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Quantification of Cost, Benefits and RiskAssociated with Alternate Contracting Methods
and Accelerated Performance Specifications
Keith R. MolenaarUniversity of Colorado
AASHTO Subcommittee on Construction
August 16, 2016 1
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Alternative Contracting Methods (ACM)
August 16, 2016 2
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Research Objectives
• Document ACM benefits, costs, risks and lessons learned
• Quantify cost, schedule, and quality consequences of ACMs
• Update Transportation Construction Management Pooled Fund Project Delivery Selection Matrix
• Promote ACM lessons learned and best practices
August 16, 2016 3
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Research Project Scope
• FHWA-funded, 2-1/2 year research study
• More than 15 investigators and research assistants
• Data collected from 291 completed projects
• Deliverables include data analysis and lessons learned– FHWA Tech Briefs– TRB and white papers– Conferences and webinars
4August 16, 2016
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FHWA Tech Brief of Empirical ACM Performance
5
• Introduction• Data Collection• Results and Discussion
– Contracting Methods– Complexity– Project Risks– Procurement Methods– ATCs
– Payment Methods– Project Costs– Project Duration– Schedule/Cost Certainty– Project Intensity
– Award Growth– Cost Growth– Change Orders– Schedule Growth
August 16, 2016
• Project Delivery Selection• Summary
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Data Collection
Data Collection Goals• Collect the largest highway project delivery database• Collect only completed projects• Collect diverse sample of completed projects
– Geographic– Project type– Project size– Project complexity
• Seek statistically significant resultsAugust 16, 2016 6
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Data Collection
August 16, 2016 7
• Two-step approach1. Contract admin
databases2. Project manager
questionnaires
• Follow-up calls for data validation
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Data Collection
August 16, 2016 8
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Data Collection
August 16, 2016 9
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Data Collection
August 16, 2016 10
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Data Collection
August 16, 2016 11
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Data Collection
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• 291 projects−134 D-B-B projects−34 CM/GC projects−39 D-B/LB projects−84 D-B/BV projects
• 28 agencies• Completed 2004-2015
Research Data Collection
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Project Procurement Methods
August 16, 2016 13
Procurement Procedure
D-B-B (n=134)
CM/GC(n=34)
D-B/LB(n=39)
D-B/BV(n=84)
Low Bid 80% 0% 100% 0%Best Value 14% 47% 0% 100%Qualification-Based 1% 41% 0% 0%
*Total of each column may not sum to 100% because of unclassified procurement procedures by respondents.
Project Procurement Methods
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Project Complexity
August 16, 2016 14
Most Complex (Major) Moderately Complex Non-complex (Minor)
• New highways; major relocations
• New interchanges• Capacity adding/major widening• Major reconstruction (4R; 3R
with multi- phase traffic control)• Congestion management
studies are required• Environmental Impact Statement
or complex Environmental Assessment
• 3R and 4R projects which do not add capacity
• Minor roadway relocations• Non-complex bridge
replacements with minor roadway approach work
• Categorical Exclusion or non-complex Environmental Assessment required
• Maintenance betterment projects
• Overlay projects, simple widening without right-of-way (or very minimum right-of-way take) little or no utility coordination
• Non-complex enhancement projects without new bridges(e.g. bike trails)
• Categorical Exclusion
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Project Complexity
August 16, 2016 15
Non-Complex (minor) = 42
(15%)
Moderately Complex = 107
(37%)
Most Complex (major) = 140
(48%)
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D-B-B Project Complexity
August 16, 2016 16
D-B-B = 134
(46%)
Non Complex
46%
Moderately Complex
39%
Most Complex
15%
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CM/GC Project Complexity
August 16, 2016 17
CM/GC = 3412%
Non Complex
3%
Moderately Complex
32%
Most Complex
65%
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D-B Project Complexity
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D-B/BV = 84
(29%)
D-B/LB = 39
(13%)
Most Complex
23%
Moderately Complex
39%
Non Complex
38%
D-B/LB
Most Complex
58%Moderately Complex
35%
Non Complex
7%
D-B/BV
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Project Size
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Contract Method Mean Median Min. Max.
D-B-B (n=134) $20,286,637 $12,438,075 $183,202 $252,052,326
CM/GC (n=34) $36,328,010 $19,167,399 $1,390,828 $235,936,099
D-B/LB (n=39) $10,646,348 $4,384,177 $69,108 $68,826,264
D-B/BV (n=77) $43,364,854 $22,127,526 $622,317 $357,760,287
Average Project Cost
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Project Size
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Contract Method Mean < $20M < $10M
D-B-B (n=134) $20,286,637 63% 39%
CM/GC (n=34) $36,328,010 47% 29%
D-B/LB (n=39) $10,646,348 82% 70%
D-B/BV (n=77) $43,364,854 38% 27%
Average Project Cost
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Tech Brief of Empirical ACM Performance
21
Contract Method Mean Cost ($) Mean Project
Duration (Days)
Mean Agency Design Duration
(Days)
Mean Construction Duration (Days)*
D-B-B (n=74) $21,687,447 1,774 932 642
CM/GC (n=24) $41,368,952 929 361 511
D-B/LB (n=18) $12,249,585 889 268 435
D-B/BV (n=21) $48,532,458 1,516 662 837
Average Project Duration
* Note “Construction Duration” for D-B projects includes design-builder design and construction (D-B contract duration).
