DEFINING THE SPECTRUM OF PROJECT DELIVERY OPTIONS AND THEIR IMPLICATIONS FOR YOUR PROJECT 2017 Airport Construction Strategy Summit

Transcription

1 DEFINING THE SPECTRUM OF PROJECT DELIVERY OPTIONS AND THEIR IMPLICATIONS FOR YOUR PROJECT 2017 Special Thanks To:

2 DEFINING THE SPECTRUM OF PROJECT DELIVERY OPTIONS AND THEIR IMPLICATIONS FOR YOUR PROJECT OVERVIEW: What problem are we trying to fix Project Delivery Defining Terms Discussion Wrap Up 2

3 Traditional Project Delivery Process Hire a designer for the least cost and the product is! Bid the drawings and specifications Build the project with the least costly design and the Contractor who had the lowest bid and the result is a happy Contractor who made the biggest mistake and the outcome is!

4 Loss of Productivity

5 The Conflict in the Law Standard of Care The common law standard of care for performance of design professional services is generally defined as the ordinary and reasonable care usually exercised by one in that profession, on the same type of project, at the same time and in the same place, under similar circumstances and conditions. Perfect performance is not required by the common law. Designer is accountable to a reasonable standard of care, therefore Errors and Omission are acceptable within a limit. CONFLICT GAME ON Spearin Doctrine United States v. Spearin (248 U.S. 132), also referred to as the Spearin doctrine is a 1918 United States Supreme Court decision. It remains one of the landmark construction law cases. The owner impliedly warrants the information, plans and specifications which an owner provides to a general contractor. The contractor will not be liable to the owner for loss or damage which results solely from insufficiencies or defects in such information, plans and specifications. The Airport Builder can assume contract is error free with no omissions.

6 Perceived Project Risk thinks the designer will: only be concerned with the own ego be over budget not be what is wanted or needed miss program elements thinks the builder will: never do what we want pursue change orders and additional cost never finish on time cut corners to save money thinks the builder will: deviate from the design look for errors and ask to many RFI s always say it is not constructible and drawings are deficient thinks the Airport will never make a decision keep changing the design blame the design for change orders always want additional design services for free thinks the Airport will: never be satisfied with the quality of the work not pay for changes never acknowledge schedule delays thinks the designer will: provide incomplete unconstructable drawings claim the drawings are perfectly understandable always fault the contractors for missing things in their bid

7 Project Risk Reality Risk Vision Will Risk Always Stay With Design the Risk Responsible Organization Construction Risk Budget expectations Funding expectations Schedule expectations Scope expectations Project outcome expectations Sharing vision with team Interpret vision Communicate design Develop Project Program Develop project contract drawings Develop project specifications Focus On Aligning Expectations Not Assigning Risk Build project in accordance with contract documents Build project within approved budget Build project within approved schedule

8 Successful Project Outcome

9 Sustainable Project Outcome 9

10 Exceptional Project Outcome Exceptional, deviating from the norm, outstanding, excellent, rare Project, something that is contemplated, devised or planned, a large or major undertaking involving considerable money, resources and equipment. Outcome, something that follows as a result or consequence and that can be measured

11 Exceptional Project Outcome Business Participation Outcomes LBE Participation Goals DBE Participations Goals Local Hire Goals New Hire Goals Create Jobs Economic Outcomes Exceed Revenue Reduce O & M Cost Local Economy Improvement Increased Competition Minimize Impact on CPE Construction Outcomes Safety Incidents Operational Impacts Profitable Outcome for All Non-Conformance Work Disputes/Claims Sustainability Outcomes Social Inclusion Environmental Stewardship Economical Responsibility Maximize Performance Optimize Operations Design Outcomes Passenger Experience Project Recognition/Awards End User Satisfaction Creative Solutions Innovative Solutions Project Management Outcomes Target Budget Performance Target Schedule Performance Activation/Startup Goals Have Fun Partnering Goals

