Procurement and Selection of DesignBuild Entities

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Procurement and Selection of Design-Build
Entities
CEM 525 PROJECT DELIVERY SYSTEMS By
MOHAMMED JALALUDDIN LECTURER CONSTRUCTION
ENGINEERING MANAGEMENT DEPT
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Presentation Outline

• The Difference between Project Delivery and
  Procurement
• Procurement Options for Implementing Project
  Delivery
• Sole-Source Selection
• Qualification Based Selection (QBS)
• Negotiated Source Selection with Discussions
• Source Selection with formal review ( No
  Discussion)
• Fixed Budget /best technical response or design
• Weighted Criteria
• Adjusted Low Bid
• Low First cost
• Other Variations
• Equivalent Design/low bid
• Meets criteria/ low bid

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Objectives of Class

• To differentiate between project delivery system
  and procurement options and recognize the key
  terms in design- build delivery system
• To describe the various options in
  procurement/selection of design-build
  contractors/design builders

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Alphabet Soup of Design Build
Technical Leveling
Procurement
D/B
DATA CENTER TOTAL 240 X 400 105,000GSF
LOBBY
SECURITY
DATA FLOOR AREA 40 X 60 BAYS TYPICAL BAYS
MEN
Two step
WOMEN
Best Value
MAIL PRINT AREA
QBS
NOC
DBOF
Sole Source
Design Criteria
OFFICE AREA
Performance specifications
UPS/ BATTERY ROOMS
Negotiated
STAGING
STORAGE
UTILITY SUPPORT AREA 15,000SF
Meets Criteria/Low Bid
RFP
MAINTENANCE
LOADING DOCK
ELECTRICAL
SWITCHGEAR
CHILLER PLANT
GENERATORS
Low Bid
RFQ
One Step
PRECAST SREEN WALL
COOLING TOWERS
UTILITY TRANSFORMERS/ SWITCHING CUBICLES
Adjusted Low Bid
Weighted Bid
Fixed Budget/Best Design
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Procurement/Selection Options
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Project Delivery System versus Procurement

• Project Delivery system is defined as an approach
  to select project team.
• Project Delivery method is an organizational
  concept which assigns specific responsibilities
  and authorities to people and organizations and
  which defines relationship of the various
  elements in construction of a project.
• It is the first allocation of base
  responsibilities between the owner, design
  professional and contractor. Thus, the project
  delivery system is the foundation on which all
  subsequent negotiations will be based.
• Procurement represents the purchasing steps that
  the owner or its representative must take to gain
  the services required under the chosen project
  delivery system.

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Project Delivery System versus Procurement

• For example, the Ministry of Education wants to
  build a new University in Riyadh, and the
  Ministry board considers three project delivery
  methodologies design-bid-build, CM (construction
  management) at risk, and design-build.
• For the project, the officials decide to use
  traditional design-bid-build as a project
  delivery system.
• To implement the delivery system, officials must
  purchase design services separately and
  construction services separately.
• Under most state law, for contracts that are
  primarily professional design services in nature,
  the state uses a qualifications-based selection
  procedure Note that qualifications-based
  selection (QBS using an RFQ) is not a project
  delivery methodology, but a procurement/purchasing
  methodology
• To obtain construction services under traditional
  design-bid-build, the Ministry is then required
  to purchase construction services via
  low-first-cost bids from construction contractors
  who meet the bonding requirements.

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Sole Source Selection

• Private owners who have established long-term
  relationships with services providers often use
  sole-source or direct selection in the
  procurement of design and construction services.
• Using selection factors such as past performance,
  reputation, technical and managerial
  qualifications, and long-standing or prior
  association, a private owner has the latitude to
  bestow contracts on the firm or individual of
  choice.
• Public owners may also employ sole-source
  selection when there are no other potential
  offerors or bidders
• or when an emergency (such as an earthquake,
  hurricane, or civil disturbance that may endanger
  the health and safety of the public) allows the
  waiver of strict procurement rules.
• The purchasing vehicle or format used for
  sole-source selection is a direct purchase
  request or sole-source contract agreement.

