Lower number of change orders 4.0 Builder or Mean level of agreement (on a 5-point scale Constructor. The entity responsible with 5 for being strongly agree) regarding fewer change orders and claims. performing construction on a design-build project. THE WATER DESIGN-BUILD HANDBOOK / 15

24 CHAPTER 1 The vast majority of respondents are satisfied with their use of DB and CMAR delivery with high levels of satisfaction for design involvement, project quality, and the communication process that occurred. Nearly all (91%) state they will use DB and CMAR delivery again. Respondents indicate that the major impediments to the broader use of DB or CMAR delivery include lack of familiarity with the process, owners perception of risk, and resistance to change. A large majority (82%) agree that the use of DB and CMAR project delivery results in fewer claims and disputes during the construction phase. An even greater number (89%) state that the use of innovative ideas saves money and time and improves quality. Respondents also expressed significant satisfaction with the transition to project operation when using DB and CMAR delivery. Among the top reasons owners give for using DB and CMAR delivery are keeping projects on schedule, achieving better quality, and controlling costs. A majority of respondents report using a two-step procurement process (an RFQ to generate a short list of qualified proposers, followed by an RFP) and selecting a firm based on best value (evaluating both nonprice and price factors). Overall, the data reports that the use of DB and CMAR delivery enables owners to achieve quality projects by employing innovative practices that result in timely schedules and cost-effective methods. Given the many benefits and positive experiences reported, it is expected that the use of DB and CMAR delivery will continue to increase. The collaborative process in design-build delivery enables owners to achieve quality projects by employing innovative practices that often result in cost and schedule savings. 16 / THE WATER DESIGN-BUILD HANDBOOK

25 Understanding the Basics Many of the survey participants also submitted candid, unsolicited comments regarding owner experiences with DB and CMAR. Listed below are a selection of comments. I feel this is the best method of contracting; it creates a team atmosphere from the beginning to the end. Alternative delivery is the best project-delivery method hands down to provide utility customers with the highest quality of work at the lowest costs. I like the fact that the contractor was involved during the design process; I believe it added real value. Our organization now has on-call design-builders on contract. This is the only way to have a plant built. Unfortunately, the cheap hard bid pricing available now is luring far too many owners towards traditional DBB approach. More experience by owner is needed. RFP needs to be written carefully specifying design basis, performance criteria, and risk sharing. THE WATER DESIGN-BUILD HANDBOOK / 17

26 CHAPTER 2 The If you district are thinking could not of doing have a had designbuild, we relationship would a better working with recommend anyone. talking MWH was to other committed communities to similar customer yours that satisfaction. have done it The to learn MWH what works team wanted and to what deliver does what not we wanted work. in the best manner Erin Anderson and by the most Attorney economical Cle Elum Wastewater means. There was a Facility genuine Cle Elum, commitment Washington to providing a high quality product to meet the district s high expectations and goals. Gary L. McFarland, P.E., Engineering Manager, Goleta Water District

27 DeciDing on the Project Delivery Method This chapter presents the factors involved in determining which of three basic forms of design-build delivery is the most appropriate to achieve the objectives of a particular water or wastewater project. It also discusses potential regulatory impediments that may affect the procurement process and the overall ability to use DB or CMAR. Selecting the best delivery method requires addressing the following questions at the outset: 1. Do state and local regulations allow the use of design-build and/or CMAR? 2. What are the priorities, project goals, and objectives driving the decision-making process? 3. How involved do owners want or need to be during the design and construction of the project? 4. Will additional outside support, assistance, consultancy, or project management resources be needed? If so, in what specific areas? 5. Is it necessary to select the site and purchase property prior to procuring design-build or CMAR services? 6. What permits or regulatory approvals will be required? What party will be responsible for securing those approvals? 7. Is adequate funding available to complete this project on schedule? 8. Which delivery method is best suited to satisfying these decision-making factors? Answering the Questions Do state and local regulations allow the use of design-build and/or CMAR as projectdelivery methods? The first step, and likely the most important, is to determine which of the design-build or CMAR delivery methods are legally permitted for water and wastewater infrastructure projects in your state and jurisdiction. Because statutes and regulations vary from state to state, as do local ordinances within different jurisdictions, it is beyond the scope of this Handbook to cover all those variations. Rather, this Handbook describes the basic project-delivery methods and their advantages and other considerations. A more current overview of individual state laws pertaining to design-build is available through the Design-Build Institute of America (DBIA) at In addition, the Water Design-Build Council also completed a small sample survey of known states allowing the use of progressive design-build delivery. This information is available on the WDBC website (WaterDesignBuild.org). However, for more definitive and current information to this question, it is wise to obtain legal advice on the project-delivery laws in a particular jurisdiction, and how they apply to an owner s specific project. THE WATER DESIGN-BUILD HANDBOOK / 19

28 CHAPTER 2 What are the owner s goals and priorities driving the decision-making process for the project? City of Lawrence, Massachusetts: Design-build water treatment facility supports community renewal The city faced an aggressive schedule mandated by a regulatory consent decree to replace its outdated 1938 water treatment plant. Financial consequences were threatened by the Commonwealth of Massachusetts if the schedule was not met. In addition to schedule constraints, construction of the new facility could not interrupt the city s water supply. In order to meet the aggressive schedule, city officials chose the design-build project-delivery method. Even with construction occurring on the same site, the 1938 facility remained fully operational. Public works officials provided input during the project to achieve a facility design that was aesthetically pleasing to the community. An owner s overall goal is to select the optimal delivery method that results in the completion of a high-quality facility in timely manner, for the lowest and realistic overall project life-cycle cost. In practice, however, trade-offs among scope, quality, schedule, risk allocation, and cost but never safety! are inevitable. But deciding which of these factors are most important, and their level of priority, is critical to guiding both the procurement process and the drafting of the design-build or CMAR contract. Model guidance in the decision-making process is provided to owners and their teams by using Table 2-1 as a sample and following the identified directions below. Determining the project s priorities begins with answering the following questions, and any others defined as essential to the success of the project: When must the project be completed? What degree of design flexibility can be allowed during the procurement process? What are the maximum acceptable upfront capital costs and overall life-cycle cost? What level of quality is required? Have previous design-bid-build projects met project quality expectations on time and within budget? What features of the project are absolute requirements? Next, taking the answers to the above questions and others identified (now a list of attributes), assign a weight that determines their greatest value. As an example: Completing the project on or within the budget may be considered 20%. Completing the project on or ahead of schedule may be 10%. 20 / THE WATER DESIGN-BUILD HANDBOOK

29 DeciDing on the Project Delivery Method TABLE 2-1. Model Decision-Making Chart to Select a Project Delivery Method. Project Priorities Design- Fixed-Price Progressive and Goals Weighting Bid-Build Design-Build Design-Build CMAR Reliability & operational 15% flexibility Single point of 15% accountability Budget certainty and 10% life-cycle costs Treatment processes 10% innovation Owner involvement 10% Schedule compliance 10% and regulatory issues Risk allocation 15% Owner DB firm relationship 15% Total Weighted Total 100% Completing the project with a life-cycle cost below the maximum desired level may be 15%. Completing the project at or above the minimum acceptable level of quality may be 25%. Other weighting considerations include, if the overall completion schedule is defined to have a greater level of priority, an owner might favor a delivery method that offers the shortest project delivery over one that has a lower cost or marginally higher quality. In addition, it is possible that different departments within the owner s organization may have conflicting priorities; in that case, the owner needs to determine a consensus weighting among these factors. Compiling the combined results of these questions then leads to a weighted understanding of the owner s goals, priorities, and objectives for completing a successful project. (See Figure 2-6 at the end of the chapter for the completed chart with rankings.) How involved do owners want or need to be during the design and construction of the project? Owners often want to participate in the design process to ensure that preferred features are included in the constructed project. Some also desire a higher degree of participation in the construction such as subcontracting oversight than the traditional design-bid-build delivery method allows. For complex projects, it is often desirable to solicit input from several departments including engineering, operations and maintenance, collection and distribution, procurement/ purchasing, and safety during the design process. When the project is being delivered under a fixed-price contract, the owner needs to provide clear and specific information in procurement documents. Many owners find this aspect challenging, due to the difficulty in providing detailed requirements when the design is at a conceptual stage. For this reason, owners have tended to use the progressive design-build approach or to include allowances on the base fixed-price bid. Under progressive design-build delivery, the design is collaboratively advanced and the scope, features, and operational issues are addressed with the owner s team; this information is then incorporated into the design prior to establishment of the guaranteed maximum price (GMP). This delivery method allows the owner the opportunity to achieve the benefits of traditional design development, but also to have the schedule and single-point accountability benefits of design-build delivery. THE WATER DESIGN-BUILD HANDBOOK / 21

30 CHAPTER 2 Similarly, the CMAR delivery method fully engages the owner prior to the establishment of the GMP but does not provide the owner with single-point accountability. Although the engineering and construction firms on a CMAR project work together during the preconstruction to address owner requirements, each is individually accountable to the owner. Will outside support, assistance, consultancy, or project management resources be needed? If so, in what specific areas? During the development of an RFQ and/ or RFP for the selected delivery method, some owners engage an owner s agent, typically from an engineering firm. In the case of a CMAR RFQ and RFP, the owner typically engages the engineer of record for assistance. Other owners rely on the expertise of in-house engineering, procurement, and construction staff. Owners are in the best position to decide whether they need the advice of an outside consultant and what specific types of advice they require. Recommended Best Practice: In deciding whether to seek outside consulting help, owners should consider firms or individuals with previous experience in design-build or CMAR procurements, as well as the workload, availability, project management, and technical experience of in-house staff. Existing RFQs, RFPs, and contracts from owners who have completed design-build or CMAR procurements for similar projects can also provide a useful point of departure. Sample contracts for design-build and CMAR projects are available from the Design-Build Institute of America at If this is the first time that a design-build or CMAR delivery method is used by the owner for a water or wastewater project, retaining a consultant who is experienced with the Collaborative delivery provides opportunities for schedule and cost savings 22 / THE WATER DESIGN-BUILD HANDBOOK

31 DeciDing on the Project Delivery Method Constructability input during design enhances efficient delivery process will help overcome challenges, attract qualified respondents, and enable the owner to realize the full benefits of a design-build or CMAR contract. Experienced outside consultants can help define the scope of work appropriately to attract highly competent design-build or CMAR firms, as well as prepare the RFQ/RFP documents, assign risk appropriately, and provide additional consulting services as needed. A trusted outside consultant can add assurance that the owner s interests are properly represented in this process. Recommended Best Practice: A consultant s role is also a collaborative one with all parties interacting with the design-build or CMAR firm, monitoring the firm s performance, approving invoices, and working to resolve any issues that may arise in the course of the project. In contrast, the contract manager is an individual representing the owner in the day-to-day work who should be committed for the duration of the project from development of the RFP through project completion. At various intervals, he or she may also need to draw on other individuals as additional resources, skilled in engineering, operations, finance, and applicable law. Is it necessary to select the site and purchase property prior to procuring design-build or CMAR services? The project site has significant impact on decisions made regarding design, construction, and associated project costs. Therefore, it is best to complete site selection, land acquisition, and easement acquisition prior to procuring designbuild or CMAR services. 1 This aspect is particularly important when using either performance or prescriptive-based designbuild that requires a fixed price or a GMP as part of a response to the RFP. The price 1 Some states have laws requiring that land must be procured in advance of any procurement for capital improvements. THE WATER DESIGN-BUILD HANDBOOK / 23

32 CHAPTER 2 submitted will be based on assumed site conditions. If the site location has not yet been acquired or there is uncertainty surrounding ownership, initial pricing may prove inaccurate pending resolution of these issues. Should an owner want to procure services for design-build or CMAR prior to site selection and property purchase, progressive design-build and CMAR delivery methods with deferred pricing (to address permitting, geotechnical, and environmental hazards) may be in the owner s best interest. Recommended Best Practice: Owners should recognize that changing the site or facility lay out later in the project can have serious design and cost ramifications, particularly with respect to geotechnical and foundation design considerations and avoid, if possible. What are the permit(s) or regulatory approvals required to support the procurement process, and which party is responsible for securing those approvals? The permitting process is always a significant project requirement and schedule driver. Therefore, securing as many of the required documents as possible prior to initiating the procurement process (particularly discretionary ones such as environmental permits) will mitigate potential impacts on project schedule and scope. Early on, a member of the owner s team or the service provider s team should develop a plan to obtain the required permits in order to avoid schedule delays. The permitting and approval plan should generally be written into the contract so that all parties clearly understand what they are committed to provide and what they can rely on others to provide. Responsibility for obtaining ministerial permits, such as construction permits, would be delegated to the design-build or CMAR firm. Owners generally undertake acquiring discretionary permits, such as environmental permits, which typically require significant time to obtain and which may depend on the owner s relationship with the permitting agency. A key benefit of design-build and CMAR delivery is the opportunity to expedite the permitting process. Depending on the regulatory agency, service providers may seek needed approvals and permits before the design is fully complete. Is there adequate funding to complete the project on schedule? Developing a realistic estimate of a project s cost is an important part of the planning process. The estimate typically takes into account internal and external resource requirements, schedule, and contingencies and serves as a benchmark to determine whether a project has adequate funding. Preparing and evaluating an RFQ/RFP is time-consuming for owners, and submitting qualifications and proposal documents is time-consuming for design-build and CMAR firms. No one wants to begin a procurement process only to find that the anticipated project is indefinitely postponed or canceled due to a lack of funding. Should funding be a concern, progressive design-build and CMAR delivery allow project costs to be determined at an early point in the design process. It also provides the flexibility necessary to address budgetary concerns. In addition, progressive designbuild and CMAR can be used to develop a phased approach that may include developing early bid or response packages and span multiple budgetary cycles to help manage project cost, cash flow, and availability of funding. 24 / THE WATER DESIGN-BUILD HANDBOOK

33 DeciDing on the Project Delivery Method The CMAR delivery method captures some of the benefit of design-build by contributing valuable input to the site work, layout, constructability, and general arrangements. Which delivery method is best suited to satisfying project goals? Answering this final question requires taking into consideration knowledge about the delivery methods (identified in Chapter 1), the core stages involved in implementing a water or wastewater infrastructure project, evaluated against the project s priorities. These stages include: 1. Defining the project scope and performance requirements, including project criteria. 2. Developing the design solution. 3. Implementing detailed design, construction, and commissioning. Procurement processes using design-build or CMAR delivery methods, which differ largely in the degree in which the project design specifications are provided in the request for qualifications (RFQ) or request for proposals (RFP) are also involved in the decision-making process. The basic design-build delivery methods, addressed in this Handbook are: 1. Progressive design-build. 2. Fixed-price design-build. 3. Construction management at-risk. Progressive design-build (PDB) is a twophase design-build delivery method in which the design, cost-estimating, and final pricing of the project progresses during the first phase. If the owner and design-builder reach agreement on the final pricing and schedule, the final design, construction, and commissioning are completed during the second phase. Final pricing with this method is also based on a guaranteed maximum price (GMP). PDB is frequently preferred when a project lacks definition, when an owner prefers to remain directly involved in the design process while leveraging the schedule and collaboration advantages provided by design-build, or when the owner is looking to minimize the time and cost of the design- THE WATER DESIGN-BUILD HANDBOOK / 25

34 CHAPTER 2 build procurement. This delivery method is most valuable when owners believe they can lower cost or otherwise improve the outcome by participating directly in design decisions. In PDB procurements the design-builder is generally selected based on qualifications. Upon selection, the owner and the designbuild firm collaboratively advances the design, incorporating the defined details desired by the owner. This method provides an owner with input regarding the options in the consideration process. More important, this open-book 2 approach enables an owner to make well-informed decisions on the overall quality of the project. The selected design-build firm then completes the design to the point agreed to by the owner (which often ranges from 30% to 60% complete) and submits a fixedprice or GMP proposal for the total project to the owner for approval. The owner can also participate in the selection of key subcontractors and equipment suppliers that the design-build firm proposes to use in developing the price. Together the owner and design-builder will establish a team that will Progressive or phased design-build TABLE 2-2. Progressive Design-Build Attributes and Considerations DELIVERY METHOD BENEFITS TO OWNER OTHER CONSIDERATIONS Allows more effective owner input into the scope, features, and operational aspects of the design because input is stimulated and facilitated by the design-build team. Simple and inexpensive procurement process can be completed in short timeframe. Potential for increased participation due to relatively low proposal preparation costs. Flexibility to complete work based on available funding. Cost is determined through combination of negotiated and competitive processes, using transparent open-book principles. Owner can reject fixed-price or GMP without causing significant delays in project. Better chance of designing to budget because cost estimates are developed at several stages during the design. Cost and schedule for construction is not known at the time of initial contract signing. An effective public education program may be needed to overcome concerns with construction price negotiation. Procurement of long-lead equipment will be delayed until GMP agreement. 2 Open-book is a process in which the development of the price (labor, material, equipment, and subcontract costs) is transparent to the owner. In an open-book process, the owner is also party to agreements on contingencies, allowances, overhead, and profit. Once the owner and the DB or CMAR firm agree on the price, the project can be implemented using the open-book approach or the book can be closed and the project administered as a fixed-price contract with all financial risk for overruns, as well as benefits for under-runs, going to the design-builder. 26 / THE WATER DESIGN-BUILD HANDBOOK

35 DeciDing on the Project Delivery Method deliver the best value. They are not bound to always select the lowest cost. If the design-build firm and owner cannot reach agreement on an acceptable price, the owner can either take the partially-completed design and use it as the basis for completing the design and proceeding with a designbid-build procurement or can negotiate with another qualified design-build firm. Progressive design-build is also referred to as a single-step selection process because the procurement process often consists of only an RFQ or an RFP not both. This approach allows for a high degree of innovation, such as in performance-based design-build, but with greater owner interaction during design development and greater certainty as to cost, albeit later in the process. Greater cost certainty is achieved because the designbuild firm can provide cost estimates during design development to confirm that the owner s target price is not being exceeded. Fixed-price design-build (FPDB) is a delivery method in which a stipulated dollar amount (may include allowances) for design and construction of the project is established when the design-build contract is signed. The contract is based on a defined scope, requirements, and schedule. FPDB is often used when the owner has defined the project requirements and scope of work sufficiently for the designbuild team to establish project cost early in the procurement process. Due to the complexity of many water and wastewater projects, owners using FPDB will often incorporate detailed project requirements DELIVERY METHOD BENEFITS TO OWNER OTHER CONSIDERATIONS Fixed-price design-build TABLE 2-3. Fixed-Price Design-Build Attributes and Considerations In the case of performancebased procurement, owner responsibility for design is limited. Cost is determined through a competitive process. Cost of design and construction is known at contract signing. Schedule is fixed at contract signing. Performance criteria and requirements are known when contract is signed. Public acceptance tends to be high with lump-sum contract award. Well suited for owners who are most interested in the performance of the plant with limited involvement in the design and construction process. Procurement costs are high to both parties because substantial design often needs to be completed prior to proposals. Procurement process takes substantially more time. Owner may need to pay stipend to unsuccessful proposers. Inefficient use of municipal funds and staff time because design solutions developed and evaluated in procurement phase by unsuccessful proposers are not applied during implementation. Potential for reduced participation due to relatively high proposal preparation costs. Difficult to price and inflation can be a major risk because designing and building a major facility can take several years. Price may be significantly higher when design is complete. THE WATER DESIGN-BUILD HANDBOOK / 27

36 CHAPTER 2 and a conceptual design in the procurement documents. At the same time, FPDB delivery can actually be more costly to an owner than the other methods because of the cost of preparing the more detailed procurement documents. In addition, the design-build firms often expend significant effort during the procurement stage to offer a fixed price to build the facilities. Recommended Best Practice: In order to attract the best design-build teams to the competition, owners should consider providing a stipend to those short-listed teams that do not win the project to help defray their cost of the pursuit. The fixed-price design-build method also includes defining project requirements used in the procurement process. These requirements, described below, are either performance or prescriptive-based. Performance requirements. In a performance-based delivery procurement, the RFP generally may or may not include limited design drawings. It sets forth standard construction specifications to establish minimum quality standards and focuses as much as possible on measurable plant performance criteria or objectives for operation, rather than on specific design approaches to achieve those objectives. Performance-based procurements are frequently used when an owner has a clear vision for how a facility must perform and is open as to the specific method for achieving the required performance. This delivery method gives proposal respondents flexibility in how they will meet the owner s objectives and generates innovative and costeffective proposal responses. Prescriptive requirements. In a prescriptive delivery procurement, the RFP typically requires that a mandatory design be submitted that is approximately 10% to 30% complete, and includes preliminary design drawings in the procurement package. Requirements stated in terms of specific design approaches follow. Prescriptive procurements are often preferred when owners are very clear on their design preferences and want to use a specific delivery method to allow selection of firms based on a combination of qualifications, schedule, and cost. Owners should also be aware that a prescriptive delivery method limits the innovation and creativity of firms responding to the RFP and may not necessarily result in the optimal solution. Deciding between performance- and prescriptive-based requirements entails striking the appropriate balance between creativity and certainty of responses. An RFP can also reflect a blend of performance and prescriptive requirements. Owners who have a preferred process technology, equipment manufacturer, or approach for a portion of the project may state those as preferences or The following illustrations explain the differences between performance and prescriptive requirements. Performance requirement: Joints must withstand a specified amount of pressure without measurable leakage. Prescriptive requirement: Gaskets for all water-resistant joints shall be a continuous rubber band or strip, at least 175 millimeters wide and 10 millimeters thick. 28 / THE WATER DESIGN-BUILD HANDBOOK

37 DeciDing on the Project Delivery Method TABLE 2-4. Benefits and Differences Between Performance and Prescriptive Requirements TYPE OF REQUIREMENTS OWNER ADVANTAGES OTHER CONSIDERATIONS Performance Maximum potential for cost savings through design innovation Maximum transfer of designrelated performance risk Relatively low cost to prepare RFP May result in higher operations and maintenance (O&M) costs or undesirable project features Proposal evaluation and selection is more complex due to multiple DB team approaches Limited owner input into design after proposal accepted Prescriptive Substantial control over project design and O&M costs Proposal selection can emphasize project design-build cost High level of project definition at time the contract is signed Procurement duration is longer RFP preparation is more costly due to high level of design Design risk not clearly assumed by the design-builder Loss of availability of creativity of great designers requirements in the RFQ/RFP, while other aspects of the project may be described purely in terms of performance criteria. Both performance- and prescriptive-based procurements usually require firms to provide a fixed-price or GMP as part of their response to the RFP. Responses to a performance-based procurement are likely to be more innovative but also may include a higher contingency in the price quote than responses to a prescriptive procurement. If the design-build firm and owner cannot reach agreement on an acceptable price, the owner can either take the partially-completed design and use it as the basis for completing the design and proceeding with a designbid-build procurement or can negotiate with another qualified design-build firm. Construction management at-risk (CMAR) is a delivery method in which the owner retains an engineer and a CMAR firm under separate and discrete design and construction contracts. The CMAR firm provides construction-related advice during design development and if the owner and CMAR firm agree on a price to construct the project the firm acts as the general contractor during construction. CMAR is most often used when an owner wants to capture many of the benefits of design-build while maintaining direct contractual control over project definition and design. In its general contractor role, the CMAR firm may either subcontract all construction work, or self-perform portions of it. The CMAR firm is also selected either on qualifications only or on qualifications and price for certain services. The selected CMAR firm works in tandem with the owner s engineer and performs preconstruction services as the design progresses. Preconstruction services may vary, but traditionally include constructability reviews, value-engineering, estimating, and scheduling. These tasks are usually performed at certain design milestones. As the design reaches 60% to 90% of completion, preconstruction services conclude with the preparation of an open- THE WATER DESIGN-BUILD HANDBOOK / 29

