A Primer Indianapolis, Indiana June 16, 2010

Transcription

1 Alternative Project Delivery Methods A Primer Indianapolis, Indiana June 16, 2010 Michael Kenig, Holder Construction Company, Past chair of AGC of America s s Project Delivery Committee Jayne O Donnell, O General Manager, Turner s s Aviation Division

2 Overview of this Summit Definitions (Four Stops) Analysis of Options and Issues Identification of Best Practices Looking for Innovation

3 Industry Convergence Lean/ Economic Pressures You Are Here Building Information Modeling (BIM) Transparency in Public Bidding Labor, Tax and Funding Laws Project Delivery including IPD Threats and Risks Sustainability

4 Reference Materials Project Delivery Systems for Construction available though Associated General Contractors

5 Tailored (but dated) Reference Material Joint effort between ACI, ACC and AGC memberships Focused on airport owners Serves as an evolving, collaborative PDS guide Customizes key concepts in AGC PDS textbook

6 The Four Stops on the Road To Alternative Project Delivery 1. Ability to Use an Alternative Project Delivery 2. Definitions and establishing best options for your airport 3. Selecting best options for specific project needs and goals. 4. Implementing best practices and innovations to deliver the project. Baseline Metrics Lessons

7 Ability to Use Alternative Delivery Methods Airports have options: Design-Bid Bid-BuildBuild Construction Management at-risk Design /Build And although not yet implemented: FAA s s pilot program for PPP (private public partnerships)

8 Stop 2: Definitions Management Options Delivery Systems Procurement/Selection Contracting/Payment /Reimbursement

9 Defining Terms Management Options (in-house or out- sourced) Contracting/ Reimbursement (GMP, cost plus, lump sum, ) Delivery Methods (DBB, CMR, DB, Other) Procurement/Selection (low price/ best value / qualification based)

10 Defining Terms Management Options Delivery Methods Procurement/Selection Contracting/Payment /Reimbursement

11 Management Options 1. Use Owner s s Own Staff to manage the project 2. Hire Consultants to Assist in the management (Program Managers, Construction Managers or other staff augmentation)

12 Management Options vs Delivery Methods Owner & Owner Representatives Management Options: Who oversees the process Designer Builder Design- Bid -Build, Construction Management at-risk, Design/Build Delivery Methods: How design and construction is contracted by the Owner

13 Defining Terms Management Options Delivery Systems Procurement/ Selection Contracting/Payment /Reimbursement

14 Contracting/ Reimbursement Defined as: How the Owner wants to pay for the services provided (GMP, Cost plus, negotiated lump sum, lump sum)

15 Defining Terms Management Options Delivery Methods Procurement/Selection Contracting/Payment /Reimbursement

16 Phases of Project Development GOAL Traditional Linear Process Planning Design Bid Construction Occupancy Overlapping Phase Process Planning Design Construction Occupancy

17 Organizational Relationships Based on Delivery Methods How the owner and its consultants interact organizationally

18 Design-Bid Bid-BuildBuild Owner/ Owner Rep Two Separate Contracts for Design & Construction A / E Responsible for Design General Contractor Responsible for Construction Implementation

19 Construction Management at-risk Owner/ Owner Rep Two Separate Contracts for Design & Construction (CMR contracted to take cost and schedule risk) A / E Responsible for Design Construction Manager at Risk Responsible for Construction Implementation

20 Design/Build One Single Contract for Design & Construction Owner Bridging Consultant (optional) Design/Build Entity Responsible for Design and Construction Implementation

21 Optional Structures for Design/Build Entities Design/Build Entity Types Integrated Firm - All services in-house Contractor Led (design subcontracted) Joint Venture (architect-contractor j.v.) Architect Led (construction subcontracted)

22 What Characterizes Design-Bid-Build? Defining Characteristics - There are Separate Contracts for Design & Construction Contractor Selection is Based Entirely on Cost And Typically Design Documents are 100% complete