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Qualification Based Selection (QBS)

• In response to the owner's RFQ, entities or
  individuals submit their qualifications
  statements for review.
• The owner will review the qualifications
  statements and rank the firms on the basis of
  their past performance, technical competence,
  capacity to accomplish the work, and geographic
  location (if applicable).
• Usually, previous experience or specialized
  experience in the type of project named in the
  solicitation is critical to being ranked as one
  of the top three "most qualified."
• During the review, the owner will rank the firms
  according to their qualifications and will then
  begin negotiations with the number 1 (most
  qualified) ranked offeror to reach a "fair and
  reasonable" price for the services required.

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Qualification Based Selection (QBS) Contd

• If the owner is unable to reach a satisfactory
  agreement with the most qualified offeror, it
  will cease discussions with number 1 and begin
  negotiating with the second most qualified firm.
• In public projects, agencies normally identify a
  set of criteria in the project announcement
  against which each qualifications statement will
  be evaluated.
• For design-build projects, a selection scoring
  matrix may include (1) past experience with
  integrated services delivery (2) past experience
  with other members of the team (3) approach to
  problem solving, creative strategies, and
  innovation (4) quality assurance planning and
  management (5) key personnel dedicated to the
  project and (6) financial solidity and
  management skills.
• The purchasing vehicles or formats used for
  qualifications-based selection are RFQ and
  qualifications statements. Firms or individuals
  who respond to an RFQ are called offerors.

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Negotiated Source Selection with Discussions

• Generally, negotiated source selection with
  bilateral discussions involves a procedure of
  inviting proposals from design build contractors,
  permits "bargaining," and usually affords an
  opportunity to revise offers before the award of
  a contract.
• Bargaining (in the sense of discussion,
  persuasion, alteration of initial assumptions and
  positions, and give-and-take) may apply to
  technical requirements, schedule, price, type of
  contract and its provisions, and other
  project-related issues.
• Discussions with proposers deemed to be within
  "the competitive range" are held, and those
  within the competitive range may submit best and
  final offers.
• The final proposal packages are considered, and
  award is made to the proposer who is providing
  the "best value" to the government.
• Owners who procure design and construction
  services via negotiated source selection would
  use a request for proposals (RFPs). Respondents
  to an RFP are known as offerors or proposers.

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Source selection with formal review (no
discussions)

• Owners may award contracts on the basis of the
  most favorable initial proposal without
  discussions.
• The use of discussions is advantageous for
  projects that have little definition however,
  the owner may not have the time or inclination to
  conduct protracted negotiations about the scope
  and terms of the contract.
• In these situations, the owner will solicit
  proposals on the basis of information that is
  contained within or appended to the RFP Relying
  on the guidance contained within the RFP, plus
  the factors for evaluation of the proposals, the
  team will generate their response documents.
• Award is made (without discussions) to the
  proposer submitting what is deemed to be the most
  advantageous offer to the owner.
• Implementation of negotiated source selection
  with unilateral evaluation and selection of the
  successful proposal by the owner requires the use
  of an RFP

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Fixed Budget/ Best Design

• Adoption of the fixed-price/best-design approach
  to procuring integrated design and construction
  services is growing rapidly.
• This procurement method relies on a contract
  price that is fixed by the owner and stated
  within the RFP Since the budget is set prior to
  the RFP announcement, proposers work to develop
  qualitative and technical proposals only, under
  the stipulation that all price offers are equal.
• Fixed budget/best design is regarded as a
  competitive procedure wherein the proposers are
  competing in terms of scope and quality, rather
  than cost.
• The proposer that can fill the owner's shopping
  bag with the most value through their technical
  submission or concept design will become the
  awardee.
• Fixed-budget/best-design procurement is
  implemented through an RFP

