Alternative Project Delivery Methods

Kurt Krause

Topics of Discussion

1. Project Delivery Method Definition2. Brief History3. Alternative Project Delivery Trends4. Key Drivers of APDM5. Risk6. APDM Decision and Selection Criteria7. Types of APDM8. CMAR 9. JOC10. Design-Build

Alternative Project Delivery Methods

Project Delivery Method: Definition

“The comprehensive process of assigning the contractual responsibilities for designing and

constructing a project from concept to occupancy. A delivery method identifies the

primary parties taking contractual responsibility for the performance of the

work.”

Ancient History Set the Ground Work for APDM

Project Delivery Historical Perspective

Code of HammurabiDesign-Build

1800B.C.

Classical Greece

Design-Build

Middle AgesCathedrals

Design-Build

RenaissanceEmergence of

Design-BidBuild

Private SectorRe-emergence of

Design-Build

Public SectorRe-emergence of

Design-Build

Emergence of

CMAR & JOC

Most States Have APDM Legislation

1200A.D.

1450 1960s 1980s 1990s 2000+450B.C.

**APDM Becomes Law in Arizona – August 15, 2000**

Project Delivery Method Trends

Key Drivers of Alternative Project Delivery Methods

• Schedule/Speed• Risk Assessment/Assignment• Improved Communication & Collaboration• Increased Efficiencies• Improved Productivity• Cost Control (Does not always mean lowest

price)• Improved Quality• Design Input from Contractors

Spearin Doctrine and the Traditional Project Delivery System

• The Spearin Doctrine is premised on the concept that the owner impliedly warrants to the contractor that the construction would be adequate if the contractor follows the plans and specifications that are provided to the contractor by the owner.

• Does this cover Alternative Delivery Methods? Some courts have ruled that it does not, representing a complete shift in responsibility from the owner to the contractor.

• More Responsibility = More Risk.

Who is at Risk?

Contractors

Client/Owners

Contractors Client/Owners

DBB CMAR JOC

RIS

K

*Key is to Balance Risk by assigning to those best suited to managing it.

DB

Making the APDM Decision

An owner faced with choosing a project delivery method should consider several factors in making the decision, including:

• Project size • Type of project • Legislative and regulatory requirements • Tolerance for risk • Schedule • Local market knowledge • Desired level of involvement • Owner’s resources and capabilities (know your

organization)

Why is Quality Based Selection Important?

• Use of sophisticated technology in construction is rapidly increasing

• Construction is becoming highly specialized

• Innovative solutions are needed

• Budget Control

• Find right team for the Project

Typical QBS Selection Criteria

• Contractor’s qualification and past performance (including references)

• Qualifications of key personnel• Financial Status• Safety Record• Quality assurance program or quality

management plan• Project management methods• Information technology systems

Types of Alternative Delivery Methods

Types of Alternative Project Delivery Methods

• Construction Management At Risk (CMAR)• Job Order Contracting (IDIQ, MATOC, SATOC, JOC)• Design-Build (DB)• Design-Build-Finance• Design-Build-Operate• Public-Private Partnerships (P3)• Integrated Project Delivery (IPD)• CM Multi-Prime• Design Assist

Most Commonly Used Alternative Project Delivery Methods in AZ

• Construction Management At Risk (CMAR)

• Job Order Contracting (JOC)

• Design-Build (DB)

Project Delivery Selection Processes

Construction Manager at Risk

Construction Manager at Risk

• Construction Management-at-Risk (Contractor) is hired before the design phase is completed (usually around 30% design), and works with the separately hired design firm to provide constructive solutions that may be more cost effective, provide a better delivery schedule, and provide for the best long-term maintenance and operability of the facility.

• The Construction Management-at-Risk also provides cost-estimating that matches the design and construction to the project budget

Construction Manager at Risk Flow Chart

CMAR Contract

• The CM @ Risk Contract Part 1:– Consulting agreement to perform the

specified preconstruction services

• The CM @ Risk Contract Part 2: – General construction contract– Plans and specs

CMAR Pre-Con Services

• Estimates• Preliminary Schedule • Constructability Review• Bid package strategy• Bidding sub-trades• General Requirements

Transition from Pre-Con Services to Construction

If the sum of the general contractor’s GMP is within the budget and the project is scheduled to complete within the Contract Time, then…..

The construction “option” in the agreement is exercised.