August 16, 2016
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Tech Brief of Empirical ACM Performance
22
Contract Method Mean Cost ($) Mean Project
Duration (Days)
Mean Agency Design Duration
(Days)
Mean Construction Duration (Days)*
D-B-B (n=19) $4,958,329 1,506 795 508
D-B/LB (n=10) $4,745,533 773 181 380
Ave Duration for D-B-B & D-B/LB projects between $2M-10M
August 16, 2016
* Note “Construction Duration” for D-B projects includes design-builder design and construction (D-B contract duration).
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Tech Brief of Empirical ACM Performance
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Timing of Award for D-B-B & D-B/LB projects between $2M-10M
August 16, 2016
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Tech Brief of Empirical ACM Performance
24
Contract Method Mean Cost ($) Mean Project
Duration (Days)
Mean Agency Design Duration
(Days)
Mean Construction Duration (Days)*
D-B-B (n=34) $21,188,585 2,130 1,139 818
CM/GC (n=10) $23,912,981 662 281 349
D-B/BV (n=10) $18,604,503 1,420 638 639
Ave Duration for D-B-B, CM/GC and D-B/BV Projects between $10M-50M
August 16, 2016
* Note “Construction Duration” for D-B projects includes design-builder design and construction (D-B contract duration).
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Tech Brief of Empirical ACM Performance
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Timing of Award for D-B-B, CM/GC & D-B/LB Projects between $10M-50M
August 16, 2016
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Tech Brief of Empirical ACM Performance
26
Contract Method
Mean Cost($)
Mean ProjectIntensity($/Days)
Min. ProjectIntensity($/Days)
Max. ProjectIntensity($/Days)*
D-B-B (n=74) $21,687,447 $12,802 $269 $123,566
CM/GC (n=24) $41,368,952 $46,450 $3,618 $159,031
D-B/LB (n=18) $12,249,585 $12,816 $894 $49,892
D-B/BV (n=21) $48,532,458 $28,527 $1,930 $204,341
Project Intensity
* Note “Construction Duration” for D-B projects includes design-builder design and construction(D-B contract duration).
August 16, 2016
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Relationship between ACMs and Award Growth
27
Project Award Growth per Delivery Method
Contract Method Mean (%) StandardDeviation
D-B-B (n=129) -9% 18%
CM/GC (n=31) 3% 6%
D-B/LB (n=37) -5% 32%
D-B/BV (n=78) -7% 22%
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Relationship between ACMs and Change Orders
28
Change Orders D-B-B(n = 65)
CM/GC(n = 19)
D-B/LB(n = 21)
D-B/BV(n = 57)
Agency Directed 1.2% 0.7% 1.6% 1.9%Plan Quantity Changes 1.1% 0.3% 0.6% 0.2%Unforeseen Conditions 2.4% 1.5% 1.8% 1.8%Plan Errors and Omissions 0.9% 0.6% 0.1% 0.5%Other 0.1% 0.2% 0.8% 0.3%Total 5.8% 3.4% 5.0% 4.7%
Average Impact (% of cost growth) of Change Order Categories
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Selecting Project Delivery Methods
• Project Delivery Selection Matrix– Colorado Department of Transportation– Next Generation Transportation Construction
Management Pooled Fund Study
http://www.colorado.edu/tcm
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Selecting Project Delivery Methods
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Create project description checklist Develop project goals and identify project constraints Evaluate the primary factors
– 1. Delivery schedule– 2. Complexity and innovation– 3. Level of design– 4. Cost– 5. Initial project risk assessment
Evaluate the secondary factors– 6. Staff experience / availability– 7. Level of oversight and control– 8. Competition and contractor experience
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Tech Brief of Empirical ACM Performance
31
• Summary– Agencies using ACMs on all project sizes– ACMs delivered 40-60% time savings on projects studied– ACM cost certainty was significantly earlier– ACM project intensity was significantly higher– Award growth, cost growth and schedule growth were
comparable to traditional methods
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Research Objectives
Document ACM benefits, costs, risks and lessons learned
Quantify cost, schedule, and quality consequences of ACMs
Update Transportation Construction Management Pooled Fund Project Delivery Selection Matrix
• Promote ACM lessons learned and best practices
August 16, 2016 32
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ACM Lessons Learned Research
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Short TitlesA. ACMs and Change OrdersB. ACMs on Small ProjectsC. QBS and Best-Value for
CM/GCD. Role of the ICE in CM/GCE. CM/GC Contract PackagingF. ACM Engineer’s Estimates
G. Effective Use of D-B StipendsH. Procurement Duration and
PerformanceI. ATC State-of-PracticeJ. ATCs Confidentiality and
InnovationK. ACM QA/QC Effectiveness
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Role of Independent Cost Estimator in CM/GC
34
• ICE hired– 40% same time as contractor– 36% after contractor– Typically at ~30% design
• ICE Best Practices– Construction experience– Local area knowledge– Include ICE in “team”
• Roles of ICE1. 100% independent estimate2. 57% attend design meetings3. 30% consult on initial procurement4. “Other”
1. Change Order Negotiation2. Constructability Consultant
• Cost of ICE – Avg. 0.9%
• 25 project surveys and six interviews
August 16, 2016
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Effective Use of Stipends on D-B Projects
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• Stipend Value & Use– 123 projects– Use of stipends
• 84% of D-B/BV• 16% of D-B/LB
• Stipend Interviews– No correlation w/amount-innovation– Required to ensure
• D-B firms propose• Adequate competition
– Stipend value• 62% less than 0.25% or award• Average 0.30% of award
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Quantification of Cost, Benefits and RiskAssociated with Alternate Contracting Methods
and Accelerated Performance Specifications
Keith R. MolenaarUniversity of Colorado
AASHTO Subcommittee on Construction
August 16, 2016 36