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Weighted Criteria

• The solicitation for proposals will include a
  requirement for the submission of a separate
  qualitative proposal and a price proposal from
  each offeror.
• The qualitative proposal contains technical
  information from the design-build team that will
  be rated on the basis of points, frequently with
  the use of a matrix that scores each proposer's
  response to each of the evaluation factors.
• After consideration of each of the qualitative
  proposals (a process that may include oral
  presentations by the teams), the price proposals
  will be opened
• Maximum price points are assigned to the lowest
  dollar bid, and all others are scaled inversely
  proportional to that amount. The firm with the
  highest total points will gain the award.
• Weighted-criteria procurement is usually
  implemented using an RFP

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Adjusted Low Bid

• Purchasing of design-build services through the
  use of adjusted low bid is similar to the
  approach used under weighted criteria.
• Following the receipt of qualitative proposals
  and fixed-price envelopes, the qualitative
  portion is scored and totaled on a scale of 1 to
  100, which is expressed as a decimal (e.g., a
  score of 92 is shown as 0.92).
• Price submissions are then opened, and each price
  is divided by its respective qualitative score to
  yield an adjusted price.
• The adjusted low-bid amount is used to determine
  the successful proposer however, the actual
  price submitted in the original proposal is used
  on the contract.
• Because the adjusted low-bid process includes
  submission of a technical portion along with a
  price, the procedure relies on an RFP format for
  implementation.

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Equivalent design/ low bid

• Under equivalent design/ low bid, the proposer
  responds to the owner's RFP with a technical
  submission and price submission.
• After review and critique by the owner and its
  consultant, the proposer is given a deadline to
  respond with specified design changes and
  corresponding price amendments (either additive
  or deductive) in order to arrive at a group of
  proposals that are technically equivalent (this
  is sometimes referred to as technical leveling).
• Revised designs and pricing are then evaluated
  by the owner using both base cost and amendments.
  Award is normally made with overwhelming emphasis
  on costs, because the initial review process
  should have created nearly equivalent designs.

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Meets criteria/ low bid

• A related purchasing variation is known as meets
  criteria/ low bid.
• This method of evaluation most closely resembles
  the traditional bid process except that the
  drawings and specifications are not absolutely
  complete
• Very specific outline or conceptual designs are
  issued as a part of the design criteria package.
• Proposals are solicited from qualified firms. The
  proposals are evaluated, deemed to meet the base
  criteria, and award is made to the low bidder.
• The proposals from design build teams are
  evaluated and deemed to meet the base criteria,
  and award is made to the low-cost bidder.

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Low First Cost

• This method of purchasing, using the single
  attribute of price, is applicable
• Owners who employ low first-cost bidding to
  purchase design-build services are sending a
  signal to the marketplace that cost is their
  overriding criterion, and that the creative value
  of a unique proposal (solution to their facility
  problem) is not wanted or desired.
• The bidder's role amounts to completing the
  partial design and constructing the facility.
• Many design-build practitioners are uncomfortable
  with bidding under these conditions, because the
  low-bid process eliminates the creativity and
  innovation of the team
• Low first-cost procurement is usually applied by
  state or local governmental agencies who, under
  anachronistic procurement laws, must use bidding
  for contracts with a majority of the dollars
  destined for construction costs.
• The format or vehicle used to implement low
  first-cost procurement is the invitation for bids
  (IFBs)..

