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Fundamentals of Alternative Delivery Methods
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Today’s Agenda
• Advantages of Design-Build
• Legal Aspects of Design-Build Projects (FL Municipalities)
• Design-Build Fundamentals
• Procurement Methods
• Case Studies
• Design-Build Resources
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Today’s Goals
Recognize...
Advantages of Alternative Delivery Methods
Benefits of Best Value Procurement Strategies
Availability of Design-Build Resources
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What is Design-Build ?
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Design-Build is…
A project delivery system Design Bid Build
Construction Management at Risk
Design-Build
Sole-source responsibilitySingle Contract
Single Point of Responsibility
Shift of Liability
Also a mindsetHighly collaborative
Fully Integrated, Innovative Process
Mental Shift – Owners and DB Team
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Design-Build looks like…
• Integrated Firm
• Contractor Led
• Designer (A/E) led
• Joint Venture
Joint Venture
5%
Integrated Firm
28%
Designer Led
13%
Contractor Led
54%
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Advantages of Design-Build
Causes of Uncertainties in Construction
Mitigating Uncertainties
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Top Causes of Uncertainty: 7 Major Drivers
Source: McGraw Hill Construction 2014 SmartMarket Report
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Top Causes of Uncertainty: Ranking by Players
Ranking of Causes
Causes of Uncertainty Owners Architects Contractors
Unforeseen site or construction issues 1 3 1
Design errors 2 (tie) 6 5
Design omissions 2 (tie) 7 2
Contractor-caused delays 4 4 6
Owner program or design changes 5 (tie) 1 4
Accelerated schedule 5 (tie) 2 3
Construction coordination issues 7 5 7
Source: McGraw Hill Construction 2014 SmartMarket Report
1
1
1
2 (tie)
2 (tie) 2
2
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Top Causes of Uncertainty: Frequency/Impact Analysis
Top Factors Index (1-100)
Owner-driven changes 84
Design omissions 59
Construction coordination 53
Unforeseen conditions 51
Design errors 50
Accelerated schedule 38
Contractor-caused delays 37
Source: McGraw Hill Construction 2014 SmartMarket Report
Index: considers frequency of occurrence and impact on cost
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Single point of responsibility
Collaborative approach
Clear conflict resolution
Risk management & allocation
91%
90%
83%
35%
Top Causes of Uncertainty: 4 Major Mitigating Factors
Source: McGraw Hill Construction 2014 SmartMarket Report
• Design omissions • Design errors
• Owner driven changes• Construction coordination• Accelerated schedules
• Construction delays
• Unforeseen conditions
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Top Causes of UncertaintyDesign Build Model – Best Value Approach
Single Point of Responsibility
Collaborative Approach
Clear Conflict Resolution
Risk Management
• One Contract
• DB Team = Errors & Omissions
• Teamwork
• Partnering
• Open communication
• Contractor/A&E – same team
• Shifted liabilities
• Contingencies
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Legal Aspects of Design-Build Projects Florida Municipalities
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Design-Build State Procurement Laws
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Design-Build Trends
Top 5 States for Design-Build Bids & RFP’s
18% Increase in Design-Build Bids and RFP’s in 2015 Cities = 38% State Agencies = 25%
Source: Onvia, Inc., Database
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Design-Build Florida Legislative History
Prior to 1986 – Florida Statutes only recognized Design-Bid-Build where the Owner hired an Architect or Engineer utilizing the Consultants’ Competitive Negotiation Act (CCNA).
Florida Statutes 287.055
CCNA Before Design-Build
• Qualifications-Based Selection Process
• Applies to Architects/Engineers/Land Surveyors
• Issue Request for Qualifications
• Rank Potential Consultants
• Select Top Three
• Negotiate Price with Highest Ranked
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Design-Build Florida Legislative History
1989– Florida Statutes includes provisions for Design-Build under the Consultants’ Competitive Negotiation Act (CCNA).