38 CHAPTER 2 book fixed price or GMP to construct the project. Similar to progressive design-build, if the CMAR firm and owner cannot reach agreement on an acceptable price, the owner can either negotiate with another qualified CMAR firm or have the design completed (by the contracted firm) and proceed with a traditional design-bid-build procurement. As stated above, price may be considered in the selection of a CMAR firm. If so, the RFP may require the CMAR firm to provide pricing information in one or more of the following ways: Preconstruction services expressed as a lump-sum value. Project personnel rate schedule. General conditions 3 expressed as a lump-sum or maximum value or as a percentage of construction cost. Overhead and profit expressed as a lumpsum value or percentage of cost. Although an owner may consider price in the selection of the CMAR firm, a typical RFP would not require a cost proposal to construct the project because the CMAR firm is traditionally selected during the design phase, well before the final pricing documents are available. As noted above, one consideration an owner must take into account when using CMAR is self-performance, or work performed by the CMAR firm s own labor force. The amount of self-performance allowed in CMAR Construction management at-risk TABLE 2-5. CMAR Attributes and Considerations DELIVERY METHOD BENEFITS TO OWNER OTHER CONSIDERATIONS Allows direct owner input into the scope, features, and operational aspects of the design Simple and inexpensive procurement process can be completed in short timeframe Potential for increased participation due to relatively low proposal preparation costs Owner can choose to move to another CMAR if unable to reach a consensus with initial CMAR Better chance of designing to budget because cost estimates are developed at several stages during the design Loss of single-point accountability Owner remains responsible for design errors and omissions Cost for construction is not known at the time of initial contract signing Owner may need to facilitate collaboration between designer and CMAR firm Owner still responsible for plant process guarantees Can require significantly more Owner involvement Owner subject to significantly greater risk of change orders 3 Construction contracts organized and priced around CSI (Construction Specifications Institute) component sections include a General Conditions section. General conditions costs include the costs to provide certain on-site services (such as construction supervision), on-site facilities (such as office trailers and related utilities), and other items (such as bonds and insurance) that are required for the duration of the construction period. 30 / THE WATER DESIGN-BUILD HANDBOOK

39 DeciDing on the Project Delivery Method contracts is often dictated by state law or funding agencies. If not, it is in the owner s best interest to determine the level of the CMAR firm s self-performance; unlike the other trades and equipment, which will be subject to multiple bids, self-performance costs will not be competitively procured. Self-performed work does offer one potential benefit to owners, however: The CMAR firm will have greater oversight and quality control of its self-performed work. CMAR should be considered when the owner wants to capture a number of the benefits of design-build delivery while maintaining direct control of the project definition and design. As described in Chapter 1, CMAR can lower costs, reduce schedules, and allow for the qualifications-based selection of the constructor. The primary disadvantage of CMAR as compared to design-build is the loss of single-point accountability, as the owner executes two contracts, one with the engineer and one with the CMAR firm. This consideration requires the owner to be more proactive to ensure collaboration between the designer and the builder. Selecting the Desired Delivery Method The final step in deciding on the preferred delivery method is an evaluation of each possible delivery method against the weighted project priorities (identified in Answering the Questions ) using a numerical rating. This action requires the owner s team to have knowledge about and understand the benefits and considerations of each delivery method using the information provided in Chapter 1. The totals of the identified delivery method ratings are compiled, and the optimal delivery method for successfully procuring, designing and executing the project and turning it over for operation is derived. (See Table 2-6.) Choosing the best delivery method is a big decision that can be as crucial to success as choosing the best service provider. Fortunately, leaders in the water and wastewater industry have developed a number of project-delivery methods to meet a variety of needs, and legislative and regulatory bodies are increasingly supportive of them. TABLE 2-6. Model Decision-Making Chart to Select a Project Delivery Method with Numerical Rankings Project Priorities Design- Fixed-Price Progressive and Goals Weighting Bid-Build Design-Build Design-Build CMAR Reliability & operational 15% flexibility Single point of 15% accountability Budget certainty and 10% life-cycle costs Treatment processes 10% innovation Owner involvement 10% Schedule compliance 10% and regulatory issues Risk allocation 15% Owner DB firm relationship 15% Total Weighted Total 100% 23% 22% 32% 23% THE WATER DESIGN-BUILD HANDBOOK / 31

40 CHAPTER 3 The I would district advise could other not municipalities have had a that better working are thinking relationship about with Design-Build anyone. to MWH focus was on qualificationsbased customer selections. committed to satisfaction. Rich Bartels, The Principal MWH Project team Manager wanted Colorado Springs, to Colorado deliver what we wanted in the best manner and by the most economical means. Design-build There allows was a genuine for quality commitment selections to of sub-contractors providing a high quality and equipment. product to meet Drew the Goins district s high Assistant expectations Director and Water goals. Production Augusta, Georgia Gary L. McFarland, P.E., Engineering Manager, Goleta Water District

41 CONDUCTING THE PROCUREMENT PROCESS As discussed in Chapter 2, successful design-build (DB) and construction management-at-risk (CMAR) projects begin with a well-planned procurement process that is based on the owner s objectives, expectations and clearlyidentified priorities. Individually or together, these attributes can affect the duration and complexity of the procurement process, as well as its cost. For a successful procurement process, an owner must have knowledge of state and local regulations and must provide a clear statement of the project s requirements, as well as a draft contract that includes terms, selection criteria and schedule. Clearly conveying this information in a transparent process minimizes unnecessary expenditures of time and resources for both the owner and potential design-build or CMAR firms. This chapter describes the major steps in the procurement of a project using either the design-build or CMAR delivery method, from preparing the request for qualifications (RFQ) and request for proposals (RFP) to selecting the design-build team. General Guidelines to facilitate a successful DB or CMAR procurement Determine which project-delivery method to use fixed-price or progressive designbuild, or CMAR and whether project requirements will be performance-based, prescriptive, or a combination. Seek the advice of other owners who have conducted design-build or CMAR procurements, in addition to obtaining appropriate legal and financial guidance. Determine whether, and to what extent, the design-build or CMAR firm will be allowed to self-perform (often the result of state laws that reflect the balance of influence among owners, general contractors, and subcontractors). Complete, and make available to respondents, any work related to permitting, environmental impacts, and site geotechnical investigations. Clearly describe the scope of services, project requirements (including desired LEED certification level, if applicable), and desired level of owner involvement and control. Issue a draft contract early in the procurement process to gain insight from prospective respondents. Present the schedule, selection criteria and process, and communication protocols to be used in the procurement process. Assemble, and include in procurement documents as appropriate, a reasonable draft contract that equitably addresses and allocates risks to the party best suited to control or absorb them. If shared savings between the owner and delivery firm(s) will be allowed, include appropriate provisions in the contract. Keep the contract language clear and format uncomplicated avoiding unnecessary complexity that can reduce participation, create delays, or increase costs. THE WATER DESIGN-BUILD HANDBOOK / 33

42 CHAPTER 3 TABLE 3-1. Project Delivery Methods DESIGN-BUILD Fixed-Price Step one: (RFQ) qualifications for short list Step two: (RFP) price & non-price considerations Progressive Single-step (RFQ) qualifications-based selection (non-price considerations qualifications and approach) Single-step (RFP) best value selection qualifications, approach, fee, and rate Two-step (RFQ/RFP) best-value selection Two-step (RFQ/RFP) qualifications-based selection CMAR Single-step (RFQ): qualifications-based selection Single-step (RFP): best-value selection Two-step (RFQ/RFP): short list and qualifications This chapter first describes the process for developing a basic RFQ and RFP. It then provides more detail on adapting these procurement documents for fixed-price design-build, progressive design-build, and CMAR project-delivery methods; and concludes with details on awarding the contract. RFQ Basics The RFQ generally describes the scope of work for the project, submittal requirements, and factors the owner uses in evaluating responses. Potential evaluation factors include: Project approach or understanding. Location of the respondent relative to the project site. History of working in a collaborative environment with owners and partners. History of meeting cost and schedule. Specialized knowledge in design-build plant performance, if required. Experience in design-build or CMAR, particularly with similar projects. Client references. Team members experience in working together. Key personnel committed to the project. Ability to meet deadlines. Sustainable design expertise and LEED certification experience, if applicable. Financial stability. Quality assurance. Safety record. Bonding capacity. Some of these are yes/no or pass/fail factors; some may be weighted and scored. 34 / THE WATER DESIGN-BUILD HANDBOOK

43 CONDUCTING THE PROCUREMENT PROCESS In general owners should ask respondents to present only qualifications and other information that will be important to the evaluation team. In other words, What are the qualities of the ideal design-build or CMAR firm for this project? Recommended Best Practice: An owner should consider conducting a pre-submittal meeting to enable potential respondents to seek clarification on the project, the RFQ, or selection process. This type of meeting also enables the owner to gauge the level of interest in the project from potential respondents. Some owners initially issue a request for expressions of interest (RFEI). The purpose of an RFEI is to solicit guidance and suggestions from interested respondents regarding approaches to the design-build or CMAR project, its proposed contract, and procurement methodology. If time permits, taking this extra step can help maximize interest and competition, especially on large or complex projects. However, this approach should only be pursued if the owner intends and has the funding to issue a design-build or CMAR contract for the identified project within twelve months of receiving the expressions of interest. An owner may also use an RFQ to establish a short list of design-build firms, who are then invited to respond to an RFP. Alternatively, an owner may decide to use a single-step RFQ process and select the design-build or CMAR firm based exclusively on qualifications, although limited cost criteria are sometimes included. RFP Basics Issuing a well-thought-out RFP is extremely vital to a successful DB or CMAR procurement. It establishes and conveys the type of relationship the owner wishes to form with the selected firm. North Davis County Sewer District, Utah: An effective way to expand and upgrade a wastewater treatment plant North Davis County Sewer District serves seven communities south of Ogden, Utah, and several industrial wastewater customers including Hill Air Force Base. The district needed an effective way to expand and upgrade its wastewater treatment plant while securing adequate funding for the duration of the project. District leadership chose design-build as their delivery method. With the help of the design-build team, the district secured $48.5 million through a general obligation bond election that passed with 90% voter approval. The district also secured a $20 million low-interest loan from the State of Utah Water Quality Board. In order to maintain cash flow and to schedule the receipt of bond and loan payments, the design-builder sequenced eight designbuild task orders to be constructed over a five-year period. Further monetary and time savings came from procuring most of the equipment before the design was completed. THE WATER DESIGN-BUILD HANDBOOK / 35

44 CHAPTER 3 The RFP should be prepared in a format that: Clearly communicates the basis for evaluating proposals, including the weight assigned to various criteria. Defines the project scope, quality, schedule, and performance requirements. Attracts competitive proposals. Minimizes questions after the RFP has been published. Minimizes the number of issues requiring negotiation prior to awarding a contract. An RFP generally includes the following topics: Background and objectives. Description of the project, the procurement process, and the scope of services. Instructions for proposers (what information is needed and how it should be presented). Required content of proposals (what needs to be specifically addressed). How to incorporate potential innovative options offered by proposers into the evaluation process. A draft contract, including insurance and bonding requirements. Special requirements for sole-source, pre-selected, or pre-qualified equipment manufacturers or suppliers. Evaluation criteria and their relative importance, accurately and reliably presented. Technical performance criteria. Key performance criteria in RFP are critical in achieving owner expectations 36 / THE WATER DESIGN-BUILD HANDBOOK

45 CONDUCTING THE PROCUREMENT PROCESS Design-build is suitable for any project where there is an opportunity for the constructor to get involved in the design process to reduce cost or schedule. Marcus Jensen, P.E., Director of Engineering Southern Nevada Water Association (SNWA) Evaluation Criteria Presenting the weighted evaluation criteria clearly in the RFP significantly helps respondents understand the owner s priorities and contributes to transparency in the selection process. Numerous combinations of criteria weighting are possible typically related to cost, technical approach, and schedule. Performance Criteria The RFP (and the subsequent contract) should explicitly and, to the maximum extent possible, quantitatively state the criteria for satisfactory plant performance. Setting forth the appropriate criteria for plant performance is vital to the project s success, as well as to creating trust between the owner and design-builder. Depending on the specific project, performance criteria may include standards for: Influent quality and quantity, including daily and seasonal variability. Treated water or wastewater quality and volumes, including both design-basis and peak flows. Residuals quality. Environmental and nuisance factors, such as noise, dust, lighting. Chemical, energy, and utility use. Building appearance and performance. Operational requirements and constraints. Coordination with on-going operations and subcontractors. Tie-in to existing facilities. On-site staffing and team availability. Schedule milestones. Recommended Best Practice: Criteria should be clearly defined in the RFP and draft contract; if they are subjective or otherwise unclear, disputes may arise. For example, taste and odor criteria should not generally be based on the number of customer complaints, as complaints may simply reflect opposition to the project. Instead, these types of criteria should typically use standard engineering measurements, such as chemical composition of the treated (finished) water at specified locations. Some criteria may pose a challenge with regard to the timing of measurement. For example, targets for chemical and energy use are typically evaluated during the acceptance-testing phase, and meeting those targets is normally the responsibility of the DB or CMAR firm. After the testing phase has been satisfactorily completed, meeting those targets generally becomes the owner s responsibility. THE WATER DESIGN-BUILD HANDBOOK / 37

46 CHAPTER 3 Increasingly, owners are using contracts that incentivize performance that exceeds expectations and impose damages for performance that falls below the established criteria. The potential consequences of such damage clauses need to be carefully considered. They might require the designbuilder to add a contingency to cover events with a low likelihood of occurrence. If overly onerous, they might preclude obtaining performance bonds from the surety industry. If damage clauses are included in the contract, incentive clauses should be included as well. Positive incentives for performance are generally a more effective project management device than negative incentives (damages or penalties), which tend to motivate project behavior only in later stages of project delivery. Using the RFQ and RFP to Select a Design-Build or CMAR Firm Chapter 1 introduced the fixed-price designbuild, progressive design-build, and CMAR delivery methods. This section discusses the RFQ and RFP procurement processes for each of those methods. Sole-source selection is also discussed. Fixed-Price Design-Build Procurement Although a single-step process may occasionally be used for selecting a designbuild firm for FPDB project delivery, a two-step process involving both an RFQ and an RFP is used in most instances. Single-Step FPDB Selection Process In the single-step approach, an RFP is issued that includes both qualification information and proposal requirements. The owner then receives and evaluates the proposals, makes the selection, and begins the negotiation process with the design-build firm that has offered the best price. If a single-step process has a high degree of technical requirements, the proposal is based on RFP bridging documents, which are provided by the owner in the RFP and represent at or near a 30% level of design completion. Two-Step FPDB Selection Process In Step One, the owner provides public notice of the procurement and issues an RFQ for all design-build teams interested in the project. Upon receipt of statements of qualifications (SOQs), the owner s selection panel evaluates and ranks respondents based on predetermined criteria and short-lists three to five (Recommended Best Practice is three) for further consideration. Cost generally is not a factor in Step One. In Step Two, the owner issues an RFP to the respondents short-listed in Step One. The RFP may be issued either concurrently with the RFQ or only to the short-listed proposers. If the RFP is issued after the short list is created, it should be first distributed in draft form to all potential responders at the outset for review and comment. RFQ for Fixed-Price Design-Build The RFQ describes the design-build firm s qualifications, experience with similar projects and financial strengths. An evaluation and scoring system that identifies the selection criteria and their relative importance or weight in the selection process is also provided. RFP for Fixed-Price Design-Build The RFP describes the project requirements in detail and clearly specifies the evaluation 38 / THE WATER DESIGN-BUILD HANDBOOK

47 CONDUCTING THE PROCUREMENT PROCESS increases in the price of materials. Some owners request a detailed breakdown of costs. Another approach is not to require a cost proposal and to evaluate RFP respondents solely on technical and related quality criteria. The owner then initiates contract negotiations, including cost negotiations, with the highest technically ranked firm. If an agreement cannot be reached in a given time frame, the owner enters into negotiations with the second-highest-ranked firm. Progressive design-build allows owners to invest in the project instead of the procurement criteria, including relative weights given to technical, non-technical, and price components. Appending a draft contract to the RFP provides further guidance to potential respondents and can reduce the time and uncertainty associated with contract negotiations after selection. (Recommended Best Practice is using an industry-standard form of contract.) Alternatively, firms can be requested to submit a draft design-build contract for the owner to consider as part of their proposals. The RFP should specify that technical and cost proposals be submitted simultaneously, in separate sealed envelopes. The technical proposals are evaluated and scored based on criteria the owner specified in the RFP first, before the cost proposals are opened. The cost proposals are scored separately; the lowest-cost proposal may be assigned the highest cost score, and the others scored proportionately lower. Finally, a total score is calculated for each proposal by applying the weights identified in the RFP for both the non-cost and cost factors. Respondents generally quote cost as a fixed price, with contingencies or allowances for owner-specified changes and for unforeseen If the owner has already specified a maximum cost for the project, RFP respondents are evaluated on their approach to meeting the performance criteria and the scope they are able to offer within the specified budget. Advantages of a Two-Step FPDB Procurement Process Over a Single-Step Process Responses to the RFQ give the owner an indication of the level of interest in the project. The owner has the opportunity to select the most qualified teams to receive the RFP. Preparing an SOQ is less costly for prospective design-build teams than responding to an RFP. Therefore, more firms are likely to reply to the RFQ, giving the owner a wider selection from which to short-list the most qualified. Firms responding to an RFP that focuses competition among only three firms are more inclined to commit resources to provide the most innovative and best-value proposals to owners. The owner avoids evaluating proposals from teams that may not be qualified. THE WATER DESIGN-BUILD HANDBOOK / 39

48 CHAPTER 3 Experience working together is important to a successful design-build team These advantages are particularly important for larger projects or those with more complex scopes of work. Progressive Design-Build Procurement Procurement for PDB delivery differs from FPDB procurement in two major ways. In contrast with FPDB, which generally uses a two-step process, most PDB procurements use a single-step process, based either solely on qualifications or on qualifications with limited cost parameters (e.g., cost to advance design to a certain stage). Also in contrast to FPDB, an owner executes a PDB contract with the design-builder in two phases. The first phase of any PDB procurement is an agreement for preconstruction services, including initial design and cost development. The second phase is an agreement for completion of design and construction for a fixed price or guaranteed maximum price (GMP). This approach provides the owner a measure of protection by creating a decision point when the total price is established, before the owner commits to have the designbuilder implement the detailed design and construction. Recommended Best Practice: In a GMP procurement, providing for a sharing of cost savings (under-runs) with the design-build or CMAR firm creates a positive incentive. Following successful execution and completion of the Phase One agreement, the design-build firm and owner proceed in a collaborative manner, with the owner retaining a substantial level of design input and control. As the design progresses, the owner benefits from the early incorporation of the design-builder s input on design and process creativity, constructability, value-engineering, scheduling, risk, and construction costs. Cost estimates can be 40 / THE WATER DESIGN-BUILD HANDBOOK

49 CONDUCTING THE PROCUREMENT PROCESS developed and refined at regular design milestones, allowing the owner to modify priorities and requirements based on the overall project budget. When the design has been completed to the level agreed to in the Phase One agreement, the design-build firm develops a cost-reimbursable, fixed-price, or GMP proposal for constructing the project. The construction cost is usually developed on an open-book basis using competitive bids solicited from subcontractors and materials and equipment vendors. On projects that allow self-performance, the design-builder may elect to submit a proposal to self-perform certain bid packages. The total price combines this cost of work with the design-builder s negotiated general conditions, such as cost, fees, allowances, and contingencies. Recommended Best Practice: An open-book approach that gives the owner transparent access to project costs, as well as the ability to factor quality considerations into the selection of subcontractors and vendors, should be employed. In the event that the owner finds the total costs unacceptable, a second procurement can be conducted for completion of the project. CMAR Procurement CMAR is similar to progressive designbuild, in that it enables the owner to realize a number of the benefits of designbuild delivery, while maintaining direct contractual control of project definition and design. Unlike PDB, however, CMAR procurement involves hiring the engineer separately and distinctly from the construction manager, and then pairing the two early in the design phase. Typically the owner will select the design firm prior to selecting the CMAR firm, which allows design development to be initiated while the owner conducts the CMAR procurement. Once selected, the CMAR design firm is integrated to provide input into the design and constructability reviews, as well as value engineering. Similar to PDB, procurement of a CMAR firm traditionally uses a single-step RFQ process, based solely on qualifications, though a single-step RFP or a two-step RFQ/ RFP process is occasionally used. Should an owner want to include price in the selection criteria, there are a variety of ways in which the RFQ could require the CMAR firm to provide pricing information: Preconstruction services expressed as a fixed-price value. Project personnel rate schedule. General conditions expressed as either a fixed-price value or a percentage of cost. Overhead and profit expressed as either a fixed-price value or a percentage of cost. As with PDB procurement, the owner executes the CMAR contract with the construction manager in two phases. The first phase is for preconstruction services, and the second phase is for construction services, including construction management. Preconstruction services may vary, but traditionally include working in partnership with the owner s engineer and performing design and constructability reviews, iterative estimations of construction cost, value-engineering, and scheduling at certain design milestones that are THE WATER DESIGN-BUILD HANDBOOK / 41

50 CHAPTER 3 coordinated with the deliverables included in the engineer s contract. Recommended Best Practice: In order to avoid delays in design development or to prevent redesign cost, owners should engage the CMAR firm when design is between 20% and 30% complete, but in any event no later than at 60% design completion. In addition to the tasks described above, preconstruction services traditionally include the development and execution of a procurement plan that establishes bid packages, prequalifies vendors, identifies and purchases long-lead material and equipment, and concludes with the development of a GMP for construction. The GMP can be established as early as 30% design completion and as late as 100%, with 60% being typical. The GMP is traditionally developed and presented in an open-book manner using competitive bids from the prequalified subcontractors and materials and equipment vendors. In addition, on self-performance projects, the CMAR firm may elect to submit a proposal to self-perform certain bid packages. The total cost of the GMP will include the direct cost of work plus the CMAR firm s general conditions, overhead, profit, allowances, and any appropriate contingencies. Once the owner and CMAR firm agree on a price, the preconstruction-services agreement is amended to recognize the approved GMP. Should the owner and CMAR firm be unable to reach agreement, the owner may end the negotiation and either initiate discussions with the second-highest-ranked CMAR firm or proceed with an alternative procurement approach. Sole-Source Procurement Where legally permissible, some owners prefer to negotiate a sole-source procurement rather than conduct a formal RFQ or RFP process. In this approach, the owner enters directly into contract negotiations with a design-build team that the owner has chosen and trusts to do quality work, on time, and at a reasonable cost often based on the owner s previous experience with the team. Alternatively, the owner might discuss anticipated project needs with several potential design-builders in a series of meetings and then work out contractual details with the one deemed to be most qualified. Many states allow sole-source procurement for professional services, such as engineering, but historically may require competitive selection for construction services. Contract Handling Costs Regardless of whether the project is performance-based or prescriptive FPDB, PDB, sole-source, or CMAR, the contract price will generally be for either a fixedprice amount, a budgeted amount based on the estimated units of work, or a guaranteed maximum price, usually with a sharedsavings provision. In general, the design-build or CMAR firm absorbs costs that exceed the fixed-price quote, except as provided in the contract, and retains any savings. In the case of a GMP, many owners incorporate shared-savings clauses into the contract to enable both the owner and design-build team or construction manager to benefit from cost savings. Care is required to establish appropriate measurement and payment provisions, as it is often appropriate to perform work with a combination of fixed-price, costreimbursable, and unit-price items. 42 / THE WATER DESIGN-BUILD HANDBOOK

