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CONSTRUCTION AND PROJECT MANAGEMENT TEAM

 

Slide 1
2005 AASHTO Value Engineering Conference...Using VE in Design Build
Presented by:
Jerry R. Blanding
Innovative Contracting Engineer
FHWA – NRC
July 21, 2005
Sheraton Gunter Hotel
San Antonio, TX

Slide 2
Using VE in Design Build

Regulatory Definitions

DB Final Rule – History & Application

VE & DB A Federal Perspective

Additional Resources

 

Slide 3
Value Analysis/ Value Engineering

23 CFR § 627.3 Definitions
Value engineering. The systematic application of recognized techniques by a multi-disciplined team to identify the function of a product or service, establish a worth for that function, generate alternatives through the use of creative thinking, and provide the needed functions to accomplish the original purpose of the project, reliably, and at the lowest life-cycle cost without sacrificing safety, necessary quality, and environmental attributes of the project.

Slide 4
Why is Design-Build different from Design Bid Build?

23 USC 112 (b)(1)
Competitively Bid
(Low bid)
Construction
Contracts
Design-Build 23 USC 112(b)(2)
Qualifications based
Selection, Engineering /
Design Services

Slide 5
23 CFR Part 636 - Design Build

Design-bid-build means the traditional project delivery method where design and construction are sequential steps in the project development process.

Design-build contract means an agreement that provides for design and construction of improvements by a contractor or private developer. The term encompasses design-build-maintain, design-build-operate, design-build-finance and other contracts that include services in addition to design and construction. Franchise and concession agreements are included in the term if they provide for the franchisee or concessionaire to develop the project which is the subject of the agreement.

Slide 6
Value Analysis/ Value Engineering

Design Build Final Rule:
23 CFR § 627.5 (e)

In the case of a Federal-aid design-build
project … the (State) shall fulfill the …requirement by
performing a value engineering analysis
prior to the release of the Request for Proposals
document.

Slide 7
Using VE in Design Build – Florida DOT Example

All projects with an estimated cost of $20 million or more shall have
a minimum of one VE study conducted during project development.

The estimated cost shall includes all costs associated with the
project including but not limited to:
Design
Right of Way
Construction
Administrative Cost.

Slide 8
Using VE in Design Build – Florida DOT example

The VE study shall be conducted during one of the following
phases of project development:
Initial Concepts
Comparison of Alternatives
Final Design

For Design Build Projects, the VE study shall be conducted prior to
the release of the Request for Proposal (RFP) Document.

The greatest potential for improvement is during the Initial
Concepts or Comparison of Alternatives review period.

Slide 9
Design Build:
Where We Are And How We Got Here
A Brief Look Back

Slide 10
TRB Task Force A2T51 - Innovative Contracting

January 1988 - 23 representatives of the highway industry participated
Mission of TRB Task Force A2T51
Compile information on contracting practices
Assess how current practices affect quality, progress and cost
Suggest measures for improving contracting practices and promoting quality in construction
December 1991 - TRB Circular #386 – Innovative Contracting Practices

Slide 11
Special Experimental Project No. 14.Innovative Contracting

Initiated 2/13/90
Objective - Evaluate project specific contracting practices which
Maintain product quality
Reduce life cycle cost
Practices proposed for evaluation
Cost-plus-time Bidding
Lane Rental
Warranty Procedures
Design-Build

Slide 12
TEA-21 Design-Build Legislation Section 1307

FHWA implemented the Final Rule in January 2003.

After the final rule, states can use design-build without HQ approval for “Qualified Projects”
ITS projects > $ 5 million
Other projects > $50 million

SEP-14 will continue for smaller projects unless Congress approves language in the reauthorization bill eliminating this threshold.

In 2005 FHWA will complete the required ‘Report to Congress’ on the effectiveness of design build.

Slide 13
Existing SEP-14 Design-Build Contracts vs. “Qualified Projects”

Existing SEP-14 Design-Build Contracts vs. "Qualified Projects"
100%    
90% 17% 44 > $ 50 M
80%   30 $ 20 - 50 M
70%   34 $ 10 - 20 M
60%   33 $ 5 - 10 M
50%   55 $ 2 -5 M
40%   29 $ 1 - 2 M
30% 83% 35 $ 0 - 1 M
20%    
10%    
0%    


December 2002 FHWA SEP-14 data

Slide 14
2005 Design-Build State Public Procurement Laws
Map of U.S.

Design-build is permitted by all agencies for all types of design and construction

 

Design-build is permitted by all agencies for all types of design and construction Design-build is widely permitted Design-build is a limited option Design-build is not specifically authorized for public agencies
* Certain states allow design-build procurement by case law.

OR
ID
NV
UT
AZ
AK
HI
SD
KY
TN
GA
FL
WV
VA

WA
CA
NM
TX
PA
VT
CT
ME
MT
ND
MN
WI
IL
MO
NE
CO
OK
AR
LA
MS
OH
NY
MA
NH
NJ
DE
DC
NC
SC
WY
KS
IA
MI
IN
AL
RI


Slide 15
Advantages of Design-Build

Single Point of Responsibility
Quality / Innovation
Potential Time or Cost Savings
Improved Risk Management
Earlier Knowledge of Firm Costs
Lower Incidence of Claims
Reduced Project Administration

Slide 16
Critical Characteristics for Public Sector Design-Build Projects .Design-Build Selector.Georgia Institute of Technology / University of Colorado.

Poor DB Projects Don’t Have:
Well Defined Scope
Shared Understanding of Scope
Owner’s Construction Sophistication
Adequate Owner Staffing
Established Budget
Established Completion Date

Slide 17
Suitability

NEPA, and major ROW and utility issues must be clear
Should have a “Strong design component”
Reasons for selection should not be:
Obligation of funds
Compensate for inadequate agency resources

Slide 18
Design-bid-build

NEPA Final Design Construction
  PS&E
  ROD,FONSI,CE
Design-build  
NEPA  
Owner PE  
  Design-Builder's Design and Construction
RFQ RFP  
Draft RFP
     

Slide 19
FHWA Perspective on Using VE in Design Build

VE is a mandate for NHS projects $25 million and over
VE must be performed prior to release of the RFP
Multiple VE’s may be appropriate for major projects
VE studies are performed to add value to a project, not simply to reduce costs.
All valid suggestions should be included in the study report. Management must determine what impact the VE suggestions may have on the environmental or public hearing agreements.

Slide 20
FHWA Perspective on Using VE in Design Build

VE should be performed on NEPA alternatives or on selected RFP requirements.

FHWA has not objected as long as VE is done prior to release of RFP at a reasonable point with the coordination of the Division Office.

Slide 21
Innovative Contracting Best Practices Web Site

Utah State University
Practical information on warranties, A+B, lane rental and design-build contracting
What is it?
Why should you use this?
Criteria for project selection?
Who is currently using it?
Example provisions

Slide 22
Innovative Contracting

Utah Technology Transfer Center

Guest Book PowerPoint OverView Document Search Home
A+B Bidding Lane Rental Design Build Warranty Job Order Contracting Constructability Reviews
Download
Best Practices Guide

Welcome to our Innovative Contracting Home Page

Slide 23
FHWA HIPA-30 web page

WSDOT Design-Build Process for Highway Projects

Slide 24

Image of Colorado DOT Design Build Search Articles Site

Slide 25
The End - Questions?

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