Florida Statutes 287.055
• Qualifications-Based Selection Process
• Short list “no fewer than 3 firms”
• Negotiate contract “with most qualified firm”
• Competitive Proposal Selection Process
• Issue Design Criteria Package
• Short list “no fewer than 3 firms”
• Evaluate responses or bids
• Establish Guaranteed Maximum price (GMP) and guaranteed schedule
• Authorizes Agencies to Develop Design-Build Procedures
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Qualifications-Based Selection Process
• Design-Build firm is based on Qualifications
• Select in order of preference “no fewer than three firms”
• Price is negotiated with the highest qualified
• If negotiations fail, price is negotiated with the next highest qualified
• Follows rules of CCNA
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Competitive Proposal Selection Process
• Design Criteria Package
• Select no fewer than three Design-Build firms• Qualifications
• Availability
• Past Work
• Evaluate Design-Build Proposals (Weighted Criteria)• Price
• Technical Aspects
• Design Aspects
• Execute Contract1996 Federal Acquisition Reform Act Redstone Arsenal (AL) 16 Bidders, $4 Million 2 Phase, Qualifications Based
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Design Criteria Professional
Design Criteria Professional is a licensed architect or engineer employed by or under contract to the agency for providing architectural or engineering services in connection with the preparation of the design criteria package. Florida Statutes 287.055(2)(k)
• In-House Professional Engineer or Architect
• Consultant Professional Engineer or Architect hired under CCNA
• Develops Design Criteria Package
• Evaluates Design Criteria Package
• Evaluates compliance of project construction with Design Criteria Package
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Design Criteria Package
“Concise, performance-oriented drawings or specifications…to permitDB firms to prepare a bid or a response...to a request for proposal..”
• Legal description of site
• Survey information
• Interior space requirements
• Material quality standards
• Schematic layouts and conceptual design criteria
• Cost or budget estimates
• Design and construction schedules
• Site development requirements
• Provisions for utilities
• Stormwater retention and disposal
• Parking requirements
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Design Considerations….
• Level of Design in the RFP• Performance based
• Prescriptive
• Who Controls “details” of the design?• Design-Bid-Build: Owner owns details and gaps between plans & specs
• Design Build: DB Team owns details and gaps between plans & specs
• Shifting Risk• Owner vs. DB Team
• Delicate balance
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Design - Balancing Act
Performance Based
• Functional Requirement
• Building Concepts
• Process Descriptions
• Operational Performance
Prescriptive
• Material Requirements
• Equipment Preference
• Design Details
• Construction Techniques
Performance vs. Prescriptive
Too Little Too Much
Expectations not met Increase Risk Profile
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The Spearin Doctrine
• Supreme Court – U.S. v. Spearin (1918)
• Owner Provides Contractors with 2 Specific Implied WarrantiesPlans and Specifications are Accurate
Plans and Specifications are Suitable for Intended Purpose
• Remedies (Errors and Omissions)Contract Changes Clause
Additional Time and/or Money
Owner is Responsible for Gaps!
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Design-Build Fundamentals
Develop Acquisition Strategy
Project Delivery Methods
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3 fundamental Owner decisions:
Developing the “Acquisition Strategy”
Project Delivery Defined
What project delivery system?
What procurement method?
What contract format?
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Project Delivery Methods
Sometime called “traditional”
DESIGN-BID-BUILD01
DESIGN-BUILD03
Also known as CM/GC
CONSTRUCTION MANAGEMENT AT RISK (CMAR)02
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Always 3 basic parties involved in the project delivery process:
Project Delivery
ContractorOwner Designer
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Importance of the Delivery Project Method
• Establishes when the contractor becomes engaged
• Influences the choices of contractual relationships among the parties
• Influences ownership and impact of changes and modifications of project cost
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Influence vs. Cost
Project delivery selection influences when Contractor gets on board.
Contractor on-board early allows best opportunity to achieve objectives
MAJOR
INFLUENCE
RAPIDLY
DECREASING
INFLUENCE
LOW
INFLUENCE
High
Small
Large
Low
INFLUENCE
COST
Planning & Design Construction & Operations
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Contractor Involvement . . . When?