51 CONDUCTING THE PROCUREMENT PROCESS Recommended Best Practice: Owners should insist that the proposed day-to-day managers and other personnel for the design-build or CMAR team participate in the interview. Also, design-build or CMAR contracts may enable the owner to directly purchase equipment and materials to be used in project construction, particularly where it might be tax-efficient. In this situation, the owner generally retains responsibility for the delivery and storage of the equipment and materials, as well as for any damages they sustain. Contract Award Many owners find it beneficial to meet with respondents to the RFQ and/or RFP prior to awarding the contract. These meetings give the owner an opportunity to judge firsthand how well the design-build or CMAR firm works together, how willing they are to partner with the owner s team, and how effectively all parties will collaborate with one another. Such factors can make the difference between the success or failure of the project. Recommended Best Practice: Owners should come to a clear understanding that designated managers are committed for the duration of the project, while recognizing that unplanned circumstances may arise. A design-build or CMAR firm that has worked together successfully on similar water or wastewater projects in similar roles may be better prepared for a smooth start than a team that has no history of working together. However, even a team that has not completed a project together has presumably collaborated on preparing a response to the RFQ or RFP. As part of the interview, there should be discussions about individual team members and key personnel s experience with water and wastewater design-build or CMAR projects. Owners need to formulate questions in advance in order to evaluate the experience of individual team members and key personnel, including subcontractors. The ultimate focus should be on how these collective experiences enable the owner s project goals and mission to be achieved. Recommended Best Practice: Owners should address which design-build or CMAR team members will take the lead during each critical phase of the project: conceptual design, detailed design, construction, startup, and operations. A note on subcontractors: Some owners (or some state procurement rules for public projects) may require that subcontractors be selected, even on a design-build project, by competitive bidding. However, many design-build firms find they can deliver more effectively when they are allowed to choose subcontractors on the basis of experience and prior working relationships. Recommended Best Practice: Owners should be willing to work with the design-build or CMAR team collaboratively to ensure that any necessary transitions go smoothly. THE WATER DESIGN-BUILD HANDBOOK / 43

52 CHAPTER 4 The Our philosophy district could not was have to allocate had a better risk working to the party relationship best with able to anyone. manage MWH was it. This committed required a to balanced customer approach satisfaction. between the The owner MWH and service team provider, wanted to where deliver protection what we wanted of essential in the owner best manner interests and was by assured the most without economical unnecessarily means. burdening There or costing was a genuine the practitioner commitment to party. providing a high quality Scott product Haskins to meet Former the Deputy district s Director Seattle Public Utilities high expectations Seattle, Washington and goals. Gary L. McFarland, P.E., Engineering Manager, Goleta Water District

53 MANAGING RISK AND LIABILITY As with any human endeavor, design-build and CMAR project delivery entails the risk of undesirable consequences. Therefore, when planning to use design-build or CMAR for a water or wastewater project, owners should address the following questions as early as possible: What undesirable events might occur? How likely is it that they will occur? If they do occur, how severe will the adverse impact be? How should the risks be managed and/or mitigated? Which party is best able to mitigate or absorb each risk? Prospective design-build and CMAR firms will usually address the same set of questions when deciding to submit a proposal and in determining the contingency and mitigation costs and the time allowances for such risks. While neither the owner nor constructor should accept all of the project risks, each party must be willing to accept appropriate risks to realize the benefits of design-build or CMAR delivery. The use of a systematic risk assessment and management process can yield significant cost and schedule benefits to both the owner and constructor during designbuild or CMAR project delivery. Early implementation of risk reduction strategies by the owner (such as site investigations, pilot studies, and permit planning) can prove particularly beneficial. Design-build and CMAR firms experienced with complex water and wastewater projects tend to apply prudent and systematic risk management during proposal preparation and project delivery. Allocating Risks Risk allocation in the design-build or CMAR contract generally follows the principle that risks should be allocated to the party in the best position to manage them. Whether it is the owner or the design-build or CMAR firm that prepares the contract, a risk allocation matrix can provide a useful starting point. Such a matrix identifies potential key project risks and allocates or shares these risks between the owner and the design-build or CMAR firm, with the objective of reducing the owner s risk-related costs by taking into account the following concepts: Loss prevention What measures can be taken to prevent or reduce the likelihood of adverse occurrences, and who can most efficiently do so? Loss control What measures can be taken to minimize the extent of damage if an undesirable event occurs (despite the loss-preventive measures taken), and who can most efficiently do so? Third party coverage What forms of insurance are available to contribute to the cost of losses incurred for what risks, and how cost-effective are these THE WATER DESIGN-BUILD HANDBOOK / 45

54 CHAPTER 4 Fair risk allocation yields cost-effective results insurance policies compared to other risk management alternatives? Absorption of risk What risks should remain with the owner because transfer to the constructor or funding by a third party is not cost-effective or possible? In complex design-build and CMAR projects, contract terms should generally balance the allocation of risks to achieve an optimum price for the owner, to foster a successful project and productive relationship, and to establish appropriate expectations. For example, seeking to impose project risks on DB or CMAR firms that are not truly within their control is rarely in the owner s best interest. Such inefficient risk shifting can reduce the number of respondents to the RFQ/RFP, result in excessive cost contingencies or risk premiums paid by the owner, and may make it more difficult for the design-build or CMAR firm to obtain required bonding and insurance. It is not feasible to shift all risks to the design-build or CMAR frim. The owner s project risk does not drop to zero under any circumstances. Risk can be reduced or mitigated, but not eliminated. Recommended Best Practice: Owners should submit a draft contract to proposing companies for review and comment (particularly on risk allocation issues) before incorporating it into the RFP. This step or action reduces the issues subject to negotiation, reduces negotiation time, and establishes a collaborative relationship for the delivery of a successful project. 46 / THE WATER DESIGN-BUILD HANDBOOK

55 MANAGING RISK AND LIABILITY Ultimately, the success of a project can be jeopardized if the service provider is forced to accept risks that are not within its control or within its ability to efficiently finance. Table 4-1 illustrates how certain risks and responsibilities are typically allocated in a water or wastewater design-build and CMAR project, respectively. Risks Assumed by the Design-Builder When making a decision as to whether to propose on a project, the design-build or CMAR firm will consider: Is the RFP risk profile generally acceptable? If not, can it be changed occur during the proposal and negotiation process? If not, is the project even worth investing business-development funds to pursue? Risks that the design-build firm is typically in the best position to control include: Design risk. Constructability, coordination, and similar problems are less likely to arise out of the design in a designbuild contract with a single source for engineering and construction, because the designer and builder are working together. If such problems do arise, the owner can TABLE 4-1. Risk Allocation in a Typical Design-Build or CMAR Project RISK DESIGN-BUILD PRIMARY RESPONSIBILITY CMAR PRIMARY RESPONSIBILITY DESIGN-BUILDER OWNER CMAR FIRM OWNER Land and Easement Acquisition Design Building and Administrative Permits (ministerial permits) Environmental Approvals and Permits (discretionary permits) Quality and Quantity of Influent Site Conditions Schedule Cost Project Performance/Acceptance Uncontrollable Circumstances Materials Cost Escalation Envision TM* LEED Certification * Envision is an infrastructure rating system developed to help designers, builders, and infrastructure owners build and direct infrastructure projects toward increasing levels of sustainability. The rating system provides a guide to address triple bottom line sustainability dimensions in the design, construction, and operation of infrastructure projects including water treatment and water reclamation facilities. THE WATER DESIGN-BUILD HANDBOOK / 47

56 CHAPTER 4 hold the design-build firm responsible for addressing many of the resulting problems. By contrast, in traditional design-bid-build delivery, the designer is typically held responsible for failing to exercise a negligence-based standard of care, but not for failing to produce a design that is free from defects. The owner supplies the design to the builder, and the builder expects to rely on it without modification. If the design proves to be defective in terms of constructability or otherwise, the owner may find it difficult to pass on responsibility to the designer. Building and administrative permits. The design-build firm typically accepts risks and responsibility for obtaining ministerial permits and governmental approvals, such as building and construction permits, tied to the specific project scope and design details, while responsibility for discretionary permits (i.e., environmental) remains with the owner. Schedule. The design-build team has the project-planning tools and schedulemanagement capability to meet expected schedule requirements, and therefore usually assumes the risk for completing the project on time in accordance with contract specifications. Failure to complete the project on time may trigger liquidated damages, if so state in the contract, since the actual damages might be difficult to calculate. However, liquidated damages may be tiered, may have a dead-band of a specified number of days, usually have a reasonable cap, and generally do not exceed actual costs to the owner. Damages would generally not be assessed if late delivery is due to circumstances beyond the design-builder s control. Complex facilities (such as this reverse-osmosis plant) require careful planning of commissioning 48 / THE WATER DESIGN-BUILD HANDBOOK

57 MANAGING RISK AND LIABILITY In the allocation of risk on the design-build project, owners need to be mindful that excessive risk not only equates to an excessive price, but also results in lessened competition for the project. Design-Build Contracting Handbook by Robert Frank Cushman, Michael C. Loulakis (2001 Aspen Publishers) Page 251 Recommended Best Practice: Consideration must be made for equitable schedule adjustments due to impacts from extreme or unusual weather conditions, unforeseen site conditions, subsurface conditions, owner changes, permit or license changes, change in law, and uncontrollable circumstances. Costs. The design-builder guarantees the costs of meeting its contractual obligations. Apart from adjustments for price escalation of materials or changed conditions and uncontrollable circumstances as specified in the contract, design-builders accept the risk that their costs may exceed the fixed-price or GMP. Provisions should be made for a sharing of cost savings when project costs are less than the GMP amount. The positive incentive of sharing in cost savings is an effective tool for accomplishing successful projects that meet owner goals. Proprietary processes or equipment. The party that selects a process, equipment, or supplier is normally responsible for its performance. Performance guarantees given by a supplier flow through the design-build firm as part of the plant performance warranty if the supplier is selected by the design-builder. Such performance guarantees flow directly from the supplier to the owner if the owner specifies the process or equipment, and the design-build firm does not directly guarantee the process. Construction warranty. Since the design-build or CMAR firm controls the procurement of materials, the administration of construction and subcontractors, and the supervision and inspection of installation, the designbuild or CMAR firm provides a normal construction warranty on the project for the normal commercial warranty period following substantial completion of the facility. Project performance and acceptance testing. The design-build or CMAR firm is responsible for ensuring that the completed project is designed and constructed to meet performance THE WATER DESIGN-BUILD HANDBOOK / 49

58 CHAPTER 4 A safety plan is critical to quality performance requirements outlined by the owner and explicitly included in the contract. The Plant-Performance Warranty to this effect may include plant-performance liquidated damages set at commercially-reasonable levels, which will apply if the performance guarantees are not met within a specified time. They may be graduated for the degree by which the plant fails to meet the performance guarantees, subject to a reasonable limit. The project is not considered complete until the design-build or CMAR firm demonstrates the facility s performance through an agreed-upon acceptance testing procedure. The design-build firm typically retains this performance risk until the project is accepted, at which point the facility (and performance responsibility) is assumed by the owner. The designbuilder may modify the plant to meet the performance guarantees. Note, however, that the owner remains responsible for the within specifications delivery of both quantity and quality of influent to the plant, as well as timely delivery of conforming influent for testing and commissioning. Coordination with existing facilities. This is particularly important when the design-build project is an addition to a major existing water or wastewater treatment facility that must remain in service. The owner provides the designbuild or CMAR firm with full detail on the existing facilities, including description, location, and condition of physical intertie points. The firm and the owner develop a mutually-agreed coordination and intertie protocol to ensure that the design-builder s work does not interfere with existing plant operations, and that the intertie itself is completed without disruption. Fines and penalties. The design-build or CMAR firm can be responsible for fines and penalties assessed with respect to their work to the extent in effect on the date of the proposal. Such liability would be subject to the Change in Law article of the contract. The owner becomes responsible for any fines and penalties after handover. Third-party liability. Since the designbuild or CMAR firm has care, custody, and control of the project worksite, it will customarily assume the liability for thirdparty bodily injury or property damage. It will indemnify the owner from and against such liability, and will provide Workers Compensation/Employer s Liability and Commercial General Liability insurance to cover such risks, along with Automobile Liability insurance. Damage to the facility. The design-build or CMAR firm will assume liability for damage to the facility under construction until handover to the owner, and will provide builder s risk insurance to cover 50 / THE WATER DESIGN-BUILD HANDBOOK

59 MANAGING RISK AND LIABILITY such risks. Following handover, the owner assumes the care, custody, and control of the facility, and provides its own property damage insurance coverage, with a waiver of subrogation. Other insurable risks. The design-build or CMAR firm will provide appropriate and available special insurance as required for transit, marine cargo, harbor workers and longshoremen, watercraft, and aircraft risks. Uninsurable risks. The design-build or CMAR firm does not assume any liability for owner s consequential damages, since these are not possible to predict or assess in advance and are not possible to insure. Professional liability. The design-build or CMAR firm will assume responsibility for any professional liability arising out of its professional services for the project. The firm s corporate assets will respond if necessary to any claim in this area. Professional liability insurance (to reasonable limits) will provide evidence of the firm s responsibility in this area. Risks Assumed by the CMAR Firm Risks that the CMAR firm is typically in the best position to control include: Building and administrative permits. The CMAR firm typically accepts risks and responsibility for obtaining ministerial permits and governmental approvals required for construction, such as building and trade permits and explosives permits, but would not be responsible for delay or other problems caused by the design of the facility. Schedule. The CMAR firm usually assumes the risk for constructing the project on time, provided that design documents and other owner responsibilities are completed on time. Failure to construct the project on time may trigger liquidated damages, since the actual damages might be difficult to Owners consider design risk when evaluating collaborative project delivery THE WATER DESIGN-BUILD HANDBOOK / 51

60 CHAPTER 4 calculate. However, liquidated damages usually have a reasonable cap and generally do not exceed actual costs to the owner. Damages would generally not be assessed if late delivery is due to circumstances beyond the CMAR firm s control. Recommended Best Practice: If liquidated damages for late delivery are included in the contract, owners should also include an early completion bonus for early delivery; generally, the positive incentive of an early completion bonus is a much more effective tool for ensuring timely completion than the fear of the negative incentive of liquidated damages. Consideration must be made for equitable schedule adjustments due to impacts from extreme or unusual weather conditions, unforeseen site conditions, subsurface conditions, owner changes, permit or license changes, change in law, and uncontrollable circumstances. Costs. Upon completion of the preconstruction phase and before starting construction, the CMAR firm typically guarantees the total cost of meeting its contractual obligations to construct the project. The point in the design development process for establishing, through negotiation with the owner, the GMP or fixed price for construction can vary depending on factors unique to the project, such as the need for schedule acceleration or early cost determination. Apart from adjustments for price escalation of materials beyond an agreed limit or changed conditions as specified in the contract, the CMAR firm accepts the risk that such costs may exceed the GMP or fixed price. It should be noted that the amount of cost contingency in the GMP or fixed price is directly affected by the level of design completion, as well as by the extent of fixed subcontractor pricing obtained. Project performance and acceptance testing. The CMAR firm may be responsible for conducting performance testing upon completion of construction, but would not be responsible for performance shortfalls tied to the project s design. Guarantees. The CMAR firm will give a normal construction warranty on the project, but will not give a plantperformance warranty. Insurance. As discussed above, the CMAR firm will provide normal workers compensation/employer s liability, commercial general liability, automobile liability, and builder s risk insurance. It may also apply specific special insurance, as above. It will generally not provide professional liability insurance, since professional liability on a CMAR project lies with the designer, nor will the CMAR firm assume any uninsurable risks, such as the owner s consequential damages. Risks Retained by the Owner Risks that the design-build or CMAR firm cannot control or finance with reasonable cost contingencies are typically retained by the owner. Design-build firm s financial capability. One of the threshold risks for owner consideration is the financial capability of the design-build or CMAR firm. This is usually determined at the qualifications stage of the project development. The design-builder provides core financial information to the owner during qualifications, and then certifies that this information is still valid during the proposal phase. The owner may also 52 / THE WATER DESIGN-BUILD HANDBOOK

61 MANAGING RISK AND LIABILITY Expediting the project schedule can reduce exposure to critical materials and equipment escalation require performance and payment bonds from the design-builder. The owner may require retainage on payments during the performance of the contract; the monthly retainage amount may be reset to 0% at the 50% complete point if performance is satisfactory. Retainage is held through substantial completion and then reduced through final completion. Land and easement acquisition. Legal ownership and availability of the project site, as well as possession of executed and recorded easements, are critical success factors for most water and wastewater projects. While this seems obvious, some projects encounter significant delays or require major design revisions due to difficulties stemming from land and easement acquisition. Regardless of the form of project delivery selected, the owner retains the risk associated with the land and easement acquisition, including temporary easements for construction or laydown areas and permanent easements for installed utilities. Local traffic management during construction may require special permits or traffic-control systems under an agreement with the local municipality. The owner may want to retain responsibility for this function, since it is closely tied to community relations. Impacts of the traffic management plan on construction costs or schedule may require an appropriate change order. Any railroad crossings will need to be negotiated with the railroad, and railroad protective Liability insurance may be required; temporary road crossings and liability insurance would normally be the responsibility of the design-build or CMAR firm, while permanent utility easements would be responsibility of the owner. Recommended Best Practice: Owners should secure the following land-related transactions as early as possible in the project schedule, preferably before the design-build or CMAR contract is awarded: Land purchase for project site and remote facilities. Permanent easements for pipelines and utilities. Temporary construction easements necessary to install pipelines and permanent easements for installed utilities. Project requirements and objectives. The owner should provide a detailed, complete, and accurate site description together with project performance and other technical requirements for the project. THE WATER DESIGN-BUILD HANDBOOK / 53

62 CHAPTER 4 JEA, Jacksonville, Florida: Designed for future expansion JEA, serving 750,000 accounts in Northeast Florida, needed an additional water treatment facility. The $10.3 million plant was designed to provide 23.1 MGD maximum daily flow with the ability to be expanded to 30 MGD maximum daily flow. The design-build team specifically considered future treatment technologies and plant expansion, resulting in increased initial capital costs, but lower future expansion costs. The ten-acre greenfield site consisted of unsuitable soil and low-lying, wetland areas, forcing the team to raise the entire site by three feet. The team also had to take into consideration architectural aesthetic standards to help the plant blend in with the surrounding natural environment and future buildings. By using a single contract for the construction or improvement of four plants, the team and JEA developed a cooperative relationship focused on meeting JEA s needs as efficiently and effectively as possible. In addition, the design-build team self-performed 32% of the project to have greater control over quality and safety. Design risk CMAR only. Unlike designbuild, where design risk is assumed by the design-builder, design risk in CMAR remains the responsibility of the owner, and the owner generally retains a separate design engineer. CMAR and traditional design-bid-build delivery are similar in that the owner s designer is typically held responsible for failing to exercise a (negligence-based) professional standard of care, but not for failing to produce a design that is free from defects. The owner supplies the design to the CMAR firm who expects to rely on it. If the design proves to be defective, the owner may find it difficult to pass on responsibility to the designer. With CMAR, the owner s design risk associated with constructability issues is significantly reduced through a range of pre-construction services, such as constructability reviews, value engineering, and cost estimating during the design-development process. Recommended Best Practice: In order to mitigate the owner s design risk associated with constructability, it is important that the CMAR firm be hired early in the designdevelopment process, and certainly no later than at 30% design completion. Environmental approvals and permitting. Although an owner may engage the design-build or CMAR firm to assist in preparing and obtaining environmental permits and approvals, the owner typically assumes the risks associated with issuance of discretionary permits by a licensing or permitting agency, particularly environmental. Since these are fundamentally based on the owner s relationship with the permitting agency, delays or additional costs in 54 / THE WATER DESIGN-BUILD HANDBOOK

63 MANAGING RISK AND LIABILITY obtaining such permits or approvals would not generally be the design-build or CMAR firm s responsibility (unless the permit preparation work performed by them somehow failed to meet the standard of care for this activity). Recommended Best Practice: Contracts between parties should allow the design-build or CMAR firm to recover schedule or cost impacts associated with permitting delays, new permit conditions, or permit denial. Quantity and quality of influent. The quantity and quality of water or wastewater that enters a facility affects the ability of the constructed facility to perform as required. Performance and cost guarantees proposed by service providers assume that the raw water input to a watertreatment plant, the sewage that enters a wastewater treatment plant, or the water and/or sewage that enters into a pipeline and/or pumping station will fall within the range of quality and quantity parameters, including seasonal variants, specified in the RFP and the contract. The design-build contract would normally state that the owner would be responsible if the influent falls outside of that range, leading to unmet requirements or increased costs. If the plant experiences out-of-specification influent at the time of performance testing, the owner and the design-builder will normally negotiate an equitable adjustment to the required plant performance criteria which appropriately allows for the deviation from specifications In the case of CMAR, the owner is likewise responsible for the quantity and quality of influent, including seasonal variants and for timely delivery. Recommended Best Practice: The owner should provide detailed, accurate, complete, and reliable input specifications for plant influent. Site conditions. The owner is responsible for providing complete, accurate, and reliable site plans, data, and investigations to the design-build or CMAR firm for incorporation into the planning and design phases of a project. In most situations, the owner retains the risk associated with site conditions that deviate materially from those described in the RFP and contract. Differing site conditions can affect both cost and schedule and may require a change order. A well-defined approach to addressing such conditions is especially important if the project involves the rehabilitation or expansion of an existing facility where as-built drawings and information may be incomplete or inaccurate. Recommended Best Practice: If there are material uncertainties about site conditions and soil or subsurface conditions, the owner should consider having the design-build firm conduct a detailed site and subsurface survey after contract award and before the final price is determined, as a project work scope item. Upon negotiation, this aspect can become a shared risk. Uncontrollable circumstances. Some risks fall into the category of uncontrollable circumstances, in the sense that they are not under the control of either party and are not insurable. Examples include loss of power, floods, unforeseen changes in law or regulatory requirements, differing site conditions, storm damage, and earthquakes that can have an affect on the ability of the design- THE WATER DESIGN-BUILD HANDBOOK / 55

64 CHAPTER 4 approaches to accomplish the changed objectives. Owners should consider a design-builder s quality management approach in determining best value builder or the CMAR firm to perform its contractual responsibilities or impact the project cost or schedule. Recommended Best Practices In order to avoid contingency amounts for non-predicted uncontrollable circumstances, owners should realize that such items are typically covered by a specific clause that provides for reimbursing the design-build or CMAR firm and adjusting the schedule for those cost and schedule impacts that could not be avoided by the exercise of reasonable care. The contract normally also includes a procedure for resolving situations such as changes in applicable law or regulatory requirements that are outside the control of either party. Such uncontrollable circumstances might lead the design-build or CMAR firm to seek a change order under the contract. In the spirit of collaboration, the design-build or CMAR firm will typically discuss with the owner the rationale for any changes and the cost and schedule implications. The design-build or CMAR firm may be able to suggest design or construction adjustments and other less expensive Materials cost escalation. Designbuild or CMAR contracts for water or wastewater projects that span several years typically include a comprehensive escalation clause to address inflation or unforeseen materials cost increases and decreases. This clause might be premised on agreed cost components in the fixed design-build price or in the CMAR guaranteed maximum or fixed price and economic indices such as the Producer Price Index for selected materials. Recommended Best Practice: Escalation costs outside a stated or reasonably anticipated range normally would be dealt with through a change order to the contract. Owner changes. Contractually, an owner is entitled to require changes within the scope of work, and may request extra work from a constructor. When considering any such change or addition, the owner works collaboratively with the design-build or CMAR firm, recognizing that early changes on a project can be accommodated more easily and/or cheaply than late or delayed changes. The owner requests a Change Order Proposal from the design-builder for the change under consideration. The Change Order Proposal details the proposed change in cost and schedule (including recognition of impacts) for the owner s decision. Damage to owner s other property, including the facility after handover. The risk of damage to the owner s property other than the facility during construction (which is covered by the builder s risk insurance) or to the facility after handover remains the responsibility 56 / THE WATER DESIGN-BUILD HANDBOOK

