Alternative Contracting Strategies for Highway Construction

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DESIGN-BUILD

The design-build project delivery system provides maximum flexibility to a contractor for innovation in the selection of design, materials and method. The owner agency only provides the end result parameters desired and the design criteria to be followed. Each of the prospective bidders submit a proposal that would optimize their construction capabilities. These proposals are then evaluated on basis of factors such as design quality, scheduled completion, management capacity and cost.

The following defining characteristics identify Design-Build:

- Two prime players—owner, design-build entity

- One contract—owner to design-build entity

Typical characteristics of the Design-Build approach include the following:

- Final design-builder selection may be based on any of the following: Direct Negotiation, Qualifications Based Selection, Best Value: Fees or Total Project Cost, or Low Bid. Project-by-project basis for establishing and documenting roles

- Continuous execution of design and construction

- Overlapping phases—design and build

- Some construction-related decisions after the start of the project

- Overall project planning and scheduling by the design-build entity prior to mobilization (made possible by the single point of responsibility)

Shorter construction duration can be achieved by accelerating or fast-tracking some key phases in the construction project, and this would favor the use of design and build or management contracting (Rowlinson & McDermott, 1999). A study of project delivery systems in China showed that Design-Build/EPC/Turnkey perform very well for project which are critical to be completed within a tight schedule or require speed for other reasons (Chen, Lu, Lu, & Zhang, 2010). Also, Design and build approach offers the highest price certainty, along with lump-sum type procurement (Chen, Lu, Lu, & Zhang, 2010).

The design-build system’s proposals inflict huge costs on the bidders and it has been argued that this would make it very difficult for smaller firms to remain competitive. (Federal Highway Administration, 1995)

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CONSTRUCTION MANAGEMENT

The term ‘Construction Management’ project delivery system encompasses all the delivery systems in which a construction manager is enrolled to provide oversight on cost, time and other project management tasks of a project. Construction Managers mostly act as a bridge between the owner and the contractor/designer. The fees of a Construction Manager are directly proportionate to the services they perform, which can range from advising for a particular phase of project or being the owner representative for each phase. Construction Managers are mostly employed for relatively complex projects, where the budget and schedule need to be closely or monitored or where extensive coordination is required between designers, contractors and specialist contractors. CMs are generally procured purely based on their qualification and experience.

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CONSTRUCTION MANAGER AT RISK

A Construction Manager (CM) at risk provides a guaranteed maximum price (GMP) for construction to the owner, while competitively managing various trades and subcontractors to ensure a profit for itself. The Construction Management firm thus acts a project coordinator and general coordinator. The CM is hired prior to completion of the design of the project. CM at risk provides the advisory benefits of CM as advisor approach along with early cost commitment seen in Design Built approach. The agency acting as CM at risk generally assumes all the general contractor’s liability and responsibility.

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PERFORMANCE CONTRACTING

In performance contracting method, a private contractor is responsible of achieving a set of goals. Here, the performance goals are specified, rather than detailed methods and means. These performance goals are mostly quality characteristics (such as air voids in asphaltic pavements or concrete core strength) that are amenable to acceptance testing at the time of construction (Walewski, Gibson, & Jasper, 2001).

Performance contracting saves time where the project outcomes are clearly defined and mutually understood. The department of transportations, as client, benefit from clearly stating the desired outcomes the contractor is expected to deliver. Whereas, the contractors stand to gain by exploiting the flexibility to determine the method to accomplish the desired outcomes through innovating competitive techniques of achieving the project objectives. In the end, the innovations introduced by the contractor shall help in improving overall safety and mobility, lowering costs and faster project completion without compromising on quality.

Performance contracting is similar to design-build method, which offers the contractor the flexibility of selecting the design, material and construction methods. So here too, the owner agency defines what to achieve rather than how to achieve it. The contracting agency identifies the parameters for the required result and establishes the minimum design criteria. The prospective bidders thereafter develop design proposals that optimize constructability. In the performance contracting approach however, the focus is on allowing contractor the flexibility to create efficiencies only during the construction phase. The construction contractors do not take responsibility of design nor do they become designers of record. Under the performance contracting method, specific performance goals are assessed and measurement methodologies applied during the construction phase. The results of these measurable and realistic assessments are a basis for applying incentives or disincentives. (Huie & Schneider, 2015)

The challenge over here is that as the responsibility of how to do the work lies entirely with the contractor, the procurement of a component contractor thus becomes crucial; else, the project will suffer adversely.

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A+B CONTRACTING

This contracting method uses cost+time bidding wherein the contractor is rewarded for reducing the project time,