Metropolitan Council
Environment Committee
Project Delivery Approaches
for
Wastewater Utilities in Minnesota
June 24, 2008
Project Delivery Options
Discussion Topics
• Why consider alternate forms of project delivery?
• Spectrum of available delivery options defined
• Project characteristics that favor specific delivery
options
Traditional Design-Bid-Build Only Delivery
Approach Formerly Allowed for Public Utilities
• Where traditional approaches are not required by
legislation, alternative delivery approaches are often
used to deliver major new construction
• Alternate forms of project delivery commonly used for
construction ranging from residential housing to
industrial processing plants and power generating
facilities
• Minnesota state statutes specifically allow alternate
delivery approaches for wastewater collection and
treatment facilities
Drivers for Using Design-Build
• Schedule (by far the most common reason)
– Regulatory compliance
– Population growth
– Derailed or otherwise delayed project
• Need for innovation/potential cost savings
– Industry input on treatment process/technical solutions
– Challenging problems that invite competitive solutions
• Avoiding low bid quality
– Bad experience with poor quality contractors
– Looking for a procurement method to select contractors on qualifications
– Can be done with Design-Bid-Build also, but more difficult to implement
• Risk transfer, single point of responsibility
– Specify the results, but not the way to get there
– Design-Build-Operate most comprehensive risk transfer approach
Basic Project Delivery Options
Design-Bid-Build
(DBB)
Traditional Delivery
Lump Sum
Design-Build
(LS)
Design-Build or “Alternate” Delivery
Design-Bid-Build Procurement
•Defined, proven process
•Distinct milestones to ensure expected results
•Project components defined in detail
•Traditional “cast” of participants
Plan Project
Owner
Consulting
Engineer
General
Contractor
Review/Approve Design
Construction Oversight
Engineering/Design
Construction Services
Construction
Procure Engineering/
Design Consultant
-selection based on
qualifications, technical
approach
Bid Construction Project
-selection based on price
(with exceptions)
Operate
Warranty
Startup
Lump Sum Design-Build Procurement
• Many “flavors” - two-phase procurement most common
• Variable milestones depending on the project
• Performance requirements defined in detail
• Somewhat different “cast” of participants
Plan Project
Review Quals
Design Concept/RFP
Quals
Solicit qualified teams
-short list
qualifications based
on capability, capacity,
experience,
Proposal Period
RFP Clarifications
Preliminary Design
Select short list
and Issue RFPdefines
performance
criteria
Owner
Owner’s
Advisor
DesignBuilder
Verify Design
Operations
Project Support
Design, Build, Startup Warranty
Select from shortlisted teams
-selection based
on “best value”
(technical + price)
Key Comparisons Between Traditional
and Design-Build Approaches
•
•
•
•
Traditional Design-Bid-Build
Owner controls most
aspects of design detail...
discrepancies become change
orders
Multiple procurements
Quals for engineers, price for
contractors
Multiple contracts/points of
contact among designers,
contractors
•
•
•
•
Design-Build
Owner controls performance
criteria, but not design
detail...and is not responsible for
discrepancies
One procurement, many phases
Qualifications, then combination
of technical and price (“best
value”)
Single contract/single point of
accountability
Key Comparisons Between Traditional
and Design-Build Approaches
Traditional Design-Bid-Build
• Standardized selection
process
• Specifications-based
requirements
• Others?
– Collaboration - limited to design
period
– Innovation – design function
– Schedule - constrained
– Price – low bid
– Quality – not typically a factor in
contractor selection
Design-Build
• Each procurement unique
• Performance-based
requirements
• Others?
– Collaboration – can include
Contractor
– Innovation – team function
– Schedule - potentially faster
– Price – “best value” proposition
– Quality – typically part of
selection criteria
Expanded Project Delivery Options
Design-Bid-Build
(DBB)
Construction
Management at
Risk
(CM@Risk)
“Progressive”
Design-Build
(GMP)
• “Design-Build Lite”
• Early involvement
by Contractor
during design
Traditional Delivery
•
•
Maximum
opportunity to
collaborate on
design
Owners have an
“off-ramp” if they
don’t agree with
GMP
Lump Sum
Design-Build
(LS)
Design-BuildOperate
(DBO)
•
•
•
Cost guarantee
extends to
operations
Comprehensive
risk transfer
Option for Owner
to operate
Design-Build or “Alternate” Delivery
What Types of Projects Fit the
Design-Build Model?
• Numerous variations,
evolving
Issue: continuously
Design Effort
How much pre• Variable milestones
depending
design
is required toon the project
Issue: Schedule
ensure you get what
• Manages
to unknown
challenges through Issue:
risk allocation
How
can the
Design Approvals
you want (versus
procurement process
performance
be varied if schedule
specifications)?
is
critical?
Plan Project Review Quals
Proposal Period
RFP
Clarifications
Issue: Price
Design Concept/RFP
Issue: Selection Criteria
What criteria are important
to success? What’s the
best indicator of future
performance?
Solicit qualified teams
-short list based on
capability, capacity,
experience,
references
How much oversight of
design should you have?
Verify Design
Operations
Project Support
How do you evaluate
Issue: Risk Sharing
Build,
Startup
Preliminary
proposalsDesign
beyond Design,
How
are risks
best Warranty
price? Does low
shared?
price always win?
Issue RFPSelect from short-Issue: Quality
How do you ensure
defines Issue: Scopelisted teams
What elements
of the
performance
-selection
based quality?
DB value”
criteria; projects
variableshould
onbe“best
versus traditional delivery?
level of design
(technical + price)
The Challenge: Match Delivery Approach to
Owner Needs and Preferences
Issues:
Schedule
Issue: Design
How can the procurement process
be
Effort
varied if schedule is critical?
Selection Criteria
How much preIssue: Schedule
Control/Risk
Allocation
What criteria are important design
to success?
is required to
How
can
the
Issue: Design Approvals
What’s the best indicator ofensure
future performance?
you get what
procurement
process
How much oversight of
Design Effort
you want (versus
beHow
varied
if schedule
design should you have?
much
pre-design is required to ensure you get
performance
is what
critical?
you want (versus performance specifications)?Cost/Competition
specifications)?
Price
How do you evaluate proposals beyond
price?
Issue:
Price
Does low price always win?
How do you evaluate
Issue: Risk Sharing
Issue: Selection Criteria
Scope
proposals
beyond
Time
How are risks best
Whatelements
criteria of
are
important
What
the
projects should
be
price? Does low
shared?
DB
traditional
to versus
success?
What’sdelivery?
the
price always win?
Design
Approvals
best indicator
of future
How
much oversight of design should you have?
performance?
Issue: Quality
Risk Sharing
Quality/Innovation
Issue: Scope
How do you ensure
How are risks best shared?
What elements of the
quality?
Quality
projects should be DB
How do you ensure quality?
versus traditional delivery?
Best Delivery Option is Project Specific
• Interceptors
– New sewers highly dependent
on land acquisition –
traditional approach often
works best
– Sewer rehabilitation or
replacement does not involve
land issues – good opportunity
for D/B
• Treatment Plants
– Greenfield process or new
plants offer opportunity for
process innovation, operating
cost considerations – D/B or
D/B/O could be good choice
– Plant rehab or expansion that
requires close coordination
with existing processes –
traditional approach usually
best.
Also consider the capacity and capability of the local
marketplace
Questions?