65 MANAGING RISK AND LIABILITY of the owner, since the owner has permanent property insurance in place covering such property. At most, if contractually required, the design-build or CMAR firm might assume liability for such damage due to its fault or negligence up to the amount of the owner s deductible on such insurance. The owner provides a waiver of subrogation with respect to such insurance. Payment risk. The obligation to make payments when due is a fundamental obligation of the owner. The design-build firm is usually paid monthly, in arrears. The contract may specify a mobilization payment due upon notice to proceed with construction. The design-builder may cease performance if not paid and is entitled to interest on late payments. LEED Certification from the U.S. Green Building Council (USGBC). LEED certification provides independent, third-party verification that a building project meets certain green building and performance metrics. According to the USGBC, sustainable building strategies should be considered early in the devel opment cycle. An integrated design-build project team typically develops an integrated, systems-oriented approach to green project design, development, and operations in a manner that can yield synergies and improve the overall performance of a building. Initial LEED assessment is recommended and most design-build firms either have checklists or use the USGBC LEED online system to evaluate probable compliance with LEED criteria. Final certification is evaluated by the USGBC based upon information submitted. While the design-build or CMAR firm can use best efforts to meet the certification requirements, the Review of contract conditions by a surety is now a typical step in issuing bond commitments firms cannot guarantee that the USGBC will actually certify the project at the desired level. Care is recommended when drafting contract requirements to reflect requirements regarding LEED certification. Recommended Best Practice: Owners should use care in specifying the portion(s) of a wastewater or water treatment plant project for which they desire LEED certification. Typically, the buildings on the site are the most appropriate structures for which to request LEED certification because the program is designed for buildings and is not applicable to many aspects of water and wastewater construction. To ensure mutual understanding and minimize subsequent disputes, the contract usually provides definitions of all important legal and technical terms. Terms that can lead to confusion if not defined explicitly include: unsatisfactory performance, uncontrollable circumstances, force majeure, consequential damages, equivalent compensation, and indemnification. THE WATER DESIGN-BUILD HANDBOOK / 57

66 CHAPTER 4 Managing Risks and Liabilities Many tools exist to manage risks and liabilities for design-build or CMAR project delivery. Basic risk management guidelines suggest that risks can be: Taken and managed. Taken and transferred fully or partially. Not taken. A useful approach to risk management is for the owner and the design-build or CMAR firm to develop risk registers to identify foreseeable risks, the potential impacts of the risk, the probability of the risk occurring, and the way the risk will be managed. The risk register can also be used to establish the project contingency on a line-item basis, an aggregate basis, or a combination of the two. The risk register can also be a useful on-going project management tool used by the owner and the design-build or CMAR firm if it is regularly updated and reviewed as part of the monthly project review process. When considering ways that risks can be managed or reallocated in part, owners can consider the following common tools or approaches: Sureties and bonding. The most common type of performance security to protect the owner against bankruptcy or nonperformance is a performance bond that provides a third-party guarantee that the design-build firm will perform its contracted obligations in designing and constructing the project or that the CMAR firm will perform its contracted obligations in constructing the project. Recommended Best Practice: Owners should consider the dynamic nature of the surety industry and the relatively recent growth in the popularity of design-build and CMAR for water and wastewater systems and approach sureties through their selected short list of proposers. This step occurs in the early stages of project development to gain input into contract requirements for the particular project. Sureties are increasingly requiring a detailed review of a project s scope of work and contract conditions prior to issuing a performance bond and may be unwilling to bond a project that has what they consider to be unreasonable terms. If state law allows, consideration should be given to requesting less than 100% bonding to cover likely exposure because 100% bonding may unnecessarily increase costs and eliminate some potential bidders. In addition, bonds may be more economically available if they only cover the construction portion of a design-build project, and not the whole design-build scope. Owners will frequently also require the design-builder or the CMAR firm to provide a payment bond, which ensures that subcontractors and suppliers on the project are paid when due, and avoids liens on the owner s property are avoided. Letters of credit. Although not commonly used for U.S. design-build or CMAR projects, a letter of credit can provide another form of security for a design-build or CMAR firm s performance on a project. An owner can draw against the letter of credit in the event that damages are suffered due to nonperformance by the design-build or CMAR firm. When a performance bond is provided to the owner by a credit-worthy surety company, it is not normally in the owner s interest to incur the 58 / THE WATER DESIGN-BUILD HANDBOOK

67 MANAGING RISK AND LIABILITY project. Large and complex projects may also required the owner s direct involvement in quality assurance through use of in-house personnel or outside consultants. Acquiring land and easements early in the process avoids delays and design revisions added cost associated with a letter of credit. On international projects, letters of credit are generally used instead of performance & payment bonds. Although most letters of credit are issued in amounts far less than the contract value (typically 5% to 10% of the contract amount), they are expensive for constructors to maintain, they may unnecessarily increase the price ultimately paid by the owner, and they may reduce the level of interest by potential bidders during the proposal phase. Quality management. Implementation of effective quality assurance/quality control processes by the design-build or CMAR firm can go a long way toward managing risks in the design and construction phases of a Insurance. Similar to the surety industry, the design and construction insurance industry is volatile and is continually adapting to the single-source accountability of design-build delivery and the cooperative integration of design and construction in CMAR delivery. Premium costs and coverage can vary widely based on the particular risks and challenges of a project as well as the condition of the insurance industry when insurance policies are procured. The insurance requirements included in a design-build or CMAR contract should be based on how risk is to be allocated between the parties. Most owners require a design-build firm (and its design sub-consultants) or in the case of CMAR the designer to carry professional liability insurance to cover liabilities that arise out of design negligence. This requirement is in addition to industrystandard worker s compensation, commercial general liability (CGL), and automobile liability insurance. Builder s risk insurance is commonly required on a design-build or CMAR project to cover replacement or repair of materials or structures damaged during the course of the project s construction. Although the policy may be purchased by the design-builder or the CMAR firm, the cost of the policy is typically passed on to the owner. In some cases it may be appropriate to consider project-specific insurance policies or products that provide coverage otherwise excluded from CGL policies. For example, pollution liability policies can insure the costs associated with addressing environmental issues, such as contaminated soils. Efficacy insurance, though expensive, THE WATER DESIGN-BUILD HANDBOOK / 59

68 CHAPTER 4 may protect against some losses associated with economic liabilities, such as liquidated damages or performance guarantees. Although insurance products are available for a wide variety of risks, the project-specific policies and coverage for certain project risks can be very expensive and contain numerous exclusions. Owners should be cautious about specifying overly-protective or cumbersome insurance policies unless they have evaluated the cost and benefits of the policies and included such costs in the program budget. Owner-controlled and contractor-controlled insurance programs, sometimes referred to as wrap-up insurance programs or OCIP or CCIP, respectively, can centralize insurance coverage for a project and attempt to eliminate some of the inefficiency and redundant costs associated with multiple policies and insurers. These programs, however, can be costly and require a great deal of oversight, making them potentially effective only for large and complex projects. Addressing Liability in the Contract A design-build or CMAR contract s approach to liability provides a key opportunity to establish the parameters for holding each party accountable for both the foreseeable and unforeseeable risks highlighted in this chapter. Limits of liability. Many design-build and some CMAR contracts include a clause that limits the overall liability of the design-build or CMAR firm to the owner. This limitation reflects the characteristically high-risk profile of water and wastewater projects. Without limiting liability, some contracts could expose the design-build or CMAR firm to the risk of bankruptcy on a single project. Many experienced design-builders and CMAR firms will avoid contracts that do not contain an overall limitation of liability. Recently, the surety industry has provided guidance that they will be less inclined to provide surety coverage to projects that do not have a limitation-of-liability provision. The specific extent of these limitations and their enforceability are best addressed between the owner and design-build or CMAR firm in the context of the particular risks, profit potential, and challenges of the project. For example, it is relatively common for design-build contracts in the powergeneration industry to include limitation of liability amounts significantly less than 50% of the contract amount. Recommended Best Practice: In order to deal with the vagaries of differing state laws and to ensure that limitations of liability expressed in a contract are fully effective, owners should consider a statement such as: Limitations of and releases from liability set forth herein shall apply whether the liability is claimed to arise in contract, tort (including but not limited to negligence), strict liability, or otherwise. Liquidated damages. The intent of liquidated damages is to hold the designbuild or CMAR firm accountable for schedule nonperformance (especially inexcusable schedule delays) by compensating the owner for losses suffered. Although liquidated damages can be appropriate under some circumstances, the owner should recognize that the designbuild and CMAR firm typically have a strong interest in finishing the project according to contracted obligations and schedules. Onerous terms and excessive liquidated damages will increase contingency costs and will reduce the number of design-build or CMAR firms interested in the project. 60 / THE WATER DESIGN-BUILD HANDBOOK

69 MANAGING RISK AND LIABILITY If liquidated damages are established, their amount should reasonably approximate what is necessary to compensate the owner for actual losses, rather than be set at a level that simply serves to penalize the design-build or CMAR firm. In addition, the aggregate amount of liquidated damages is generally capped, and also may be tiered or include a dead-band for the early days of a delay. Provisions setting unrealistic liquidated damages, or providing for payments when no actual financial loss has been suffered by the owner, or transferring the risk of financing costs, will impose risks that such payments may not be enforceable by the owner as a matter of state law, raise costs to the owner, and increase the likelihood that an adversarial relationship between the owner and contractor will develop. A more collaborative and positive approach to delay damages would balance any potential liquidated damages with comparable earlycompletion incentives. In any event, the use of liquidated damages as a negative incentive should be matched with an early completion bonus as a positive incentive. Consequential damages. Generally, designbuild and CMAR contracts hold neither the owner nor the service provider responsible for the indirect results of alleged failures. These might include damages to the contractor such as loss of market position, harm to reputation, or economic losses, or damages to the owner such as loss of customers or use of a facility or payment of debt service costs. However, due to the subjective nature and varying scope of state laws, it may be desirable to include in the contract a definition of what is intended to be excluded by the consequential damages waiver. Owners should also be aware that the surety industry currently limits issuance of surety bonds on contracts that do not exclude consequential damages. For example, if the design-build or CMAR firm must take a water treatment plant off line for two months to address a warranty obligation, the designbuild or CMAR firm typically would not be required to pay the costs of the owner s debt service or of the owner having to purchase water from another utility to cover the lost capacity. Attempting to apply consequential damages in such a situation can result in excessive project costs paid by the owner in the form of risk contingencies or lack of competitive interest in the project. Indemnification. Neither party should be expected to indemnify the other for that other party s own negligence. Indemnification often is proportionately shared based on the negligence of each party in a given situation. Typically, the designbuild and CMAR firm would be indemnified from third-party claims beyond their control, such as claims filed against the project by outside organizations, and the owner would be indemnified from third-party claims based on the negligence or failure of the design-build or CMAR firm to perform its contractual obligations. In any event, the scope of available insurance coverage should be taken into account in finalizing the indemnification language. Where the design-build or CMAR firm has care, custody, and control of the construction worksite, it will usually provide an indemnification to the owner for bodily injury or property damage to third parties incurred at the site, and such indemnification will be covered by the worker s compensation/employers liability insurance and/or the commercial general liability insurance provided for the project. THE WATER DESIGN-BUILD HANDBOOK / 61

70 CHAPTER 4 Warranty provisions and performance guarantees enable owners to manage risks Warranties. Design-build and CMAR contracts typically contain construction warranty obligations that are similar to traditional design-bid-build contracts such as those covering construction defects, as well as those covering materials and equipment defects items that can be passed along to suppliers and equipment vendors, with a specified warranty term (e.g., one year from substantial completion). Other warranties in design-build contracts often address the issue of defects in design or performance, and their terms will vary based on the agreements reached between the owner and contractor. As with any warranty, the terms should be clearly defined in the contract. Overly protective or unreasonably extended warranty terms may require a contractor to incorporate expensive or cumbersome contingencies into its price, and in some cases may reduce participation if warranty terms place the contractor at too great a risk. In addition, design-build contracts may also contain a performance warranty, which guarantees to the owner that if the plant receives the necessary influent within specification, then the plant will meet its specified requirements as to energy and chemical consumption, emissions, and effluent quality. Performance warranties are usually satisfied by performance tests on an agreed basis. 62 / THE WATER DESIGN-BUILD HANDBOOK

71 MANAGING RISK AND LIABILITY Equitable sharing of risks and reasonable protections against risk facilitate a productive, collaborative relationship between the owner and the design-build or CMAR firm and help the owner realize all the benefits of design-build or CMAR project delivery. The Design-Build Institute of America (DBIA) has developed guidelines to help share risks equitably. These documents offer a good starting point for contract development and can be obtained at Industry-Shared Forms In addition, several industry service organizations have developed standard forms of contracts that have gained wide acceptance in the design-build and CMAR world, since they provide a balanced approach to risk management and project delivery between the owner and the design-build or CMAR firm. These include contract forms developed by the DBIA, the ConsensusDOCS developed by the Associated General Contractors (AGC), and those of the Water Design-Build Council (WDBC). Such industry-standard forms are generally accepted by design-build and CMAR firms with a minimum of negotiation. Contracts prepared by outside advisers may not necessarily be consistent with such principles and may require extended negotiation to reach an acceptable agreement. Recommended Best Practice: An initial kickoff workshop or project chartering session that aligns owner expectations with CMAR or design-build implementation establishes and reinforces a collaborative relationship. These sessions should focus on communications, reporting, monitoring, and oversight issues and particularly on exchange of communication and information, even if data are incomplete. Such sessions also provide early consultation on risk sharing and the form of contract in advance of the issuance of an RFP. Summary In conclusion, a principal advantage of designbuild and CMAR delivery methods is that they foster a highly collaborative relationship between the owner and the design-build or CMAR firm. This relationship is established at the very beginning of the delivery process and promotes mutual trust from the start. It is reinforced by agreements that reflect collaborative principles and the equitable sharing of risk and reward for a well-delivered project. All parties work for their mutual benefit and for the success of the project itself. See Table 4-2 for a summary of key risks and liability principles in design-build contracts. THE WATER DESIGN-BUILD HANDBOOK / 63

72 CHAPTER 4 TABLE 4-2. Key Risk and Liability Principles in Design-Build Contracts for Water and Wastewater Plants Risk ITEM DB Joint Ventures Financial risk Risk Principle and MitigATIon Joint and several liability of DB co-venturers. Financial statement as part of selection criteria, updated to date of proposal; financial capability evidenced by DB performance and payment bonds; payment in arrears; reasonable retainage. Land and easement acquisition Owner acquires land and easements necessary for the project, and provides access to design-builder when required to support the project schedule. Design risk Construction risk Plant performance Schedule risk Site conditions Cost risk Permits and approvals Proprietary materials or equipment, such as membranes or UV technology Design-builder designs to normal professional standard, in accordance with project criteria. Design-builder provides construction warranty for normal warranty period; repair, replace, or remediate defects in materials, equipment, or construction. Design-builder provides warranty of operation within project criteria, subject to: Quantity and quality of effluent meet project criteria. Other plant inputs meet project criteria. Performance tests, as specified. Specified warranty period. Owner operates and maintains in accordance with plant O&M manual. Remediation or potential buy-down for lower-than-expected performance. Design-builder commits to meet project completion schedule, with reasonable liquidated damages for failure to meet schedule, and early completion bonus for completion in advance of scheduled completion date. Owner provides accurate, complete and reliable site information to design-builder; design is based on information provided plus further site investigations, if budgeted; equitable cost and schedule relief for unanticipated site conditions. Design-builder provides fixed price or guaranteed maximum price, subject to: Equitable relief for uncontrollable circumstances (including weather, unanticipated site conditions, etc.) Equitable relief for materials cost escalation beyond allowable amounts. Owner-directed changes or other design-builder entitlements to change. Sharing of cost savings for completion below GMP. Owner obtains environmental and other discretionary permits. Design-builder obtains ministerial permits (building permits, explosives permits, etc.). Performance risk borne by party specifying such materials or equipment. 64 / THE WATER DESIGN-BUILD HANDBOOK

73 MANAGING RISK AND LIABILITY Coordination with existing facilities Fines and penalties Third-party liability Damage to project Damage to owner s other property Contractor s payment risk Limitations of liability Owner provides accurate, complete, and reliable information on existing facilities. Owner and design-builder agree on a coordination and intertie protocol. Design-builder plans and schedules physical interties with existing facilities so as not to disrupt owner s plant operations other than as agreed in coordination and intertie protocol. Design-builder responsible for fines and penalties to extent in effect on effective date of contract; owner responsible after handover. Design-builder provides and administers a comprehensive site safety program. Design-builder indemnifies owner for third-party bodily injury or property damage resulting from design, construction, or construction site. Design-builder carries commercial general liability insurance, auto liability insurance, workers compensation and employer s liability insurance, and other insurance (longshoremen and harbor workers, watercraft, aircraft, etc.) as required. Design-builder carries construction equipment insurance against loss of or damage to such equipment. Design-builder carries builder s risk insurance to full replacement value of project until handover. Owner adds the facility to owner s permanent plant insurance following handover. Each party gives waiver of subrogation to the other. Owner carries insurance on owner s property other than the project; design-builder may be liable for damage to such property up to the amount of owner s insurance deductible; owner provides waiver of subrogation. Design-builder is entitled to payment of all undisputed amounts when due. Interest on late payments at stated rates. Design-builder may suspend or terminate for non-payment, after specified notice and cure period. Owner provides a waiver of liability for claims of consequential damages. Contract contains a reasonable and appropriate limitation of design-builder s total liability to owner (other than warranty and indemnity obligations). Contract contains a full-effect clause (limitations apply whether liability is claimed to arise in contract, tort (including but not limited to negligence, strict liability, or otherwise). THE WATER DESIGN-BUILD HANDBOOK / 65

74 CHAPTER 5 The district construction could not process have didn t had a better working interrupt relationship operation with of the anyone. facility, MWH so our was customers committed never to lost customer a day of service. satisfaction. Considering the The level MWH of activity team taking wanted place, to this deliver is unprecedented. what we wanted Anthony in Delescinskis the best manner Senior Project and by Manager the United Water most economical means. There was a genuine Technical commitment to qualifications providing a are high quality important, product but at to the meet end of the the district s day what high makes expectations a difference is and relationships goals. and how you deal with problems Gary L. McFarland, P.E., Engineering when they Manager, arise. Goleta Water District Fred Aigbe Deputy Director Public Utilities Seattle, Washington

75 MANAGING THE DESIGN-BUILD PRoject Design-build projects are all about teamwork. In the most successful projects, the designer, the builder, and owner collaborate seamlessly for the duration of the effort. They work together as a single team based on trust, with a single goal: to deliver a quality product on time and on budget. Their communications are transparent, frequent, and timely. The key to this success is collaboration and communication. It is through the collaborative process between the designer and builder from the very start of the project distinguishes design-build from design-bidbuild. In design-build projects, the owner has a single point of contact the designbuild firm and no longer has to serve as an intermediary between the designer-build firm and the builder. However, the owner does have to function as an active member of the design-build team. This chapter advises and provides guidance to owners on how to manage and oversee the design-build project. Chapter 6 presents the key aspects of managing a CMAR project. Recommended Best Practice: Owners should consider engaging in a formalized partnering process at project inception to allow members of the owner s team and design-build team to build trust and an understanding of each other s critical success factors. Establishing the Implementation Team In selecting a project oversight team, bear in mind that project-management skills particularly collaboration, communication, teamwork, and trust are important. You may want to include representatives from different departments such as engineering, operations, finance, and legal. Owners with little or no prior experience with designbuild procurements often find it useful to include a design-criteria professional (DCP) or owner s agent on their team (see Chapter 2). In some states, on public projects for public-policy reasons, a DCP must prepare the technical document upon which the design-build procurement is based. The entire team should have a clear understanding of the project goals and the chosen design-build delivery method. Individual members should have sufficient knowledge and experience to offer constructive comments, suggestions, and input to their counterparts on the designbuild team. The owner should designate a well-qualified project manager (PM) and give that individual appropriate decision-making authority. The PM s role is to oversee the work of the design-build firm and to administer the terms of the design-build contract. The ideal owner s PM should have strong leadership and consensus-building skills to establish and maintain alignment among all of the project participants within the owner s organization. THE WATER DESIGN-BUILD HANDBOOK / 67

76 CHAPTER 5 West Basin Municipal Water District, Carson, California: Dealing with continued population growth, increased water demands, and reductions in future imported potable supplies West Basin Municipal Water District provides several types of high-quality recycled water to various agencies, cities, private water purveyors, and oil refineries throughout the Los Angeles County region. West Basin expects continued population and water demand growth within its service boundaries over the next 20 years. In addition, a reduction in available sources for importing potable water has significantly impacted water supply reliability in the region. As a result, West Basin implemented the fifth expansion of its water-recycling plant to increase water production and improve water quality. To ensure that the plant remained fully operational and expansion efforts proceeded as planned, West Basin maintained close communication with the design-build team s project managers throughout the project duration, by holding weekly meetings and hiring an independent program management firm. Start-up planning began early in the project, and regulators were involved from the start to ensure timely acceptance. The owner s project manager and associated staff may all be in-house staff. If the required functional skills are not available inhouse, owners often elect to hire an outside consultant (sometimes called an owner s agent or representative) to support the project manager. The owner s representative often fills particular roles such as design review, construction observation, financing, permitting, or legal support. An owner s representative with experience in designbuild delivery for water or wastewater projects can add value, especially if the owner is unfamiliar with design-build delivery. If the owner lacks certain skills or staff depth for a particular project and is not planning multiple water or wastewater projects in the short term, using consultants can be more efficient and effective than hiring additional in-house staff. It is often desirable for such a consultant to have experience in all aspects of design-build delivery that is, to have been or to have represented owners, designers, and constructors and not merely one dimension of the design-build process. Creating the Collaborative Mindset Design-build delivery calls for a paradigm shift in mindset and culture. In contrast to DBB projects, participants in DB projects need to think in terms of we as a team and abandon the you versus us thinking between designer and builder and between owner and design-build firm. Developing and maintaining trust among all stakeholders is critical. A team working together synergistically in a trusting environment can deliver outstanding results. The entire team must put commitment to project goals above satisfaction of personal goals. It requires understanding individual team members goals and empathizing with them to build trust and rapport. This shift applies to all 68 / THE WATER DESIGN-BUILD HANDBOOK

77 MANAGING THE DESIGN-BUILD PROJECT members of the team: the owner in transition from approaching DBB with a perhaps adversarial mind-set; the designer who has historically been defensive of the intellectual beauty of his design; and the constructor who is moving from a low-bid now, claims later mentality to one of a project-solutionoriented mindset. Individual design-build team members are responsible and accountable not only for the tasks they have been assigned, but also for coordinating with other team members to achieve the goals of the project. Open, transparent, and timely communication among all stakeholders is critical. Roles, responsibilities, and reporting relationships must be clearly defined within the designbuild team, within the owner s organization, and between the design-build firm and the owner. Progressive design-build, in particular, fosters these principles as the team works together from the inception of the design through construction and commissioning. For fixed-price design-build, achieving the collaborative mindset is somewhat more challenging because the design-build firm has proposed a fixed scope and price, and the owner typically has more constraints with its participation in the design development process. Preceding chapters of this Handbook have emphasized the importance of defining the scope of work clearly, establishing performance criteria, and assigning risks Fixed-price design-build limits an owner s post-award input into the design THE WATER DESIGN-BUILD HANDBOOK / 69

78 CHAPTER 5 at the outset of the project. Although those are necessary factors for success, teamwork throughout the project contributes significantly to success, as does sound planning and contracting. Producing a Project Management Plan Immediately following award of the design-build contract, an overall project management plan should be developed to guide implementation. Such plans often include: Financial management policies and procedures. A detailed project schedule integrating design, procurement, construction, and commissioning activities. Design and construction oversight procedures (QA/QC). Health and safety planning and protocols. Communication procedures. Risk management plan. An action plan to address unexpected occurrences. Recommended Best Practice: A draft project management plan should be distributed to solicit comments from the owner s team members and the design-build firm s project manager. The contract will provide the basis for the project management plan, but the owner should describe the structures and processes necessary to implement the contract. Financial Management Policies and Procedures Well-articulated policies and procedures for financial management help sustain mutual trust and cooperation between the owner and the design-build firm. Both parties have financial obligations. The owner is responsible for securing all funds necessary to pay the design-build firm s invoices in a timely manner. The contract terms typically grant the design-builder interest on late payments and/or the ability to stop work should payment delinquency exceed a pre-determined duration; this is important protection for the design-build firm, which may not positioned to provide more than a month or two of credit support Partnering is encouraged on collaborative delivery projects 70 / THE WATER DESIGN-BUILD HANDBOOK