Design-Bid-Build
CM-at-Risk
ConstructionDesign & Bid
Design & Bid Construction
Extensive Contractor
Involvement Possible
No Project Contractor
Involvement
Overlapped design &
construction
Speed to market considerations…
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Contractor Involvement . . . When?
Design-Bid-Build
Design-Build
ConstructionDesign & Bid
Design & Bid Construction
Extensive Contractor Involvement
No Project Contractor Involvement
Key Subs included in
design phase
Speed to market considerations…
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Design-Bid-BuildContractual Relationship
CHARACTERISTICS
• Three linear phases:Design, bid and build
• Three prime players: Owner, designer, constructor
• Two separate contracts:• Owner to designer• Owner to constructor
RESPONSIBILITIES
• Owner: program, finance, management
• Designer: prepares plans & specs, normal services
• Constructor: Prime & sub construction
OWNER
Designer
Sub
Contractor
Sub
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Project Delivery ConsiderationsDesign-Bid-Build
Opportunities• Widely accepted procurement method
• Owner controls design and selection of equipment
• Designs more easily “shelved”
• VE opportunities during design
• Competitive bids = low initial prices
Obstacles• Linear process requires time
• Owner liable for errors/omissions
• Delay in obtaining accurate construction costs
• Limited contractor innovation
• Final costs unknown until completion
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CM – at – Risk Contractual Relationship
CHARACTERISTICS
• Three linear phases: Design, bid, build may be fast tracked
• Three prime players: Owner, designer, CM-constructor
• Two separate contracts:
• Owner to CM-constructor
• Owner to designer
RESPONSIBILITIES
• Owner: program, finance
• CM-Constructor: Provides pre-construction & project managementservices, coordinates design prior to construction, is prime with thesubcontractors
• Designer: All normal services
OWNER
Designer
Sub-consultant
CM-GC
Sub-contractor
Two Part ContractPre-Construction Services (Design Assist)
& Construction
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Project Delivery ConsiderationsConstruction Management at Risk
Opportunities• Owner controls designer
• Works will with complex, phased projects with multiple trades
• Build to budget
• Earlier contractor involvement (costing)
• Early identification and resolution of design and construction issues
Obstacles• Initial project costs may be higher
• Owner liable for errors/omissions of designer
• Success depends on willingness of designer/contractor collaboration
• Potential for not reaching a GMP
• Engineer led team vs. constructor led team
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Design-BuildContractual Relationship
CHARACTERISTICS•Integrated process-overlapped design & construction•Often fast tracked•Two prime players: Owner & design-build entity •Entity can take on many forms•One contract:
• Owner to Design-Builder
RESPONSIBILITIES•Owner: Program, performance requirements, & finance*•Design-Builder: Design & construction. Can include programming & post construction services
* D-B can expand services to include programming, finance, operate, etc.
OWNER
Design-Build Entity
A/E SubSub-
contractor
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Project Delivery ConsiderationsDesign-Build
Opportunities• Ability to fast track schedule
• Requires limited upfront design by Owner
• Shift schedule risks (and errors and omissions) to DB Team
• Early team integration enhances innovation
• Sole point of responsibility
Obstacles• Limitation of Owner’s staff with skill set
and experience to manage DB projects
• Requires commitment to provide expeditious reviews
• Less Owner control over the design
• May be difficult to review and compare variable scope proposals
• Poorly defined risks and allocation may impact GMP
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Progressive Design-Build Contractual Relationship
CHARACTERISTICS• Integrated process-overlapped
design & construction• Often fast tracked• Two prime players:
Owner & design-build entity • Entity can take on many forms• One contract:
• Owner to Design-Builder
RESPONSIBILITIES• Owner: program, finance, management• Design-Builder: Design & construction. Can include
programming & post construction services
* D-B can expand services to include programming, finance, operate, etc.
