Evaluation of Project Delivery Methods (2009)

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TCRP G-08 – Project Delivery Methods Chapter 2 – Background and Definitions CHAPTER 2 – BACKGROUND AND DEFINITIONS Distinguishing Characteristics of Transit Projects Several types of project delivery methods are currently available to the owners of publicly funded transportation projects in the United States. An important decision, especially in the case of large complicated transportation projects, is to select the most appropriate project delivery method for a specific project. Contractual relations, contemporary laws and regulations, owner’s perception of risks, awarding mechanisms and the method of payment all contribute to project delivery method selection. This document in no way advocates one project delivery method over another. In fact, it is the expressed purpose of this effort to assist transit agencies in making the right project delivery method decision. In the subsequent paragraphs, alternative project delivery methods will be compared to traditional design-bid-build (DBB) project delivery, which functions as the benchmark against which all other methods should be compared. The literature has found that the use of alternative project delivery can accrue benefits for owners. However, that is usually across a population of projects rather than on an individual basis. Thus, the reporting of benefits found in the literature should not be misconstrued as advocating one project delivery method over another. All project delivery methods have yielded both success and failure. Selecting the wrong project delivery method is often a significant driver of project failure. Therefore, the reader should accept the facts reported in this document as evidence that a given project delivery method can be used successfully on a specific set of projects, not as a declaration that any method is inherently superior to all others. Before embarking on describing various delivery methods it is important to observe the distinguishing features of major transit projects compared to other transportation projects. Transit projects are larger projects, usually in excess of $100 million. These projects, especially projects with fixed guideway system, usually consist of at least two large contracts: civil and systems. The nature of these contracts and the specialization required is such that usually two different entities deliver these contracts. This makes the coordination between these players of paramount importance to project success. Generally, in DBB projects the owner hires a construction manager (This construction manager (CM) is a representative of the owner, i.e., Agency CM, as opposed to the CM-at-risk) to coordinate these two separate contracts and manage their work. In design-build (DB) projects, the design-builder often subcontracts to separate systems and civil contractors or forms a joint venture with them. Another feature of transit projects is that they are usually built in major urban population centers. This increases the complexity of dealing with various stakeholders. The ability of various delivery methods in dealing with project stakeholders then becomes a major decision criterion. Whenever a commuter rail project is considered, a freight line may be in the mix where the owner will have to share the line with temporal separation or track separation. This makes coordination with the railroad company owning the freight line extremely important. Reaching agreements with the Northeastern University The Research Report 10

TCRP G-08 – Project Delivery Methods Chapter 2 – Background and Definitions railroad company and clarifying the details of the work and responsibilities of various parties cannot be overemphasized. The railroad company usually wants to do the track work with its own forces on a cost reimbursable basis and this puts all the risk on the owner. This also increases the constructor’s risk because its work may be impacted by the railroad. This makes early involvement of the construction contractor very important to project success. Also, the railroad company tends to do the work at its own pace while considering project milestones; as a general rule, the agency does not enjoy the same degree of control that it exerts over the constructor with the railroad company. Another distinguishing characteristic of transit is that typical projects may require multiple disciplines as well as incorporating a significant degree of architectural features that extend the project outside the scope of a normal engineered project and demand the involvement of design professionals from architecture, landscape architecture and interior design. The integration of “vertical” construction features such as parking structures and transit stations with the “horizontal” construction features such as track bed, bridges, and roadway elements creates a need for a comprehensive set of both design and construction services that is not normally found in transportation projects. Additionally, the need for transit agencies to integrate their facilities with other modes of transportation demands another comprehensive set of both design and construction service providers and requires a more flexible approach to design and construction than single mode transportation projects. These characteristics drive the need for a “toolbox” of project delivery methods that permits the transit agency to select the appropriate project delivery “tool” based on the technical demands of a given project. Unlike some toll roads in the highway sector, transit projects are not usually money makers. So it is difficult to generate interest in potential public private partnerships. Financial institutions, while sometimes interested in supporting toll road and bridge projects, are usually not interested in transit investment, although that may change in the future. Finally, federal support for transit projects, often crucial for bringing the project into reality, depends on specific steps not similar to other transportation projects. The Federal Transit Administration (FTA) plays an important role in this process. Various transit agencies compete for federal dollars by preparing specific reports to the FTA. Depending on the rating that a project receives, it may be permitted to move into the next development stage. The owner agency needs to meet certain requirements to advance from planning to final design, and finally into construction. If during various phases of project development, and as project scope becomes more accurate, the rating of the project falls below the required threshold, there is a possibility that the project may be discontinued. The burden is on the owner agency to ensure that the project remains viable and meets the federal requirements. Evolution of Current Alternative Delivery Methods in Transit Projects Public procurement law has historically limited public agencies to only use design-bid-build (DBB) construction project delivery. The wide range of options for project delivery methods that are available today is a relatively recent development for publicly funded transit projects in the United States. The shaping of the public procurement laws leading to the traditional DBB project delivery method, in part can be traced to the Brooks Act. Enacted in 1972, the Brooks Act (Public Law 92- 582) states that design services on federally funded projects in the United States (US) should only be procured on the basis of qualifications. Alternatively, numerous laws and statutes throughout the US Northeastern University The Research Report 11