79 MANAGING THE DESIGN-BUILD PROJECT Detailed and integrated project schedules promote teamwork between the owner and design-build firm to an owner s project. The design-build firm, in turn, is responsible for documenting project progress and milestones. The owner and the design-build firm will agree on a schedule for submitting and paying invoices, with the owner usually specifying the content and form of the invoices to expedite approval and agreeing to pay undisputed elements of all invoices when required by the contract. Most contracts require the design-build firm to submit progress reports on a fixed schedule (weekly, biweekly, or monthly, depending on the duration and complexity of the project, or occasionally on a milestone basis). These reports generally include the following content: A summary record of project activities and accomplishments during the reporting period. Details regarding any revisions to the progress schedule and resultant changes required in the construction schedule or critical path schedule. Addressing short- and long-term scheduling and cash-flow forecasting. Identifying issues and challenges requiring action by the owner or design-builder. Providing information to help substantiate payment requests. As required by the contract, the design-build firm s invoices or payment requests should normally attach sufficient documentation to demonstrate that any relevant milestones have been achieved. Such documentation is typically in the form of submittals, transmittal records, or construction schedules showing detailed progress on various project elements. Owners need to establish a process for review and timely approval of the design-build firm s expenditures and an internal budget for staff assigned to support the project. The THE WATER DESIGN-BUILD HANDBOOK / 71

80 CHAPTER 5 Progressive design-build allows owners to advance the early stages of the project prior to securing full financing design-build firm typically provides the owner with a schedule and budget plan for completing the project. The plan should have sufficient detail to track progress, without being so detailed that realistic tracking is lost in the detail. 1 The owner usually pays the design-build firm in the manner specified in the contract. Design-stage payments are generally based on design milestones, such as 30% design drawings. Depending on the type of design-build contract used, the basis for payment may change during construction. For example, under a fixed-price contract, construction-phase payments are generally based on progress against a predetermined Schedule of Values. In contrast, construction payments made under a progressive designbuild GMP contract are likely to be based on actual costs incurred by the design-builder. Recommended Best Practice: Depending on state and local procurement policies, experienced owners should incorporate positive incentive clauses. These inducements afford the design-build team an opportunity to achieve an incentive payment for completing the project ahead of schedule or under budget. Both the private sector and the municipal sector have demonstrated that incentive clauses in design-build contracts stimulate superior achievements. 2 1 A usable, manageable, and comprehensible project schedule might have line items, not 1500 line items. 2 Many forms of incentives as well as cost over-run sharing provisions exist. For more information, contact the Water Design-Build Council. 72 / THE WATER DESIGN-BUILD HANDBOOK

81 MANAGING THE DESIGN-BUILD PROJECT Facilitating Dispute Resolution Although embarking on the design-build process with a collaborative mindset substantially reduces the potential for disputes, unforeseen or unexpected issues and questions may occur on projects. Despite the best intentions of owners and designbuild firms to amicably address such issues, in some instances the differing expectations or needs of the parties cannot be resolved without a process involving a third party. Litigation pursued through the state or federal court system has traditionally been used by municipalities for intractable disputes; as many litigants would attest, this is an expensive, time-consuming, and ultimately exhausting route. Therefore, an alternative that is commonly used is arbitration of construction disputes. This approach is preferable because it reduces the costs and time necessary for reaching binding decisions. However, neither litigation nor arbitration is designed to facilitate dispute resolution. Recommended Best Practice: Taking advantage of the lessons learned in the municipal contracting environment, owners and design-builders both benefit when the project implementation is supported by a process designed to promote the timely, costeffective, and amicable resolution of disputes. One of the most efficient and cost-effective ways to resolve disputes between the designbuild firm and the owner is with a process that advances the dispute directly to the parties respective senior management, where the dispute can be resolved. Often, when the owner s and the design-build firm s project teams understand that the first step in resolving a dispute is to refer it to their own senior management, the teams are able to resolve the dispute on-project and in real time the most desirable outcome. Another widely accepted approach is the use of a third-party neutral in a non-binding process, commonly referred to as alternative dispute resolution (ADR). This method is increasingly being employed within the industry and should be considered for these types of situations. A number of ADR process variations are available, such as negotiations with senior (nonproject) representatives, mediation, minitrial, dispute review board, and standing arbitrators. What ADR processes all have in common is the early and non-binding participation of a neutral third party to bring an objective, independent, and pragmatic perspective to assist the parties in reaching a timely and amicable agreement on how to address issues and disputes, rather than the traditional adversarial and confrontational approach. In selecting the most appropriate ADR process, owners and service providers need to take into account factors unique to the project, such as size, complexity, and schedule, as well as the preferences of the parties. Creating a Detailed Project Schedule The project schedule should integrate all design, procurement, construction, and commissioning activities. This is critical so that key owner and design-build team activities (perhaps line items at the managerial level of detail) are shown in the proper sequence with sufficient time allocated for achieving the overall project schedule. The contract typically includes key milestones and may also include procedures for getting back on track if the schedule slips. If the delay is caused by the owner or by an uncontrollable circumstance, the contract schedule and price may need to be equitably adjusted. THE WATER DESIGN-BUILD HANDBOOK / 73

82 CHAPTER 5 Recommended Best Practice: The project schedule should include a process for achieving the buy-in of stakeholders who may be affected by the project or even of those who oppose the project. Stakeholders need to be informed well in advance of any inconveniences they may experience during the course of the project, such as noise, odors, or road blockages. Formation of a stakeholder advisory group may be worthwhile to provide an opportunity for the community to monitor the project and to have stakeholder concerns heard. Overseeing Design and Construction (QA/QC) Quality assurance and quality control (QA/ QC) procedures help ensure that the project is designed and constructed to meet owner requirements. Contracts often specify quality criteria, and design-build firms typically include QC procedures as an integral part of project implementation. The owner may require additional procedures, such as design-document reviews, value engineering, independent inspections, sampling, testing, and other methods to evaluate adherence to quality criteria. Results of QA/QC tests are normally documented and reported to the owner on a regular basis. Owners who often participate actively in QA/ QC also need to decide which of the QA/ QC documents they need to approve before allowing the project to go forward. Health and Safety Planning and Protocols Design-build teams achieve results through safely delivering the project. Most owners now consider a team s safety record, as well as their approach to dealing with health and safety, as one of the key selection criteria. The health and safety aspects of project planning are just as critical for project success as other planning elements, and are represented in the project health & safety plan and its implementation. All members of the team need to understand how essential the health and safety aspects of project health & safety plan are, and participate in those activities to achieve safe project delivery. Risk Management Planning Design-build provides opportunities for both the owner and the design-build firm to develop and implement comprehensive risk management plans. The goal of the riskmanagement plan is to reduce the overall risk profile for the project, and generate cost and schedule benefits for both parties. Such opportunities occur during the pre-proposal phase (before issuance of the RFP), the proposal phase, and the project execution phase. Generally speaking, the earlier project risks can be identified and appropriate steps taken to manage those risks, the more effective the risk-management planning will be, from both a cost and a schedule standpoint. Many owners have found that including comprehensive risk-management planning as part of preparing an RFP pays big dividends during the proposal process and project execution. Formulating a Communications Plan Frequent and open communication even the communication of incomplete data between the design-build firm and the owner is one of the critical keys to a successful project. Developing and implementing a 74 / THE WATER DESIGN-BUILD HANDBOOK

83 MANAGING THE DESIGN-BUILD PROJECT By utilizing the design-build-operate project-delivery approach, we expected to secure a highly efficient state-of the-art water treatment plant, with substantial benefits for our customers, including timely, efficient, and cost-effective project scheduling, optimal risk allocation, long-term facility operations and maintenance efficiencies, and cost savings. Through these efficiencies the project construction started ahead of schedule. The team worked extremely hard to ensure that the project met all of the technical, schedule, and cost objectives originally set by the city. Troy Hayes, Project Manager for the City of Phoenix good communications plan, can help an owner resolve and may even prevent misunderstandings, disagreements, and disputes. The objective of a communications plan is to keep project participants well informed of the project s status and provide a forum for resolving issues and concerns as they arise. An effective communications plan should be based on a broad and open dialogue process of information to facilitate effective decisionmaking. It should generally include internal and external procedures for the following project-related activities: Requirements for producing project designs including the drawing system to be used, nomenclature, and symbology. Using an electronic document-control system to manage correspondence, drawings and other documents including the process for accessing, storing and retrieving from the system. Written correspondence procedures and distribution. Telephone calls. s. Site visit. Meetings. Payment processing. Document management. Complaints management Emergency response. THE WATER DESIGN-BUILD HANDBOOK / 75

84 CHAPTER 5 Preparing for the Unexpected Water and wastewater construction projects are complex undertakings and are likely to encounter unexpected situations. Often owners choose design-build for their most complex and longest-duration projects. Unexpected changes may occur during delivery of these complex projects, and a well-defined method for managing change can help avoid delays and disappointments. One of the main reasons owners have embraced progressive design-build delivery is the flexibility it allows in scope adjustments and timing, when compared to fixed-price design-build delivery or designbid-build delivery. Change management issues are generally of two types: Expected (but unquantifiable) changes such as materials cost escalation, differing site conditions, changes in law, permitting delays, and labor issues. Completely unexpected changes or unforeseeable circumstances. Defining a methodology for addressing expected and unexpected changes will help to preserve the collaborative nature of the design-build effort. Beyond simply stating something to the effect that we will work it out, the contract may include terms that guide the parties to an equitable resolution, including: A clear definition supporting the concept that unknowable changes exist that cannot be fully articulated in the contract. Recognition that parties to the contract are committed to resolving the actual impacts to the project to the extent that they can control or are responsible for the cause of the change. In the best case, a provision for a decisionmaking mechanism for mitigating unforeseeable events. Figure 5-1 illustrates that changes can be made more easily and at lower cost in the early stages of a project than in the later stages. This reinforces the importance of careful planning, a well-crafted RFP, comprehensive pre-rfp risk-management planning by the owner, and close communication between the owner and the design-builder from contract initiation through to completion. Recommended Best Practice: During project execution, owners are reminded that early decision-making on owner-directed changes are accommodated much more economically than changes that are delayed in the owner s decision-making process for a number of months. Whenever there is a need for a change in scope, schedule, or budget, the design-build firm s project manager and the owner s contract manager should be alerted immediately. The owner and the designbuilder should discuss the issue as soon as possible and agree on any changes that may be necessary. The changes, actions to be taken, and anticipated impacts on the project should be documented in order to avoid or minimize the need to revisit change decisions. 76 / THE WATER DESIGN-BUILD HANDBOOK

85 MANAGING THE DESIGN-BUILD PROJECT FIGURE 5-1. Influence vs. Expenditure MAJOR INFLUENCE RAPIDLY DECREASING INFLUENCE LOW INFLUENCE HIGH LARGE INFLUENCE INFLUENCE EXPENDITURES EXPENDITURES LOW PERFORM BUSINESS PLANNING PERFORM PROJECT PLANNING EXECUTE PROJECT OPERATE FACILITY SMALL There are numerous ways that owners and design-build firms establish a change and dispute resolution process. However, the overall goal is to create and agree on an issueresolution process that allows a decision to be reached promptly and equitably without requiring costly legal actions. A process for dispute resolution is highly critical for a successful project and should be incorporated into the project plan as an integral component. Recommended Best Practice: In order to maintain the teamwork synergy, day-to-day decisions should normally be maintained at the project manager level. If a dispute cannot be resolved, the process should allow an issue to advance to each party s upper management. This alone is often enough to produce the settlement of disputes on-project and in real time the most desirable solution. THE WATER DESIGN-BUILD HANDBOOK / 77

86 CHAPTER 6 The We are district looking could not forward have to had moving a better working straight into relationship the with next phase anyone. of MWH was construction. committed... to This customer is the smoothestrun project I have The ever satisfaction. MWH had during team my wanted 13-plus to years deliver in public what works. we wanted No complaints the best at all. manner Keep up and the by great the most work. economical means. Bobby There Marr was a genuine Public Works commitment Director City of St. Marys to St. providing Marys, Georgia a high quality product to meet the district s high expectations and goals. Gary L. McFarland, P.E., Engineering Manager, Goleta Water District

87 MANAGING THE CONSTRUCTION MANAGEMENT AT-RISK PROJECT Although many facets of managing a CMAR project are similar to managing a design-build project, there are distinctive differences. Similar to design-build projects, CMAR projects are all about teamwork and attaining the benefits of constructor collaboration as early as possible in design development. Unlike a design-build project, however, the owner has separate contractual relationships with the designer and CMAR firm. Although the owner may experience a higher level of design control, the bifurcation of the design and CMAR contracts is the most significant difference from design-build, since the CMAR contract allocates major design and process risk to the owner. Collaboration between the designer and CMAR firm from very early on in the project design process is one of the keys to a successful project, because the CMAR firm s input during the early stages of design development is so important. The owner should function as an active member of the design-cmar team, because design decisions made early on can have significant cost and schedule ramifications. Establishing the Implementation Team In selecting an owner s project oversight team, it is important that project management skills emphasizing collaboration, communication, teamwork, and trust are emphasized. Representatives from different departments such as engineering, operations, finance, and legal should be included in the implementation team, and the entire team should have a clear understanding of the project goals and the chosen CMAR delivery method. Individual representatives from each department should have sufficient knowledge and experience to be able to offer constructive comments and suggestions to their counterparts on the team. The owner should designate a well-qualified project manager with appropriate decisionmaking authority to oversee the work of the designer and the CMAR firm. The project manager should assess recommendations from each of the two parties and serve as a decision-maker for the best interests of the owner. The project manager should have strong consensus-building skills to establish and maintain alignment among all of the project participants within the owner s organization, as well as between the design and CMAR teams. The construction manager and associated team members may all be in-house staff. If the required functional skills are not available in-house, an outside consultant may be needed to support the project manager or to fill particular roles such as financing, permitting, or legal support. Creating the Collaborative Mindset CMAR calls for a paradigm shift in mindset from design-bid-build. Having the entire team commit to project goals is especially important, given that two different firms, THE WATER DESIGN-BUILD HANDBOOK / 79

88 CHAPTER 6 The Messerly facility is on a crowded site with a long history so there were many unknown conditions that could not be easily identified during design. This facility is critical to Augusta Utilities Department systems and must remain in full operation with minimal interruption during project construction. In addition, a desire for change management, budget and cost control, and a strong focus on equipment and construction quality led Augusta Utilities Department to choose a construction manager at-risk approach for this project. D. Allen Saxon, Jr. Assistant Director for Wastewater Treatment Augusta Utilities Department Augusta, Georgia the designer and the CMAR firm, are both working for the owner in the best interests of the project. Some owners prefer to have the same firm perform the design and the CMAR work, an approach that more closely resembles the progressive design-build delivery approach. Producing a Project Management Plan Recommended Best Practice: CMAR delivery requires a bit more owner planning prior to selection of the designer and the CMAR firm. Owners should develop an overall project-delivery and management plan, parts of which need to be well-defined before selecting the designer. In addition to the topics discussed earlier as part of design-build project management planning, owners should consider developing the following components for CMAR projects. An integrated project schedule including each planned procurement. Requirements for the CMAR procurement. A process to guide collaboration between the designer and the CMAR firm, including an understanding of when to have the CMAR firm engage with the design firm. Often, the input from the CMAR firm may reduce the overall project cost but may increase the cost of engineering design. The responsibilities for QA and QC for each team member. A process for how CMAR services during design are to be paid to the CMAR firm. The procurement approach for the CMAR component of the project. 80 / THE WATER DESIGN-BUILD HANDBOOK

89 MANAGING THE CMAR PROJECT The level of self-performance, if any, to be allowed by (or required of) the CMAR firm. The level of transparency in development of the cost of work that will be required to finalize the GMP or fixed price. The level of transparency in the cost of the work that will be required for invoicing the construction work. Information on how the CMAR firm is expected to prepare procurement and subcontracting packages. A process for how changes are to be addressed with the CMAR firm. Clear delineation of responsibilities among the designer, the CMAR firm, and the owner during the startup and commissioning period. CMAR Firm Input to Design The owner, designer, and CMAR firm need to develop a clear process for the CMAR firm s input to design development. The input from the CMAR firm is similar in many respects to the value-engineering process often used in conventionally-designed projects. The bounds of the comments and suggestions need to be established at each major review and input point. This process ensures that each recommendation is reviewed before the design advances. A full review of each of the CMAR firm s recommendations mitigates the risks Engaging the CMAR firm early in the design phase maximizes the value of CMAR to the owner THE WATER DESIGN-BUILD HANDBOOK / 81

90 CHAPTER 6 associated with redesign work that often results in additional costs to the owner. Similarly, the owner will need to be timely and proactive in reviewing the CMAR firm s recommendations and the design engineer s responses, in addition to analyzing the resulting potential financial impacts of the recommendations. Overseeing Design and Construction (QA/QC) The owner must recognize that on a CMAR project, unlike progressive or fixed-price design-build, the owner remains ultimately responsible for the process performance of the water and wastewater facilities. Quality assurance and quality control (QA/QC) procedures help to ensure that the project is being designed and constructed to meet owner requirements. As previously noted, contracts often specify quality criteria, but for CMAR projects, the owner needs to establish the appropriate QA and QC responsibilities between the design team and the CMAR firm because the two functions are contractually independent. Preparing for the Unexpected Hiring both an independent designer and an independent CMAR firm may reintroduce a higher likelihood of change orders than in design-build delivery. Changes are likely to occur, and a well-defined method for managing them can help avoid delays and disappointments. From design through final acceptance, the project ran smoothly. Issues were resolved expeditiously and with no adverse impacts to the project. Dale L. Smith, City Manager City of Winter Haven, Florida 82 / THE WATER DESIGN-BUILD HANDBOOK

91 MANAGING THE CMAR PROJECT Defining a methodology to address expected and unexpected changes will help to preserve the collaborative nature of the CMAR effort. The contract may include terms (identified below) that guide the parties to an equitable resolution. A measurement and payment structure that defines allowable costs of the work and has flexibility to accommodate changes without delay or finger-pointing between the parties. Recognition that parties to the contract are committed to resolving the actual impacts on the project to the extent that they each can control or are responsible for. In the best case, a provision for a decisionmaking mechanism for mitigating unforeseeable events, perhaps linked to the same mechanism used to evaluate price change orders. The need for changes in scope, schedule, or budget should be called to the attention of the owner s contract manager as soon as the need is recognized. The owner, the designer, and the CMAR firm should discuss the issue as soon as possible and agree on any changes that may be necessary. The actions to be taken and anticipated impacts on the project should be documented in order to avoid, or at least minimize, the need to revisit change decisions. The quality of delivered work is key to future selections Recommended Best Practice: As noted in Chapter 3, incorporating positive incentive provisions in design-build contracts can yield excellent results. For CMAR contracts, owners need to approach the use of incentives carefully so they do not benefit one member of the team at the expense of another. THE WATER DESIGN-BUILD HANDBOOK / 83

92 CHAPTER 7 The We re district especially could not pleased have that had this a better working water pipeline relationship with replacement anyone. project MWH was committed completed to four customer weeks ahead satisfaction. of schedule. The An MWH important team component wanted to of the deliver project what was we wanted installation the of fire best manner hydrants so and by critical the most to protecting economical the means. residents There and their was a genuine property commitment in this to neighborhood. providing a high quality Steve product Daignault to meet Administrator the district s of Public Works & high Utilities expectations Services and City goals. of Tampa, Florida Gary L. McFarland, P.E., Engineering Manager, Goleta Water District

93 TRANSITIONING TO OWNER OPERATIONS (Not for a DBO Project) This chapter covers the final stages of a design-build or CMAR contract startup and commissioning of the water or wastewater infrastructure project, the owner s acceptance of the completed project, and transition to owner operation. (Chapter 8 which follows, specifically addresses a DBO project.) The most important part of the transitioning process is clearly defining the conditions and terms within the contract for the owner s final acceptance of the completed designbuild or CMAR project. After a start-up and commissioning period, the designbuilder or CMAR entity typically performs acceptance testing. Acceptance testing verifies that the system satisfies the owner s objectives, as stated in the contract. This step usually means operating the system and demonstrating that it can meet the contractually agreed-upon performance criteria. The contract usually defines the required duration of the acceptance testing period, as well as tolerance levels for each of the stated performance criteria. In designbuild contracts, performance criteria may include process performance. But in CMAR contracts, the CMAR firm is not held accountable for process performance, but only for constructing the project as designed. The performance criteria defined in the contract should be measurable, achievable, and within the control of the service provider. Examples below illustrate some of the challenges that might be encountered in developing and applying sound performance criteria. 1. The owner-supplied equipment does not function properly. Normally, the service provider is responsible if the equipment was not installed correctly, and the owner is responsible if the equipment itself proves to be defective. 2. Criteria requiring that the temperature of the receiving stream will not increase at the plant s point of discharge. The designbuild entity can be held responsible for the temperature of the effluent, but not for the temperature of the receiving stream in situations where the temperature could be affected by upstream discharges. In CMAR contracts, the CMAR firm will not be held accountable for temperature criteria or any other process performance criteria. 3. The owner requires design and construction of a system to meet future capacity needs for the water or wastewater project. Where capacity needs are expected to increase, some type of modeling would be used to extrapolate from the acceptance-test conditions to full capacity. 4. Influent received for acceptance testing does not conform to that specified in the design criteria for the facility. The owner and the design-builder will need to meet to agree on adjustments to the performance criteria, as appropriate, to permit performance testing to be satisfactorily performed, and, if necessary, schedule relief under the contract. THE WATER DESIGN-BUILD HANDBOOK / 85

94 CHAPTER 7 Contracts for larger or more complex projects often specify conditions that allow for partial and/or substantial completion and final completion levels. This allows the owner to accept certain aspects of the project for example, equipment and process performance of certain portions of the plant, or non-treatment-related tasks such as paving or landscaping prior to completion of the entire project. If some minor performance requirements are not achieved during initial acceptance testing, the contract may allow the owner to grant the service provider provisional acceptance, with final acceptance being granted once the remaining criteria are met. City of Palm Coast, Florida: Reverse osmosis membrane softening water treatment plant expansion Seeking to triple capacity under schedule restraints, utility executives responsible for the Palm Coast reverse osmosis water treatment plant chose design-build as the project-delivery method. The expansion, including design, permitting, and construction, was completed ahead of an aggressive 13-month schedule. Once the owner officially accepts the performance test, the design-build or CMAR firm begins final transition of plant operations and responsibilities to the owner. The effort required of the owner and the owner s operators in this last stage of project delivery can be significant and should not be underestimated. Transition to owner operation must also be addressed in the original project plan, with startup, testing, training, and transitioning activities described early during the design phase of the project to help ensure smooth project closeout. The owner should consider asking RFP respondents during the procurement phase to recommend acceptance testing approaches appropriate for the particular challenges of the proposed project, as well as training. A detailed start-up plan, integrating input from all project participants, should be completed well in advance of initial startup activities. The plan should address items such as the members of the start-up team, schedule of the meetings for the discussion of start-up needs, the role of the 86 / THE WATER DESIGN-BUILD HANDBOOK

95 TRANSITIONING TO OWNER OPERATIONS design-builder or CMAR firm in the period between owner acceptance and transition to owner operations, and the handling of contingencies that may arise during start-up. Start-up plans often include a division-ofresponsibility matrix that delineates the responsibilities of the owner and designbuilder or the designer and CMAR firm during start-up and commissioning. The division-of-responsibility matrix should be reviewed and refined in a collaborative effort between design-builder/cmar and the owner well in advance of start-up commencement. If the project is delivered under a fixed-price contract, careful planning by the owner and the design-builder or CMAR firm for the final stages is especially important. It is important to identify responsibilities for: Paying for power and chemicals to operate the facilities during startup and commissioning, both prior to and after acceptance. Disposal of treated but not marketable or dischargeable product. Meeting licensed operator requirements for operation prior to and following facility acceptance. Recommended Best Practice: One or more representatives from operations should be part of the owner s team from the inception of the project. The staff responsible for the day-to-day operation and maintenance of the new facility needs to understand the design as it is being developed, ask questions about it, and offer suggestions to enhance the operability of the completed project. Key operations staff should also be on-site during construction, during equipment and systems testing, and during final acceptance testing. The use of unfamiliar or emerging technologies, such as sophisticated SCADA systems, may require an extended start-up and training period. To ensure a smooth transition, the owner may ask the designbuilder or CMAR firm to provide classroom and field training and an operations & maintenance manual to the operators. In DB delivery, the design-builder is probably in the best position to prepare the operations & maintenance manual and should develop it with those operators who will use it. The owner may also contract with the designbuilder to train the operating staff on the use of the manual. In CMAR project delivery, the designer is more likely to conduct the training and prepare the operations & maintenance manual, but this depends on the CMAR firm s capability to perform operations and maintenance tasks. THE WATER DESIGN-BUILD HANDBOOK / 87

