Memorandum

City of Lawrence

 

TO:

Tom Markus, City Manager

FROM:

Melinda Harger, Utilities Engineer

DATE:

November 28, 2017

RE:

Alternative Project Delivery Methods for Contractor Selection

CC:

Diane Stoddard, Assistant City Manager

 

Casey Toomay, Assistant City Manager

 

Brandon McGuire, Assistant to the City Manager

 

Toni Wheeler, City Attorney

 

Bryan Kidney, Finance Director

 

Dave Wagner, Utilities Director

 

Charles Soules, Public Works Director

 

Scott McCullough, Planning and Development Director

 

Gregory C. Burns Jr., Chief of Police

 

Anthony Brixius, Police Captain

 

Background

The City of Lawrence has historically used a Design-Bid-Build (DBB) approach to construct most capital improvement projects. Over the past two decades, municipalities in Kansas and across the country have started using different types of project delivery to enhance collaboration, decrease cost, and shorten project timelines. This memo will summarize the differences between various project delivery methods and the benefits of one over another for the City, also referred to as the owner in these contractual arrangements. Staff recommends that the City consider alternative delivery methods on future projects.

 

Traditional Method of Design-Bid-Build

The traditional DBB approach for construction projects involves three sequential project phases. First, a design firm is hired to develop complete design documents, including detailed specifications and drawings. Then, the owner solicits fixed price bids from contractors. The contractor with the lowest bid is typically selected to construct the project. In this traditional method, designers and contractors have no contractual relationship to one another because the owner contracts separately with each entity. The contractor is responsible to build the project as designed. The designer is responsible to design to the professional standard of care. The owner bears risks associated with the completeness of the design documents.

 

Although DBB is well understood and has clearly defined roles for all three entities, it is not always the best option to meet the needs of a more complex project. The most significant disadvantage is that this project delivery method is not collaborative in nature. The absence of construction input into the project design can limit the constructability of the design and efficiencies can be overlooked. In addition, actual construction costs are not available until design is complete and bids are received. Due to the lack of collaboration, increased owner risk, and rigid step-by-step project phases, this method can result in overrun budgets and timelines.

 

Alternative Project Delivery Methods

Alternative project delivery methods can be used to evaluate critical parameters before design even commences, including regulatory demands, cost sensitivities, and specific stakeholder requirements. The two most common alternative project delivery methods are Construction Manager at Risk (CMAR) and Design-Build (DB). Both of these methods increase collaboration by involving the contractor early during the project design phase.

 

In a CMAR project, the owner benefits from having the contractor’s prospective and input on planning and design decisions. The contractor provides earlier knowledge of costs as well as constructability reviews on the design documents to reduce change orders during construction. Instead of the owner soliciting bids, this delivery method includes a commitment by the construction manager to deliver the project within a defined schedule and price. The construction manager becomes the general contractor during the construction phase. Similar to DBB, the owner has separate contracts with the designer and contractor; therefore, the owner is still placed between those entities for the resolution of project issues. Even though the owner benefits from early involvement of the contractor, the owner is still at risk for the completeness of the design documents.

 

DB is characterized by high levels of collaboration between design and construction disciplines throughout all project phases. Under the DB method, the owner hires a single DB entity to perform both design and construction under a single contract. The design and construction disciplines are contractually obligated to work together to complete a design that meets the owner needs within constructability and budget parameters. The DB entity bears the risk for the design completeness thereby reducing the need for many change orders that can derail budgets and schedules. A single point of contact reduces adversarial roles between design and construction. Site construction can typically begin before the final building design documents are completed in order to speed project delivery. There are various forms of DB, including the use of bridging documents, design competition, and progressive design-build (PDB). PDB is one of the newer forms of DB that uses a qualifications-based selection followed by a process whereby the owner then “progresses” towards a contract price with the PDB team. PDB also provides an “off-ramp” option where the owner can use the design and move forward with the project through a DBB procurement, with another DB entity, or any other way desired.

 

The City has utilized these alternative delivery methods on a few projects. The CMAR delivery method was used on the Lawrence Library Renovation, which was completed in 2014. Three wastewater DB projects were completed in 2007: Pump Station #16 rehabilitation, Yankee Tank Creek Interceptor, and Pump Station #48 and force main. Other municipalities in the region have also successfully used alternative project delivery on recent projects.

 

Below is a summary of these three most common project delivery methods for comparison.

 

Traditional Design-Bid-Build (DBB)

Construction Manager at Risk (CMAR)

Design-Build

(DB)

Two separate contracts with designer and contractor

Two separate contracts with designer and contractor

Single point of contact

Owner has more control of design details but bears risk for completeness of design

Owner has more control of design details but bears risk for completeness of design

Owner controls performance criteria. DB team responsible for discrepancies resulting in less risk to owner

Designer selected based on qualifications, project competitively bid to select contractor

Designer and CM selected based on qualifications, CM provides guaranteed price before construction begins

DB team selected based on qualifications & best value with a guaranteed price provided before construction begins

Common and familiar linear process

Collaboration between designer and contractor throughout design

Collaboration between designer and contractor throughout entire process

Design complete before construction begins

Faster timeline

Fastest timeline

Best for simple and well-defined projects with specification-based requirements

Good for unique, complex projects regarding construction methods and logistics

Good for complex projects with clear performance requirements and flexibility for innovation in design

 

Staff Recommendation

Staff recommends that the City consider alternative delivery methods on future projects due to the benefits of enhanced collaboration during design, increased quality with reduced rework, decreased construction cost, shortened project schedules, and less owner risk. Considering alternative delivery would allow the best method to be selected for each project based on the specific project requirements and constraints. Staff will return with a specific proposal for the preferred methodology for the police facility project once we have reviewed the alternatives and developed a specific recommendation.