TCRP G-08 – Project Delivery Methods Chapter 2 – Background and Definitions Northeastern University The Research Report 12 have limited the procurement of constructors to the lowest responsible, responsive bidder. The combination of these two procurement practices has helped solidify the proliferation of DBB in the public sector. This method has been the traditional project delivery method in transportation projects until the introduction of DB and design-build-operate-maintain (DBOM) in the Intermodal Surface Transportation Efficiency Act of 19911. Another step was taken in 1996 when the Federal Acquisition Reform Act explicitly authorized the use of DB for federal projects. After that, the Transportation Equity Act for the 21st Century, Public Law 105-178 (TEA-21) allowed the state departments of transportation (DOTs) to award DB contracts if the enabling state-level legislation was in force (TEA-21 1998). Subsequent to the successful experience of using DB in several projects, many states passed new legislation and codes to allow alternative project delivery methods, i.e. DB and Construction Manager-at-Risk (CMR). Adding the responsibility of operation and maintenance to DB projects expanded to another delivery method called DBOM. The difference between delivery methods, the unique characteristics of each project, and the vast variety of parameters affecting the project delivery method selection, has made the decision complicated for many owners. The purpose of this guidebook is to facilitate decision-making by clarifying the differences between the delivery methods and proposing a structured decision-making approach which incorporates all the pertinent parameters. Definitions of the Delivery Methods Since the early 1980s, owners of construction projects have been putting greater pressure on the architecture/engineering/construction (A/E/C) industry to improve quality, reduce cost, and more importantly compress the period it takes from concept to completion for all manner of public and private facilities. As a result, both owners and industry have experimented with various forms of project delivery with varying degrees of success. The adoption of alternative project delivery methods has added to the challenge of selecting the method most appropriate to the owner’s needs and desires as well as the project’s technical requirements. As a result, this document provides a set of standard project delivery definitions as a basis for communicating the technical requirements for bringing a new project from the owner’s concept to operation and final decommissioning of the project. Project delivery method is a term used to refer to all the contractual relations, roles and responsibilities of the entities involved in a project. The Texas DOT defines project delivery method as follows: “A project delivery method equates to a procurement approach and defines the relationships, roles and responsibilities of project team members and sequences of activities required to complete a project. A contracting approach is a specific procedure used under the large umbrella of a procurement method to provide techniques for bidding, managing and specifying a project.” (Walewski et al 2001) The AGC (2004) defines project delivery method as “the comprehensive process of assigning the contractual responsibilities for designing and constructing a project. A delivery method identifies the primary parties taking contractual responsibility for the performance of the work.” Thus, the different project delivery methods are distinguished by the way the contracts between the owner, the designer, and the builder are formed and the technical relationships between each party within those contracts. 1In 1992 the FTA announced the initiation of a Turnkey Demonstration Program (Federal Register Vol. 57, No. 157, 8/13/92) and later selected five projects for DB implementation. These projects were Los Angeles Union Station Intermodal Terminal, Baltimore Light Rail Transit, San Juan Tren Urbano, Bay Area Rapid Transit in San Francisco, Hudson-Bergen LRT.

