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Management of the military facilities procurement program. Final report (1971)

Chapter: Procurement of Design and Construction Services

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Suggested Citation:"Procurement of Design and Construction Services." National Research Council. 1971. Management of the military facilities procurement program. Final report. Washington, DC: The National Academies Press. doi: 10.17226/28198.
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Suggested Citation:"Procurement of Design and Construction Services." National Research Council. 1971. Management of the military facilities procurement program. Final report. Washington, DC: The National Academies Press. doi: 10.17226/28198.
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Suggested Citation:"Procurement of Design and Construction Services." National Research Council. 1971. Management of the military facilities procurement program. Final report. Washington, DC: The National Academies Press. doi: 10.17226/28198.
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Page 20
Suggested Citation:"Procurement of Design and Construction Services." National Research Council. 1971. Management of the military facilities procurement program. Final report. Washington, DC: The National Academies Press. doi: 10.17226/28198.
×
Page 21
Suggested Citation:"Procurement of Design and Construction Services." National Research Council. 1971. Management of the military facilities procurement program. Final report. Washington, DC: The National Academies Press. doi: 10.17226/28198.
×
Page 22
Suggested Citation:"Procurement of Design and Construction Services." National Research Council. 1971. Management of the military facilities procurement program. Final report. Washington, DC: The National Academies Press. doi: 10.17226/28198.
×
Page 23
Suggested Citation:"Procurement of Design and Construction Services." National Research Council. 1971. Management of the military facilities procurement program. Final report. Washington, DC: The National Academies Press. doi: 10.17226/28198.
×
Page 24

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result i n significant gains not only in quality achievement and cost reduction, but in timeliness, which can have considerable intangible as well as tangible value Thus, the discussion which fbllows centers on various design and constru9tion procurement modes having potential application within the mi l i ta ry f a c i l i t i e s procurement system, and on current practices and procedures which tend to inh ib i t the considera- t ion of alternate modes and the e f f i c i e n t operation of the design or construction process once mode selection has been made 2 5 1 Procurement of Design and Construction Services Al thou^ the Departments are experimenting wi th , and, m special circumstances, using some of the newer procurement modes, the ma;jonty of mil i tary f a c i l i t i e s s t i l l are acqmred throu£^ the more conventional process of separate sequential contracts fo r design and construction Sequential design and construction procurement is unquestionably the most practicable procurement mode, given the current mil i tary f a c i l i t i e s funding process (authorization and appropriation) Early each year, the mi l i ta ry Departments siibmit their request fo r funds to the Congress fo r f a c i l i t i e s planned for construction during the forthcoming f i sca l year Simultaneously, the mi l i ta ry Departments request funds fo r the planning and design of f a c i l i t i e s fo r which construction funds w i l l be requested one year hence Therefore, design funds usually are available some eigjit or more months i n advance o f construction funding This period generally is used to accomplish design so that construction can begin immediately once funds fo r construc- t ion are made available This process also provides the opportuni- ty fo r obtaining f i rm estimates of construction costs from f i n a l design drawings before the Congress must act on construction funding The mil i tary Departments are not prevented from using design funds which are s^propnated at the same time as construction funds, however, when this is done i t erodes funds that otherwise would be available fo r planning and design of f a c i l i t i e s to be included m the siibsequent request to the Congress, and the eig^t or more months that could have been used for the design process are lost Most of the alternative procurement modes now available require either simultaneous design and construction funding or funding withm a one-year period Therefore, i f these alternative procurement modes are to be more generally used, the Congress w i l l need to provide the necessary funding f l e x i b i l i t y I t is recognized that separate sequential contracts for design and construction are l ike ly to remain the principal procurement mode for the immediate future Not only is i t compatible with the present funding process, but experience with most other modes of procurement which show promise—such as phased construction, design/construct, two-step, construction manager, and to ta l cost 59

