Construction Contract Approachesand Project Value

Clean Water Management Trust Fund

Board of Trustees Meeting

February 14, 2010

Construction Contract Approaches

Clean Water Management Trust Fund

Board of Trustees Meeting

February 14, 2010

Topics

Grant recipients’ contracting approaches

Comparing approaches

Ensuring project value

Contracting approaches

Two basic approaches grant recipients use to contract for construction:

- design-bid-build- design-build

Key difference is the “bid” part

Bidding:- obtaining pricing by competitive process- qualified contractor with lowest price is selected: “lowest qualified bidder”

Contracting approaches

Other differences:- when contractors get involved- how contractors are selected- how contractors price construction

GRs in two groups, differing purchasing reqs:- local govts and State agencies (by State law)- private nonprofits and SWCDs (no State law)

Contracting approaches

Constructor is selected (based on low bid)

construct

DESIGN-BID-BUILD

Engineer is selected(based on qualifications)

grant application, award, and contract

design and permit

Contracting approaches

Constructor is selected (based on low bid)

construct

DESIGN-BID-BUILD

grant application, award, and contract

design and permit

Engineer is selected(based on qualifications)

Contracting approaches

Engineer is hand-picked

Constructor is hand-picked

grant application, award, and contract

design and permit

construct

Constructor is selected (based on low bid)

construct

DESIGN-BID-BUILD DESIGN-BUILD

grant application, award, and contract

design and permit

Engineer is selected (based on qualifications)

Comparing approachesDESIGN-BID-BUILD DESIGN-BUILD

GRs: private nonprofits and SWCDs

Constructor selection: GR’s preference; less process time/cost (established team)

Constructor pricing: negotiated

Construction observation/admin: less time/cost (more collaborative, flexible)

Construction quality: usually better

Final cost vs. budget: projects generally close out at budgeted cost (neither overrun nor revert)

GRs: local govts and State agencies

Constructor selection: competitive; more process time/cost (law-mandated)

Constructor pricing: bids

Construction observation/admin: more time/cost (more oversight needed)

Construction quality: usually good

Final cost vs. budget: CWMTF asked to fund overruns; underrun projects revert unneeded funds

Ensuring project value

Both contracting approaches widely accepted

Ensure water quality benefits at reasonable cost

Improve evaluation of applications

Discussion