OWNER
Design-Build Entity
A/E SubSub-
contractor
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Project Delivery ConsiderationsProgressive Design Build
Opportunities• Uses qualification based procurement
to select DB team
• A design is not required to select the DB team
• Increased Owner participation during design
• Project risks better allocated to entity best able to manage risks
• Can incorporate studies and preliminary designs
Obstacles• Cost certainty not achieved until GMP
is negotiated
• Requires negotiation and execution of two contracts – design and GMP
• Difficulty in GMP negotiations could result in design-build-bid delivery
• Strong Owner management is required to manage schedule, budget and risks
• Requires collaboration throughout design and construction processes
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Comparison of Project Delivery Methods (CII/Penn State Study)
Metric DB vs DBB CM@R vs DBB DB vs CM@R
Unit Cost 6.1% lower 1.6% lower 4.5% lower
Construction Speed 12% faster 5.8% faster 7% faster
Delivery Speed 33.5% faster 13.3% faster 23.5% faster
Cost Growth 5.2% less 7.8% more 12.6% less
Schedule Growth 11.4% less 9.2% less 2.2% less
Re: “Comparison of U.S. Project Delivery Systems,” Mark Konchar & Victor Sanvido, Journal of
Construction Engineering and Management, Vol. 124, No. 6 (1998), pp. 435-444.
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Which Project Delivery Model is best? ….
• Impact on stakeholders• Owner & funding sources
• Local professionals and contractors
• Market conditions• Qualified DB teams
• Get the word out
• Owner profile• Risk management
• Performance-based results
• Project Specific Factors • Schedule and budget
• Complexity
IT DEPENDS
Match owner & project characteristics to project delivery system options
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Project Delivery Selection ApproachDBIA Rocky Mountain Region/University of Colorado
https://dbiarmc.colorado.edu/
Owner Forums
DBIA Certification
Design Criteria Professional
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Procurement Methods
Procurement Options
Contract Formats
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Traditional Procurement
• Historically Designer-only selections have been qualifications-based (Brooks Act 1972)
• Historically Contractor-only selections have been selected on basis of price
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Design Build Procurement Options
• Limited Competition:• Sole Source (direct)
• Negotiation
• Open Competition:• QBS (Qualifications-Based)
• Price and design are not selection factors (i.e., progressive DB)
• BVS (Best Value) – FAR 36.3• With Criteria Documents:
• Owner’s criteria provided to shortlisted proposers
• Selection based on qualifications, technical solution & price
• With Bridging Documents:• Plans & specs are developed to +/- 30%
• Usually leads to low price selection
• Low Bid
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Ph
ase
1Two Phase D-B Selection
Contracting
OfficerOfferors
Solicits for the most
highly qualified Offerors
Ph
ase
2
Short Lists most
qualified offerors (up to 3)
Shortlisted Offerors
Prepare technical & price
proposal
Submit RFQ
Contracting
Officer
ContractingOfficer
Issues RFP Award made to
proposal offering
Best Value
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Contract Format
• Lump Sum/Firm Fixed Price
• Cost Reimbursable:• Cost Plus Fee
• Guaranteed Maximum Price (GMP)
• Unit Price
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Guaranteed Maximum PriceExample Project – WWTP Rehabilitation
Bid Item Bid Price Actual Cost Owner Cost
General Conditions (1) $ 50,000 $ 50,000 $ 50,000
Engineering 50,000 100,000 50,000
Concrete Work (2) 500,000 900,000 500,000
Pipeline Work (3) 500,000 300,000 300,000
Owner’s Allowance (4) 100,000 50,000 50,000
$ 1,200,000 $ 1,400,000 $ 950,000
(1) Typically Lump Sum or % of Actual GMP(2) Contractor Self Performs (3) Three (3) Bids are Received for Pipeline Work(4) Owner Upgrades Unforeseen Electrical Issues
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Summary – Project Delivery Options
Design-Bid-Build(DBB)
Construction Management at Risk (CM@Risk)
Lump SumDesign-Build
(LS)
“Progressive”Design-Build
(GMP)
Design-Build Operate (DBO)
TRADITIONAL DELIVERY INTEGRATED DELIVERY
OWNER
DESIGNER BUILDER
OWNER
DESIGNER CM
OWNER
DESIGN/BUILDER
DESIGN/
BUILDER/
OPERATOR
OPERATOR
OWNER
DESIGN/BUILDER
DESIGN/BUILDER
OWNER
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Summary – Project Delivery Options
Design-Bid-Build(DBB)
Construction Management at Risk (CM@Risk)
Lump SumDesign-Build
(LS)
“Progressive”Design-Build
(GMP)
Design-Build Operate (DBO)
DESIGNER
OWNER
DESIGNER BUILDER
OWNER
CM
OWNER
DESIGN/BUILDER
OWNER
DESIGN/BUILDER DESIGN/
BUILDER/
OPERATOR
OPERATORDESIGN/BUILDER
OWNER
Key Measures of Project Success
Opportunity for Owner Collaboration (especially during construction)