96 CHAPTER 8 Pima County Regional Wastewater Reclamation Department (RWRD) has recently performed a number of large capital improvement projects using alternative delivery methods. One of the most successful of these efforts was a design-build-operate project with CH2M HILL for the County s new 32 MGD Agua Nueva Water Reclamation Facility. This approximate $175 million project was completed 8 months ahead of schedule and significantly below initial engineering cost estimates. The project has gone exceptionally well from the client perspective and has been an enjoyable experience for all involved. Jackson Jenkins, Director Pima County Regional Wastewater Reclamation Department (RWRD)

97 Design-BuilD-Operate for Water and Wastewater Infrastructure Projects Design-build-operate (DBO) offers an important expansion of the design-build (DB) project-delivery method for the water and wastewater industry. DBO comprises all the components of DB including design, permitting, procurement, construction, and testing and also includes operation and maintenance (O&M) of the completed facility. Thus, the delivery of the project and services provided to the owner do not end at final acceptance; services continue through a defined operational term. DBO is particularly suited for use in specific circumstances, which include: When a project will incorporate new or emerging water or wastewater technology. When an owner s staff resources are limited. When an owner seeks to transfer operational performance risk to a third party. When an owner seeks an efficient delivery method that encompasses both the capital and O&M components of a new project. As illustrated below (Figure 8-1) when the DBO project is completed, and according to the executed contract, the contractor then takes full responsibility including all the risk for O&M. In assuming the risk of performance, the contractor provides a facility performance guarantee, for a specified period of times typically between five and 25 years, possibly with renewal options. This long-term obligation to operate and maintain the project serves as an important incentive FIGURE 8-1. Design-Build-Operate Delivery Method OWNER OWNER DESIGN-BUILDER/OPERATOR DESIGN- BUILDER/ OPERATOR Plan Project RFQ Period RFP Period Verify Design Monitors Operations RFQ - Quals Proposers Design Approach and Price Design, Build, Startup Ongoing Operations Warranty Construction Warranty Operates Plant Ongoing THE water DESIGN-BUILD HANDBOOK / 89

98 CHAPTER 8 In 2001, Seattle Public Utilities (SPU) used a singleentity DBO contracting model for their new $79-million, 180-mgd water treatment facility. CH2M HILL was the DBO contractor responsible for design, construction, and O&M services under a 25-year contract with an overall project value of $109 million. One of the unique requirements of the project was that it meet LEED criteria, eventually receiving a rating of Gold. for the DBO contractor to maximize lifecycle cost efficiencies during the design and construction phases of the project. It is important to note that cost efficiencies in a DBO project are largely realized through control over design decisions, which may involve trade-offs between capital investment and long-term operating costs. Given the broad scope of the contracted services, the owner typically allows wide flexibility in the project s design and therefore relies heavily on the DBO contractor for successful operation and cost-effectiveness over the project s life cycle. (See Figure 8-2.) Development Stage FIGURE 8-2. DBO Project Stages Design-Build Stage Operations Stage Planning and conceptual design Permit acquisition Property rights and facility siting Detailed design Subcontracting and equipment procurement Construction Startup, commissioning, and acceptance testing Operations & maintenance Asset management Repair and replacement Handover at end of term 90 / THE WATER DESIGN-BUILD HANDBOOK

99 Design-Build DBO Organization Models Owners opting for DBO delivery can choose among several structural models. The two presented in this Handbook are those most frequently used with the U.S. publiclyfinanced and private water and wastewater industry. Moreover, DBO is also the primary delivery method used when public or commercial projects are privately financed (i.e., financed by a third party). Model I Integrated Entity The most commonly used DBO structure is the integrated-entity model. A single firm or, sometimes, a joint venture between a design-build team and an operations firm executes the DBO contract with the owner. In this approach, the DBO firm assumes responsibility for design, engineering, construction, and long-term O&M of the project. (See Figure 8-3.) In the case of an integrated-entity DBO whether a single firm or a joint venture an owner may elect to accept dual performance guarantees from the DBO participant firms. One participant assumes responsibility for the performance of the design-build project from kickoff through acceptance testing, and the other participant is responsible for the long-term operational performance. Rather than both parties having joint and several performance liability during the entire life of the project, risk and related performance guarantees for different performance periods are allocated to the DBO participant best equipped to manage it. FIGURE 8-3. Model I Integrated Entity Design-Build-Operate OWNER OWNER DESIGNER BUILDER OPERATOR DESIGNER BUILDER OPERATOR Plan Project RFQ / RFP Period Verify Design Oversee Construction Monitor Operations Ongoing Responses Responses Responses Design Engineering Construction Warranty Operate Plant Ongoing Operations Warranty T H E WAT E R D E S I G N - B U I L D H A N D B O O K / 91

100 CHAPTER 8 Model II Operations-Led Entity Another frequently used DBO structure is one in which the O&M firm executes the DBO contract with the owner and serves as prime contractor, thereby assuming full responsibility for the design, engineering, construction, and the long-term O&M of the project. As the prime contractor, the O&M firm subcontracts with a design-build firm or with separate design engineering and construction firms for design and con struction of the project (see Figure 8-4); and allocating risk among the firms as appropriate. Comparing DBO to DB Delivery Although both private-sector and publicutility owners use DBO, their decision-making processes are quite different. Private owners tend to have more flexibility in making decisions about operation-related services. Their decisions are driven almost entirely by the cost-effectiveness (including any related tax impacts) of operating a facility over its defined project life. Public owners also tend to consider policy issues related to whether the facility should be operated by an outside contractor (DBO) FIGURE 8-4. Model II Operations-Led Design-Build-Operate OWNER OPERATOR OWNER OPERATOR DESIGN-BUILDER DESIGNBUILDER Plan Project RFQ / RFP Period Verify Design Verify Construction Monitor Operations Ongoing Responses Design Input Operations Warranty Construction Warranty DBO Service Agreement Operations Ongoing Plant Design 92 / T H E WAT E R D E S I G N - B U I L D H A N D B O O K Plant Construction

101 Design-BuilD-Operate or its own employees. Answering this question entails evaluating various additional factors in parallel with comparing the costeffectiveness of the two operational alternatives. Labor agreements: Is there a union workforce in place, and if so, how does DBO fit into the existing union labor agreement? Employee retention: Will the DBO contractor be required to hire existing personnel? Public perception: In the case of public projects, does the community perceive DBO as a positive or negative delivery model? The typical scope of services and related terms and conditions associated with a DBO contract differ from those of a DB contract. In addition to permitting, design, construc tion, and acceptance testing items in a DB contract a DBO contract also encompasses long-term O&M. This component requires managing the facility on a day-to-day basis and periodically renewing and replacing equipment components. However, DBO is not commonly used for a water distribution system, wastewater collection infrastructure, other pipelines or pumping stations on a stand-alone basis. In contrast with water and wastewater treatment plants, which are process plants that require relatively sophisticated O&M, operating water distribution and wastewater collection infrastructure, pipelines, and pumping stations requires only dispatching skills. Generally speaking, the O&M scope of work for stand-alone water/wastewater conveyance or transmission projects is not significant enough to warrant long-term contract operations by a third party. Table 8-1 summarizes the differences between certain aspects of the design-build and the design-build-operate delivery methods the relative advantages of each, as well as potential concerns that owners should consider. Holyoke, Massachusetts, obtained special permission through the Massachusetts legislature to conduct its CSO treatment facility and new wastewater plant upgrade projects using the designbuild-operate delivery method. Although the city received only one bid, it was able to successfully negotiate a contract with AECOM. THE WATER DESIGN-BUILD HANDBOOK / 93

102 CHAPTER 8 TABLE 8-1. Comparison Between DBO and DB: Advantages and Possible Other Considerations Design-Build-Operate Design-Build Advantage Other Considerations Advantage Other Considerations Procurement Can allow a relatively wide range of technical solutions. Complex process can be costly and timeconsuming. Number of qualified proposers may be limited. Less complex. More likely to have desired level of competition. Owner will be responsible for operation and maintenance. Project Cost Often results in lowest life-cycle cost. Higher degree of cost certainty for long-term costs of operation and maintenance. Some added costs when multi-firm teaming, as each firm requires opportunities to turn a profit. Competitive process brings best value to owner with a defined scope of project. Potential for increased costs in long-term operation and maintenance, due to owner inefficiencies and inexperience. Project Quality Level of service can be controlled with performance/quality standards during design, construction, and operations period. Requires quality testing and oversight, which can increase project cost. Can establish minimum design criteria and mandate quality testing and reporting. Limited period for performance testing prior to acceptance as specified in contract. Project Risk Optimum allocation of risk: DBO contractor responsible for design, performance and client interaction during entire project life cycle or duration of the contract. Insurance and bonding will be complicated. Uncontrollable risks (change in law, inflation, site conditions, etc.) remain with owner. Design-build firm fully responsible for schedule, cost, and performance of the asset. Risk allocation limited to design and construction phases of project. Uncontrollable risks (change in law, inflation, site conditions, etc.) remain with owner. Project Schedule Can shorten the time to place project into operation. Extended time for procurement process can delay schedule. Can reduce time by integrating design and construction. May challenge owner s decision process and schedule given the need for expedient owner review and approval of project deliverables. Accountability Single point of accountability for entire life cycle and designconstruction-operation interfaces. Reliance on one contractor for all phases of the project. There may be the perception by owners of a loss of control in certain project decision making. Single point of accountability limited to design and construction and does not extend to operations. Owner holds accountability for longterm operations. Contract Administration Single contract to be administered by owner. Long-term duration and comprehensive scope of contract requires careful and attentive administration. Contract administration limited to design and construction phases. Should problems arise during operations, the owner is responsible for addressing issue. Workforce Cost of O&M workforce, including benefits, allocated to DBO contractor. May require equal or better benefits (including medical, pension, etc.) and job protection as part of union labor agreement. Owner controls size and composition of O&M workforce; pays salaries; provides benefits (medical, pension, etc.). Owner s labor union engaged. 94 / THE WATER DESIGN-BUILD HANDBOOK

103 Design-Build-Operate Procurement In most circumstances, the DBO procurement process follows the same steps as the two-step DB procurement process; the RFQ is issued in the first step and the RFP is issued to a short list of qualified proposers in the second step. The addition of long-term O&M re quirements, however, changes the DBO procurement process in several ways. For example, it adds complexity to the RFQ/RFP, as only certain contractors may have the appropriate qualifications due to the need to add the operation function to the designbuild team. On the other hand, because there are usually fewer prescriptive design requirements or constraints defined in the RFP, DBO often results in a wider variety of design solutions in the technical proposals. The best-value selection approach for DBO procurement emphasizes the project s entire life-cycle cost, whereas in DB it typically does not. DBO project costs are based on long-term operational performance, adding complexity to contract negotiations, but projecting long-term benefits. Therefore, flexibility in certain contract terms is needed to reflect the long-term (i.e., 5 25 years) operation period. Typical contract terms requiring flexibility include: Estimated long-term operating costs operational costs are often preliminarily quantified and then subject to a yearly As a DBO project, the 2.8-mgd sewage treatment water reuse Facility in Clovis, CA, includes both membrane bioreactor process as well as Siemens Cannibal process, which delivers high quality water and exceptional effluent. THE WATER DESIGN-BUILD HANDBOOK / 95

104 CHAPTER 8 review and adjustment throughout the life of the contract. Maximum energy use often tied to variability in quantity and quality of influent to be treated. Future staffing levels typically, the DBO contractor can revise staffing levels based on the necessity to increase or decrease resource consumption. In selecting a DBO contractor, the owner will generally put even greater weight on the ability to achieve a collaborative and cooperative working relationship with the firm due in large part to the long-term nature of the relationship. It is important that the owner and the DBO contractor understand and agree regarding which party will assume each of the risks involved in the project. Table 8-2 shows how various risks are commonly allocated. TABLE 8-2. Typical Contract Risk Allocation Between an Owner and DBO Contractor Risk Owner DBO Contractor Site (acquisition and conditions) 4 Major environmental permits and unusual permit types 4 Building permits 4 Project financing 4 Scope of project 4 4 Design / technology 4 Raw water source and/or influent wastewater quality 4 Finished water-quality specification 4 Costs: DB & O&M 4 Performance guarantees 4 Construction / start-up / commissioning / acceptance testing 4 Schedule 4 Operation and maintenance 4 Regulatory permit compliance 4 Capacity to treat water or wastewater 4 Uncontrollable (change in law, third-party delay, force majeure, inflation) 4 Repair & replacement 4 Handover condition 4 96 / THE WATER DESIGN-BUILD HANDBOOK

105 Design-BuilD-Operate Recommended Best Practices To optimize DBO procurement and implementation, owners should: 1. Identify key activities in a procurement plan; retain essential advisors with relevant experience and capabilities; and clearly articulate the project scope, schedule, quality, cost, and risk allocation. 2. Conduct procurement in a transparent process with open communication, recognizing that the participating firms are making substantial investments to produce quality proposals that are responsive to the procurement documents. 3. Hold a review and comment session with short-listed proposers to present the draft RFP, specifically addressing the terms and conditions in the draft DBO contract. 4. Advise participating firms on whether strict adherence to RFP conditions is required, or whether alternative proposals will be considered. (Flexibility recommended.) 5. Consider offering a stipend to non-selected participating firms as payment for their proposal effort, and as compensation for any project-delivery ideas of which the owner may take advantage. 6. Reduce project uncertainties and risks by completing all engineering and related studies (e.g., investigations of site geotechnical, environmental and cultural conditions; pilot testing of technologies and other water or wastewater quality studies prior to issuing the final RFP; and detailing the location and condition of existing utilities and other facilities) and obtaining major permits and approvals. 7. Confirm that the raw water/influent quality and quantity specification is complete, accurate, and reliable with respect to water condition and temperature, flow rates (daily and seasonal), potential contaminants that could impact operational efficiencies, taste, odor and turbidity requirements. 8. Confirm that operational specifications are complete, accurate, and reliable with respect to noise, odor, emissions, repair, and replacement, energy consumption, and specified condition of facility at the end of operating term. 9. Confirm that labor relations issues will not directly or indirectly impact the procurement process. 10. Conduct a thorough community relations program. THE WATER DESIGN-BUILD HANDBOOK / 97

106 APPENDIX The This district a major could not step have forward had for a better the working Connecticut relationship River with and the anyone. environment MWH was of Western committed to Massachusetts. customer satisfaction. Kurt Boisjolie The MWH Project team Manager wanted Massachusetts to Department deliver what of we wanted Environmental in the Protection best manner and by the most economical The design-build means. There was a approach emphasizes genuine commitment partnerships between to providing a high the owners and the quality product to design-build team. meet the district s high Rich expectations Bartels Principal Project and Manager goals. Colorado Springs Gary Utilities, L. McFarland, Colorado P.E., Engineering Manager, Goleta Water District

107 CASE STUDIES Design-build, construction management at-risk (CMAR), and design-build-operate delivery methods for water and wastewater projects are now used throughout the United States. This appendix features a selection of projects representing the delivery methods discussed in the Handbook chapters. For additional information on these and other design-build projects completed by WDBC members, please visit the WDBC website: WaterDesignBuild.com/water-design-build-projects. Please remember that laws vary from state to state; to determine whether you can use a specific design-build delivery method, seek local legal advice. The map below identifies the location of the selected sample of design-build, CMAR, and design-build-operate projects presented in this Appendix PAGE DESIGN-BUILD PROJECTS 1 Cauley Creek Water Reclamation Facility (GA) Tampa (FL) CIP Infrastructure Projects Edward C. Little Water Recycling Facility (CA) 102 CONSTRUCTION MANAGEMENT AT-RISK PROJECTS 1 Highland Avenue Water Treatment Plant (GA) St. Mary s (GA) Wastewater Treatment Plant Expansion Orlando (FL) Wastewater Treatment Discharge Project 105 FIXED-PRICE DESIGN-BUILD PROJECTS 1 Arbennie Pritchett Water Reclamation Facility (FL) Olathe (KS) Water Treatment Plant Expansion Eagles Point Wastewater Treatment Plant (MN) 108 PROGRESSIVE DESIGN-BUILD PROJECTS 1 Goodyear Water Supply Project (AZ) Carroll County (MD) Water Treatment Plant Castle Rock (CO) Water Supply Augmentation Project Davie (FL) Water Treatment and Reclamation Projects Jacksonville (FL) TWMP Segment 2 River Crossing Project Longmont (CO) Water Treatment Plant 114 PAGE 7 Midland (TX) T-Bar Ranch Well Field Development and Delivery Project Salt River Pima Maricopa Indian Community Water Treatment Facility (AZ) Charnock Well Field Restoration Project (CA) Delta Water Supply Project (CA) United Water (NJ) Water Treatment Facility Colorado Springs (CO) Utilities Lee County (FL) Utilities 121 DESIGN-BUILD-OPERATE PROJECTS 1 Clovis Sewage Treatment-Water Reuse Facility (CA) Holyoke (MA) Combined Sewerage Overflow Treatment Facility Southern Regional Wastewater Treatment Plant (CA) Sacramento (CA) Regional Wastewater Treatment Plant (Pilot Project) Cedar Water Treatment Facility (WA) Spokane (WA) Water Reclamation Facility Islamorada (FL) Wastewater Treatment, Pumping and Conveyance Systems Carlsbad Seawater Desalination Project (CA) 129 THE WATER DESIGN-BUILD HANDBOOK / 99

108 appendix Design-Build Cauley Creek Water Reclamation Plant (GA) design-builder Fulton County was under a consent decree that restricted issuance of building permits until sufficient wastewater-treatment capacity was available. As a result, the county planned to build a $35 million, 2.5-mgd facility to meet its expanded wastewater-treatment needs. The location of the site near a high-end residential community dictated that the facility produce zero odors, met a prescribed noise limit, and blend in architecturally with surrounding structures. Parsons was awarded the design-build contract through a qualificationsbased selection process with negotiated costs and schedule. Parsons led public meetings to develop community trust and get approval for both the design development report (DDR) and national pollutant discharge elimination system (NPDES) permit. The design-build process made it possible to permit, design, and construct the facility in less than 11 months. The regulatory consent decree was lifted, and Fulton County was allowed to resume approving building permits in this high-growth service area. The Cauley Creek Reclamation Plant now provides treated effluent that surpasses tertiary standards. The treated effluent is provided to local golf courses, subdivisions, schools, and churches for irrigation, thereby reducing the amount of water drawn from the Chattahoochee River. During the wetweather season, when irrigation water is not required, effluent quality exceeds all state requirements for discharge directly to the river. This is Georgia s first distributed reuse water system, and it significantly reduces water withdrawal from the stressed Chattahoochee River for irrigating golf courses and public facilities. In addition, the structure is designed to resemble a rustic country equestrian estate, in keeping with the surrounding landscape. To reduce odors, the facility has a compact odor-control system for all enclosed buildings over odor-producing areas. The initial 2.5-mgd plant was so successful that is has been expanded to 5 mgd. 100 / THE WATER DESIGN-BUILD HANDBOOK

109 case studies Design-Build Tampa (FL) CIP Infrastructure Projects Design-Builder The City of Tampa needed a program manager and design-builder that could handle the numerous challenges related to urban pipeline construction through residential neighborhoods and commercial districts. The City of Tampa selected CH2M HILL to manage, design, and construct a series of capital improvement projects under the city s utility capital improvement project (UCAP). UCAP was created to improve the quality of life for 657,000 residents by addressing critical water, wastewater, and stormwater infrastructure needs. This single-entity program management/ design-build program involves more than 16 individual infrastructure improvement projects valued at $250 million. There are currently 11 water and stormwater projects under design and four water and wastewater projects under construction. CH2M HILL engineers spent considerable time driving and walking each portion of the pipeline route, acting as an extension of the city s staff and responding rapidly and flexibly to the city s needs. In addition, CH2M HILL s visibility has increased communication with Tampa communities. Working with the city and the community, CH2M HILL continues to develop measures to minimize impacts on residents as pipeline repair and replacement projects continue. THE WATER DESIGN-BUILD HANDBOOK / 101

110 appendix Design-Build Edward C. Little Water Recycling Facility (CA) Design-Builder Parsons is the engineer-of-record and was selected as an integrated design-build firm, performing the design as well as self-performing the construction, by the West Basin Municipal Water District (West Basin) for its Phase V expansion of the existing Edward C. Little Water Recycling Facility (ECLWRF). ECLWRF produces ultra-high-quality recycled water for groundwater replenishment, seawater intrusion barrier, and various industrial uses. The plant also generates Title 22 recycled water for irrigation and other general reuse purposes. The Phase V expansion, an innovative firstof-its-kind collaborative ozone-pretreatment process, was completed while expanding under the rigorous space and logistical constraints of an operational plant. This project is historically and technologically significant: It is the first full-scale application of ozone for microfiltration (MF) pretreatment in the United States. A key benefit to this application is increased reliability and operability of the MF system. Prior to the Phase V expansion project, the MF membrane systems at the plant experienced rapid and severe fouling due to organic foulants in the non-nitrified secondary-effluent water supply. As a result, the systems required cleaning every seven days instead of every 21 calendar days, as the system had been designed to do. The ozone pretreatment breaks down the organic foulants to pass through the MF system, which reduces the fouling rate. Post expansion, MF membranes now require cleaning per original design, which increases the operational period between cleanings, increases reliability of water supply, and reduces operations and maintenance (O&M) costs for the MF system. Because southwest Los Angeles County borders the ocean, seawater can seep into the aquifers and mix with groundwater. A seawaterintrusion barrier was constructed to protect the aquifers. The barrier is a series of injection wells positioned between the ocean and the groundwater aquifer. These wells inject fresh water along the barrier to ensure that the water level near the ocean stays high enough to keep the seawater from seeping into the aquifer. As phases of the ECLWRF were completed, the amount of water imported for injection dropped. At the completion of the Phase IV expansion, the facility was able to supply 75 percent of the fresh water injected into the aquifer. The Phase V work consists of adding a 30-million gallons per day (mgd) ozonation process for MF pretreatment and expanding existing advanced treatment processes consisting of MF, reverse osmosis (RO), and ultraviolet (UV) systems by a total of 5 mgd. The capacity of the MF process will be increased by 7.55 mgd and the capacities of the RO and UV processes by 5 mgd each. The work also includes adding a 20-mgd, Title 22 pretreatment high-rate clarifier for media filtration process, a gravity belt thickener solidshandling process, and solid conditioning tanks; and expanding existing chemical storage and feed facilities. The design accommodated an accelerated construction schedule and involved parallel design and construction work. Due to West Basin s commitments to continue delivering water to its industrial customers, the plant needed to stay fully operational for the duration of project construction with severe constraints on shutdowns for connections to existing facilities. The completion of Phase V further decreases the facility s reliance on imported water by increasing the ECLWRF s design capacity from 46.8 mgd to 62.3 mgd, effectively increasing the fresh-water supply for the intrusion barrier to 100%. This locally-produced recycled water is more reliable than imported water, which is subject to drought, regulation, and changes in weather patterns. 102 / THE WATER DESIGN-BUILD HANDBOOK

