Guidebook on Alternative Quality Management Systems for Highway Construction (2015)

Below is the uncorrected machine-read text of this chapter, intended to provide our own search engines and external engines with highly rich, chapter-representative searchable text of each book. Because it is UNCORRECTED material, please consider the following text as a useful but insufficient proxy for the authoritative book pages.

5 The Business Case for Alternative Quality Management Systems 2.1 Current Status of Highway Quality Management This guidebook provides transportation agencies with recommendations and tools to assist in developing QMSs that expand beyond the traditional, baseline systems typically associated with DBB project delivery. While there are no sig- nificant flaws with the baseline QMS, the underlying premise of DBB is a very clear division between design and construc- tion. DBB project delivery assumes that a project’s design is complete and its technical scope and quality requirements are fully articulated in the construction documents that accom- pany the invitation for bids to construction contractors. As a result, any attempt to deviate from traditional DBB project delivery creates a discontinuity in the baseline QMS and the potential for costly disputes over construction quality issues precipitated by using a baseline quality system that doesn’t match the organizational structures of non-DBB projects (Ernzen and Feeney 2002, Anderson and Damnjanovic 2008). The deteriorating condition of the U.S. highway system has created pressure to accelerate project delivery, and, as a result, the traditional period allowed to complete design has been compressed to its shortest state (Lee 2008). In June 2010, the FHWA introduced its “Every Day Counts” (EDC) initiative to address this and other issues of similar importance. The pro- gram is designed to accelerate the implementation of inno- vative practices that are immediately available, as described by then FHWA Administrator Victor Mendez (Mendez 2010, emphasis added): Our society and our industry face an unprecedented list of challenges. Because of our economy, we need to work more efficiently. The public wants greater accountability in how we spend their money. We need to find ways to make our roads safer and we have an obligation to help preserve our planet for future generations. But it’s not enough to simply address those challenges. We need to do it with a new sense of urgency. It’s that quality— urgency—that I’ve tried to capture in our initiative, Every Day Counts. Many authors have documented the “urgent need to replace aging infrastructure” (Dowall and Whittington 2003), but response has been slower than might be expected. The resistance to change is rooted in the concern that the agency’s historic set of checks and balances will be upset and control over cost, schedule and quality will be lost (NSPE 1995). Hence, the FHWA EDC focus is on innovations that have already been successfully employed by typical STAs. According to Mendez (Mendez 2010, emphasis added): EDC is designed to identify and deploy innovation aimed at shortening project delivery, enhancing the safety of our roadways, and protecting the environment . . . it’s imperative we pursue better, faster, and smarter ways of doing business The EDC program has created the impetus to improve the baseline design and construction QMS and develop QAOs that are specifically designed to facilitate better, faster, and smarter ways of delivering highway improvement projects. So before the system can be improved, one must first benchmark the state-of-the-practice, which for purposes of this guidebook will be termed the baseline QMS. 2.2 Defining the Quality Management Baseline As seen in Figure 2, the baseline QMS is not just a set of organizational structures and tools. It is also a set of “hard coded” and culturally embedded standards about how to approach quality management on any given project. Thus, the baseline QMS (see discussion of the Deterministic QAO in Chapter 3) consists of a predetermined distribution of qual- ity management tasks, tools, and standard specifications used to implement the various pieces of a QAO. Since the baseline QMS was predominantly developed for use on DBB proj- ects, it has been traditionally used by STAs on most projects that they undertake and has become the default standard; the implicit assumption is that the baseline QMS will be used C H A P T E R 2