bidding ».a.s as yet insuf f ic ien t to permit isolat ion o f those qiplications where superior co?t-effBCtiveness can be adiieved In fac t , some of the alternative procurement modes may not be applicable to certain portions of the mi l i ta ry f a c i l i t y procure- ment program Eiqpenence xn the private sector, however, indicates that each does have certain advantages when properly applied and I t I S believed that the i r use (or continued use) w i l l pe imt the Department of Defense to evolve adequate c r i t e r i a fo r selection and application Further, i f s ignif icant application o f the emerging industrialization of building and technology is to be realized, the alternative procurement modes, as well as others yet to be devised, w i l l unquestionably be needed Potential benefits to be gained from use o f the alternate modes include time savings by prebidding, increased efficiency of on- si te construction, time savings and efficiency i n design and construction because o f increased a b i l i t y to develop and control sdieduling, greater owner control over cost, and, economic potential from contractual groiqping of small projects As previously noted, the manner i n whidi authorizations and appropriations are made for design and construction funds is not conducive to the use o f the alternate modes There are other deterrents, however—e g , procurement regulations whidi require exceptional ju s t i f i ca t ion fo r the i r use i n l i e u o f the t radi t ional sequential design and construction mode, and pressures exerted to ensure that small, local and separate organizations are not excluded and can continue to function m the conventional manner "Hiese, too, can be overcome by increasing freedom of selection and stimulating change i n the manner i n which small business can pairticipate (1) Phased Construction - Phased design and construction is a modification of the separate sequential design and construction procurement process I t provides fo r pre- award of contracts fo r certain construction products and services pr ior to completion o f the to ta l design and prior to the award of the general contract or major subcontracts H I I S technique has been used with reason- able success i n reducing the to ta l time required fo r sequential design and construction o f large projects I t is particularly useful for projects which involve d i f f i c u l t and extensive s i te preparation problems, those which involve complex and lengthy foundation work, or those which involve complex and lengthy design of the si^erstructure I t also is useful when cost benefits can be realized by prepurdiase o f long lead-time items such as structural steel, boilers, and switdigear Thus, excavation, grading, foundation construction, and struc- tura l steel erection, for exanple, can be mderway before plans are completed for the superstructure and general or 60

major subcontracts are l e t Therefore, fo r projects where such concerns are important or c r i t i c a l , this procurement method should be given serious consideration However, because the r isk of changes during the construction phase IS greater/than with other procurement modes, close coordi- nation between the architect-engineer and the contractor performing the early work is essential Also, substantial financial commitments may have to be made before f i n a l f ixed costs are known, and subsequent price reduction revisions may be d i f f i c u l t to make Phased construction can be used by the Faci l i ty Procure- ment Agents as a procurement mode, but so also can i t be used by design/construct contractors or construction managers on behalf of the Agents, and in conjiqiction with other procurement modes When used as the sole procurement mode. I t places a responsibility on the Faci l i t ies Procure- ment Agent to accept a greater share of the responsibility for construction work scheduling and labor relations-- ' usually the domain o f the general contractor I f this method is to be ef fec t ive , i t is imperative that purchase and expediting services be managed by personnel su f f i c i en t ly competent to minimize potential construction scheduling and labor problems (2) Des 1 gn/Construct - This mode o f procurement (often refenred to by the mi l i ta ry Departments as "turnkey" or one-step procurement) places the responsibility fo r design and construction services with one contractor The contractor may have the in-house capability f o r these services or may subcontract for them outside o f his organization The design/construct approach, with the designer and builder working as a team under one responsible party, allows construction to start early m the design phase, thus providing the potential fo r realizing siibstantial savings in both time and money This mode of procurement should be considered where completion time is of overriding impor- tance Because the bids are generally sought on the basis of performance specifications, the successful contractor IS given f l e x i b i l i t y m design and choice of components withm a range of desired quality which allows him to arrive at cost-beneficial solutions not restricted by def ini t ive design standards or prescriptive or standard specifications In addition, the personnel of the Fac i l i - ties Procurement Agent, freed from much of the operating responsibility, can direct greater attention to design review for compliance with performance specifications I t should be noted, however, that m allowing the contractor such f l e x i b i l i t y , the Faci l i t ies Procurement Agent r e l i n - quishes the r ight to be part o f the decision-making process during detailed design and construction when many value 61