111 case studies case studies Construction Management at-risk Highland Avenue Water Treatment Plant (GA) Design-Builder The City of Augusta, Georgia s Highland Avenue Water Treatment Plant (HAWTP) was permitted to treat 60 mgd, but could only produce a continuous 45 mgd. The city wanted to upgrade the facility to meet its permitted capacity. The construction management at-risk (CMAR) contract was awarded through a two-part qualificationsbased selection process. The client short-listed three CMAR firms after receiving statements of qualifications and subsequently chose Parsons to perform the pre-construction-phase services. Parsons and the city then negotiated a guaranteed maximum price for constructing the facilities. Parsons constructed a multipurpose building to house a new plant control room, seven new deep-bed filters (for a total of 17 filters), all chemical facilities (including a new sodium hypochlorite generation system), administrative offices, operations and maintenance areas, laboratories, and ancillary pumping systems. The total CMAR contracted value was $63.5 million. Design cost totaled $3 million. Parsons faced numerous hurdles while performing the work. First, Parsons developed and implemented a plan for using cranes on the site in response to FAA restrictions. Second, the project resulted in a 2.5-year road closure. Parsons facilitated a community involvement program that included local businesses, residents, and the chamber of commerce. The group developed a mutually acceptable plan for the construction and road closure, including a website for road closure information and signage in the area to notify patrons of alternative parking for businesses within the construction zone. Third, the public needed access to buildings within the construction area during construction. Parsons developed and implemented plans for temporary concrete walkways, barricades, and fencing to maintain public access to buildings in operation during construction. Finally, Parsons ensured continuous water production while transitioning from the existing facilities to the new facilities. Parsons employed two state-certified water operators to perform all plant start-up activities and provided 30 days of training to the city s plant personnel. Parsons subcontracted 41% of the overall contract value to local, minority, and women-owned businesses, exceeding its original target of 35%. The project will enable the city to meet projected population growth through THE WATER DESIGN-BUILD HANDBOOK / 103

112 appendix appendix Construction Management at-risk St. Marys (GA) Wastewater Treatment Plant Expansion Design-Builder The City of St. Marys consistently exceeded the capacity and discharge limits of its wastewater treatment operating permit, due to unanticipated development in the area. The facility was experiencing flows of 1.2 mgd, consistently exceeding its 0.9-mgd discharge limit. To address this issue, the city embarked on an emergency upgrade of the wastewater treatment plant to double the capacity of the facility to 1.8 mgd. The emergency upgrade needed to be completed on an accelerated schedule in order to avoid further fines. Immediately following the emergency upgrade project, the city initiated a 4 mgd expansion of the facility to satisfy its long-term capacity needs. The city initially chose construction management at-risk (CMAR) delivery on both projects. The objective was to accelerate the project schedule by setting the guaranteed maximum price (GMP) prior to completing the design, expediting regulatory approval and permit acquisition, and releasing long-lead-time equipment early in the project. The GMP was especially important because the city secured municipal-bond financing based on an early estimate of probable construction cost prepared by the engineer of record. The financing plan was based on this strict construction cost, which could not be exceeded. The city chose Haskell as the CMAR firm; then expanded Haskell s CMAR contract to include design of all buildings, resulting in a progressive design-build engagement for a portion of the project, further accelerating project delivery. Haskell prepared milestone estimates and conducted value-engineering studies to ensure that project construction costs were kept below the city s original estimate. The city accepted $1.5 million in valueengineering alternatives identified by Haskell. Haskell was also able to help the city save approximately $500,000 in sales tax by suggesting and administering an owner direct-purchase program. The emergency upgrade was successfully delivered in less than 12 months, and the subsequent expansion was completed in 21 months. Haskell returned to the city $425,000 when the emergency upgrade was completed and an additional $494,000 when the expansion was completed. Following completion of the projects at a total cost of $38 million, the city was never assessed any fines by the regulatory agencies. 104 / THE WATER DESIGN-BUILD HANDBOOK

113 case studies case studies Construction Management at-risk Orlando (FL) Wastewater Treatment Discharge Project Design-Builder In an effort to relocate freight traffic out of Orlando, Florida, CSX offered to purchase the City of Winter Haven s 1,200-acre spray field for the development of an intermodal station. The city was interested in selling the property to gain the financial benefit of the sale price and to create economic development and additional tax revenue for the community. To eliminate the need for a spray field and discharge directly into the adjacent surface water, the level of treatment from the existing facilities had to be improved to meet strict effluent nutrient limits. The city chose to use construction management at-risk (CMAR) for the 7.5 mgd, $16 million facility for two main reasons. First, as part of the purchase agreement, the property had to be available to CSX for construction of the intermodal station in a very short period of time. Second, to make the transaction financially worthwhile, the city developed a strict construction cost that could not be exceeded. CMAR enabled the city to accelerate the project schedule by setting the guaranteed maximum price prior to completing design, expediting regulatory approval and permit acquisition, and releasing long-lead-time equipment early in the project. The city s very capable and experienced personnel had never delivered a project using a collaborative delivery method. Their internal project-management processes were designed for traditional design-bid-build delivery. The city chose Haskell as its CMAR firm. Haskell openly communicated and informed the client on CMAR delivery, which created trust and ensured a successful outcome. Haskell prepared milestone estimates and conducted value-engineering studies to ensure the project construction costs were kept below the value that had been used to determine the viability of the project. The value-engineering studies led to $1.9 million in savings. Compared to design-bid-build delivery, using CMAR shortened the overall project schedule by six months, adhering to the strict timelines outlined in the purchase agreement. In addition, Haskell returned $300,000 to the city at project completion. THE WATER DESIGN-BUILD HANDBOOK / 105

114 appendix appendix Fixed-Price Design-Build Arbennie Pritchett Water Reclamation Facility (FL) Design-Builder Okaloosa County, Florida, needed increased water-treatment capacity, as well as new treatment technology to treat future flows. The plant was past its effective life span and had serious odor-control problems that generated numerous community complaints, given its location adjacent to an elementary school and residential area. The county determined it needed a new facility in a new location. CDM Smith was chosen as the designbuilder. The 10-mgd, $50 million Arbennie Pritchett water reclamation facility was built on land leased from the U.S. Air Force in order to be far from the original facility. To facilitate project communication and efficiency, CDM Smith used intelligent 3D design across all disciplines for more than 20 buildings and structures. The project also incorporated 4D design, which integrates a living database into the 3D model by linking operations and maintenance manuals, a computerized maintenance management system, and process monitoring and control software. This intelligent process and instrumentation database was the single source of data from which the design of the facility was developed. Construction was completed on time and on budget due to timely completion of complex designs and a collaborative environment with real-time technical and visual data. In addition, the streamlined design-build approach met the aggressive project schedule, allowing final design to be completed in 5.5 months and producing a seamless project delivery. 106 / THE WATER DESIGN-BUILD HANDBOOK

115 case studies Fixed-Price Design-Build Olathe (KS) Water Treatment Plant Expansion Design-Builder The City of Olathe retained Carollo Engineers to perform a feasibility study to expand the city s existing 17- mgd water-treatment plant to 36 mgd. Following the feasibility study, the city contracted with Carollo for 30% design of the expansion. The city then chose to contract with the joint venture of Carollo Engineers and Garney Construction to complete the design and construct the expansion of the facility. The award-winning designbuild project included the integration of membrane filters into the existing retrofitted lime-softening facility. The city wanted the first stage of the plant s expansion completed in less than a year. The single greatest challenge to meeting this schedule was developing a workable yard-piping configuration. Due to a large number of basins and outlet locations, Carollo/Garney developed a computer model to optimize piping sizes and location. The final step in completing the complex yard piping was a 72-hour plant outage with seven major tie-ins. The tie-ins were completed 26 days ahead of schedule, resulting in an estimated savings of $40,000 due to not needing to purchase water from a neighboring utility. Among the may innovative ideas that made it possible to design and construct the project within the prescribed budget, reconfiguring the existing basins made it possible to increase basin capacity without having to build additional basins. This reconfiguration made it possible to optimize plant operations and to reduce chemical usage, saving over $125,000 a year. THE WATER DESIGN-BUILD HANDBOOK / 107

116 appendix Fixed-Price Design-Build Eagles Point Wastewater Treatment Plant (MN) Design-Builder Metropolitan Council Environmental Services (MCES) operates and maintains seven wastewater treatment plants in the Twin Cities seven-county area. MCES needed to replace an aging and undersized wastewater treatment plant to meet the demand of a growing population. The project required an aggressive design and construction schedule. The new facility was built around the existing one to maintain operations during construction. Once a functional treatment block was available, the new plant was brought on line and the corresponding treatment block on the existing facility was demolished to allow construction of the next treatment block of the new facility. The Eagles Point Wastewater Treatment Plant fixed-price design-build project was contracted through a competitive best-value selection process and awarded to a joint venture consisting of Black & Veatch and Knutson. Black & Veatch was responsible for project management, design, procuring engineered equipment, and startup services for the $44.7 million, 10-mgd facility. The facility includes biological nutrient removal, UV disinfection and sludge thickening. Completion of the solids and liquids facilities was staged to enable the site to continue treating wastewater, sometimes in a treatment train consisting of new and existing infrastructure. Extensive planning included input from the MCES s operations staff. The project was completed on time, with no permit excursions occurring during the construction and operational transfer phases. 108 / THE WATER DESIGN-BUILD HANDBOOK

117 case studies Progressive Design-Build Goodyear Water Supply Project (AZ) Design-Builder The City of Goodyear, Arizona, faced a water quantity and quality crisis. Rapid growth outpaced the city s water supply, the availability of an additional source of treated surface water was years away, and the local groundwater was brackish. To complicate matters, a new baseball spring training facility with a large water demand was under construction. The city chose progressive design-build delivery, and over the course of twoand-a-half years, the city and Brown and Caldwell Constructors conceived, designed, and built a multitude of innovative solutions to remedy the city s potable water challenges. In the span of three months, Brown and Caldwell Constructors converted an agricultural well for raw-water use, the city s first new water source in over four years. Brown and Caldwell Constructors subsequently relocated a major production well and designed and constructed the city s first prototypical raw production well. The team also constructed a permanent 5-mgd (expandable to 7-mgd) reverse-osmosis facility to replace a temporary treatment system that was slowly losing capacity and was unreliable. The plant was completed on schedule and was put into full production in The total cost of these projects was approximately $25 million. The team saved the city more than $1 million by using existing components of old and abandoned facilities and by phasing the work to match the city s available capital funds with their water demands. THE WATER DESIGN-BUILD HANDBOOK / 109

118 appendix Progressive Design-Build Carroll County (MD) Water Treatment Plant Design-Builder The Carroll County Bureau of Utilities needed a 4-mgd expansion to their existing 3-mgd water-treatment plant to adequately serve their 31,000 residents. The Bureau also needed to design and construct a new 24-inch watertransmission main, as well as ancillary equipment, structures, and facilities. These activities needed to be undertaken on an accelerated schedule while continuing to operate the existing watertreatment facility and modifying the existing solids-handling operations. The County chose progressive design-build project delivery to meet these objectives. AECOM was chosen through a competitively-bid procurement that required them to provide a fixed price for engineering and a not-to-exceed cost for construction. The design was advanced to 60%, on which a guaranteed maximum price was established for the construction portion of the project. The County asked AECOM to implement an alternative facility layout to reduce construction time and to save significant capital and operational costs. The alternate design, developed by AECOM during the procurement process, consolidated the facility s primary components into one compact structure. Design and construction cost totaled $27.5 million. The tight site constraints and accelerated schedule necessitated innovative planning and partnering with the County and its consultant. The AECOM team developed an environmentally friendly, multi-level compact footprint, housing all treatment features, administrative spaces, chemical areas, and clearwell under one roof. AECOM s design reduced construction time by three months and saved the County approximately $3 million. The new facility also employed a state-of-the-art, highly automated computer system that aids operations staff in the day-to-day management of the new plant, including chemical addition, dissolved-air flotation, and membrane filtration. The expanded plant will be large enough to meet the drinking water supply needs of Carroll County, MD, for years to come. 110 / THE WATER DESIGN-BUILD HANDBOOK

119 case studies Progressive Design-Build Castle Rock (CO) Water Supply Augmentation Project Design-Builder The Town of Castle Rock, Colorado, faced demand projections that exceeded their available water supply. The town identified properties for deep-aquifer well development and transmission to their newly constructed water-treatment facility. Because the town had only eight months to complete the project, it selected the progressive designbuild delivery method. The $6 million project included four new wells, three new well houses, and approximately two miles of new raw-water pipeline. The well facilities had to be located on undisturbed two-acre parcels, adjacent to a highway. The 20-inch raw-water transmission line had to cross the highway and McMurdo Gulch, which is a FEMA-delineated 100-year floodplain. Special site-grading and construction activity provisions were incorporated into the design to minimize the impacts on the Gulch. HDR engaged qualified specialty subcontractors for the well facilities and pipeline, negotiated the prices and delivery of major equipment items, and developed cost and schedule tools to give the town critical, real-time information on the project budget and schedule milestones. Key team members were engaged in the project from start to finish. Team members worked closely with the town s engineering and operations staff to fulfill the town s equipment preferences and ensure that instrumentation and controls requirements were incorporated into the project. The project met the town s quality expectations, was operational one month ahead of schedule, and was delivered at a cost savings of more than $328,000. THE WATER DESIGN-BUILD HANDBOOK / 111

120 appendix Progressive Design-Build Davie (FL) Water Treatment and Reclamation Projects Design-Builder Upgrading its utility system to accommodate growth resulting from two major redevelopment initiatives within the service area (91,000 pop.), enables the Town of Davie, Florida, to address the anticipated steep increases in demand for both potable water and wastewater-treatment capacity. In addition, recent legislation and regulations affecting ocean outfalls required the Town to implement a tertiary treatment and high-level disinfection-reuse program. Deciding to use a two-step progressive design-build delivery method for the project, the Town awarded the Step 1 contract to AECOM through a competitive bid process based on qualifications and negotiated price. At the conclusion of Step 1, AECOM presented the town a GMP proposal for final design and construction services. This delivery method allowed the Town to actively participate in the selection of all subcontractors and vendors. Successfully overcoming the challenges in the permitting process required a hands-on and interactive approach. The project required an unusually high number of permits from federal, state, and local authorities in addition to the actual building permits for the project. Facility design specifications also needed to address the challenges of combining the planned 6-mgd water-treatment plant (expandable to 12 mgd), a 3.5-mgd water-reclamation plant (expandable to 7 mgd), the underground utilities, landscaping and stormwater management needs on the 14-acre site, in order to provide reclaimed water to adjacent users. South Florida s extensive stormwatermanagement regulations also resulted in the need for underground storage to be constructed in addition to surface dry retention areas. To minimize land usage, the town selected a high-rate, compact treatment process for both the water-treatment and water-reclamation facilities thereby allowing adequate space for construction on the available property. This approach presented the town with a progressive opportunity to be among the first in the state to employ reverse-osmosis technology to treat brackish water from the Floridan Aquifer as an alternate source of potable water. In addition, rather than obtaining fresh water from the Biscayne Aquifer at a depth of roughly feet, a more complex process, employing raw-water wells, was needed to extract brackish water from the Floridan Aquifer at a depth of approximately 1,400 feet. Particular care was taken to ensure that all facilities blend in with their surroundings. Membrane bioreactor technology was chosen for the waterreclamation facility enabling it to have a smaller footprint, and at the same time to be located near its users in the immediate vicinity. The project started in 2009 and concluded in Contract costs for Phase One and Phase Two were $6,150,000 and $107,000,000, respectively. 112 / THE WATER DESIGN-BUILD HANDBOOK

121 case studies Progressive Design-Build Jacksonville (FL) TWMP Segment 2 River Crossing Project Design-Builder Jacksonville, Florida s total water management plan (TWMP), a segment 2 river-crossing project, is a progressive design-build delivery approach for a massive directional drilling job, requiring the installation of 6,700 feet of 36-inch steel pipe under the St. Johns River. The project ensures that water is safely provided to area residents. Over the years, Jacksonville Electric Authority (JEA) wanted to sustain the Floridian Aquifer for future generations, while continuing to serve the growing potable-water needs of Jacksonville residents. The original design of the TWMP segment 2 river-crossing project called for a new 36 water main under the St. Johns River near the Mathews Bridge. The scope of work included approximately 4,300 LF of 36-inch welded steel water main constructed by horizontal directional drill from the west bank of the St. Johns River to Exchange Island, an unoccupied island in the middle of the St. Johns River. The route also included installation of approximately 900 LF of 36-inch water main by open-cut construction along Exchange Island from south of the Mathews Bridge (main bridge heading into downtown Jacksonville) to north of the Mathews Bridge. The final piece of the proposed route was approximately 1,600 LF of 36-inch welded steel water main constructed by horizontal directional drill from Exchange Island to the east bank of the St. Johns River at Rio St. Johns. This second segment of the multi-phase project represents unique technical and logistical concerns. Running a pipeline 100 feet below the surface of the St. Johns River required specialized skills and materials. Manufacturing 6,700 linear feet of 36-inch diameter steel piping and a horizontal directional drill under the river required assembling a team of industry experts. Moreover, all the resources needed to be organized, scheduled and coordinated to minimize impact on city residents. JEA tapped Haskell a proven partner to accomplish the task. JEA reduced both risk and costs by selecting progressive design-build as the delivery method for this project. Haskell s project management expertise allowed for smooth coordination with the Florida Department of Transportation and environmental permitting agencies. With Haskell s assistance in executing a welldefined plan, JEA accomplished its goals and completed the project three weeks early. Haskell offered an alternate design route for the pipeline that consisted of a single horizontal directional drilling (HDD) under the river from upland to upland on the south side of the Mathews Bridge. This alternate route cut costs by $5 million, shortened the schedule by 6 to 12 months, reduced environmental impacts, created a safer approach and improved quality and system operability. THE WATER DESIGN-BUILD HANDBOOK / 113

122 appendix Progressive Design-Build Longmont (CO) Water Treatment Plant Design-Builder Located within Boulder County, the City of Longmont had been operating three water-treatment facilities: the Wade-Gaddis plant and two much older facilities known as the West plants. The city needed to replace the two aging plants due to more stringent regulatory standards for drinking water and the increased demands of a growing population and economy. The city desired a single contract with a private company to design, obtain permits, construct, start up, and conduct acceptance testing of the plant. A two-phase approach was used to select Black & Veatch and Western Summit Constructors, Inc. (WSCI) as the design-build team for the 30-mgd, $41.8 million facility. The proposal process included proprietary meetings with owner representatives to discuss the owner s needs and objectives. This early interaction between the city and the design-build team led to greater collaboration, innovation, and equitable risk allocation for the project. After the contract award, the city and the Black & Veatch/WSCI team negotiated a final, open book, guaranteed maximum price (GMP). Preliminary design and pricing were completed on a fast-track schedule. This made it possible to develop a GMP within five months of the notice to proceed, and final design and construction for a planned startup of the plant within 35 months. The basin structure, filters, chemical feed facilities, laboratory, and administration facilities were combined into a single treatment complex building to allow centralized operation of the treatment plant. This was a highly integrated team, with the city actively involved in all aspects of the project. Black & Veatch led the engineering and design aspects, procurement of engineered equipment, on-site construction engineering, start-up supervision, and performance testing. WSCI led the management of construction activities, including subcontracts for construction work. The city maintained the role of instrumentation and control designer. The facility was completed two months ahead of schedule and $2.8 million under the GMP. The plant has consistently met or exceeded all drinking-water standards and has demonstrated that it can operate at its rated capacity under a wide range of raw-water quality conditions. 114 / THE WATER DESIGN-BUILD HANDBOOK

123 case studies Progressive Design-Build Midland (TX) T-Bar Ranch Well Field Development and Delivery Project For two years, the area around Midland, Texas, suffered extreme to severe drought. In 2011, the area had less than 5.5 inches of precipitation, compared to the annual average of 15 inches. In 2012, the situation improved only slightly. The lack of rainfall led to water restrictions and drought contingency plans across West Texas. In late 2011, the Colorado River Municipal Water District advised the city that, due to the sustained drought, it would be unable to provide more than the winter allotment in June The city required a new source of water to be available by May 31, The new source was T-Bar Ranch beneath which flows the Pecos Valley Aquifer near the New Mexico border. Midland had owned both land and water rights on the 22,149-acre property since the 1960s. The T-Bar Ranch Well Field Development and Delivery Project would be one of the largest waterline projects in the U.S., as well as one of the city and county s largest public works projects. The city contracted with the Midland County Freshwater Supply District No. 1 (District) as a public-to-public partnership in 2012 to design, build, own, operate and finance the development of the T-Bar project. As a first step in the delivery process, the District contracted with a team, featuring Black & Veatch, Garney Construction, and a few local contractors. Black & Veatch developed a unique solution by using project-delivery systems from previous work in North America and Australia in similar severe drought situations. The company used the body of work of all of those systems to lead the Design-Builder team in development of this fully integrated, design-build, fast-track delivery plan. The project stayed on or ahead of schedule from inception. Black & Veatch was responsible for the complete design, procurement and construction of more than 40 production wells, high-service pumping, 2-million- and 5-million-gallon storage tanks, chlorination facilities and terminal control facilities. Garney Construction procured and built the entire 60-mile, 48-inch-diameter transmission pipeline and well-field collection piping. Besides an aggressive schedule, the team faced logistics challenges with three project sites separated by many miles of ranch land teeming with oil and gas wells. Also, construction required purchasing easements from more than 55 landowners in three counties. The project, valued at $200 million, was begun June 1, 2012, and substantially completed in less than 12 months on May 14, With the project completed, the city has a water supply solution for the next 40 years and can continue exploring other long-term supply options. THE WATER DESIGN-BUILD HANDBOOK / 115

124 appendix Progressive Design-Build Salt River Pima Maricopa Indian Community Water Treatment Facility (AZ) Design-Builder Leaders of the Salt River Pima Maricopa Indian Community (SRP-MIC) realized that their planned commercial corridor along Highway 101 in Scottsdale, Arizona, was going to result in an influx of customers. Aside from the new business development, the commercial corridor was to include the Talking Stick Resort Casino. To complicate the matter, their existing water-treatment facility was located on land where the planned resort casino was to be built. The SRP-MIC needed a new water-treatment facility to meet future demands resulting from the resort casino and expanded commercial corridor, as well as to address new EPA arsenic requirements in drinking water. In addition, they needed to decommission and demolish the existing facility to move forward with their resort casino plans. The SRP-MIC chose progressive design-build delivery for the new facility. The SRP-MIC selected HDR through a qualifications-based bidding process. The 21-mgd, $26 million facility was designed and constructed to be expandable as future demand increases. Each phase of the project was a guaranteed maximum price. An 80/20 shared-savings clause was included in the contract and the designbuild fee was reduced to provide an incentive for cost savings and innovation. HDR needed to find a location for a new four-million-gallon reservoir. The decision required evaluating numerous parameters, including tank design loading, access for operations and maintenance, water quality, security and the community s aesthetic requirements. Performing a preliminary reservoir siting evaluation to determine the best location of the reservoir based on existing and planned structures, HDR ultimately recommended the tank be installed under the parking lot of the casino. HDR needed to address water quality in relation to the runoff from the parking lot. For aesthetic and security reasons, tank access hatches and vents were incorporated into the landscape design. The ultimate capacity for these water improvements was determined based on future demands. HDR worked hand-in-hand with the community and the EPA to get an extension for arsenic treatment, allowing the construction of the reservoir and pump station to come on line before the arsenic-treatment facility was completed. This allowed the construction of the casino to begin nine months ahead of the original schedule. The arsenic-treatment facility was completed prior to EPA s deadline. The water facility meets all EPA water quality requirements and the project was completed in time to begin construction of the new resort casino. 116 / THE WATER DESIGN-BUILD HANDBOOK