Project Schedule
Cost Control (more control = fewer changes, better value)
Quality (including design intent, innovation, installed quality)
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Summary – Project Delivery Options
52
Design-Bid-Build(DBB)
Construction Management at Risk (CM@Risk)
Lump SumDesign-Build
(LS)
“Progressive”Design-Build
(GMP)
Design-Build Operate (DBO)
DESIGNER
OWNER
DESIGNER BUILDER
OWNER
CM
OWNER
DESIGN/BUILDER
OWNER
DESIGN/BUILDER
DESIGN/
BUILDER/
OPERATOR
OPERATORDESIGN/BUILDER
OWNER
Less
Collaboration Schedule Cost Control Quality
More
Key Measures of Project Success
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Case Studies
Progressive Design-Build Design-Build (Performance Based)
Small Scale, Short Duration
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Case Study: UCAPProgressive Design-Build
Owner: City of TampaLocation: Tampa, FL
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Case Study: City of Tampa – UCAP
• $110 million progressive design build
program
• 25 water, wastewater, and storm water
improvement projects
• 50 square mile urban area
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Case Study: City of Tampa – UCAP
3 tiered progressive design build delivery method selected
5-Year Program to:
• Improve service reliability
• Improve water pressure
• Reduce pipe breaks
• Improve fire protection
• Stimulate economy
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City of Tampa UCAP
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City of Tampa – UCAPUncertainties – Unidentified utilities
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City of Tampa UCAPUncertainties - Unsuitable Fill/Contaminated Soils
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City of Tampa UCAPUncertainties - Community/Stakeholder Challenges
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Teamwork
and collaboration
Risk
management
Conflict
resolution
City of Tampa UCAP: Planning for Uncertainty
Established claims
procedures
Established
unit prices
Leadership meetings Contingencies
Pro-active
outreach program
Transparent
communication
Emergency
planning
Community issues
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Uncertainties Minimized
Leadership
MeetingsContingencies
Proactive
Community
Outreach
Owner-driven changes
Construction coordination
Schedule issues
Design changes
Contractor delays
Design issues
Unforeseen conditions
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City of Tampa – UCAPSuccess Story
• Over $2.5 million in returned savings to City
• 94% reduction in public complaints
• 3.1 OSHA recordable for 5-year period program
“The UCAP Team delivered the mostsuccessful downtown project theCity of Tampa has ever experienced.”
Steve Daignault, City of TampaPublic Works Administrator
APWA FL Chapter2017 Project of the YearMore than $75 M
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Case Study:Northwest Hillsborough WW Consolidation Program Design-Build (Performance Based)
Owner: Hillsborough CountyLocation: Tampa, FL
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Northwest Hillsborough Wastewater Consolidation ProgramHillsborough County, FL
Dale Mabry AWWTFNorthwest Regional WRF
River Oaks AWWTP
Citrus Park Dr
Van Dyke Rd
Waters Ave
Linebaugh Ave
She
ldo
n R
d
Dal
e M
abry
Hw
y
I-2
75
River Oaks PS
Dale Mabry PS
N
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Hillsborough County Wastewater Consolidation Program
Estimated Program Costs:
Program = $245 million• Expand Northwest Plant = $180 million
• Dale Mabry & River Oaks Plants off-line = $65 million
Why Design- Build?• Industry knows best – highly skilled teams
• Teamwork – no more “us against them”
• Conflict management – rapid resolution to issues
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Northwest Hillsborough Wastewater Consolidation Program4 Overlapping Design-Build Projects
Design-Build Summary
7/2014 Northwest Regional WWRF Expansion
6/2014
9/2019
9/2016
9/2019
4/2016
Dale Mabry WWTP
River Oaks WWTP
Program Objectives:
Public outreach – proactive Project team – collaborative & innovative Project delivery – risk management & safety
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Dale Mabry Diversion Design-Build Project - PipelineValue to Hillsborough County
Design-Build Summary
Design-Bid-Build Summary
DB Firm SelectionDCP Selection
Select Contractor
1/2014 6/2014 3/2015 9/2016
Procurement of Designer Design
Final Design & Construction
Construction
1/2014 6/2014 6/2015 1/2016 6/2017
Time Savings Associated
with Design-Build
Note: The Design-Bid-Build Schedule Does Not Include Liability Gap
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Hillsborough County Wastewater Consolidation Program
Some Procurement Highlights:
• Truly Receiving “Best Value”
• Kept Transition Familiar• Use Existing Formats (e.g. RFPs, Contracts, etc.)