CMAR Considerations

Benefits Success Elements• Team approach from the start• Increased owner Control• Value Engineering• “Open Book” financial approach• Fewer claims / Litigation• Improved Collaboration• Shorter project schedules• Improved construction quality• Phased construction option• Improved service response to owner

Unique to CMAR:• Change management by owner advocate• Strong Check & Balance• Continuous budget control• Quality/cost tradeoffs are within owner control

• Owners must be comfortable with "at risk“ contracts

• Owners must embrace a partnering relationship with the contractors

• Owners must have a strong basis of the project estimate

• Owners become involved with contractors during design phase

• The roles of the CMAR & A/E in pre-construction need to be clearly defined

• GMP factors that must be considered: - Timing of GMP - Contingency level - Avoid confusion of design vs. construction responsibility

Job Order Contracting

Job Order Contracting

"(A) competitively bid, firm fixed price, indefinite quantity contract for the performance of minor construction, ... (or) the renovation, alteration, painting, and repair of existing public facilities.. A JOC is generally a multi-year contract including a base year and multiple option years and is bid and awarded prior to the identification of any specific projects to be performed. Thus, a typical JOC involves a variety of tasks such as the remodeling, renovation, and repair, including roofing, electrical, plumbing, and painting, of all a public agency's buildings or facilities for a period of years.“

Job Order Contracting offers public owners an efficient way to outsource these types of projects that include work of a recurring nature, with indefinite delivery times, types and quantities of work

Job Order Contracting Flow Chart

Why Use Job Order Contracting?

• Saves Time - JOC enables Owners to initiate and complete routine construction projects quickly by eliminating the time to bid each project

• Decreases project duration and cost

• Potential to Increase Quality• QBS Selection Process• JOC Contractor/Owner relationship developed

• Better use of Owner resources in procuring services

JOC Procurement Process – One or Two Step

1 Step Selection

•Request for Qualifications (RFQ)•Evaluate SOQ’s•Score and Rank•Recommend Award•If you conduct interviews…..•From SOQ’s compile Short List for Interviews•Conduct Interviews•Score and Rank•Recommend Award

2 Step Selection

•Request for Qualifications (RFQ)•Evaluate SOQ’s•Score and Rank•Step 2 – Request for Proposals (RFP) and Interviews•Evaluate RFP’s – Best Value (Quality and Price)•Conduct Interviews•Score and Rank•Recommend Award

In AZ, you can select at Step 1

Advantages

• Reduces Project Delivery Time• Quality of work equal to or higher than

traditional procurement methods• Long-term relationship established

between Owner and Contractor• Job Orders can be issued quickly • Saves time and money in procurement

process• Minimizes staff and resources

required to procure construction services on a project by project basis

• Contractor can provide design services and other pre-construction services as provided in contract

Job Order Contracting

Disadvantages

• Not conducive to large, detailed projects

• Method does not accommodate work outside of original scope well

• Culture Shift

Design-Build

Design Build

A design-build contract involves the award of a single contract for both the design and construction of a structure or public improvement.

The primary advantage of awarding a project on a design-build basis is that the project will likely be completed sooner than if two separate contracts are awarded for design work and construction work, although it may not necessarily be cheaper.

By combining the design and construction, the design-build contractor has greater control over the schedule, quality of the work and ultimately the efficiency of the project as conflicts between design and construction are significantly reduced

Design-Build Key Elements

• Criteria for use of DB

• Owner provides Preliminary Design (approx. 30%)

• Contractor provides final design and construction services

• Qualifications-based selection process

• Risk transferred from Owner to Contractor– Contractor is responsible for the design of the project as well as the

construction.

Design-Build Flow Chart

Advantages

• Reduces Project Delivery Time

• Cost Control

• Any problem with design = $ Lost Profit

• Quick Resolution = Fewer $ Lost

Design Build

Disadvantages

• Loss of direct design control

• Need for early, comprehensive project definition

• Re-training of Staff

Alternative Project Delivery Methods

Used Properly APDM can:• Reduce Schedules• Reduce Cost Overruns• Reduce Design Errors & Omissions• Reduce RFI’s• Reduce Change orders• Reduce Warranty Problems• Reduce Claims & Litigation• Can be a lot more Fun!!!!

Conclusion

APDM’s are alternatives to traditional Design-Bid-Build. They add to the tool box to help improve the success of project implementation, but are not a guarantee.

With the right pre-project planning, the right team, the right selection process, APDM should provide a better chance of project success!!

Questions?