Any project can benefit from the collaborative spirit and
cooperative relationships embodied by design-build. But is there a point of
diminishing return where the design-build project delivery model just doesn't
make sense for small projects?
How small is too small for design-build? This question was
asked at last year’s Design-Build Institute of America’s (DBIA) Federal Project
Delivery Symposium, and it stumped the panel of federal owner
representatives.
Certainly, any project can benefit from the collaborative
spirit and cooperative relationships embodied by design-build. But is there a
point of diminishing return where the implementation of full procurement and
project development processes for design-build just don’t make sense for small
projects? And how do we achieve design-build benefits on those types of
projects?
This challenge has been brought into even greater focus as
federal construction dollars are reduced and there is a greater emphasis on reinvesting
in existing building stock, as evidenced by 2014 budgets for most federal
agencies.
DBIA recently released research indicating that design-build
project delivery represents nearly 40 percent of total market share in the
United States, based on dollar value. The federal government was an early
adopter of design-build in the 1990’s, with many agencies now procuring up to
75% of their projects through this process. Most federal agencies agree that
the surge of BRAC, ARRA, and MILCON work peaking in 2010 could not have been
accomplished without design-build in the federal toolbox. State and local
governments have quickly followed suit, with 41 states now enabling broad use
of design-build.
“This growth of design-build project delivery across geographic
regions and building sectors throughout the United States reflects the
imperative for cost and time efficiencies in a world of tightened budgets, and
that can be achieved through interdisciplinary teamwork, innovation, and
effective collaboration,” says Lisa Washington, Executive Director and CEO of
the DBIA.
Design-build takes a sophisticated, engaged owner, and while
there are clear time savings over other contracting methods, it does require a
three to six month procurement process. This makes sense for larger project
investments but sometimes smaller projects need to be even more responsive to
urgent facility maintenance needs or shifts in government mission. Federal
owners have taken a two-prong approach to expediting these types of projects with
a design-build methodology by leveraging procurement and process efficiencies
available to them.
The federal government has long been a leader in Indefinite
Delivery Indefinite Quantity (IDIQ) procurement approaches that enable
efficient delivery of construction programs. These long-term contracts have
helped federal agencies accomplish more construction—from BRAC to ARRA—even as
acquisition personnel have been reduced. An IDIQ contract is any type of
acquisition where work is delivered under multiple task orders, and the
specific project needs are undefined at contract acquisition. An IDIQ must have
a defined pricing structure or a competitive process at the task order level,
and both of these approaches have been used to leverage design-build construction
delivery.
MACCs and MATOCs
The most common and straightforward of IDIQs are Multiple
Award Construction Contracts (MACCs) and Multiple Award Task Order Contracts
(MATOCs). Especially beloved of the DOD, these contracts come in
design-bid-build and design-build flavors, and the primary advantage for both
is a smaller pool of pre-selected, qualified contractors that compete for
individual task orders. This both reduces the selection process workload at the
task order level and creates inherent efficiencies in a reiterative contractor
pool that invests in becoming familiar with a particular facility, base, or
region, its staff, and its preferred working process.
There are varying degrees of opportunity to streamline the
design-build process in MACCs and MATOCs.
In the DOD, where there are clear design-build process requirements for
MILCON projects—specifically any new construction over $750,000 or
life/health/safety upgrades over $1.5 million—it can be challenging for owner
and contractor to streamline the design development steps. But enterprising
contractors are working to accomplish sensible efficiencies for their
government clients while fulfilling process requirements.
Lifecycle Construction Services, based in Fredericksburg,
Va., holds several MATOCs and has developed a fast-track design process for
smaller projects that compresses front-end civil and structural design packages
(or, for renovations, demo and remediation design packages) into a single
design review with associated “interim building package”), which can be
accomplished in 4-6 weeks.
Lifecycle Construction has successfully used the process on
numerous design-build projects for the military. One recently completed project
at Fort Lee, Va., compressed the civil and structural design packages to one
submission completed in four weeks. This enabled major aspects of the work to
begin while the interior design details were being finalized. The successful
implementation of this approach resulted in a three-month reduction to the
overall schedule as compared to a traditional approach.