23 What Characterizes CM At-Risk? Defining Characteristics - There are separate contracts for design & construction Contractor selection is NOT based entirely on cost CMR contracts directly with trades and takes on performance risk (cost and schedule commitments) And Typically though not unique to CMR Schedule allows for overlapping design and construction Owner procures preconstruction services from the CMR Owner expects CMR to provide Guaranteed Maximum Price (GMP) and to commit to delivery schedule

24 What Characterizes Design/Build? Defining Characteristics - Single Point of Responsibility And Typically Schedule allows for overlapping design and construction Owner procures Preconstruction Services from the CMR Owner expects CMR to provide Guaranteed Maximum Price (GMP) and to commit to delivery schedule

25 Strengths of Each Delivery Type DBB -100% design complete CM at Risk bring builder in during design to improve design cost and accelerated schedule D/B single point of contact, fastest

26 Defining Terms Management Options Delivery Methods Procurement/ Selection Contracting/Payment /Reimbursement

27 Contracting Reimbursement What is The Project Cost? Cost of Construction + Contractor s s Fee & General Conditions + Contingencies /Allowances Total Construction Cost + Professional Services Fees + Design Contingencies + Permitting & Other Soft Costs +Owner Contingency Total Project Budget

28 Procurement /Selection Types 1. Low Bid Total Construction Cost, is the only selection criteria. (Total Construction weighted 100% ) 2A. Best Value Bid Total Construction Cost is a weighted selection criteria. (Total Construction Cost weighted between 0% & 100% ) 2B. 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% ) 3. Qualifications Based Selection Price is not a selection criteria. (Price weighted 0% )

29 Typical Public Owner s Delivery Options SELECTION TYPES Price Definition Designer & Contractor 2 separate contracts Design- Builder 1 combined contract 1. Low Bid Total Construction Cost Professional Services Selected on Price Design/Builder Selected on Price 2A. 2B. Price and other Qualifications Total Construction Cost Fees, General Conditions, Contingencies Etc. Pre Qualified Bid Best Value Proposal Design/Build Pre-Qualified Bid Design/Build Best Value Proposal Qualifications ONLY 3. Based Selection None Professional Services based on Qualifications only Design-Build Services Based on Qualifications only

30 Examples of Airports Choices SELECTION TYPES Price Definition Designer & Contractor 2 separate contracts Design- Builder 1 combined contract 1. Low Bid Total Construction Cost John Wayne Airport, Washington Dulles - Contractor services Federal Contracts (FAA, DOT, COE)? 2A. 2B. Price and Other Qualifications Total Construction Cost Fees, General Conditions, Contingencies Etc. JetBlue Terminal 5, JFK Airport Most Common -PHX, SEA, FLL, Sacramento Airport* San Francisco Airport Qualifications ONLY 3. Based Selection None John Wayne Airport (PM/CM and A/E services) San Diego Airport

31 Delivery Methods Selection Options 1. Delivery Method / Selection Types Design-Bid-Build Low Bid Best Value Bid Best Value Fees Qualifications Based Selection (QBS) 2. CM at-risk (aka CM/GC) 3. Design-Build 4. Other

32 Another Way

33 Selection Process Summary SELECTION PROCESSES DELIVERY METHOD IFB 1 RFQ 2 RFP 3 Design-Bid-Build Design-Build, 1-Step Design-Build, 2-Step X X Const. Risk JOC, 1-Step JOC, 2-Step X X Notes: 1. Invitation for Bids, low bid process. 2. Request for Qualifications, a qualifications-based selection process with no element of price considered in the first step. 3. Request for Proposals, a process that combines qualifications, technical capabilities, and price in a Best Value process. X Engineering and Architectural Services Department 33 X X X

34 End of Definitions Next.. we continue to Stop 3 on the Road To Alternative Project Delivery 1. Ability to Use an Alternative Project Delivery 2. Definitions of the each of the Delivery Method Options 3. Selecting the appropriate Project Delivery Method 4. Implementing the chosen Project Delivery Method