judgments must be made, and therefore he must rely heavily on the conpetence of the design/construct team When u t i l i z i n g the design/construct mode, the Faci l i t ies Procurement Agent would be required to ensure that the performance c r i t e r i a presented to the contractor are reasonably detailed, otherwise, the concept presented may not ref lect actual f a c i l i t y objectives I t i s equally important that the Facil i t ies Procurement Agent have some available mechanism for ensuring contractor a b i l i t y and in tegr i ty so as to avoid design solutions which ca l l fo r minimum construction e f f o r t and which meet the performance c r i t e r i a only nominally I f the Agent is not capable o f ensuring both, then use of design/construct procurement should be avoided (3) Two-step Procurement - Hie mi l i ta ry Departments have successfully used two-step procurement on a l imited basis f o r obtaining f a c i l i t i e s such as housing, warehouses, and hangers This approach also is predicated on development of s i i f f i c i en t ly detailed, though not unduly res t r ic t ive , performance c r i t e r i a The f i r s t step consists of develop- ment and issuance by the Faci l i t ies Procurement Agent of a request for proposals, subsequent evaluation o f proposals, and i f necessary, discussion with potential bidders, with- out detailed price information, to determine concept acceptability The proposals siibmitted during this step need not be i n the form of f i n a l design documents but must contain suff ic ient information to demonstrate f u l l under- standing of f a c i l i t y objectives and to enable a comprehen- sive evaluation by the Facil i t ies Procurement Agent Ihose proposers judged responsive are then invited to participate in the second step i n which more complete designs and to t a l cost information are presented, and a contract is awarded Although this technique has been employed principal ly fo r the procurement of complete f a c i l i t i e s or building systems. I t can be applied to portions of the procurement proces| as well—e g , f o r the procurement of building subsystems As in the case of design/construct procurement, detailed performance c r i t e r i a should be provided with the i n i t i a l request for proposals Assuming this is done, the mode would give the Facil i t ies Procurement Agent better opportunity fo r analyzing design and assessing qual i f ica- t ion of proposers before contracts have to be le t (4) Construction Management - A procurement mode being tised with increasing frequency by the private sector is that o f See Appendix B for definitions 62

engaging a construction manager f o r a f ixed fee to act as the owner's representative m providing professional management o f the construction process Depending on contractual agreement, the scope of the construction manager's responsibilities can include responsibility fo r coordination between owner and designer i n budget formula- t i o n , provision of information on construction tedinology, management of the procurement e f f o r t , supervision o f construction, as well as a wide range of other services i f desired To use this mode successfully, the construction manager must have the expertise and personnel capabilities which correspond to the contract responsibil i t ies, especi- .ally m such areas as engineering, budgeting, cost estima- t i n g , scheduling, purchasing, inspection, management, and labor relations To be considered qua l i f ied , a construc- t ion manager should have a history of successful perfor- mance m both the management and furnishing of professional services during design The construction manager approach has many of the same advantages as the phased construction and design/construct procurement modes m the sense that coordination o f the design and construction process is optimized In addition. I t can provide fo r a better selection of both architect- engineer and construction capabili t ies, because the manager has the ab i l i t y to break out various phases of the construc- t ion e f f o r t fo r assignment to uniquely qual i f ied people and organizations Because he is not t i ed to the restrictions imposed by use of the t radi t ional design and general contractor services, he can employ such practices as pre- bidding, separate bidding, and prepackaging of bids fo r subcontracts, thus obtaining a wider involvement of the construction commmity and the advantages of more competi- t ive bidding on a greater portion of the work Although the construction manager mode can be applied to jobs of any size and type, greatest advantage can be gained m applying i t to major projects and whenever a nunber o f smaller projects can be aggregated for execution under a single responsibility (5) Total-Cost Bidding - Another procurement mode which may have applicabil i ty to mi l i ta ry f a c i l i t i e s procurement i s to ta l cost bidding--! e , the l e t t i ng of a single lump sum contract for a l l design, construction, and maintenance associated with a given f a c i l i t y , or portion thereof, over I t s l i f e expectancy This approach has several features which tend to minimize i t s use fo r to t a l f a c i l i t y procure- ment I t can reqiure long-term financial commitments on the part of both the owner and the contractor, and few, i f any, contractors are organized to provide the maintenance 63