JOCs and SABERs
Another tool at the disposal of federal owners is Job Order
Contracting (JOC), which many practitioners consider “design-build lite.” A Job
Order Contract is another long-term contract vehicle, but instead of
establishing a pool of contractors for Task Order competition, it establishes
contractual unit pricing through the use of a Unit Price Book (UPB) like
RSMeans and a competitively-procured coefficient, which is applied to every
unit price contained in the UPB.
Job Order Contracting streamlines the design and procurement
process in a way that is appropriate for small projects.
Since competitive
pricing is established upfront, it allows task orders to be developed on a sole
source basis, often enabling a true performance-based design-build process.
While JOC is not appropriate for larger projects, it can be a very effective
tool for smaller projects. JOC task orders are typically under $1 million, but
total contract volume can run to the hundreds of millions. The key to success
on these projects is a contractor-led, simplified design process.
The JOC process typically begins with an owner-issued
request for proposal detailing the project requirement, followed by a site
visit where the owner and contractor develop the scope collaboratively. During this meeting, design requirements are
typically defined, with much flexibility on design deliverables.
JOC contractors typically have simple design capabilities
in-house, and many projects do not require anything beyond this level of
definition, often called “incidental design.” Incidental design runs the gamut
from contractor-produced AutoCAD to the use of annotated photos and detailed
scope description to marked up as-builts. Where professional design is needed,
it can often be streamlined from that required for a full bid or even a MATOC
process.
It is critical that the JOC process engage design
professionals when task order scope demands it, and that the JOC contract
vehicle not be used as an end-run around professional design. With best
practice implementation, JOC allows contractors and design professionals to
offer the greatest value to their clients. Once the design is defined, whether
by the contractor or a design professional, the cost can be quickly calculated
using the contractual unit pricing, resulting in a lump sum task order proposal
for government approval.
Opcon Inc., based in Carol Stream, Ill., holds several Job
Order Contracts for the Department of Veterans Affairs throughout the Midwest.
These contracts offer added value to the end-users in the demanding sphere of
occupied healthcare facilities by allowing rapid and integrated development of
project scopes of work, including the flexibility to hold on-site design
meetings so that all parties are able to fully review existing conditions
before the proposal stage in order to minimize change orders.
Effective technology support is critical when dealing with a
large number of projects and unit pricing data. The largest number of JOC
projects is executed by the Air Force, where the contracts go under the moniker
SABER, or Simplified Acquisition of Base Engineering Requirements. The Air
Force and other federal owners are further increasing the efficiency of JOC by
using advanced software technologies such as project Estimator by 4Clicks
Solutions and JOCWorks by RSMeans to embed JOC processes, including independent
cost estimating, automatic technical evaluations, auto-population of
government-mandated paperwork, and collaborative processes.
Hybrid Approaches
GSA Region 7 has long run a series of hybrid IDIQ contracts
that combine the capabilities of the JOC and MATOC worlds. The contract
provides great flexibility, including a unit-price structure that is often used
on projects under $100,000 with the ability to compete larger delivery orders
or award them on a design-build basis.
FacilityBUILD Inc., an Albuquerque, N.M.-based general
contractor, holds the contract for the State of New Mexico Zone, and has
completed 32 individual task orders worth nearly $2 million in the first two
years of their four-year contract. The largest of these was a design-build
project to convert an unused courtroom and judge’s chambers on the 11th floor
of the Dennis Chavez Federal Building in Albuquerque into office space for the
Small Business Administration.
Design-build team integration was evident in the closely
scheduled engineering inspections which occurred midway through abatement and
demolition activities, with appropriate safety precautions, so that the
internal space alteration carving two floors out of the cavernous courtroom
could be engineered on a fast-track schedule. The project was designed and
constructed to the Executive Order 13514 for high-performance building
standards, and also complied with the “GSA Green Initiative,” which requires
the recycling/reuse/repurposing of a certain percentage of materials.
As the federal government faces fiscal constraints and the
retirement of 50% of its acquisition personnel in the next seven years, the use
of IDIQ contracts is poised to grow. The design-build community can play a
proactive role in bringing the value and efficiency of our delivery method is
part of the evolution of these important contract vehicles.
About the Author
Lisa Cooley is a construction industry veteran with 16 years
experience in design-build and IDIQ contracting. She is a specialist in Job
Order Contracting and works with RSMeans, the largest producer of construction
cost data for JOC programs, to implement JOC for government owners.
Source: BDCNetwork
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