6on most projects. Changes to both design and construction delivery methods have caused a rethinking of this historic approach. The typical understanding of the baseline QMS is presented in Figure 3. In this arrangement, no specific designation is made for design or construction; however, in practice the baseline QMS heavily emphasizes construction quality assurance with- out placing the same emphasis on design quality assurance. As a result, the arrangement shown in Figure 3 applies pre- dominantly to construction with a focus on physical inspection, testing, and contractor quality control in addition to statistical testing and verification of those tests. The baseline QMS is characterized by heavy agency involvement in all aspects of construction quality management down to field independent assurance of contractor-performed quality control tests. The control that STAs exercise in this approach renders the base- line QMS to be a reactive form of quality management applied during construction where final products are inspected for quality rather than a proactive approach in which the project team builds quality into the process from the beginning of design. Unlike construction quality management, design quality management is typically not emphasized or formally defined in the baseline QMS. This lack of emphasis on design quality management is largely a product of the fact that STAs in the United States have historically performed most, if not all, of the design for their projects, and most continue to do so to this day. Because the design function rests within agency hands from start to finish, the baseline QMS has evolved with the assumption that quality designs are being produced by the agency without the need for a formal quality management model. Increasing use of outside consultants has caused a focus on systems for design quality management. As previously mentioned, the baseline QMS is not just an approach to quality management on a project; it is also a set of institutional standards defining that approach and a reflexive assumption that the baseline approach will be used. These standards appear in the boilerplate language of standard contracts and specifications in STAs around the country with built-in assumptions through decades of use. The implementation of a baseline approach to quality man- agement can require a large agency staff—sufficient numbers of employees to staff internal design teams as well as the numer- ous construction, engineering, and inspection staff needed to observe construction as it is put into place and tested. However, even if an agency outsources many of these roles to external agents, the agency still ultimately takes respon- sibility for its actions and thus controls most of the quality management functions of a project. To respond to changing conditions, a more flexible definition of a QMS and QAO is required. 2.3 Future Needs of Highway Quality Management Transportation project delivery has evolved to include new forms and procedures over the past couple of decades. The inclusion of alternative project delivery methods such as CMGC and DB as well as the use of best-value selection methods has created a new environment in which the quality of highway projects must be managed. Not only are projects being delivered at a much faster pace for rapid renewal, but they are also outsourcing more of the actual quality manage- ment tasks to consultants, construction managers, and design builders (Miron, Rogers, and Kopac 2008). Alternative project delivery methods have spawned alternative QMSs and some STAs are applying alternative QMSs such as contractor accep- tance testing on traditional DBB projects (Turochy, Willis, and Parker 2006). There is a need to structure the approach to highway project quality management so that it addresses the need for rapid renewal of a deteriorating network in a manner that facilitates both the planning that leads to project delivery decisions and the successful execution of highway projects (Blanding 2006). The baseline QMS (see Section 2.2) is frequently just an assumed standard that is hard coded into the written pro- cedures, specifications, and contracts of most agencies. An expansion of the baseline would be to remove those policies that force the selection of a particular QAO automatically. In essence, this change would place the baseline QMS, includ- ing the Deterministic QAO (see Chapter 3) and the tools to implement it, as simply one QMS-QAO combination from which project managers could choose. While it is important Figure 2. Current QMS model. Figure 3. Traditional QA model (Burati et al. 2003).

