Innovative ContractingUDOTDirector of Construction and MaterialsKris Peterson
Innovative Contracting Works to Improve the Process
Reduce impact to publicReduce overall project time Limits Schedule Growth
Reduce overall project cost Limits Cost Growth
Types of Innovative Contracting
Contract Manager / General Contractor (CMGC or CM@Risk) Design-BuildA + B BiddingLane RentalWarrantiesIncentivesPerformance-based
Design Phase Construct Phase
Design Bid
Build
Design Build
CMGC/DB
CMGC
SelectAdvertise
NTP
SelectAdvertise
NTP
SelectAdvertise
SelectAdvertise Open Bid
NegotiateNTP
Open BidNegotiate
NTP
Open BidNegotiate
NTP
Open BidNegotiate
NTP
B1 BnB2
Timeline Comparison
CMGC Roles
UDOT
Plan
Build
Design Consult
Design
Contractor
UDOT
Bid Build
Contractor
Negotiate
Why Innovative Contracting
CMGC Benefits
UDOT Controls Design UDOT Selects Innovation
Lessons Learned
Other CMGC Benefits / Risks
BenefitsReduces design time and design errorsImproves constructabilityIdentifies and reduces riskEarly procurementLower cost
RisksSole source contract Bid price needs
to be 10% of EE or below
Negotiation skills
Why Innovative Contracting
Reduce Risk to Reduce Cost &
Increase Profit
DBB DB CMGC
Contractor Risk
Owner Risk
Ris
k
Selection Strategy
Select complex projects That benefit from contractor input With third-party risk That need innovation Need early procurement
Select projects with a budget emphasisTake time for design
Why Innovative Contracting
CMGC Requires Approval
Experimental Process - SEP 14 12 Federal Projects per year 12 State Projects per year
Justification requiredProject Development approvesFHWA must also approve federal projects
Contracting ProcessDevelop RPF Selection Criteria Price components
AdvertiseSelection team Complex participants Region participants AGC and ACEC representatives
Select & Award
Processing Time
No
Yes
Yes No
Acquire Designer 9-10 weeks
Plan Project Phases 3-5 weeks
Design Phase
Independent ?
Region recommends Multiple phases to Project Development
Multiple Phases
Designers & Contractor Design Phases
Select Contractor 14-16 weeks
Designers & Contractor Design Project
Price Benefits
Brings cost accountability to the tableBrings cost competition to the tableBrings cost innovation to the tableProvides validation of good price for public trust
Price in CMGC RFP
Price Continue to use the average target
Most realist cost
Approach to Price Emphasize during pre-proposal Change the format
Where are we going?
Yes
YesNo
No
Bids & EstimatesSubmitted to Electronic Vault
Contractor Createsprice proposal
Designer Creates Engineer Estimate
Stanley Red Flag Analysis
Third PartyIndependent CostEstimate
Bid Below CAA
++ Funds/ Rescope
Go Back To Design
Go Traditional Bid Build
Utah CMGC Projects (State)
Where are we going?
Utah CMGC Projects (Federal)
Where are we going?
BuildPhase 1
BuildPhase 2
Design Build
Design
UDOT
Plan
Contractor
BuildPhase n
Design Consultant
Design-build
Benefits Faster Design/Construction Smaller cost growth Smaller schedule growth Innovation (Contractor controlled)
Risks: Design-build is built for speed Contractor owns the design
Design Build Advertising Process
Letter of Intent (Interest) LOIRFQRFP
Low-BidBest-Value
Checklists
Located on the 2008 Standards / Checklists website
http://www.udot.utah.gov/Inside UDOT/Project Development/Standards and Specifications /2008 Standards/2008 Project Checklists
Selection CommitteeSO
Selection Official(Projects above $100M)
PEBProposal Evaluation
Board
CMGContracts Management
Group
TEBTechnical Evaluation
Board
PETPrice Evaluation Team
TATechnical Advisors
PEB Consists of:Program Manager (Chair)
Project ManagerRegion Functional Manager
Central ConstructionInnovative Contracting Engineer
TEB Consists of:Project Manager (Chair)
AGC Representative (if available)ACEC Representative (if available)
Reduce Time on Project
A+B Bidding Contractors bid
the time to complete the project and a dollar amount for work items
Award to lowest combinations of time and cost
Lane-Rental Minimize the time
lanes are closed Contractors are
charged a fee for closing lanes and shoulders
Focus on time the public is affected
A + B Bidding
Benefits: Improved coordination between prime and sub-contractors Reduced construction time minimizes impacts to users Contractors are required to put together a well conceived
schedule
Drawbacks : Contract changes are magnified; too many changes nullify
the advantages of A+B Acceleration techniques may require more resources for
contract administration More hours and over-time budget required from Region
staff Negotiations for additional work are more intense since
time is a bigger issue
A+B Candidates
Good: Interstate Projects Mill and Overlays Projects with Detours Bridge Painting Intersection upgrades New Construction/Reconstruction
Bad: Third-party delays Rehabilitations
Lane Rental
Benefits:– Better coordination of prime and sub-contractors– Minimized impact to traveling public– Better public perception due to fewer un-utilized
lane closures
Drawbacks:– Extra effort by staff to monitor lane rental– Negotiating lane rental adjustments can be
difficult with contract changes– Potential added costs to the project
Lane Rental Candidates
Good: Mill and Overlay (2-lane roads with
flagging ops. or intersection impacts) Safety projects
(guardrail/signing/striping/bridge painting)
Bad: New construction Long-term projects
Warranties
Guarantee all or portions of a construction project Free of defects in material Workmanship Time Period
Correct deficiencies during warranty period
Warranty Pros and Cons
Benefits Quality and
durability guaranteed
Longer acceptance time
Less inspection needed
Drawbacks Owner must
ensure warranty Warranty may not
be collectable Staffing to monitor
warranty
Incentives - Disincentives
Paid for early completionsPenalized for late completions
I & D Pros and Cons
Benefits Reduced
construction time May lower
contract admin costs
PI benefits Control of project
acceleration
Drawbacks May require
additional funding Contract changes
may lead to disputes
Pay-for-Performance
Pay is dependent upon final outcome Measured against performance criteriaSet by contractPay withheld for poor performanceCorrective action required
PFP Pros and Cons
Benefits Eliminates blame Shifts risk to
contractor Higher quality
Drawbacks Time to measure
performance Long project
close-out Monitoring is time-
consuming Contractor may
have to finance a portion
Innovative Web Site
www.dot.state.mn.us/const/tools/docments/Guidelines.pdfDec 2005