TCRP G-08 – Project Delivery Methods Chapter 2 – Background and Definitions The Construction Industry Institute (CII) maintains that there are really only three fundamental project delivery methods: DBB, DB, and CMR (Project Delivery Methods 1997). While there are a multitude of various names for project delivery methods throughout the industry, CII is essentially correct. Therefore, this report will focus its information in those three categories. The AGC also distinguishes between the delivery method and the management method. The management method “is the mechanics by which construction is administered and supervised” (AGC 2004). This function is either retained by the owner agency or is outsourced. An example of outsourcing the management process is to hire an Agency CM to represent the owner’s interests during design and construction. Theoretically any management method may be used with any delivery method. As an example, the owner may hire an Agency CM to manage a DBB, DB, or even a CMR project. The definitions and a brief explanation with a graphic displaying the contractual relationships are included below to assist the reader in putting the contents of this report into proper context. Note that the lines of communication shown in the figures represent the ability to exchange information through the use of formal and informal requests for information between various entities in the project. Design-Bid-Build (DBB) DBB is the traditional project delivery method in which an owner retains a designer to furnish complete design services and then advertises and awards the separate construction contract based on the designer’s completed construction documents. The owner is responsible for the details of design and warrants the quality of the construction design documents to the construction contractor. Northeastern University The Research Report 13

TCRP G-08 – Project Delivery Methods Chapter 2 – Background and Definitions Northeastern University The Research Report 14 Figure 2-1 - Design-Bid-Build2 Figure 2.1 shows that the owner is squarely situated between the designer and the builder in the project delivery process. In DBB, the owner “owns” the details of design during construction and as a result, is financially liable for the cost of any design errors or omissions encountered in construction, called the “Spearin Doctrine” (Mitchell, 1999). The construction phase of DBB projects is generally awarded on a low bid basis. There is no incentive for the builder to minimize the cost of change orders in this delivery method. In fact, there can be quite the opposite effect. A builder who has submitted a low bid may need to look to post-award changes as a means to enhance profit on the project after bidding the lowest possible margin to win the project. One author states that the defining characteristics of DBB are as follows (Bearup et al 2007): • There are separate contracts for design and construction. • Contractor selection is based entirely on cost. • Design documents are 100% complete. Despite the above definitions, DBB projects can also be awarded on a negotiated basis and a best- value basis (Scott et al 2006), although in transit projects this usually will require FTA approval and frequently violates local laws. In both cases, the probability that the project will be awarded to a builder who has submitted a mistakenly low bid is reduced. Additionally, the motivation of the builder in both cases is to complete the project in a manner that will get it invited back to do the next negotiated contract or that will reflect well in the next best-value selection. Regardless of the award method, DBB is distinguished by less builder input to the design than DB or CMR. Thus, the owner must rely on the designer or agency CM (and not the builder) for constructability review if there is any at all. However, in this method the owner has full control over the details of design which may be a requirement for some complex projects. 2 Figures adapted from American Institute of Architects, California Council (1996). Handbook on Project Delivery. Sacramento. American Institute of Architects, California Council, Sacramento, CA. Owner Designer Builder Contracts Communication

TCRP G-08 – Project Delivery Methods Chapter 2 – Background and Definitions DBB is also characterized by the greatest amount of familiarity in both the design and construction areas. All qualified designers are able to compete for the design without restriction. Additionally, all constructors who are able to furnish the requisite bonding and meet any agency pre-qualification criteria are also able to compete without constraint. Design sub-consultants and construction trade subcontractors are also able to compete with minimal restrictions. Finally, as DBB is normally viewed as the traditional project delivery method in the US, it is both well-understood and well- accepted by both owners and members of the design and construction industries. Construction Manager-at-Risk (CMR) or Construction Manager/General Contractor (CM/GC) CMR projects are characterized by a contract between an owner and a construction manager who will be at risk for the final cost and time of construction. In this agreement, the owner authorizes the construction manager to handle the construction phase and give inputs during the design development. The idea of CMR is to furnish professional management of all phases of a project life to an owner whose organization may not have those capabilities (North Carolina 2005). Typically, CMR contracts contain a provision in which the CMR stipulates a guaranteed maximum price (GMP) above which the owner is not liable for payment. Often these contracts include incentive clauses in which the CMR and owner can share any cost savings realized below the GMP. Some states, like Oklahoma, take the GMP and convert it to a firm-fixed price contract and administer the construction as if it were a traditional DBB project thereafter (AIA 2005). CMR contracts can contain provisions for the CMR to handle some aspects of design, but generally, the owner retains the traditional responsibility by keeping a separate design contract and furnishing the CMR with a full set of plans and specifications upon which all construction subcontracts are based as seen in Figure 2.2. The CMR will usually be paid for furnishing preconstruction services such as cost engineering, constructability review, and development of subcontractor bid packages. According to AGC (2004) the defining characteristics of the CMR are the followings: • The designer and the CMR hold separate contracts with the owner. • The CMR is chosen based on criteria other than just the lowest construction cost, such as qualifications and past performance. Additional defining characteristics are: • “The CMR contracts directly with trades and takes on ‘performance risk’ (cost and schedule commitments) • Schedule allows for overlapping design and construction • Owner procures preconstruction services from the CMR • Owner expects the CMR to provide guaranteed maximum price (GMP) and to commit to delivery schedule” (Bearup et al 2007) • “Transparency is enhanced, because all costs and fees are in the open, which diminishes adversarial relationships between components working on the project, while at the same time eliminating bid shopping” (AIA 2005). Northeastern University The Research Report 15

