Alternative Delivery Summit Delivered Big Options

Design-build, construction management at risk, public-private partnerships (P3) and integrated project delivery were the topics of discussion at the Western Council of Construction Consumer’s third annual Alternative Project Delivery Summit in West Sacramento on Sept. 14, 2011.

Held in the Ziggurat Auditorium of the California Department of General Services building (or the “pyramid” building as it is more commonly known by locals), more than 170 construction industry experts gathered to network and learn more about these alternative delivery methods. The full-day conference featured an impressive slate of presenters, including top professionals from some of the most prominent regional, national and international firms, complete with case studies, panels and open-floor discussions.

Formed 30 years ago, the WCCC serves as a forum for owners involved in commercial, institutional and industrial construction. The nonprofit council provides members with the resources and support necessary to fully develop and advance in the areas of operations and maintenance, safety, cost-efficiency, professional development and overall quality construction.

The summit began with a panel discussion of design-build case studies with Tim Murchison, vice president of URS Corp. serving as moderator, and panelists Mark Cirksena, regional manager of DPR Construction; Mike Corrick, president of Nacht & Lewis Architects; Mike Meredith; project director, CDCR CHCF Stockton; and Ellen Warner, partner at David S. Taylor Interests Inc.

Design-Build
Design-build is probably best described as a delivery method where both the design and the construction of a structure are the responsibilities of the same contractor. D/B relies on a single point of responsibility contract and is used to minimize risks for the project owner and reduce the delivery schedule by overlapping the design phase and construction phase of a project.

During this session, each of the four panelists discussed a project that was important to their company and why design-build was chosen as the delivery method of choice.

For instance, Warner highlighted the $60 million Sacramento City Hall that was completed in 2005; while for Cirksena, he told the audience why DPR chose D/B for the Los Rio Community College District’s new instructional facility in Sacramento. For Corrick, he expressed pride at his firm’s involvement in the Central Plant renovation project in Sacramento; and for Meredith, it was the Capitol East End project, a $392 million project spanning more than 1 million square feet that was completed in 2003.

“Design-build is a great methodology,” said Meredith, “but low bid still has its place, especially in the government sector. D/B harbors a ‘master-builder’ mentality. So, at some point, you have to take a leap of faith.”

Warner added that with a low-bid process, the contractor often has to catch up. “It can be harder to maintain the integrity of the project design.”

While the comments between the panelists were extensive, each agreed that D/B was the right choice for their project because of its cost-effectiveness and allowance for creativity. D/B also allowed schedules to be streamlined more efficiently, such as in the case of the Central Plant renovation project that was completed more than six months ahead of schedule. The panelists also all agreed that complex projects may be better suited for D/B, especially if the owner desires an early cost commitment.

CMAR
Following the design-build session, the next group of panelists focused on construction management at risk (CMAR) with moderator Ken Harms, vice president of Gilbane Building Company. Industry panelists included Jeff Lage of Skanska USA Building Inc.; James Sowerbrower, chief of CM, California State University; Jim Mueller, COB and corrections director, KMD Architects; and Robert Uvalle, manager, design and construction services, AOC.

While the definition of CMAR can sometimes be blurred with the specifics changing, it’s probably safe to say that similar to a traditional design-bid-build delivery process, CMAR involves two contracts — one between the owner and the contractor and one between the owner and the architect or engineer. This differs from a design-build contract where the owner contracts with a single design-build entity composed of the designer and contractor.
The panelists agreed that for complex projects, CMAR can be the route to go as it permits equal input for all companies involved. “It allows the design to evolve,” said one panelist, “and creates a team that will produce the best results.”

The panelists also said that in CMAR projects, more owners are now asking construction managers to disclose their staffing by both position and schedule. “This establishes a baseline and allows for changes and negotiations,” added another panelist.

In this type of delivery method, the construction manager must manage the entire project and keep the owner informed of any delays. From the owner’s perspective, early input from the construction team is vital in maintaining a collaborative process.

“Participate like it’s the Super Bowl,” said KMD’s Mueller. “Look for solutions. It’s about performance. And performance promotes trust. In order to trust, we have to remove the fear of trust.”

Before breaking for lunch — which gave attendees a chance to network —Gilbane’s Ken Harms commented about the information presented at his summit and said there is a lot going on in the industry today.

“I think owners have been looking for a better way for a very long time. The lump sum way of doing business is very much old school. And, because of budget cuts, they don’t have enough staff to defend against a lump sum general contractor should the project go south. They’re thinking, ‘Ok, I’ve got fewer people on my side of the table; let me move the risk to the other side of the table. How do I collaborate and have a better experience?”

While there has been some push back from the architectural community, it can be a challenge for owners to find a happy medium.

“It’s very difficult right now, particularly in California,” said Harms. “There’s a proliferation of large design build projects. If you have a large design-build project — say anything over $100 million — as a contractor you are going to be spending in excess of $1 million to pursue it, as will your design team. If you win, it’s all great. But if you lose and then lose several others, you could be upside down as a business. If this trend continues, who will be left standing? It will just be the really large conglomerate architectural firms and no longer the smaller boutique regional firms.”

Sen. Wright and P3 Legislation
Following lunch, the crowd was treated to a very humorous keynote speech on public-private partnerships legislation from Senator Rod Wright (D- Inglewood) author of SB 475, a bill that allows for alternative delivery through P3.

With his natural ability to get the crowd laughing, Wright injected personal anecdotes in his 30- minute speech about P3 legislation that involved everything from his maserati, his prostate cancer health scare and dating life, to wanting to get back to L.A. as soon as possible to where the “cool people” are.

Essentially, P3 legislation recognizes the importance and need of California’s public and private sector to partner together to develop, construct and operate various types of projects across the state in order to improve to California’s economic development.

“Government has a difficult time adjusting to change,” said Wright. “We get wedded to the way it’s always been done. Europe has been doing P3 for a long time. We have to look at alternatives to getting things done — be it an airport, bridge or courthouse — and expand our sources for capital and skill. The question becomes, ‘What becomes the most efficient way to provide services?’”

Directly following the senator’s speech, moderator Jeff Baize, CEO, Brookhurst Development Corp. introduced the panelists of the P3 case studies session that included Clifford Ham, principal architect, AOC; Roger Niello, former assemblyman and author of the PPP bill; Lynn Smull, managing director of Table Rock Capital; Mark Kempston, director, Skanska; and Jim Corning of the National Development Council.

Each panelist discussed how their projects — which included the Long Beach Courthouse; the Presidio Parkway project in San Francisco; and a 3.5 billion square foot, ultra-modern hospital in Stockholm, Sweden — were successful using P3 as its delivery method.
“Essentially, managed risk is the name of the game in P3 project,” said one panelist. “There is a predictable cost and timeline.”

Integrated Project Delivery
The final session of the day feature a presentation by Dick Cowan, vice president of Davis Reed Construction Inc. who spoke to the group about the importance of integrated project delivery.

“It’s an approach to planning, design and construction that integrates the knowledge of the manufacturers, suppliers and trade experts in systems and materials into the process,” he explained. “Under the traditional approach, those builders and trade contractors most knowledgeable about systems and materials are kept ‘outside the door’ while planning and design occurs. They are invited in only at final pricing time, and then in a haphazard way.”
The main benefits of IPD include a selection of systems and materials that have the best value for the owner’s project; the timely ordering of materials and systems; and detailed plans of the actual product that will be supplied and used.

As for the projects that would benefit more from IPD, Cowen said, it is any project, but especially those with tight budgets or timelines or complex projects involving many systems and materials.

“As owners, require your design and construction team to adopt an IPD approach so that your project benefits from the wisdom of the actual trade experts in systems and materials.”