7 to consider changing those agency policies that force the use of the baseline QMS, the more fundamental change would be encouraging a cultural shift so that project managers expect the process of selecting a QMS to involve choosing among several options. Project managers should approach any project (even those using DBB, which is typically associated with the baseline QMS) without a preconceived notion of what QAO to use for their project (see Chapter 4). The selection of a QAO should be made based on the relevant project characteristics and constraints. It is expected that in many cases practitioners may end up selecting the Deterministic QAO (see Chapter 3) at the end of the process. What is important is not that the Deterministic QAO be used with any less frequency, but rather that the unconscious selection of it by project managers (“that’s how it’s always been done”) be replaced with a con- scious decision to select that QAO on its merits. The baseline approach (see Section 2.2) requires substantial agency resources and staff to implement. However, many STAs across the country are facing significant reductions in their budgets and staff, forcing them to increasingly rely on exter- nal consultants for design and inspection. “It is also recog- nized that, because of constrained staffing and budgets, it is not possible for state agencies to ‘inspect’ quality into the work” (Scott et al. 2006). It is precisely in these kinds of situations that project managers need to evaluate whether the baseline QMS is the best use of limited agency resources on any given project. As more and more projects are procured using alternative project delivery methods or outsourced designs, they need to include design quality management in the project’s QMS. Design quality management is an integral portion of a complete QAO and should be approached with the same level of formal- ity and care as construction quality management. While it is important to build quality into the constructed work, it may be even more important to ensure that the designs produced fully meet all design input requirements and are delivered to the constructor without significant design errors. As a result, an approach to design quality management and construction quality management ought to be decided upon before design begins in earnest. A further expansion to the agency’s QMS development process is to undertake QMS planning as soon as possible, preferably before the agency or its consultant begins design. This would be a significant departure from the baseline QMS, in which decisions about the approach to quality management often are just assumed or are not made until construction is ready to begin. 2.4 Impact of Quality Management on Highway Projects Driving the shift in public procurement culture is the perception by government and industry practitioners that benefits may be accrued by integrating the project team, bringing the constructor into the project before design is complete to furnish substantive input on cost, schedule, and constructability to the final design (Miller et al. 2000; Touran, Gransberg, and Molenaar 2010). Beyond time and cost savings, the salient question has been whether the quality of the ultimate product was degraded through either the speed at which the design and construction were completed or by an agency loss of control over the design and construction process (Gransberg and Molenaar 2008). One study definitively linked construction quality to the quality of the design documents (Dunston, McManus, and Gambatese 2002, emphasis added): Quality documents facilitate quality construction. . . . Review of the constructability of transportation facilities in the planning and design phases, specifically [for] deficiencies in quality and clarity of construction plans is critical . . . Constructability reviews . . . are the key mechanism for insuring that plans and specifications fulfill these quality objectives. However, the pressing need to deliver highway construction projects as fast as possible puts stress on the design quality management system by compressing the design period in order to begin construction operations as soon as possible. “Demand for increasing speed of project delivery is the top reason for decline in construction document quality” (FMI/ CMAA 2003). A survey of project owners in 2003 raised seri- ous questions about the current state of design quality man- agement (FMI/CMAA 2003): In their responses to questions about the quality of construction documents, more than half of the owners surveyed responded that these documents often have significant amounts of missing information. Specifically, 45 percent of respondents indicated that construction documents, while sufficient, still had ‘signifi- cant information needed,’ while an additional 12 percent found that documents were typically inadequate because of major information gaps. Dornan et al. (2005) note: “Assembling an entire design and construction project team at the beginning of the design process can promote better scope definition, more realistic expectations, and better communication throughout a project.” This notion is implemented by selecting “a procurement process . . . that considers value-related elements in awarding contracts” (Scott et al. 2006); DB, CMGC, and best-value DBB all qualify under this definition. Table 2 consolidates the results of NCHRP Synthesis 376 (Gransberg, Datin, and Molenaar 2008) and NCHRP Synthesis 402 (Gransberg and Shane 2010), which reported STA personnel ratings of the impact of con- struction quality components on the procurement phase. Since both DB and CMGC incorporate best-value award mechanisms, the data shown in Table 2 describe the param- eters around which a complete QMS can be built. Some

8owners have used change orders as a gauge of design quality. A Utah DOT study of $330M of CMGC projects found that change orders for CMGC and DB are virtually the same, and approximately one-third the rate of traditional DBB projects (Alder 2010), a potential indication of the impact of increased emphasis on design-phase quality systems. The UDOT study confirms the fact that alternative QMSs are currently being successfully implemented and the value of this guide in drawing from experience gleaned in the field by practitioners who have been able to improve the baseline QMS by developing QMSs that include an integral design quality process. 2.5 Summary of the Business Case NCHRP Synthesis 379 (Anderson and Damnjanovic 2008) evaluated the potential for alternative construction methods to accelerate project completion and what the impact would be. DB and CMGC methods were included in the study. The authors found that quality was the same for [DB and CMGC] as compared with typical projects. This result seems to counter the perception that accelerating project completion negatively impacts quality, which was cited as a perceived disadvantage for some contracting methods. NCHRP Synthesis 379 aptly points out the “popular mythology” that appears to surround the cultural shift from traditional project delivery to something different. There are always champions that promote the new method with evan- gelistic zeal and opponents that can see all sorts of unsolvable problems being spawned by the change in contractual relation- ships. Degraded quality appears to be one of the disadvantages cited by opponents to change while champions cite reasons why quality is actually enhanced. The real issue with regard to quality is not how to guarantee that it will improve but rather to ensure that the change does not create a set of circumstances that causes it to decline. This quality issue was effectively debunked by the FHWA Design-Build Effectiveness Study. The FHWA study team found that (FHWA 2006, emphasis added): On average, the managers of DB projects surveyed in the study estimated that DB project delivery reduced the overall duration of their projects by 14 percent, reduced the total cost of the projects by 3 percent, and maintained the same level of quality as compared to design-bid-build project delivery. In summary, the pressure to accelerate highway project delivery will not decrease and the continued deterioration of the nation’s network will probably cause that pressure to increase. A public transportation agency has a fiduciary duty to furnish the traveling public with a safe, efficient, and effec- tive transportation network and fulfilling that duty demands ensuring that the network’s quality is satisfactory by deliv- ering high-quality, rapid renewal, rehabilitation, and repair projects. In many cases, this cannot be done using traditional DBB project delivery and the baseline QMS. Rebuilding U.S. roads and bridges demands a QMS that is just as fast, just as good, and just as smart as the product it regulates. This guidebook’s objective is to furnish the necessary information to permit an agency to modify its existing QAO and QMS to accommodate the demands of accelerated delivery. Procurement Phase Component Agency Ratings DB and CMGC Contractor Ratings Very High or High Impact Some or Slight Impact No Impact Very High or High Impact Some or Slight Impact No Impact Qualifications of DB’s or CMGC’s staff 91% 9% 0% 100% 0% 0% DB’s or CMGC’s past project experience 76% 24% 0% 100% 0% 0% Use of performance criteria/specifications 72% 28% 0% 67% 33% 0% Early contractor involvement in design 70% 30% 0% 100% 0% 0% Level of agency involvement in the QA process 69% 31% 0% 33% 67% 0% Level of detail in the procurement documents 68% 32% 0% 0% 83% 17% Preconstruction services 63% 30% 7% 100% 0% 0% Quality management plans 61% 39% 0% 83% 17% 0% Warranty provisions 55% 38% 8% 33% 50% 17% Use of agency specifications and/or design details 51% 42% 7% 17% 67% 17% Table 2. Impact on final project quality of procurement components for DB and CMGC.