• Merge Existing Successful Documents/Language
• Utilize Outstanding Contractor, Designer, Owner Network for Assistance!
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Hillsborough County Wastewater Consolidation Program
Lessons Learned:
• Much in Outreach & Procurement – “What do you want?”
• Internal & External Shifts in Thinking – “Champion”
• Once D-B Team is On-Board – Hold On, It Will Move Fast!
FL Chapter APWA2017 Project of the Year$25 to $75 million
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Case Study: Small Scale, Short Duration ProjectsGoogle Data Center
Owner: Google Location: Austell, GA
Scope:
Retrofit Sand Filters with DiskFilters
GMP:
$450,000 ($63,000 Design)
Google Data Center
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Case Study: Small Scale, Short Duration ProjectsPublic Utilities Instrumentation & Controls
Owner: City of Cape Coral Location: Cape Coral, FL
Scope:
I&C Design, Installation, and Integration
GMP:
TBD – Master Services Contract
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Case Study: Small Scale, Short Duration ProjectsAllandale Kerr Avenue
Owner: Cape Fear Public Utilities AuthorityLocation: Wilmington, NC
Scope:
Manhole Rehabilitation
GMP:
$250,000 ($20,000 Design)
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Design-Build Resources
Standard Contracts
Best Practices
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Standard Form Contracts
• DBIA
• AIA
• EJCDC
• Consensus Docs
• Agency/Owner Specific (FDOT, ACOE)
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DBIA Manuals of Practice
• Overview
• Overcoming Legal Impediments to Design-Build in the Public Sector
• Best Practices in Acquisition and Procurement
• Best Practices Pre-Award
• Best Practices Post-Award
• Sector-Specific Best Practices• Transportation Infrastructure Best Practices
• Design-Build Process for Civil Infrastructure Projects
• Process Industries Best Practices
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DBIA Position Statements Foundation for Best Practices
http://www.dbia.org/about/positionstatements
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Final Thoughts….
Owner Education
Administrative, Engineering & Field Staff
Procurement & Legal
Identify Champion
Risk Management
Allocate to party that can best control risks
Geotechnical
Environmental
Allowances/Contingencies
Stipends/Incentives/Shared Savings
0.01 to 0.25%
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Moving Forward….
First Build the Team – then Build the Project
Identify High Performance DB Teams
Select Experienced DB Team Members
RFP – Bigger is not BetterMore factors, evaluators = more time, money, complexity
Include goals, challenges & constraints – not solutions
Don’t Start from Scratch – many resources are available!
www.dbia.org www.fldbia.org
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Today’s Goals
ifferentiate Between Alternate Delivery Methods
etter Understand Procurement Methods
nvestigate Design-Build Resources
dvocate for Design-Build
www.dbia.org
www.fldbia.org
D
B
I
A
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Annual Conference
Design-Build Done Right
DBIA Florida Region’s 12th Annual Conference
October 12 – 13, 2017
Renaissance Orlando @ Sea World
Orlando, Florida
Information coming soon!!!
www.fldbia.org