TCRP G-08 – Project Delivery Methods Chapter 2 – Background and Definitions Northeastern University The Research Report 16 Figure 2-2 - Construction Manager-at-Risk Constructability and speed of implementation are the major reasons an owner would select the CMR method (3DI 2005). Additionally, CMR greatly facilitates phased construction if that is a requirement for given project. Unlike DBB, CMR brings the builder into the design process at a stage where definitive input can have a positive impact on the project. “The CM[R] becomes a collaborative member of the project team. Preconstruction services include budgeting, cost estimating, scheduling, constructability reviews and value engineering studies.” (3DI 2005). In CMR, the construction manager essentially becomes the general contractor at the time the guaranteed maximum price is established. While some experts attempt to distinguish between CMR and Construction Manager/General Contractor (CM/GC) due to perceived levels of risk, many agencies use these terms more or less interchangeably3. The CMR can and is expected to provide realistic project cost estimates early in the project life cycle. It is anticipated that after a certain amount of design is complete and the project is sufficiently defined, the owner will enter into a contract with the CMR for providing construction services. Many states reserve the right to go out for bid if they think that the CMR’s price is not competitive (Minchin et al 2007)4. The timing of GMP negotiations varies among different agencies. In many cases, at least 60% of design is completed before a GMP is established. In some cases, the design is carried to 80-90% before a GMP can be effectively negotiated with the CMR. This depends on project complexity, agency rules and external conditions such as inflation and level of competition expected among subcontractors. In general, the CMR may feel that committing to a GMP while all the details of design are not defined, may put undue risks upon him. Also, some agency rules may hamper early GMP 3 According to AGC (2004) there has been some confusion about terms CM-at-risk and CM/GC because of the assumption that the phrase at-risk connotes cost guarantee. Even if there are no cost guarantees, the CM is still at-risk because the CMR holds the trade contracts (warranting the performance of the work). Because of this, some users choose to avoid the debate over the term risk and instead use the term CM/GC (p.8). 4 There are two types of CM arrangements, namely Agency CM and CM-at-risk. Our emphasis in this work is CM-at-risk. Agency CM is not a project delivery method as the CM is not contractually responsible for delivering the project. Its role is purely consultative and is usually not at risk for the cost and schedule of building the project. Owner Designer Trade Subs CM At Risk Contracts Communications