125 case studies Progressive Design-Build Charnock Well Field Restoration Project (CA) Serving a population of nearly 90,000, the Santa Monica Water Treatment Plant and the City s Charnock Well Field stand as examples of the issue faced by many utilities throughout the United States limited fresh water supplies, mixed and/or emerging contaminants, and tighter regulations. After more than a decade with the Charnock Well Field closed due to contamination from MTBE (a gasoline additive), the City reached a settlement agreement with the three major oil companies, whose leaking underground storage tanks caused the contamination. The settlements would fund a restoration project on the facilities. On the heels of the lengthy settlement process, Santa Monica faced an urgent need to move toward water self-sufficiency. Drought limited the volume of water that could be delivered to Southern California from the state water project. Using the city s groundwater wells is a sustainable way to provide water, and this project was on the fast track. In deciding to use progressive designbuild delivery for this project, the city selected the design-builder based both on qualifications and approach to problem-solving, with an open-book cost estimate for construction to be made during the 30% to 60% phase of design. Black & Veatch s approach to progressive design-build enabled city leaders to successfully navigate numerous emerging issues. As the city began to develop a project-procurement plan, restrictions on importing water to southern California were being considered and/ or implemented. Therefore, it became urgent for the city to quickly restore its sustainable groundwater supply. The city s decision to use progressive Design-Builder design-build for the water-treatment infrastructure offered flexibility in implementing a technical solution in a complex regulatory setting. It also allowed the city to pursue a model of competitive pricing with an aggressive schedule. The progressive design-build approach further allowed the city to obtain approval of a treatment facility to remove a mixture of water quality contaminants, which requires more time, communication, planning, and collaboration among the owner, the design-builder, and regulatory agencies. The project incorporated a 3,750-gpm wellhead treatment plant for MTBE and TBA removal at the Charnock Well Field; and a 7,000-gpm treatment plant at the SMWTP site for softening and removal of radionuclide, iron, manganese, and volatile organics. With the city and Black & Veatch working collaboratively to provide rapid response at all levels to expedite restoration of the well field, the progressive designbuild approach made it possible to meet a 20-month project schedule. In December 2010, the city restored its valuable groundwater supply with the successful startup of the Charnock Well Field Restoration Project. The city now produces 70% of its water supply needs and is moving toward its 2020 goal of 100% self-sufficiency. THE WATER DESIGN-BUILD HANDBOOK / 117

126 appendix Progressive Design-Build Delta Water Supply Project (CA) Design-Builder Located 90 miles east of San Francisco, the city of Stockton, California, is home to approximately 300,000 people. Until 1977, groundwater was Stockton s sole source of domestic water. At that time, a surface-water supply was established for the Stockton Metropolitan area with nearby reservoirs supplying about 60% of the area s water and underground wells supplying the remaining 40%. Needing to protect existing groundwater sources, increase water reliability, and provide for future planned growth, the city embarked on the Delta Water Supply Project to provide a new, supplemental highquality surface water supply for Stockton residents and businesses. CDM Smith partnered with the city to integrate surface and groundwater management efforts and ensure an adequate, reliable water supply that will support current and future planned water needs. The project was delivered using a phased or progressive design-build approach. The $176 million contract included 12 miles of raw-water pipeline, six miles of treated-water pipeline, and a new ozone and pressure-membranefiltration treatment facility. The 30-mgd plant is initially expandable to 60 mgd, and its site layout can accommodate an ultimate capacity of 160 mgd. Phase 1 of the project included 65% design and a cost proposal for project completion. After phase 1, the city chose to move forward with CDM Smith for phase 2 design completion and construction. The project incorporated sustainable building practices, particularly in the water treatment plant s administration and operations building. Photovoltaic solar panels on the parking area carport surfaces provide more than half the building s power a feature that helped earn the project LEED Gold certification. Additional green features include reclaimed water and microirrigation systems for a 50% reduction in water consumption, ozone-safe heating and air conditioning systems, and recycled construction materials. A significant effort was made to hire local subcontractors and bring as much economic benefit to the community as possible. At the peak of construction, 140 onsite jobs were created. In addition, 45% of the project cost consisted of local materials, suppliers and vendors a number that jumps to 65% when items unavailable locally are not considered. The project was completed in June 2012, at which point CDM Smith supported the city for a one-year commissioning period to ensure water quality and performance requirements. 118 / THE WATER DESIGN-BUILD HANDBOOK

127 case studies Progressive Design-Build United Water (NJ) Water Treatment Facility Design-Builder United Water New Jersey faced growing customer demand, new stringent drinking water regulations from the New Jersey DEP, taste and odor issues in the treated drinking water, and aging water-treatment plant equipment. United Water New Jersey needed to upgrade its drinking-water facility to address these challenges. The utility chose CDM Smith, from a group of three pre-qualified design-build engineeringcontracting companies, to design and build the 200-mgd, $100 million watertreatment facility. The plant upgrade included implementation of new pre-ozonation facilities containing the largest high-rate dissolved air flotation (DAF) process in the U.S. and new disinfection facilities prior to filtration. The high-rate DAF removes 90% of particles and algae from source water before it is filtered, saving energy and producing higher quality water. The DAF also requires 1/8 the process tank volume needed for traditional sedimentation clarification, conserving 12 acres of woodland. The ozone generators were installed within the existing equipment s footprint and building space eliminating the need to construct a new ozone generation building, preserving green space, and saving over $3.5 million. CDM Smith designed, permitted, and constructed all of the major process treatment units in 21 months half the time that a conventional design and construction approach would have required. The project was completed ahead of schedule and met pending regulatory deadlines. The project was also completed under budget, thereby minimizing customer rate increases. During the project, 400 carpenters, laborers, ironworkers, pipe fitters, electricians, and other trades people were employed, while customers never lost a day of service. The existing plant remained fully operational throughout the project. THE WATER DESIGN-BUILD HANDBOOK / 119

128 appendix Progressive Design-Build Colorado Springs Utilities (CO) Design-Builder The Colorado Springs Utilities (CSU) needed to increase its water production in order to meet its future demands within its service area. Phase 1 of the Southern Delivery System (SDS) includes a new watertreatment plant (WTP) and finished water pump station (FWPS). These facilities will have an initial capacity of 50 mgd and be expandable to 130 mgd. In 2010, CSU reviewed and updated the delivery strategy for the various components of the SDS. Use of a progressive design-build approach for the WTP and FWPS was reaffirmed. It was also determined at this time that 100% level of design should be achieved for all the facilities before establishing a final guaranteed maximum price (GMP) for construction. Through a formal procurement process, respondents were required to submit their qualifications, a detailed technical approach, a fixed price for design development, and fees that would apply during the construction phase. Proposals were evaluated on a best-value basis: qualifications 15%, technical approach 40%, and cost 45%. The Carollo team was selected as the design-build contractor, and after negotiations, a contract was executed in August Through the progress design-build process, construction cost estimates were prepared at 30%, 60%, 90%, and 100% levels of design. At completion of the design, the construction was divided into 59 work categories, and bids were solicited. At the end of the bidding process, a final GMP was established at $124.6 million. Based on the conceptual design, the initial construction cost estimate was $190 million. The final GMP represents a 34% reduction from the initial construction cost estimate. 120 / THE WATER DESIGN-BUILD HANDBOOK

129 case studies Progressive Design-Build Lee County Utilities (FL) Design-Builder Lee County Utilities in Florida was facing increases in potable water demands in the Pinewoods service and limited fresh water resources to meet this demand. As a result, they found it necessary to rehabilitate their existing nanofiltration membrane water treatment plant and expand the plant s capacity from 2.1 to 2.3 mgd. It was further determined that an additional 3.0 mgd of capacity would be required through a reverse-osmosis system to treat water from the brackish Lower Floridian Aquifer. Lee County Utilities selected the Carollo Engineering Design-Build team to complete the required rehabilitation and expansion of the facility within an 18-month project schedule. A progressive design-build model was used to deliver this $17 million project. During the construction phase of the project, the owner identified the need to also rehabilitate the existing 1-MG concentrate storage tank. The inside lining of the tank had deteriorated and the concrete walls were showing signs of erosion. The Carollo team designed a process whereby the tank could be temporarily bypassed to allow the refurbishment, while the plant continued to produce water and not impact the overall project schedule. During the execution of the project, additional pilot testing was conducted to determine that less chemical could be used to pre-treat the NF water. The result of this testing enabled the utility to save the capital cost associated with an additional stage tank and continues to save the county money in ongoing chemical costs. The newly reconditioned and expanded water treatment plant is large enough to reliably meet the potable water demands of the Pinewoods service for the foreseeable future. THE WATER DESIGN-BUILD HANDBOOK / 121

130 appendix Design-Build- Operate Clovis Sewage Treatment/Water Reuse Facility (CA) Design-Builder The City of Clovis, California, solicited proposals for the design, construction, and operation of a new sewage-treatment, water-reuse facility capable of 2.8-mgd average daily flow (expandable to 8.4 mgd) with 10 years operations and maintenance (O&M). CH2M HILL developed a solution to reliably meet the City s goals using proven process solutions in combination with innovative solids reduction technology. In October 2006, Clovis officials awarded the design, construction, and long-term operations of a $37-million 2.8-mgd ST/ WRF to CH2M HILL. The new ST/ WTF was designed to fulfill the City of Clovis area growth needs and provide highly treated recycled water. CH2M HILL engineered, designed, and constructed the new ST/WRF and will operate and maintain the facility until at least The integrated DBO delivery contract provided seamless delivery by a true DBO provider resulting in an integrated mindset and single point of contact and responsibility. Through the delivery method, CH2M HILL provided for facilities planning and engineering, design, construction, obtaining governmental approvals, permitting, acceptance testing, startup, O&M, and warranty for the ST/WRF. The selected treatment included both membrane bioreactor process (MBR) and Siemens Cannibal process. MBR delivered the highest quality water and provided exceptional effluent quality; created the least environmental impact with a small footprint; significantly reduce costs; offered simplified expansion for future needs; and presented improved aesthetics. In addition to MBR, Siemens Cannibal solids reduction process was incorporated into the new ST/WRF. The Cannibal process greatly reduced solids production with consequent capital and operating cost savings. Design and construction of the treatment plant began in late 2006 and was completed in March CH2M HILL OMI operates and maintains the facility, chemicals, capital maintenance repair and replacement, membrane maintenance and replacement, residual-solids disposal, and guaranteed maximum energy usage. The facility was designed to blend in with the local residential and business community. Architectural features included prairie-style architecture, water features, and extensive landscaping and screening to minimize visual impact. The facility also included extensive odor control, including reuse of odorous air within the treatment process and biofilters. In 2008, the Clovis ST/WRF DBO project was honored with a Water/Wastewater Project Merit Award by the Environmental Business Journal in its yearly Business Achievement Awards. 122 / THE WATER DESIGN-BUILD HANDBOOK

131 case studies Design-Build- Operate Holyoke (MA) Combined Sewerage Overflow Treatment Facility Design-Builder Holyoke, Massachusetts, is an older industrial city with limited resources and aging wastewater infrastructure located along the Connecticut River. It has over 16 combined sewer overflow (CSO) discharge locations into the Connecticut River. The Connecticut River is the largest river in New England and flows 410 miles from the Canadian border to the Long Island Sound. The river provides tremendous natural resources and is renowned for its shad fishery, boating, and other recreational uses. A significant portion of the more than 500 million gallons per year of combined sewer overflows into the river came from CSO outfall No. 9 in Holyoke. The high bacteria levels from the untreated CSO discharge affected water quality 15 to 30 miles downstream of the discharge. The city was under a consent order from the EPA to abate both dry and wet weather overflows such that CSO outfall No. 9 would not be permitted more than four untreated overflows per year. The city obtained special permission through the Massachusetts legislature to conduct the project using the designbuild-operate delivery method. Although the city only received one bid, they were able to successfully negotiate a contract with AECOM. Both the CSO-treatment facility and the new wastewater-plant upgrades were completed ahead of schedule, under budget, and with minimal project changes. The state-of-the-art CSO treatment facility brought the city into compliance and will keep millions of gallons per year of untreated sewage from polluting the Connecticut River. In its first year of operation the CSO facility captured and treated approximately 480 million gallons of combined storm water and wastewater. The city needed an innovative technical solution and project-delivery method to build a new 103-mgd CSO-treatment facility on budget and on schedule. In addition, significant repairs and upgrades were needed at the city s wastewater treatment plant including headworks, dewatering, aeration, and odor control systems. The city decided to combine the new CSO-treatment facility and the wastewater-plant upgrades into a single design-build project valued at $24 million. THE WATER DESIGN-BUILD HANDBOOK / 123

132 appendix Design-Build- Operate Southern Regional Wastewater Treatment Plant (CA) Design-Builder Utility operations at the U.S. Marine Corps Base Camp s prime amphibious training base, encompassing 17 miles of coastline were constrained by aging water and wastewater infrastructure. These constraints were also affecting the vitally needed resources for more than 60,000 troops and a fluctuating population deployed to the area. In addition, the command center (NAVFAC) was under orders to respond to a court consent decree from the California Department of Public Health to improve the quality of effluent being discharged into the environment and to protect human health. Through a competitive bid process, a design-build-operate (DBO) contract was initiated by NAVFAC Southwest in It included the centerpiece of this overall plan, a 5- to 7.5-mgd tertiary wastewatertreatment plant for the southern region (SRWWTP). The two-phase procurement process included a qualifications submittal, followed by a proposal providing preliminary designs, a detailed management approach, and initial project pricing. In its RFP response, CDM Smith proposed a unique collaborative partnership with the Corps and the Naval Facilities Engineering Command Southwest. This approach enabled them to design, build, operate and maintain the overall program resulting in an enhancement of the operations and reliability capabilities for the water and wastewater system. CDM Smith filled the dual roles of designer and constructor, which as a single team created synergy and efficiencies that resulted in the project being completed six weeks ahead of schedule a critical achievement for a project that was under a consent order. Design-build delivery enabled CDM Smith to respond to NAVFAC s needs with a level of flexibility that is not possible in the traditional design-bid-build process. The project combined advanced technologies, an accelerated schedule, limitations on construction practices, and site restrictions. Site complexities included a tight footprint next to a base shopping center in which to construct the plant, a heavily trafficked access road, construction in an ecologically sensitive area, and basespecific approval and oversight procedures. Upon completion of construction in August 2006, CDM Smith began operation and maintenance of the SRWWTP. The accomplishment of the SRWWTP represents a major step forward for environmental conservation on the southern California coast, with many attendant social and economic benefits. This ongoing $260 million program delivers flexible, reliable, safe and easy-tooperate facilities that achieve rigorous regulatory compliance objectives and creates a cleaner coastal environment. It also includes new recycled water systems. In addition, effective project team collaboration has facilitated an understanding that helps meet stakeholder interests while protecting the base s endangered species and sensitive habitats. 124 / THE WATER DESIGN-BUILD HANDBOOK

133 case studies Design-Build- Operate Sacramento (CA) Regional Wastewater Treatment Plant (Pilot Project) Design-Builder In 2010, the Central Valley Regional Water Quality Control Board issued a new discharge permit for the Sacramento Regional Wastewater Treatment Plant that required the construction and operation of several new treatment processes by December Due to stays of permit conditions issued by the Sacramento Superior Court and a separate partial settlement agreement, the compliance deadline has shifted to mid-2021 or mid-2023, depending on the treatment process. The critical path in meeting the District s implementation schedule for permit compliance required successfully completing a pilot plant project that accurately simulated the future full-scale plant. Using an approach similar to designbuild-operate project delivery, Brown and Caldwell designed and constructed a $16.5 million (engineering, construction, and operations) advanced wastewater treatment pilot plant in 10 months, then operated the plant for 11 months to evaluate the efficacy of new and existing technologies. The pilot facility was designed for an average annual flow of 0.25 mgd and a peak hourly flow of 0.52 mgd, sized to accurately simulate full plant conditions and give the district confidence in the reliability and operability of the selected treatment processes. The district s pilot-testing technology-selection team, which included Brown and Caldwell, had previously selected air-activated sludge for nitrogen removal, followed by tertiary filtration and disinfection. The team identified granular media filtration (GMF) with pre-ozonation, and membrane filtration as viable tertiary filtration technologies; and chlorination, ozonation, and ultraviolet disinfection as viable disinfection technologies. Meeting an aggressive 10-month design and construction schedule required designing, selecting and obtaining final submittals on all major process equipment within the first three months. An 11-month operations phase began in April With support from the District s O&M, laboratory and engineering staffs, a team of Brown and Caldwell and district staff operated the plant seven days per week on staggered schedules. Operators varied loading rates, chemical feeds and control systems to test the ability of the processes to meet the new, stringent discharge requirements, while simulating full-scale operating conditions for the upgraded facility. The pilot project proved the efficacy of technologies to meet the new permit requirements and is helping the Sacramento Regional County Sanitation District establish a solid design basis for the full-scale plant. Because the pilot project is on the critical path to meeting the deadline for permit compliance, on-time and high-quality performance by Brown and Caldwell and district staff have been instrumental in keeping the full-scale upgrade on schedule. THE WATER DESIGN-BUILD HANDBOOK / 125

134 appendix Design-Build- Operate Cedar Water Treatment Facility (WA) Design-Builder Prior to 2004, Seattle Public Utilities (SPU) was one of the few major water utilities in the United States that did not completely filter its water. SPU s source water was generally pristine and only required fluoride, chlorine, and corrosion control treatment. In light of changing water regulations, SPU used the designbuild-operate (DBO) delivery method for constructing its new $79 million 180-mgd water-treatment facility. In April 2001, SPU selected CH2M HILL as the prime contractor to design, build, and operate the new facility. CH2M HILL currently provides operations and maintenance (O&M) services under a 25-year contract resulting in a full DBO project value of $109 million. The new facility has two independent treatment trains, each providing ozone generation, injection, contact, residual quenching and destruction systems, and UV disinfection. The project included construction of a new intake and raw-water pump station that extends 450 feet into Lake Youngs from the shoreline. Existing transmission pipelines were relined and used as highly efficient ozone contactors, thus avoiding costs and site impacts associated with construction of conventional ozone contactors. Other facility components include two 10-million-gallon clearwells for treated water storage, and flow metering and control stations designed for an ultimate capacity of 270 mgd. One of the unique requirements of the project was that it meet LEED TM criteria, eventually receiving a rating of Gold. (LEED TM is a building-rating system developed by the U.S. Green Building Council to promote the design of facilities that are economically and environmentally viable through the use of sound design practices and the use of sustainable materials.) The Cedar treatment facility is designed to be costeffective and durable based on the 25- year life of the contract. In addition, the design for site layout minimizes impacts to surrounding sensitive areas and wetlands. The project was recognized by the Washington Industrial Safety and Health Administration (WISHA) as the firstever recipient in the State of Washington of the voluntary protection program (VPP) Star award for construction. The VPP Star award is the government s highest award of recognition available to companies for health and safety excellence. The Cedar project also won the National DBIA Design-Build Excellence Award in November / THE DESIGN-BUILD HANDBOOK

135 case studies Design-Build- Operate Spokane County (WA) Regional Water Reclamation Facility Design-Builder The Spokane County Board of Commissioners awarded the design, permitting, construction, and longterm operations of a new 8-mgd waterreclamation facility to CH2M HILL in January Construction began June 2009 and was fully operational in December The Spokane County Regional Water Reclamation Facility significantly improves the County s wastewater-treatment capabilities, meets anticipated population growth, and meets septic-tank-elimination goals, while improving water quality and the environment by reducing phosphorous discharges to the Spokane River. CH2M HILL designed and constructed the treatment facility and will operate and maintain the facility for 20 years. The single, integrated, design-buildoperate delivery contract included $127 million for design, permitting, and construction plus an annual operation and maintenance fee of $5.5 million per year. The new facility s treatment process includes chemically enhanced primary treatment in conjunction with membrane bioreactor technology to produce Class A effluent-reuse water quality for initial discharge into the Spokane River. The effluent criteria to be met by the Spokane County Regional WRF are some of the most stringent in the country, including a seasonal phosphorus average of less than 50 micrograms per liter (50 parts per billion). The 8-mgd water-reclamation facility includes a 20-year operations period and the administration of an industrial pretreatment program and the ability to expand to 24-mgd ultimate capacity. CH2M HILL operates and maintains the facility, including provision of onsite staffing, chemicals, capital maintenance repair and replacement, membrane maintenance and replacement, and residual-solids disposal. THE WATER DESIGN-BUILD HANDBOOK / 127

136 appendix Design-Build- Operate Islamorada Wastewater Treatment, Pumping, and Conveyance Systems (FL) Design-Builder In an effort to prevent unpermitted and noncompliant wastewater effluent from entering the pristine coastal waters surrounding Florida communities, state legislators passed a law in 2010 requiring, that by December 2015, all wastewater generated in communities must be collected and conveyed to a central location for treatment and disposal. This required the Village of Islamorada (located in the Florida Keys, 100 miles south of Miami) to address the serious problem presented by failed septic tanks, which were causing septic leachate to percolate through porous coral rock into both the Gulf of Mexico and the Atlantic Ocean. In 2012, the Village selected the designbuild team of Layne Heavy Civil and ARCADIS-US to design, build and operate a hybrid collection system (combination vacuum collection and low-pressure sewer) on four Florida Keys, serving the combined population of 20,000 and connecting 75 existing package-plant facilities within the Village. In this new system, the collected wastewater will be conveyed via a 26- mile conveyance-force main through an extremely congested corridor along US 1/ Overseas Highway, through the Village and Key Largo to the 1.4-mgd Key Largo Water Treatment District s Regional Treatment Plant. The $100 million project is expected to be completed in The Village selected the design-build delivery method to address the extreme schedule demands and requirements needed to closely coordinate all aspects of the project concurrently. Routing and constructing the force main through the corridor is made difficult by busy traffic conditions and pending Florida DOT paving projects on US 1, numerous utilities in the US 1 right-of-way, environmental concerns with protected trees and wetlands, and requirements for constructing more than 9,000 linear feet below the highly-protected channels between keys. This project will ultimately improve the quality of the waters surrounding the Village of Islamorada. To support the local economy, a local staff of eight individuals was hired to be on-site at least through the end of construction in the fall of The DBO team is also under contract to operate the system for 30 years, which will create operator jobs. Layne Heavy Civil subcontracted this work to Severn-Trent. 128 / THE DESIGN-BUILD HANDBOOK

137 case studies Design-Build- Operate Carlsbad Seawater Desalination Project (CA) Design-Builder The Carlsbad Seawater Desalination Project will provide San Diego area businesses and residents with a consistent, drought-proof supply of high-quality water, less than three years after notice to proceed, using world-class desalination technology. Located 35 miles north of San Diego, in the City of Carlsbad, California, this impressive project estimated at $922 million includes a 100-mgd nominal seawater intake, interconnecting civil works, ten-mile conveyance pipeline and financing. The project will provide 50 mgd of finished water. It is funded with approximately 80% taxexempt bonds and 20% private equity. With design of the project beginning January 2013, completion of the construction is anticipated in late This construction effort marks a major milestone for seawater desalination in all of North America as the largest desalination plant in the western hemisphere. Competitively procured by Poseidon Water as owner using a hybrid EPC/ DBO model, the project team is led by Kiewit-Shea Desalination functioning as a JV prime, with ARCADIS-U.S. as the EPC engineer and IDE Technologies (Kadima, Israel) as the process designer/ operator in a 30-year operating agreement. The construction process included significant physical constraints on the six-acre site at an existing operational power generating station, together with schedule constraints of under 36 months allowed for design and construction. To address these issues, Kiewit, ARCADIS, and IDE developed an integrated team to produce several hundred design deliverables in a 13-month period and to significantly advance plant construction and the go to work ability of field operations staff. ARCADIS scope includes all detailed design engineering in support of plant construction, exclusive of detailed process design and engineering, which was provided by IDE Technologies. A true economic stimulus, this project will provide approximately 2,500 jobs during construction and about 200 direct and indirect jobs once operational, as well as large purchases of equipment and materials both locally and across the United States. THE WATER DESIGN-BUILD HANDBOOK / 129

138 WaterDesignBuild.org is your #1 resource for information on design-build and CMAR delivery methods. 3 Three Educational Videos 1. Project Delivery Methods for Design-Build and CMAR Projects 2. Conducting the Procurement Process for Design-Build and CMAR Projects 3. Managing the Risk and Liability Process for Design-Build and CMAR Projects 3 Case Studies 3 Owner Resources 3 Legislative Updates 3 Workshop Announcements 3 Water Design-Build Blog