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DESIGN BUILD
NATIONAL PERSPECTIVE
byDwight Horne
FHWA
WHAT IS DESIGN-BUILD ??
• PROCUREMENT METHOD
• RISK SHARING TECHNIQUE
• INNOVATION
• QUALITY BASED SELECTION
• WARRANTY OPTIONS
• FINANCING OPTIONS
Design-Build - Why is it Experimental?
Design-Build
23 USC 112 (b)(1)Competitively Bid(Low bid)Construction Contracts
23 USC 112(b)(2)Qualifications basedSelection, Engineering /Design Services
Capitol Outlay
0
10000
20000
30000
40000
50000
60000
1950
1952
1954
1956
1958
1960
1962
1964
1966
1968
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
Year
$ (m
illio
ns)
Local
State
Federal
STATE DOT CHALLENGES
• FEWER STATE DOT EMPLOYEES
• MORE $$• HIGHER PUBLIC
EXPECTATIONS– MORE CUSTOMER
FOCUS
– MORE INNOVATIVE CONTRACTING
Design / Build
• NOT “IF”
• NOT “WHEN”
• “HOW”
Design-Build Selection Procedures
• Low Bid
• Modified Design-build
• Adjusted Bid
• Highest Composite Score
• Best Value
• Best Value / Fixed Budget
Procurement StrategyProcurement Strategy
Advantages of Design-Build (from Owner Perspective)
• Single Point of Responsibility
• Quality / Innovation
• Potential Time or Cost Savings
• Improved Risk Management
• Earlier Knowledge of Firm Costs
• Lower Incidence of Claims
• Reduced Project Administration
Advantages of Design-Buildto Industry
• INNOVATION• CONSTRUCTABILITY• DESIGN TO STRENGTHS• BETTER SCHEDULING• MORE COST AWARENESS• SHORTER DECISION TIME
DESIGN / BUILD
• State & Local Governments
• Private Companies
• Federal Agencies
FHWA Design-Build Philosophy
• Give same Flexibility & Protection offered by FEDERAL ACQUISITION REGS.
• Allow D-B contracting techniques allowed under STATE LAW
• Comply with other Federal-aid Provisions• Preserve the NEPA process• Determine best entity to manage risk• Protect the Public $$
– Competition - Best Value - Quality
States Currently Using Design-Build
SEP-14 Design-Build Contract Amounts
15
18
24
710685
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
> $100 M$ 50 - 100M$20 - 50 M$ 10 - 20 M$ 5 - 10 M$ 2 - 5 M$ 1 - 2 M$ 0 - 1 M
TEA-21 Design-Build LegislationSection 1307
• By June 2001 FHWA must develop regulations • It will allow states to use D/B without HQ approval for :
– ITS projects > $ 5 million
– Other projects > $50 million
• Existing SEP-14 will be used in the transition period• SEP-14 will continue for smaller projects
ISSUES• For Consideration when Structuring Procurement
•For FHWA Consideration in Rulemaking
NEPA COMPLIANCE?RFP Release?
Issue• When should the RFP
be released relative to the conclusion of NEPA?
• Public perception - bias for build/preferred alternate if RFP prior to ROD
• Contingencies• Federal investment / risk • Trade-off - time vs. risk of
increased costs
Procurement Issues
Issue• Basis of evaluation
and award
• Low-Bid• Two-Phase Process• Best Value
Decision based on %, design complete, risk, project uniqueness
Procurement Issues - Weight of Price
Issue• Weight of price in the
selection process
• Relative weight• How to compare• Consideration of other
factors
Standardized Changed Condition Clauses
Issue• For traditional Federal-
aid construction projects, 23 CFR 635.109 applies.
• However, TEA-21 Section 1307(b) indicates SCCC are not necessary for design-build.
• Owner delays• Differing site
conditions• Significant changes
in character
FHWA Authorization / Approvals
Issue• Timing of
authorization• Involvement in project
approvals
• Timing relative to NEPA
• Prior to release of RFQ, RFP, Concurrence in award
• Existing stewardship agreements
• “Clean Air” Implications
Conflict of Interest
Issue• Owner’s consultant?• Owner’s
subconsultants?• Same consultant /
different teams• post award team
changes /enhancement
• Competition• Unfair
advantage• Bid shopping?• Minimum
team requirements/ enhancement?
Owner Oversight
Issue• What is the
appropriate level of owner oversight?
• Owner’s role• Verification• Applicability of 23
CFR 637 (acceptance testing, IA testing)
• Warranties
Time Table
• NPRM - Fall ‘00/Early Winter Published in Federal Register
• Final Rule - Spring of ‘01 Published in Federal Register
• + 30 Days - Effective
Additional Resources on SEP-14 Design-Build Projects
• FHWA HIPA-30 web page– http://www.fhwa.dot.gov/infrastructure/progadmin/
contracts/d_build.htm
• Utah State University web page– http://www.utaht2.usu.edu/projects/innovativecontracting/
ICSearchpage.html
– Run query for design-build projects
• WSDOT Design-Build Process for Highway Projects– http://www.wsdot.wa.gov/designbuild/db/index.htm#Stake
GIVE US YOUR COMMENTS
• On THESE and OTHER DESIGN/BUILD ISSUES Important to you
• IN WRITING– as an Association
– as a Company
– as an Individual
• TO FHWA 400 SEVENTH STREET WASH. DC 20590