Wednesday, April 25, 2012

Project Delivery Methods for Public Construction Projects

Let's take a look at some of the project delivery methods that are sometimes used for public works construction projects. 

Design-Bid-Build:  Traditionally, most public works construction projects are advertised and then awarded to the lowest responsible bidder with a responsive bid.  This is known as the Design-Bid-Build model, where there is a separate designer, the agency then bids the project, and it is awarded to a contractor to build it.  

Rosters:  Sometimes, there are variations to the bidding process.  The project may be publicly advertised or the plans and specifications may be provided to only a limited number of bidders on a roster.  But it's still Design-Bid-Build since bidders are submitting prices for constructing the project based on complete plans and specifications.

Design-Build:  In the Design-Build model, the public agency selects one firm to both design the project and to build it.  Here are some features of Design-Build: 
  • Ends the blame game:  Eliminates a traditional source of contention with contractors blaming the designer for faulty design when things go wrong, and the designer blaming the contractor for faulty installation.
  • Speed:  Can be a fast process for delivering projects.  
  • Requires sophisticated owner:  It is a more complex process and requires a fairly sophisticated public agency to manage not only the selection process, but the actual design and construction portions of the work.   
  • Not applicable for all projects:  May not be a good project delivery method if the agency and the end users or the public want to have significant input into the design.
  • Selection process:  In some instances, the Design-Builder might be selected based on a combination of qualifications, design, and price, while in others they may be selected only based on qualifications, and then work with the agency during the design process.  At the end of design, the parties would negotiate a contract price.
Construction Manager at Risk: The Construction Manager at Risk method goes by a variety of different names, including GC/CM (General Contractor/Construction Manager), CM/CM (Construction Manager/General Contractor), CM at Risk, and CMAR.  
  • Preconstruction Services:  It is a method in which the agency selects a contractor early in the design process to provide consultant input to the design from a contractor’s viewpoint, and to begin planning the project.
  • Qualifications and Price Based Selection:  The selection is based on qualifications and limited pricing, such as the cost of general conditions work and the contractor’s overhead and profit.
  • Negotiated Price:  When the design documents reach a certain percentage of completion, the agency and contractor negotiate the construction cost.
  •  Subcontractors:  In some jurisdictions, there are requirements that all work be competitively bid or that limits the amount of work the contractor may perform with their own forces, while other agencies don’t have such requirements.
IDIQ (Indefinite Delivery/Indefinite Quantity):  Job Order Contracting is one form of IDIQ and is a means for agencies to obtain the services of a contractor on an on-call or as-needed basis for construction, maintenance, and repair work without advertising each specific project.  Typically, the contractor is selected partially on qualifications and partially based on either unit prices or price markups.  Other forms of IDIQ include advertising for bids from contractors  to perform on-call work in a specific specialty area (such as electrical or carpentry).  Selection is usually based on unit prices.

Public-Private Partnerships: In an era with shrinking public dollars for public improvements, some agencies have successfully tapped into the private sector with creative, “one-off” types of partnerships, in which the private sector contributes financially to the project with the prospect of gaining financially.  Examples might include a toll highway built and operated by the private sector, or low income housing projects that benefits from federal tax credits.

Best Value Procurement:  In Best Value Procurement, a contractor is selected based on a combination of their bid of complete plans and specifications for a construction project, and also based on their qualifications.  Evaluation criteria with maximum points are established for both the bid price as well as specifics about the contractor’s qualifications.  As an example, if the bid amount was only worth 15 points out of a total of 100 points, an agency could end up awarding a project to a firm without the low price because they were rated high on their qualifications.  

No Competition:  Some public agencies have dollar thresholds, below which they are not required to obtain bids for a project, but are free to select any contractor.  

Emergency Project:  Other times, competitive bidding is waived in the event of an emergency situation when there is not sufficient time to advertise and award a project.  Emergencies are usually based on a threat to public safety or health, or a situation which would prevent the agency from performing its essential functions and providing critical services.

Work Performed by Agency Staff:  Some public agencies have dollar thresholds, below which their own internal staff may perform public works projects, and that don't have to be competitively bid to contractors.

Other Project Delivery Methods:  There are a variety of other project delivery methods, some of which are not used as frequently.  These include Multiple Prime Contracts and Integrated Project Delivery.

Regulations and Resources:  In assessing the most appropriate project delivery method to use:
  • Regulations:  Review your state and local laws to see what methods your agency is authorized to use.
  • Staff:  Assess your staff resources and knowledge and whether you have sufficient ability to engage in some of the more complex project delivery methods.
  • Project:  Evaluate what project delivery method will be best for a specific project.
Mike Purdy's Public Contracting Blog 
© 2012 by Michael E. Purdy Associates, LLC

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