service required f o r a t o t a l f a c i l i t y thiougjiout i t s l i f e cycle However, t o t a l cost bidding need not be applied only to the procurement of a complete f a c i l i t y The method can be used f o r procuring major items of equipment or siibsystems which require routine maintenance or periodic replacement Such procurement, which focuses on lowest to t a l net cost ( i n i t i a l purchase price less manufacturer's repurchase guarantee plus manufacturer's operation and repair cost guarantee), does not res t r ic t competition and permits the owner to better budget annual operating costs As noted previously, many of these alternate procurement modes are part icularly q)propnate f o r the application o f the emerging industrialization of building and technology The mil i tary f a c i l i - t ies procurement program, with i t s annual eiqpenditure on the order of two b i l l i o n dollars, represents a substantial market base, and thus could be a primary contributor to and beneficiary of such industrialized biulding techniques Care must be taken, however, to ensure that such new techniques are t r u l y cost-effective, nevertheless, they do have signif icant potential i i ) view of chang- ing conditions in and pressures on the building industry fo r increased productivity and performance * Industry has made substantial progress in mass production technology in construction This has been acconplished pr incipal ly by achiev- ing a degree o f dimensional and functional standardization and coordination o f products within and between segments of the indus- t ry where high volume is possible and large markets have existed or could be created This has been a gradual though accelerating trend, however, i t has not been accomplished i n the context o f a unifying concept of industrialization Rather, i t has been accomplished by simply improving eff iciency whenever possible and treating product interface problems where they arose This trend has been part icularly noticeable in sudi areas as precut structural members, panels, trusses, appliances, and other mechanical/ electr ical equipment The present e f f o r t is to capitalize on these trends and to unify the often disparate e f for t s within well defined concepts and approaches, and with defini te goals A large volume of construction by any given procurement agent is ' not required to make use of the existing technology or o f the emerging systems, subsystems, and systems-onented building compo- nents Once they have been developed and a distr ibution capability has been established by the producers, they may be used by any procurement agents and fo r many individual projects I t is often possible to use such available tedinology without adopting the f u l l See Appendix B fo r a more detailed treatment o f industrialized bmlding technology, the reasons fo r current interest i n i t s development, definitions of terms, recent developments, constraints, and a workable develc^mental program 64

building-system concept To accomplish the l a t t e r , however, requires (1) a substantial organized market, (2) standardization of dimensionally and functionally conpatible subsystems and systems-onented components, (3) designer usage of the systems hardware, (4) volume purdiasing, and (S) some degree of systems management Once the constituent parts of the mi l i ta ry f a c i l i t i e s procurement program—1 e , types, nunibers, and proposed location of f a c i l i t i e s , and their common elements—have been iden t i f i ed , the avenues fo r implemenlfing industrialized building techniques can be many and could determine the approach to be taken with regard to system development, system design, and construction Where existing hardware can be used, a minimum of devel(^ment may be reqmred Normal design procedures need only be amended to allow the i r incorporation With time, however, some measure o f standardization on the basis of dimensions and functions would be reqmred to enhance ease ^ d f l e x i b i l i t y of design and replacement and to assure consistent quality Possible waiver o f standardized mil i tary specifications also mig^t be required Where no existing system hardware i s available, or i s not available m suf f ic ien t volume to simply an ident i f ied demand, system develop- ment, design, and construction must be viewed i n a much broader context Again, many q)proaches are possible Industry may, fo r example, be asked to assume a l l responsibility fo r development, design, and construction o f a to ta l building system (as m the case o f the industrial consortium m which producer, architect, planner, and contractors are combined i n a legal ent i ty) or fo r selected subsystems, with the overall design, construction, and coordination being accomplished in accordance with conventional practices These approaches can be coupled with the various other procurement modes discussed earl ier , such as two-step procurement, design/ construct operations, and construction management, and other tediniques which are aimed at tightening the construction process through effective management procedures In any case, preplanning and coordination in development, design, and execution w i l l be c r i t i c a l i f problems of interfacing are to be eliminated Consequently, the need for the headquarters of the Faci l i t ies Procurement Agents to concentrate on development of c r i t e r i a fo r use by the f i e l d offices m selecting the appropriate procurement modes fo r this new technology w i l l be of paramount importance So also w i l l be the need for c r i t e r i a and guidelines concerning the form and content of the actual procurement document The coupling of actual procurement with development of new technology and procurement c r i t e r i a is treated further m the section which follows and i n ^pendix B From the preceding discussion, i t i s apparent that both new procurement modes and technology are available True cost 65

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