Innovative Contracting

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Innovative Contracting

• UDOT
• Director of Construction and Materials
• Kris Peterson

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Innovative Contracting Works to Improve the
Process

• Reduce impact to public
• Reduce overall project time
• Limits Schedule Growth
• Reduce overall project cost
• Limits Cost Growth

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Types of Innovative Contracting

• Contract Manager / General Contractor (CMGC or
  CM_at_Risk)
• Design-Build
• A B Bidding
• Lane Rental
• Warranties
• Incentives
• Performance-based

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Timeline Comparison
Design Phase
Construct Phase
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CMGC Roles
Why Innovative Contracting
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CMGC Benefits
Lessons Learned
UDOT Controls Design UDOT Selects Innovation
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Other CMGC Benefits / Risks
Why Innovative Contracting

• Benefits
• Reduces design time and design errors
• Improves constructability
• Identifies and reduces risk
• Early procurement
• Lower cost

• Risks
• Sole source contract
• Bid price needs to be 10 of EE or below
• Negotiation skills

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Reduce Risk to Reduce Cost Increase Profit
Contractor Risk
Owner Risk
Risk
DBB
DB
CMGC
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Selection Strategy
Why Innovative Contracting

• Select complex projects
• That benefit from contractor input
• With third-party risk
• That need innovation
• Need early procurement
• Select projects with a budget emphasis
• Take time for design

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CMGC Requires Approval

• Experimental Process - SEP 14
• 12 Federal Projects per year
• 12 State Projects per year
• Justification required
• Project Development approves
• FHWA must also approve federal projects

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Contracting Process

• Develop RPF
• Selection Criteria
• Price components
• Advertise
• Selection team
• Complex participants
• Region participants
• AGC and ACEC representatives
• Select Award

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Processing Time
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Price Benefits

• Brings cost accountability to the table
• Brings cost competition to the table
• Brings cost innovation to the table
• Provides validation of good price for public trust

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Price in CMGC RFP
Where are we going?

• Price
• Continue to use the average target
• Most realist cost
• Approach to Price
• Emphasize during pre-proposal
• Change the format

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Utah CMGC Projects (State)
Where are we going?
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Utah CMGC Projects (Federal)
Where are we going?
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Design Build
Plan
UDOT
Design
Contractor
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Design-build

• Benefits
• Faster Design/Construction
• Smaller cost growth
• Smaller schedule growth
• Innovation (Contractor controlled)
• Risks
• Design-build is built for speed
• Contractor owns the design

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Design Build Advertising Process

• Letter of Intent (Interest) LOI
• RFQ
• RFP
• Low-Bid
• Best-Value

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Checklists

• Located on the 2008 Standards / Checklists website

http//www.udot.utah.gov/Inside UDOT/Project
Development/Standards and Specifications /2008
Standards/2008 Project Checklists
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Selection Committee
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Reduce Time on Project

• AB Bidding
• Contractors bid the time to complete the project
  and a dollar amount for work items
• Award to lowest combinations of time and cost

• Lane-Rental
• Minimize the time lanes are closed
• Contractors are charged a fee for closing lanes
  and shoulders
• Focus on time the public is affected

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A B Bidding

• Benefits
• Improved coordination between prime and
  sub-contractors
• Reduced construction time minimizes impacts to
  users
• Contractors are required to put together a well
  conceived schedule
• Drawbacks
• Contract changes are magnified too many changes
  nullify the advantages of AB
• Acceleration techniques may require more
  resources for contract administration
• More hours and over-time budget required from
  Region staff
• Negotiations for additional work are more
  intense since time is a bigger issue

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AB Candidates

• Good
• Interstate Projects
• Mill and Overlays
• Projects with Detours
• Bridge Painting
• Intersection upgrades
• New Construction/Reconstruction
• Bad
• Third-party delays
• Rehabilitations

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Lane Rental

• Benefits
• Better coordination of prime and sub-contractors
• Minimized impact to traveling public
• Better public perception due to fewer
  un-utilized lane closures
• Drawbacks
• Extra effort by staff to monitor lane rental
• Negotiating lane rental adjustments can be
  difficult with contract changes
• Potential added costs to the project

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Lane Rental Candidates

• Good
• Mill and Overlay (2-lane roads with flagging ops.
  or intersection impacts)
• Safety projects (guardrail/signing/striping/bridge
  painting)
• Bad
• New construction
• Long-term projects

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Warranties

• Guarantee all or portions of a construction
  project
• Free of defects in material
• Workmanship
• Time Period
• Correct deficiencies during warranty period

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Warranty Pros and Cons

• Benefits
• Quality and durability guaranteed
• Longer acceptance time
• Less inspection needed

• Drawbacks
• Owner must ensure warranty
• Warranty may not be collectable
• Staffing to monitor warranty

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Incentives - Disincentives

• Paid for early completions
• Penalized for late completions

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I D Pros and Cons

• Benefits
• Reduced construction time
• May lower contract admin costs
• PI benefits
• Control of project acceleration

• Drawbacks
• May require additional funding
• Contract changes may lead to disputes

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Pay-for-Performance

• Pay is dependent upon final outcome
• Measured against performance criteria
• Set by contract
• Pay withheld for poor performance
• Corrective action required

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PFP Pros and Cons

• Benefits
• Eliminates blame
• Shifts risk to contractor
• Higher quality

• Drawbacks
• Time to measure performance
• Long project close-out
• Monitoring is time- consuming
• Contractor may have to finance a portion

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Innovative Web Site

• www.dot.state.mn.us/const/tools/docments/Guideline
  s.pdf
• Dec 2005