TCRP G-08 – Project Delivery Methods Chapter 2 – Background and Definitions negotiations. As an example, if the agency insists on requiring a fully open competition for hiring of subcontractors, then negotiating an early GMP may be more difficult because some subcontractors may be reluctant to give their prices without a 100% complete design. This in turn makes the CMR hesitant to provide a reasonable GMP fearing he may lose money if the subcontract bids come in too high. As the design selection process virtually mirrors the same process in DBB, implementing CMR does not inherently restrict competition among designers and design subconsultants (AIA 2005). Owners occasionally require the designer in a CMR project to have previous CMR experience, which may result in fewer qualified proposers, but only if the owner chooses to do so. As the constructor is selected on a basis of qualifications and past performance and must also have the capability to perform preconstruction services, CMR project delivery can constrain competition to those constructors that have previous CMR experience. Most public CMR laws require competitively bidding out the construction trade subcontract work packages. The central idea of CMR is to get the advantage of price competition in the sub packages combined with the qualifications-based selection of the GC as CMR. One author puts it this way: “To ensure a positive relationship, C&S engages in a number of practices to involve and benefit our clients. We are responsible for complete bid documents, pre-bid meetings, and a fair and competitive bid process. We share the results of all bids with the owner for review and final selection” (C&S 2005). Hence competition is not restricted at that level by CMR. Design-Build (DB) Design-Build is a project delivery method in which the owner procures both design and construction services in the same contract from a single, legal entity referred to as the design-builder. A variety of methods exist for selecting the design-build constructor. The more common methods are the one-step and the two-step process. The one-step process provides for competitive evaluation of technical proposals, with the contract award decision based on best value to the owner agency. The best value is based on a combination of technical merit and price. The two-step process separates the technical proposal from the price. The method typically uses request for qualifications (RFQ)/request for proposal (RFP) procedures rather than the DBB invitation for bids procedures. There are a number of variations on the DB process, but all involve three major components. The owner develops an RFQ/RFP that describes essential project requirements in performance terms. Next is the evaluation of proposals, and finally, with evaluation complete, the owner must engage in some process that leads to contract award for both design and construction services. The DB entity is liable for all design and construction costs and normally, must provide a firm, fixed price in its proposal (El Wardani et al. 2006, Ibbs et al. 2003, Graham 2001). Figure 2.3 clearly shows that the project’s chain of responsibility is considerably simplified from the owner’s standpoint. As in CMR, the builder has early constructability input to the design process. As the owner no longer owns the details of design, its relationship with the design-builder must be based on a strong degree of mutual professional trust (Beard et al 2001). The design-builder literally controls this project delivery process. As a result, DB delivery method has proven to be highly successful in compressing the project delivery period (FHWA 2006) and as a result is often used for “fast-track” projects. Northeastern University The Research Report 17

TCRP G-08 – Project Delivery Methods Chapter 2 – Background and Definitions Owner Designer- Builder Designer Builder Communication Contracts Figure 2-3 - Design-Build Bearup et al (2007) state that the defining characteristics of DB are as follows: • Single Point of Responsibility • Schedule allows for overlapping design and construction • The design-builder furnishes preconstruction services during the project design • Owner expects the design-builder to provide a firm fixed price and to commit to delivery schedule DB creates the greatest constraint on competition in that all parties to the DB contract are selected using qualifications and past performance as a major selection factor. As the owner transfers responsibility for all design and construction through the DB contract, it also loses the ability to foster competition between design subconsultants and construction trade subcontractors. There is typically no requirement to competitively bid for subcontract work packages and often the scale, complexity and speed at which DB projects are executed precludes firms with no DB experience from being able to participate. Additionally, as the contract is awarded before design is complete, DB can also create an unfavorable risk environment for subcontractors whose cost estimating systems lack the sophistication to be able to price work without completed construction documents. There are many variations on the DB method. Design-build-operate-transfer, design-build-operate- own (sometimes called lease-back), design-build-operate-maintain, all require the DB contractor to remain with the project after construction is complete. Design-Build-Operate-Maintain (DBOM) is very similar to DB. However, the DBOM contractor assumes the operation and maintenance risks and is responsible to operate the new facility according to a set of regulations and codes for a determined duration (Wiss et al 2000, Kessler et al 2005). Northeastern University The Research Report 18