9 2.6 Chapter 2 References Alder, R., “UDOT Construction Manager General Contract (CMGC) Annual Report,” Engineering Services and Bridge Design Section, Utah Department of Transportation Project Development Group, Salt Lake City, Utah, 2010, 39 pp. Anderson, S. D., and I. Damnjanovic, NCHRP Synthesis 379: Selection and Evaluation of Alternative Contracting Methods to Accelerate Project Completion, Transportation Research Board of the National Academies, Washington, D.C., 2008, 68 pp. Blanding, J., “Quality Incentives: A Federal Perspective,” Transportation Research Circular E-C090: Design-Build: A Quality Process, Transportation Research Board of the National Academies, Washington, D.C., 2006, p. 8. http:// onlinepubs.trb.org/onlinepubs/circulars/ec090.pdf Burati, J. L., R. M. Weed, C. S. Hughes, and H. S. Hill, “Optimal Procedures for Quality Assurance Specifications,” Office of Research, Development, and Technology, FHWA- RD-02-095, 2003, p. 4. Dornan, D., K. R. Molenaar, N. Macek, and J. S. Shane, Study to Congress on the Effectiveness of Design-Build Project Delivery Relating to the Federal-Aid Highway Program, FHWA, Washington, D.C., March 2005, 160 pp. Dowall, D. E., and J. Whittington, Making Room for the Future: Rebuilding California’s Infrastructure, Public Policy Institute of California, San Francisco, 2003, 13 pp. Dunston, P. S., J. F. McManus, and J. A. Gambatese, NCHRP Project 20-7: “Cost/Benefits of Constructability Reviews/ Task 124,” Transportation Research Board of the National Academies, Washington, D.C, 2002, p. 2. Ernzen, J., and T. Feeney, “Contractor-Led Quality Control and Quality Assurance Plus Design-Build: Who Is Watching the Quality?” Transportation Research Record: Journal of the Transportation Research Board, No. 1813, Transportation Research Board of the National Academies, Washington, D.C., 2002, pp. 253–259. FHWA, Design-Build Effectiveness Study—As Required by TEA-21 Section 1307(f): Final Report, USDOT, Federal Highway Administration, Washington, D.C., January 2006, 215pp. http://www.fhwa.dot.gov/reports/designbuild/design build0.htm FMI/CMAA, The Results of FMI/CMAA’s Fourth Annual Survey of Owners, McClean, Virginia, 2003, 20 pp. http:// www.cmaafoundation.org/careers-in-cm/research Gransberg, D. D., J. Datin, and K. Molenaar, NCHRP Synthe- sis 376: Quality Assurance in Design-Build Projects, Trans- portation Research Board of the National Academies, Washington, D.C., 2008, 130 pp. Gransberg, D. D., and J. S. Shane, NCHRP Synthesis 402: Construction Manager-at-Risk Project Delivery for Highway Programs, Transportation Research Board of the National Academies, Washington, D.C., 2010, 128 pp. Gransberg, D. D., and K. R. Molenaar, “Does Design-Build Project Delivery Affect the Future of the Public Engineer?” Transportation Research Record: Journal of the Transportation Research Board, No. 2081, Transportation Research Board of the National Academies, Washington, D.C., 2008, pp. 3–8. Lee, J., “CM/GC at Oregon DOT,” Presentation, WASHTO Conference, Portland, Oregon, 2008, 14 pp. Mendez, V., “About Every Day Counts: Message from the Administrator,” Washington, D.C., 2010. http://www.fhwa. dot.gov/everydaycounts/about/ Miller, J. B., M. J. Garvin, C. W. Ibbs, and S. E. Mahoney, “Toward a New Paradigm: Simultaneous Use of Multiple Project Delivery Methods,” Journal of Engineering and Management, ASCE, Vol. 16, No. 3, 2000, pp. 58–68. Miron, A., R. B. Rogers, and P. A. Kopac, “Applying Advanced Quality Systems in the Highway Industry,” Public Roads, Vol. 72, No. 2, September/October 2008, pp. 1–14. National Society of Professional Engineers (NSPE), “Design/ Build in the Public Sector,” NSPE Board of Directors, Position Statement #1726, 1995. http://www.nspe.org/govrel/ gr2-ps1726.asp Scott, S., K. R. Molenaar, D. D. Gransberg, and N. C. Smith, NCHRP Report 561: Best-Value Procurement Methods for Highway Construction Projects, Transportation Research Board of the National Academies, Washington, D.C., 2006, 82 pp. Touran, A., D. D. Gransberg, and K. R. Molenaar, “A System for Selecting Project Delivery Methods in US Airports,” Journal of Airport Management, Airports Council Inter- national, Vol.4 (4), July 2010, pp. 305–314. Turochy, R. E., J. R. Willis, and F. Parker, “Quality Assurance of Hot-Mix Asphalt: Comparison of Contractor Quality Control and Georgia Department of Transportation Data,” Transportation Research Record: Journal of the Transportation Research Board, No. 1946, Transportation Research Board of the National Academies, Washington, D.C., 2006, pp. 47–54.