35 Benefits and Results of Alternate Delivery Methods Airport Project Delivery Summit II Chicago, IL May 17, 2007 Wylie Bearup, City Engineer

36 APDM Project Summary Delivery Methods Total Projects Projects Awarded Projects Completed Contractors Selected Value ($M) Design-Build $436.9 Risk $2,484.6 Job Order Contracting $ $3,133.9 * Cumulative since passage of legislation in 2000 through December 2006 Engineering and Architectural Services Department 36

37 APDM Benefits Ability to pick Best Qualified contractor Better relationships among all project team members Contractor involvement throughout design phase: more control of budget through design phase true Value Engineering to ensure most costefficient systems enhanced project communications by selecting entire team early more time to plan construction activities better designs through constructability reviews Engineering and Architectural Services Department 37

38 APDM Benefits, con. Better quality from better subcontractors Smoother project close out Better contractor performance for repeat business Reduced completion time with fast tracking and long lead procurement Greater control of subcontractor selection Higher levels of M/W/SBE participation Ability to meet Green Building goals Engineering and Architectural Services Department 38

39 APDM Research Analyzed 59 completed projects: 33 DBB to serve as baseline 20 completed projects 6 completed DB projects Analysis compared results in 3 areas: Schedule Growth Cost Growth Delivery Speed Team perceptions: APDM projects on time, with better quality Engineering and Architectural Services Department 39

40 Schedule Growth 30.0% 25.0% 24.7% 20.0% 15.0% 10.0% 7.0% 5.0% 4.8% 0.0% Design-Bid-Build Design-Build Engineering and Architectural Services Department 40

41 Cost Growth 16.0% 15.2% 14.0% 12.0% 10.0% 8.0% 6.0% 4.7% 4.0% 2.0% 0.0% 0.7% Design-Bid-Build Design-Build Engineering and Architectural Services Department 41

42 Construction Speed 2,500 2,000 2,141 SF/month 1,500 1, , Design-Bid-Build Design-Build CM@Risk Engineering and Architectural Services Department 42

43 Conclusion Process is working very well Methods have provided significant benefits to the City City continues to utilize all of the tools in our tool box Engineering and Architectural Services Department 43

44 6 th Annual FMI/CMAA Survey of Owners

45 6th Annual FMI/CMAA Survey of Owners

46 6th Annual FMI/CMAA Survey of Owners

47 How to Choose the Best Delivery Method Airport Project Delivery Summit II Chicago, IL May 16, 2007 Wylie Bearup, City Engineer, City of Phoenix

48 NUMERICAL ANALYSIS 1. Select and rank criteria. 2. Rate Delivery Methods ability to deliver criteria. 3. Apply ratings to ranked criteria. 4. Sum scores for each method. 5. Highest scored method selected. Engineering and Architectural Services Department 48

49 Developing Criteria CRITERIA Low initial design and construction costs High aesthetics of design High quality project Short project schedule High City control of design Low risks to City Non-adversarial relationships Effective coordination of design and construction Maximum flexibility to revise scope Low cost growth Engineering and Architectural Services Department 49

50 Ranking Criteria CRITERIA RANK Low initial design and construction costs 3.5 High aesthetics of design 10 High quality project 8 Short project schedule 6 High City control of design 9 Low risks to City 1 Non-adversarial relationships 2 Effective coordination of design and construction 7 Maximum flexibility to revise scope 3.5 Low cost growth 5 10 = most important, 1 = least important Engineering and Architectural Services Department 50

51 Rating Delivery Methods CRITERIA DBB DB Low initial design and construction costs High aesthetics of design High quality project Short project schedule High City control of design Low risks to City Non-adversarial relationships Effective coordination of design and construction Maximum flexibility to revise scope Low cost growth = best able to deliver, 1 = worst able to deliver Engineering and Architectural Services Department 51

52 Weighted Criteria CRITERIA DBB DB Low initial design and construction costs High aesthetics of design High quality project Short project schedule High City control of design Low risks to City Non-adversarial relationships Effective coordination of design and construction Maximum Flexibility to revise scope Low cost growth TOTAL SCORE CM@R selected as Best Method Engineering and Architectural Services Department 52