TCRP G-08 – Project Delivery Methods Chapter 2 – Background and Definitions Statutory Authorization of Delivery Methods in Various States The traditional method of DBB has been used throughout the United States and state codes of all 50 states have given full authority to the transit agencies to use it in their projects. Alternative delivery methods do not have this clear statutory support. Some states do not allow transit entities to use them, some others have given one time authority for a special project, a group of states have put some limits on the application of alternative delivery methods and a few states require extra approval to be obtained by transit agencies in order to use alternative methods. Developing pilot programs is a common approach in some states for implementing previously unauthorized project delivery methods, particularly DB. In order to update information on the legal status of alternative project delivery methods in various states, a thorough literature search was conducted on the laws of all the 50 states. Several relevant keywords were electronically searched using LexisNexis search engine and all the state codes and statutes that deal with project delivery in transportation projects were examined. The results were then compared to the existing surveys of legal codes that are available in the literature (for example see Nossaman et al 2006; AIA Minnesota 2006). Our research shows that 37 states permit the use of DB in their transportation projects leaving 13 state agencies without the authority to do so. The application of CMR is not authorized in 31 states and only 14 states have fully authorized DOTs for use of this delivery method. Five states allow the use of CMR with some restrictions or after obtaining of extra approvals (Ghavamifar and Touran 2008). It should be noted that the laws governing the legality of alternative project delivery methods are evolving and because of this, giving any final conclusion is impossible. Also, while some state DOTs are permitted to use alternative delivery methods, it is not clear if those states’ transit agencies are allowed to do that or not. The purpose of the literature search was to provide an overall picture of the status of legality of delivery methods for transportation projects in the United States at the time this report was prepared. Each public agency who is considering the use of a specific delivery method must check the legality of the method carefully. FTA’s requirements for third party contracting, described in Circular 4220.1E, are sufficiently flexible to allow the agencies to select their contractors through competitive bidding and/or competitive proposal/RFP (both price and other parameters considered). For the DBB the Circular allows the procurement of services through sealed bidding or competitive negotiations. For DB, the grantees must procure DB services through qualifications-based competitive proposal procedures. So it seems that if a specific state’s laws allow an alternative project delivery method, the federal regulations will not prevent the agency of undertaking such procurement. Existing Selection Approaches of Project Delivery Methods Selection of the appropriate alternative project delivery method is a complex decision-making process. The decision should be made as early in the design phase as possible; preferably in the project scoping process and certainly before the final construction estimates of the projects are ready. The decision will occur when the owner still has little information about the outcome of the project and the project plans are not detailed enough to be reliable grounds for judgment about the project. In this environment, having a framework for decision-making is vital for transit projects. This framework should be simple, comprehensive, rational, and objective. The literature review of this research report shows that some experts have concentrated on this issue and have developed a list of criteria and some decision making frameworks (Gordon 1994, Konchar et al 1998, Debella et al. 2006, Mahdi et al. 2005, Ibbs et al. 2003, Oyetunji et al. 2006, Garvin 2003). Several of these Northeastern University The Research Report 19

TCRP G-08 – Project Delivery Methods Chapter 2 – Background and Definitions researchers have chosen some projects and have based the selection methodology on the characteristics of those projects. One can roughly divide the relevant literature into two groups: (1) the papers and reports that compare the delivery methods based on the observed performance measurements, collected from a group of projects, and (2) the papers and reports that give a list of criteria and a framework for decision-making. One of the best examples for the first group is a paper by Konchar et al (1998) in which a set of criteria is defined for a performance comparison of different delivery methods (i.e. DB, DBB and CMR) in 351 building projects. These criteria are mostly objective and measurable, like cost growth, construction speed, and schedule growth. Some criteria are also defined to incorporate the quality performance of the delivery methods, like difficulty of facility start up, number and magnitude of call backs, and operation and maintenance costs. Based on Konchar et al (1998), “when all other variables were held constant, the effects of project delivery system indicated design-build projects to be at least 5.2% less than design-bid-build projects and 12.6% less than construction management at risk projects on average in terms of cost growth.” The authors of the paper divided the projects into six different groups (such as light industrial, complex office, heavy industrial, etc) in order to get clearer trends in each group. Taking this into account, the paper does not have enough data to distinguish between the performances of different delivery methods in transit projects. However, two studies of DB versus DBB project performance in the federal building sector did make direct comparisons. The first compared 54 DBB projects to 34 DB projects and discovered that DB projects had 16.4% less cost growth and 19.0% less time growth than similar DBB projects. Another that looked at 110 Navy projects found that DB projects again performed better with 18.0% less cost growth and 60.0% less time growth (Allen et al 2002). Additionally, a recent NCHRP study of best value contracting (Scott et al 2006) also furnished direct comparison of transportation project performance between delivery methods. While that study did not include CMR projects, it did include DBB projects awarded on a best value basis which parallels the CMR delivery method. It found that DB projects had 4.7% less cost growth and 9.3% less time growth. Best value projects had 2.0% less cost growth and 18.5% less time growth. Others such as Debella et al (2006) and Ibbs et al (2003) have used a methodology similar to Konchar’s, but they have narrowed down the scope of their research either to special kinds of projects or fewer performance measures. The papers and reports of the second group have focused on the decision-making process. These papers propose mechanisms for decision-making and define the necessary criteria and frameworks so that the most important project parameters are defined and used in the decision-making method. The frameworks are primarily intended to be simple, rational, and comprehensive. They range from basic flow chart methods (Gordon 1994) to more sophisticated processes based on methodologies such as multiple linear regression, the Analytical Hierarchy Process (AHP) (Mahdi & Al-Reshaid 2005), or Simple Multi Attribute Rating Technique with Swing weights (SMARTS) (Oyetunji and Anderson 2006). Gordon (1994) created a procurement method selection model that uses a flowchart for selecting the best contracting method. Within the flowchart are a number of drivers that directs the owner’s attention to the most important issues in delivery method selection. A/E/C Training Technologies (2005) has developed a multimedia education compact disc and delivery selection tool. The tool integrates training on project delivery selection systems with a matrix-style decision framework that owners can complete to make an informed delivery selection. Skitmore and Marsden (1988) Northeastern University The Research Report 20