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Alphabet Soup of Design Build
Technical Leveling
Procurement
D/B
DATA CENTER TOTAL 240 X 400 105,000GSF
LOBBY
SECURITY
DATA FLOOR AREA 40 X 60 BAYS TYPICAL BAYS
MEN
Two step
WOMEN
Best Value
MAIL PRINT AREA
QBS
NOC
DBOF
Sole Source
Design Criteria
OFFICE AREA
Performance specifications
UPS/ BATTERY ROOMS
Negotiated
STAGING
STORAGE
UTILITY SUPPORT AREA 15,000SF
Meets Criteria/Low Bid
RFP
MAINTENANCE
LOADING DOCK
ELECTRICAL
SWITCHGEAR
CHILLER PLANT
GENERATORS
Low Bid
RFQ
One Step
PRECAST SREEN WALL
COOLING TOWERS
UTILITY TRANSFORMERS/ SWITCHING CUBICLES
Adjusted Low Bid
Weighted Bid
Fixed Budget/Best Design
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BEST VALUE

• Also known as Greatest Value,
• A selection process in which proposals contain
  both price and qualitative components,
• Award is based upon a combination of price and
  qualitative considerations. Qualitative can be
  further subdivided as to technical design
  and/or Management plan. etc

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TWO PHASE SELECTIONPROCESS

• The most popular method of design-build
  procurement is Two phase selection
• AIA, AGC, DBIA all recommend Two-phase process
• Two-phase selection refers to a design-builder
  selection process where the first
• phase involves shortlisting of candidates on the
  basis of the qualification statements they supply
  ( 3-5 )
• And the second phase involves final selection on
  the basis of technical and price proposals, etc.
  from the shortlisted offerors.

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Stipend

• Stipend (or Honorarium) A stated amount
  sometimes paid to offerors in consideration for
  the cost of preparing a Design-Build proposal.
  The stipend or honorarium would be paid to
  unsuccessful offerors.

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Request for Qualifications (RFQ)

• Request for Qualifications (RFQ) The document
  issued by the Owner prior to an RFP that
  typically
• intended to procure Qualification Statements from
  potential design-builder offerors that are then
  evaluated and ranked based on the qualifications.
• It also describes the project in enough detail to
  let potential proposers determine if they wish to
  compete and forms the basis for requesting
  Qualifications Submissions in a two phase or
  prequalification process.

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Request for Proposal (RFP)

• Request for proposal (RFP) the document that
  totally describes the procurement process, forms
  the basis for proposals, and ultimately becomes a
  potential element in the contract.
• Requests for proposals contain information about
  the size, scope, and complexity of the project,
  the clients requirements and budgetary
  considerations,
• selection criteria, and the desired form and
  content of the proposals

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TECHINCAL LEVELLING

• Technical leveling a part of the Equivalent
  Design Low bid selection process
• In which the technical aspects of competing
  design-build proposals are critiqued and
• Offerors respond with adjustments to create
  technical equivalency across all proposals.

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Adjusted Low Bid

• Adjusted Low Bid
• A form of best value selection in which
  qualitative aspects are scored on a 0 to 100
  scale expressed as a decimal
• bid price is then divided by qualitative score
  to yield an adjusted bid or cost per quality
  point.
• Award is made to offeror with the lowest
  adjusted bid.

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Fixed Price/Best Design

• A form of best value selection in which contract
  price is established by the Owner and stated in
  the RFP.
• Design proposals and management plan are
  evaluated and scored, with award going to the
  firm offering the best qualitative proposal for
  the established price.

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Design competition

• Design competition a method of procuring
  design-build services in which design-build teams
  submit detailed design proposals to the client,
• who then selects a team based on the ability of
  their proposal to meet the requirements of the
  project.
• The "winner" of the competition is awarded the
  contract to complete the design and construct the
  project.

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Design Criteria Professional

• Design Criteria Professional An individual
  (typically a registered professional Architect or
  Engineer) who develops the facility program,
  design criteria, outline performance
  specification and other project specific material
  to provide to potential design-build offerors.
  The design criteria professional may be in-house
  or may be an outside consultant (see Owners
  Consultant).
• A consultant or consulting firm that may be
  employed by an Owner (e.g. an Owner who may not
  have sufficient in-house expertise to acquire
  design-builder services) to assist in organizing
  and administering the design-build selection
  process, and for other consulting services such
  as review of submissions for compliance with the
  RFP. Is often the design criteria professional
  who develops the facility program, performance
  specifications and other RFP components.