12 Aligned Project Delivery Lines of Communication Contractual Relationship The Project Team The Project Collaborate

13 Integrated Project Delivery Developing high performing teams through a Structured Collaborative Partnering Program Integration through Stakeholder Engagement Process Integrated project delivery (IPD), is a collaborative alliance of people, systems, business structures and practices in a process that harnesses the talents and insights of all participants to optimize project results, increase value to the owner, reduce waste, and maximize efficiency through all phases of design, fabrication, and construction. Common Purpose as defined by Exceptional Project Outcomes EPO and continual improvement. Source: the American Institute of Architects

14 Integrated Project Delivery Programming Phase Schematic Design Phase Design Development Phase Construction Documentation Phase Procurement of Trades Construction Phase Closeout Phase Operations and Maintenance Phase Design Effort/Stakeholder Involvement Ability to Control Cost Integrated Traditional Cost of Changes Exceptional Project Litigation Outcome Phase Time

15 Domains of Project Delivery Project Organization Alliance Structure is built Organization on is hierarchical Common Behavior: Purpose The Partnered Blame project is assigned individual Approach to team to members issue party based identification behavior contract will and depend resolution requirements on the leadership style - How is the participant control structure organized? Terms Lowest of Bid Cost, Wins Scope Commercial and Qualifications Terms: schedule You is are Cowill not get the behavior Created considered you prior contract to for what finalizing is the contractual relationship? Qualifications are considered Operating Management Co-Created Dictated Requirements Operating Management: Behavior will reflect the way the project Pull Critical Planning is Path managed or to Push promote how Scheduling is the project improvement Fixed Cost management based on plan Low Bid created? Target Value Budgeting

16 Integrated & Collaborative Elements Integrated Project Delivery Qualification Based Selection Integrated Technology Systems Lean Construction Tools Stakeholder Engagement Process Structured Collaborative Partnering

17 Design-Bid-Build Delivery Design Bid-Build Delivery Timeline Design Bid Build Project Completion Project Budget Project Cost Conceptual Estimate No Collaboration from Builder Lump Sum Bid Time

18 Alternative Project Delivery Alternative Project Delivery Timeline Design Build Project Completion Project Budget Project Cost Conceptual Estimate Begin Buyout Collaboration Lump Sum Bid Buyout GMP Time

19 Optimize Time & Cost Design Bid-Build Delivery Timeline Design Bid Build Alternative Project Delivery Timeline Design Build Project Completion Cost Optimization Project Budget Project Cost Conceptual Estimate Begin Buyout Collaboration Lump Sum Bid Buyout GMP Time Optimization Opportunity for Exceptional Project Outcome Time

20 Why Vocabulary Matters? Capturing Lessons! Identifying Best Practices! Continuous Improvement!!

21 Who Cares?! (about Project Delivery) A Strategy for Getting the Most for the $ s 1. We measure cost and schedule how do we measure quality? 2. Collaboration/Project Delivery as a strategy to manage risk Project Delivery: A way to maximize value!

22 Delivery of Projects Management Options Delivery Systems Procurement/Selection Contracting/Payment /Reimbursement

23 Defining Terms Management Options (in-house or out- sourced) Contracting/Payment/Reimbursement (GMP, cost plus, lump sum, ) Delivery Methods (DBB, CMR, DB, IPD) Procurement/Selection (1. low price; 2. best value: total cost; 3. best value: fees; 4. QBS - qualification based)

24 Procurement: What is the Price? Cost of Construction + Contractor s Fee and General Conditions + Construction Contingencies /Allowances Total Construction Cost + Professional Services Fees + Other Project Costs + Permitting & Other Soft Costs +Owner Contingency Total Project Budget

25 Procurement /Selection Types 1. Low Bid Total Construction Cost, is the only final selection criteria (Total Construction weighted 100% ) 2. Best Value: Total Cost Construction Cost is a weighted final selection criteria (Total Construction Cost weighted between 0% & Total C100% ) 3. Best Value: Fees Fees and/or General Conditions are weighted; but Total Construction Cost is not a weighted selection criteria (Fees weighted between 0% & 100% ) 4. Qualifications Based Selection Price is not a selection criteria (Price weighted 0% )

26 Typical Delivery Method / Selection Options DELIVERY METHOD Common Nicknames Low Bid Best Value: Total Cost Best Value: Fees Qualifications Based Selection (QBS) Design-Bid-Build Competitive Sealed Bid; Low Bid; Inv. to Bid (IFB) CM at-risk CM/GC; GC/CM; CMc; ECI Design-Build Engineer-Procure- Construct (EPC) IPD Multi-party; Alliancing Not Typical Not Typical Which do you use?

