1. Progressive Design-Build: Examining the Basics
September 25, 2017
Michael C. Loulakis, Esq., DBIA
President/CEO
Capital Project Strategies, LLC

2. Introduction
Project delivery studies show benefits of Design-Build Done Right:
Early contractor involvement
Highly qualified teams
Group cohesion and team integration
Most private sector owners readily understand these benefits
Qualifications dominated procurement practices
Collaborative development of design
Negotiation of ultimate project price

3. Introduction (cont’d)
Unfortunate reality – many public sector owners do not use Design-Build Done Right
Price is often dominant selection factor
Use bridging documents vs. performance requirements
Little meaningful collaboration prior to contract award

4. Introduction (cont’d)
Challenges created by these practices
Bridging documents can stifle innovation
Owners susceptible to change orders for problems in their design documents
Competitive procurements are costly and take time for all parties
Is there a way for owners to exercise substantial design control and comply with Design-Build Done Right principles?

5. Progressive Design-Build’s Core Features
Design-builder retained by owner early in project’s life
Design-builder selected primarily, if not exclusively, on qualifications
Final project cost and schedule commitment is not established as part of the selection process
Two phases of work
Preliminary services
Final design and construction, once the parties have agreed upon price and other commercial terms

6. Core Features (cont’d)
Design-builder collaborates with owner during Phase 1 to create or confirm project’s basis of design
Design-builder advances design
Decisions based on cost, schedule, operability, life cycle and other considerations
Ongoing, transparent, cost estimates to achieve budget requirements

7. Core Features (cont’d)
Formal commercial proposal for Phase 2
“Appropriate” level of definition, often at 40-60% design completion
Dependent on amount of control owner desires to maintain over design definition and reduction of contingency
Phase 2 initiated upon acceptance of commercial proposal

8. Core Features (cont’d)
Owner right to exercise “off-ramp”
End relationship and use design to advance project
Right to have designer complete design and become designer-of-record
Early work packages for discrete work elements

9. Why Owners Choose Progressive Design-Build
Interest in contracting with design-builder very early in design process
Complex projects requiring high level of collaboration
Higher degree of cost certainty and transparency during design development
Owner wants to remain actively involved in making design decisions
Avoids time and expense of owner creating design baselines for procurement
Streamlines and simplifies procurement process
Reduced or limited need for stipends

10. Why Owners Choose Progressive Design-Build (cont’d)
Ability to use early work packages and fast track
Removes some of owner’s time pressures in reviewing and acting upon design submittals
Allows owner participation in subcontractor and supplier selection
Offers transparency into design-builder’s proposal cost
Provides collaborative way to establish “single point of responsibility” – there is no design “handover”

11. Why Owners Choose Fixed Price Design-Build
Interest in awarding contract with full competition
Opportunity for more creative technical approaches
Opportunity for multiple technical approaches
Opportunity for best value and lower prices
Restrictive procurement regulations
Prohibit progressive design-build
Preclude early involvement of subcontractors

12. Why Owners Choose Fixed Price Design-Build (cont’d)
Concerns over attributes of progressive design-build (e.g., negotiating price or exercising “off-ramp”)
Marketplace concerns with progressive design-build
Success and comfort in using fixed price design-build – procurement infrastructure already developed

13. CMAR vs. Progressive Design-Build
Benefits of CMAR
Ability of owner to have a direct contract with a designer who is independent of contractor
Easier ability to exercise “off-ramp”
Benefits of progressive design-build
Owner does not have to manage/procure designer
Slight schedule benefit
Ability to obtain performance guarantee and other benefits of design-build

14. Progressive Design-Build Procurement
Pick the right team through streamlined and simple procurement
The right team is the one that:
Will work well and collaboratively with owner
Offers best chance to meet owner’s project goals and required outcomes
Owner believes is trustworthy, fair, qualified and transparent

15. QBS and Best Value Qualifications based selection Best value
Solely non-price factors
Team qualifications and past performance
Innovative ideas
No price information
Best value
Both price and non-price factors
Price factors might include Phase 1 services and overall design-build fee (low weighting)

16. Other Procurement Decisions
One-step or two-step
Statutory requirements?
Deliverables required for shortlisted proposers?
Pricing information?
Proprietary meetings
Interviews
Stipends

17. Lessons Learned from Procurement of Progressive DB Projects
Process may benefit in having Phase 1 services divided into 2 or more components
Confidential meetings are extremely valuable in obtaining real insights from proposers
Owners often try to resolve too many commercial and contractual details during procurement
Process benefits from post-award discussions
Contract will essentially be subject to modifications once contingency and risk pricing are developed

18. Unique Contracting Issues
Scope of Phase 1 services, including cost modeling
Ability of design-builder to rely upon owner-furnished information
Early work packages
Design-builder self-performance
Subcontractor and vendor procurement and involvement in Phase 1
Commercial proposal
Exercising off-ramp
Contract should reflect collaborative nature of relationship

19. What Should an Owner Do to Prepare for Implementing Progressive DB?
Assess appropriateness of process
Use experienced consultants
Understand procurement limitations
Have a strong cost estimator on team
Make early decision on subcontractor procurement and design-builder self-perform
Ensure the team is willing and able to collaborate and trust

20. Dulles Rail, Phase I
$1.6 billion contract for first phase of WMATA extension to airport
Virginia PPTA procurement process
Investment by design-builder in the preliminary engineering through unsolicited proposal
Negotiated lump sum price at completion of 30% design (preliminary engineering) after open book process
Project on line 2014
Allowances used to overcome certain pricing issues
Interim agreements used to address ROW/utility/design issues pending federal funding

21. DC Water Headquarters
New HQ to be built over an operating pumping station
2-phase procurement with shortlist of 3
Design competition – iconic design that would satisfy permitting agencies, based on $55MM budget
$75,000 stipend
Skanska USA Building, with Smith Group as lead architect
Weighted criteria approach used for technical approach
Solicitation of only lead constructor and lead designer
Pricing information provided for informational purposes
Single contract with two phases
GMP proposal will be provided at 80% design

22. City of Houston, Northeast Water Purification Plant Expansion Project
320 MGD treated water facility
Estimated cost in excess of $1B
Approximately two years of preliminary engineering expected
Completion by 2024
Two step procurement with shortlist of 3
Best value approach, with price proposal to include:
Design-builder’s fee and Basis of Design services
Indicative pricing
Full contract approach
Early work packages expected
Solicitation of full teams

23. Other Progressive Design-Build Projects
Substantial number of water/wastewater projects
Northern Treatment Plant, Colorado
South Florida Water Management District
Los Angeles World Airports
Port of Seattle International Arrivals Facility

24. Progressive Design-Build: Examining the Basics
September 25, 2017
Michael C. Loulakis, Esq., DBIA
President/CEO
Capital Project Strategies, LLC