TCRP G-08 – Project Delivery Methods Chapter 2 – Background and Definitions presented a multi-attribute analysis technique and a discriminant method for selecting delivery methods. The multi-attribute method uses utility factors to evaluate the suitability of a delivery method with respect to a client’s priority criteria. Kumaraswamy and Dissanayka (1996) propose a client advisory system with an expert system front end, which will gather project information and model the project profile to generate a list of delivery options. Finally, Oyetunji & Anderson (2006) use a SMARTS approach for delivery selection. The approach utilizes a matrix that has 20 criteria each with a given weight. The owner rates these criteria and goes through the required calculation that gives a single rank to each delivery method. The delivery method with the highest rank should be chosen for the project. Based on both groups of the literature, one can find that the number of important parameters that affect the decisions early in the project can be divided into four groups: project-related parameters, agency- related parameters, legal parameters and life-cycle issues. Project-related parameters are those parameters that pertain to the duration, estimated cost, quality level, project risks, limits on schedule growth, project complexity, etc. Agency-related parameters mainly consist of the status of agency, the role of this project in the strategies of the agency and organization of the agency i.e. availability of funds, sophistication of the agency’s employees, flexibility needs in construction phase, level of risk assumption, importance of preconstruction services, and quality level expectation. The legal parameters mainly cover the legal and contracting issues, such as statutory authority to use alternative project delivery methods, the level of competition in the market, permits needed for the project. Life-cycle issues cover the costs of maintaining and decommissioning the facility as well as the ability to minimize energy and environmental effects of the project. In the parameters mentioned above, the ability to transfer risks of a project to other entities rather than the owner is a characteristic that is related to both the project and the owner agency. It shows the level of risk and uncertainty of the project and also the ability of the owner to assume the risks or transfer them (risk-averse or risk-prone agency). Delivery methods have different mechanisms for risk distribution among the entities involved. In summary, the existing body of knowledge in this area, along with specific information collected on transit projects during interviews, provides a solid foundation for developing a new selection system tailored to the needs of transit owners. Timing of Project Delivery Method Selection Transit projects, especially those that receive federal funds follow several steps during their development. These steps can be summarized as follows: • Alternative Analysis – Draft Environmental Impact Statement (AA/DEIS) • Final Environmental Impact Statement (FEIS) • Full Funding Grant Agreement (FFGA) The first two steps roughly coincide with conceptual design (5-15% of design effort) and preliminary engineering (PE) (25-30% of design effort). The timing of FFGA which represents the commitment of the federal government to fund the project depends on the project delivery method and can be at the end of PE or final design. In selecting a project delivery method, the owner should realize that the window of opportunity will pass for some as the project moves to various stages of development. Table 2-1 maps project Northeastern University The Research Report 21

TCRP G-08 – Project Delivery Methods Chapter 2 – Background and Definitions Northeastern University The Research Report 22 delivery method selection decision against project development phase. It can be seen that selecting an alternative project delivery method should be done relatively early. Most of the benefits can be realized by engaging the constructor as soon as possible. The decision point for PDM selection should not be confused with the time that the constructor is engaged. As an example, an owner may decide to engage a DB contractor at the end of Preliminary Engineering or even later in order to clarify the scope and reduce the uncertainty. However, the owner should have decided on the type of delivery (for example DB) much earlier, so that the design documents can be properly developed considering the type of delivery method. Table 2-1 – The Timing of PDM Selection PDM At the end of Conceptual Design At the end of Prelim. Eng. At the end of Final Design Construction DBB ■ ■ □ CMR ■ □ □ DB ■ ■ DBOM ■ ■ ■ Desirable □ Feasible