Guidebook for Implementing Alternative Technical Concepts in All Types of Highway Project Delivery Methods (2020)

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1 The business case for extending the use of alternative technical concepts (ATCs) into all forms of project delivery can be summed up in the following quotation: “There is an emerging view in the construction industry that better performance or better value for money can be achieved by integrating teamwork for planning, design and construction of projects” (Forgues and Koskela 2008, emphasis added). Integration can be achieved in a number of different ways, but in the final analysis, an “integrated” construction project includes the construction contractor in the design process in some meaningful manner. By that definition, traditional design-bid-build (DBB) contracts are not integrated. However, most alternative contracting methods (ACMs) are. For example, design-build (DB) project delivery is the most common method used in the highway industry for developing an integrated approach to design and construction. The construction manager/general contractor (CMGC) method is also integrated by bringing the construction contractor into the design process via a preconstruction services contract. Public–private partnerships (P3s) take integration to a higher level by including private financing and, in many cases, post-construction operations and maintenance. This guidebook uses a more focused working definition for ATCs than the one proffered by the FHWA in conjunction with its Every Day Counts (EDC) initiative (FHWA n.d.): “An ATC is a proposed modification to a contract requirement in a manner that is equal to or better than the baseline articulated in the project’s solicitation.” This guidebook presents effective practices for establishing and implementing ATCs in different project delivery methods. At the time of this writing, ATCs are used by at least 31 states and are thought to stimulate innovative approaches to delivering a project that were not considered in agency baseline planning and design. Nearly all states that use ATCs apply them to DB projects and, if enabling legislation is in place, to P3 projects as well. As a result, the focus of this guidebook is on these two project delivery methods. In all ACMs, including ATCs requires an agency to conduct careful evaluation of project requirements to determine whether the potential benefits offset the time and resources needed to accept, review, and approve ATC submittals. At least three states have used the ATC process to obtain early contractor design input on traditional low-bid DBB projects. S U M M A R Y Guidebook for Implementing Alternative Technical Concepts in All Types of Highway Project Delivery Methods The California Department of Transpor- tation (DOT) recorded the following benefit-cost (B-C) data on the eight proj- ects in its Design-Build Demonstration Program: • $3.23 million paid in stipends • $502.8 million approved ATCs • $142.5 million ATC incorporated into final projects • B-C ratio = $156 savings/$1 of stipend (R. Tritt, “California DOT ATC Program,” unpublished memorandum. August 14, 2016)

2 Guidebook for Implementing Alternative Technical Concepts in All Types of Highway Project Delivery Methods Limited-scope DBB ATCs appear to be the most promising, with competing contractors proposing concepts for temporary construction works associated with alternative means and methods as well as for construction administration tasks such as maintenance of traffic and work sequencing plans. Applying ATCs in CMGC projects is not generally accepted despite the fact that at least three states have reported that they include ATCs as part of their CMGC procurement process. Similarly, the use of ATCs on projects using an emerging variant of DB called pro- gressive design-build (PDB) would likely fall into the same category. In PDB, the design- builder is selected on the basis of qualifications, and the project price is then negotiated during the preconstruction phase of the PDB contract in much the same manner as the price is negotiated in CMGC. The issue at hand is that in both methods there is no quanti- fied baseline design, and both processes are designed to involve the contractor in assisting the agency and the designer to evaluate potential technical alternatives as part of the pre- construction contract. Thus, the ATC component becomes a matter of evaluating potential alternatives identified by competing contractors during the selection process, which is typi- cally termed evaluating “proposed innovations.” NCHRP Synthesis 455: Alternative Technical Concepts for Contract Delivery Methods (Gransberg et al. 2014) found that confidentiality must be guaranteed for competing contractors so they can build a viable competitive advantage with their ATCs. While the legal and contractual issues (such as confidentiality) associated with the ATC method can be quite diverse and may create challenges for both the procuring agency and those entities responding to the pro- curement, these issues are surmountable by applying a thoughtful approach to understanding possible local constraints and through active outreach to the design and construction industry. This guidebook does not advocate the use of ATCs in any particular project deliv- ery method but rather aligns with the philosophy espoused in the FHWA EDC program that ATCs are merely another tool proven to be useful in a given agency’s procurement toolbox. As with all ACMs, the utility of ATCs is directly related to unique highway proj- ect characteristics and requirements. Thus, the guidebook’s underlying conclusion is that each project, regardless of delivery method, be individually assessed to determine if including ATCs in the procurement process will add value to the final constructed project. Lastly, it is also important to note that implementing ATCs with any ACM is a process of creating potential improvement rather than one of generating alternatives. The baseline design articulated in the project’s solicitation documents will range from a complete set of construction documents in DBB to a set of performance requirements in P3. Hence, the essence of successful ACM procurement is to develop a solicitation that does not exclude value-adding ATCs rather than one that actively stimulates ATC submittals. Put another way, an ACM project procurement should not be deemed unsuccessful if no ATCs are generated because that means that the technical content of the baseline design is prob- ably optimized within the constraints of project requirements and available construction means and methods. Thus, the inclusion of ATCs should be viewed as an enhancement to an agency’s process for achieving value for money during procurement rather than as merely a mechanism to cut costs. “Confidentiality in the ATC process is very important for the success of the ATC process.” (Hitt 2012)