27 Contracting/Payment/ Reimbursement How the Owner wants to pay for the services provided. Common Options: GMP, Cost plus, negotiated lump sum, lump sum

28 Contracting/Payment/Reimbursement Guaranteed Maximum Price Cost Plus Firm Fixed price (lump sum) Target Price (IPD)

29 Closed or Open Book: Transparency? DELIVERY METHOD Common Nicknames Low Bid Best Value: Total Cost Best Value: Fees Qualifications Based Selection (QBS) Design-Bid-Build Competitive Sealed Bid; Low Bid; Inv. to Bid (IFB) Closed Book CM at-risk CM/GC; GC/CM; CMc; ECI Design-Build Engineer-Procure- Construct (EPC) Closed Book Open Book IPD Multi-party; Alliancing Not Typical Not Typical

30 Example: San Diego Delivery Method / Selection Options Delivery Method Common Nicknames Low Bid Best Value: Total Cost Best Value: Fees Qualifications Based Selection (QBS) Design-Bid-Build N/A NA CM at-risk N/A N/A RCC Design-Build T2PP TDP IPD Not Typical Not Typical 32

31 Example: Seattle 37 million annual passengers 7.7% enplanement growth (2014) 33

32 Example: Seattle Delivery Method Options DELIVERY METHOD Common Nicknames Low Bid Best Value: Total Cost Best Value: Fees Qualifications Based Selection (QBS) Design-Bid-Build CM at-risk NSAT Design-Build IAF IPD

33 Contract Delivery Methods Contract Delivery Method Contract Elements Design-Bid-Build CM at Risk Design-Build (Lump Sum) Design-Build (Progressive) Owner Builder Owner Builder Owner Builder Owner Builder Contract Relationship Designer Procurement of Construction Designer Procurement of Trade Packages Procurement of Construction Designer Procurement of Trade Packages Designer Pricing Model for Direct Construction Cost Lump Sum/Low Bid Negotiated GMP Lump Sum/Low Bid Negotiated GMP Qualifications Part of Selection of Builder No Yes Yes Yes Design Philosophy Owner Managed Design Design Assist Builder Managed Design Collaborative Design Not Desirable Desirable Very Desirable PLANNING, DESIGN & CONSTRUCTION

34 Progressive Design Build Progressive Contract Amount PLANNING, DESIGN & CONSTRUCTION

35 San Francisco Delivery Method Options? DELIVERY METHOD Common Nicknames Low Bid Best Value: Total Cost Best Value: Fees Qualifications Based Selection (QBS) Design-Bid-Build?? CM/GC?? Design-Build???? IPD??

36 Which Design-Build?!

37 Example: San Francisco Delivery Method Options DELIVERY METHOD Common Nicknames Low Bid Best Value: Total Cost Best Value: Fees Qualifications Based Selection (QBS) Design-Bid-Build X CM/GC X Design-Build X Traditional Design-Build Progressive Design-Build X IPD X X

38 DELIVERY METHOD Common Nicknames Discussion? Low Bid Best Value: Total Cost Best Value: Fees Qualifications Based Selection (QBS) Design-Bid-Build Competitive Sealed Bid; Low Bid; Inv. to Bid (IFB) Closed Book CM at-risk CM/GC; GC/CM; CMc; ECI Design-Build Engineer-Procure- Construct (EPC) Closed Book Open Book IPD Multi-party; Alliancing Not Typical Not Typical

39 Recall, why vocabulary matters Capturing Lessons! Identifying Best Practices! Continuous Improvement!!

40 Thank You! Panelists: Geoffrey W. Neumayr, Michael Kenig, Holder Construction Company cell: