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Innovations - Design-Build Contracts: Performance Specifications
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Specifying results instead of process leverages contractor creativity
Over the next 5 years, the investment needed to address the backlog in highway infrastructure repairs may reach $1.6 trillion, according to American Society of Civil Engineers estimates. Compounding the problem is highway agency downsizing, reduced funding, aging infrastructure, growing congestion, escalating material costs, and public resistance to tax increases. Innovative investment financing is an increasing need in the delivery of transportation infrastructure projects.
Design-build (D–B) is a method of project delivery in which the design and construction phases of a project are combined into one contract and awarded on either a low-bid or best–value basis. D-B projects allow for greater private sector participation in the delivery of transportation projects. Agencies can focus on policy and planning, leaving the private sector to deal with cost efficiency and construction risk, which it is in the best position to manage. Medium–to–large transportation projects are best suited to D-B project delivery because the agencies involved with larger projects typically have sufficiently knowledgeable staff to prepare the comprehensive contract documents required to clearly delineate roles, responsibility, and liability.
Performance specification contracts between an agency and private partner define only the end product or performance for the project, not the methods required to achieve results. Performance specification agreements significantly increase the opportunities for cost savings because they capitalize on a contractor's experience, technology, and procedural innovations, often resulting in accelerated schedules.
Performance specification contracts include the following:
Advantages of considering innovative design-build contracts include the following:
In 1990, the Federal Highway Administration (FHWA) established Special Experimental Project Number 14–Innovative Contracting (SEP–14) to enable state transportation agencies to test and evaluate a variety of alternative project contracting methods. One method was design-build, which remains a core element of SEP–14. Between 1990 and 2002, nearly 300 projects totaling $14 billion were proposed for D–B contracting under SEP–14 by transportation agencies in 32 states, the District of Columbia, and the Virgin Islands.
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