53 PROS & CONS ANALYSIS CRITERIA DBB COMMENTS Contractor Selection Subcontractor Selection Design Input Quality Speed Relationships City selects Best Qualified contractor, based on demonstrated performance. Can select best Civic Plaza constructor in the country. DBB must select low bid, even if no experience or poor past performance. provides proposed subcontractors to City for approval. City can veto any poor performers or non-local firms. competes subcontracted work among prequalified, approved subs. DBB, low bid contractor brings own subs, no City control. selected during design process. Participates in design reviews. Provides true value engineering, constructability reviews. Validates design within budget throughout process. DBB, no design input, no constructor estimate until bid day. is selected on past performance. Has opportunity to work with designer, understand Owner s quality needs. Able to price construction cost proposal to satisfy quality requirements. Wants to provide high quality for future selections. DBB, quality reduces profit. CM@R can begin work as phases of design are completed; accelerates project. Can plan construction activities during design - site layout, circulation, etc. Is productive from 1st day on site. DBB, cannot start any work until entire design complete. CM@R, entire project team together throughout project. Able to establish relationships, communications processes up front. CM@R selected through professional process, similar to designer. DBB, contractor selected later, after City and designer working together. Engineering and Architectural Services Department 53

54 Pros & Cons Analysis, con FACTOR DBB COMMENTS Cost Growth Schedule Growth Initial Cost Cost Certainty Litigation Value involvement during design improves drawings and specs. More clearly understands design intent, helps eliminate ambiguities and deficiencies. Is motivated to limit change orders for future business. DBB, can exploit design deficiencies, no motivation to reduce. Prior planning during design makes more efficient, less surprises. Motivated to perform for future business. Paid lump sum for overhead, looses money if project delayed. DBB, negotiates extended General Conditions for changes, covers costs. requires fee to contractor during design, not required by DBB. receives construction phase fee, more visible than DBB. Research indicates can actually save money over project life. City doesn t have sufficient experience to evaluated total cost savings. CM@R gives City Guaranteed Maximum Price, absorbs cost if exceeded. Any savings realized during project returned to City. CM@R involvement during design reduces E&O change orders, cost growth. DBB, final project cost not known until negotiate final change order. Previous litigation used as negative factor in selection process. Improved relationships and communications reduces issues that lead to claims. Desire for repeat business compels CM@R to settle problems early. DBB not concerned about litigation, doesn t impact next low-bid selection. Fees paid to CM@R are investment in the project. Improves relationships, schedule, quality; reduces change orders and litigation. Research indicates CM@R is good value over project life. CM@R selected as Best Method Engineering and Architectural Services Department 54

55 SUMMARY Have applied Numerical Method on limited projects: Lake Pleasant Water Treatment Plant IGC/TGen Headquarters Convention Center Expansion Typically apply some form of Pros & Cons Analysis Engineering and Architectural Services Department 55

56 6 th Annual FMI/CMAA Survey of Owners Primary issues surveyed include role of A/E and C, collaboration, commissioning, sustainability, and delivery methods

57 Need more information?... Contact AGC of America Mike Stark:

58 RECAP: Defining Terms Management Options (in-house or out- sourced) Contracting/ Reimbursement (GMP, cost plus, lump sum, ) Delivery Methods (DBB, CMR, DB, other) Procurement/Selection (low bid / best value / qualification based)

59 From this session Management Options Delivery Systems Procurement/Selection Contracting/Payment /Reimbursement Consensus.

60 Agenda for Remainder of Summit Low Bid vs QBS GMP Contracting Funding Best Practices, a Case Study Design Level of Detail Innovations: BIM, Partnering, IPD

61 Alternative Delivery Methods, A Primer Michael Kenig, Holder Construction Company Phone: mkenig@holder.com Jayne O Donnell, O Turner Aviation Phone: JODonnell@tcco.com

62 End