Two Parts of our Discussion - Amazon S3 · 41-2582. Project delivery methods for design and...

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Two Parts of our Discussion

Part One: The basics (what, why, how, when, etc)

An overview of process

By no means comprehensive (not enough time)

Part Two: From the trenches stuff

Not contained in statute

From experience as a practitioner

Hopefully participative (a.k.a., opportunity toshare our war stories)

Authorization Under StatuteTitle 34, Chapter 6, Art. 1ARCHITECT SERVICES, ASSAYER SERVICES, CONSTRUCTION SERVICES, ENGINEER SERVICES, GEOLOGISTSERVICES, LANDSCAPE ARCHITECT SERVICES AND LAND SURVEYING SERVICESArticle 1 General Provisions34-601 Definitions34-602 Project delivery methods for design and construction services34-603 Procurement of professional services and construction-manager-at-risk, design-build andjob-order-contracting construction services; definition34-604 Procurement of multiple contracts for certain job-order-contracting construction services and certainprofessional services; definition34-605 Requirements applicable to construction services and professional services and to contracts forconstruction services and professional services; definition34-606 Emergency procurements34-607 Multiterm contracts for job-order-contracting construction services34-608 Bid security for design-build and job-order-contracting construction services34-609 Contracts for construction-manager-at-risk, design-build and job-order-contracting constructionservices; payments to contractor; security; recovery of damages by contractor for delay; progresspayments34-610 Construction-manager-at-risk, design-build and job-order-contracting construction services suretybond required; suit on bond; limitations34-611 Payment bonds for construction-manager-at-risk, design-build and job-order-contractingconstruction services34-612 Accounting standards; statutory applicability34-613 Failure to comply; civil penalty

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Authorization Under StatuteTitle 41, Chapter 23, Art. 5 (under the APC)Procurement of Construction and Specified Professional Services41-2571. Definitions41-2572. Construction by state employees; construction by inmates of publicinstitution41-2573. Bid security41-2574. Contract performance and payment bonds41-2576. Contract payment retention; partial payment41-2577. Progress payments41-2580. Requirements applicable to construction services and professional servicesand to contracts for construction services and professional services; definition41-2581. Procurement of certain professional services41-2582. Project delivery methods for design and construction services41-2583. Construction contracts; void provisions

D-B Definition under Statute13. "Design-build" means a project delivery method in which:

(a) There is a single contract for design services andconstruction services, except that instead of a single contract fordesign services and construction services, the purchasingagency may elect separate contracts for preconstructionservices and design services during the design phase, forconstruction and design services during the construction phaseand for any other construction services.

(b) Design and construction of the project may be either:○ (i) Sequential with the entire design complete before construction

commences.○ (ii) Concurrent with the design produced in two or more phases

and construction of some phases commencing before the entiredesign is complete.

(c) Finance services, maintenance services, operations services,preconstruction services and other related services may beincluded.

D-B Definition by DBIA

Design-build is a method of projectdelivery in which one entity - the design-build team - works under a single contractwith the project owner to providedesign and construction services.

- Design-Build Institute of America

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Project Organization:Design-Bid-Build v. Design-Build

Construction Manager

(In-house or contracted)

Owner Architect

Prime Contractor

Trade Contractors

OwnerConstruction

Manager(In-house or contracted)

D-B Entity (Architect +

Prime Contractor)

Trade Contractor

s

Design-Build Processes & Procedures

Selection procedure for One-Step andTwo-Step design-build outlined in statute.

Key difference from IFB and RFPprocesses – agency must use ofQualifications Based Selection (QBS), asestablished by The Brooks Act (Public Law92-582).

Prohibited from requesting or consideringcost information as a part of the evaluationand selection process.


Qualifications Based Selection for two-stepdesign-build essentially includes:1. Public Notice of Request for Qualifications;2. Submittal & evaluation of Statements of

Qualifications;3. Development of a Short-List of at least 3 and

not more than 5 top-ranked teams;4. Issuance of RFP to short-listed teams;5. Submittal of Preliminary Technical Proposals

and discussions with short-listed teams;6. Submittal & evaluation of Final Technical and

Price Proposals;7. Ranking of the short-listed teams;8. Negotiation with the top-ranked team;

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Public Notice of Request for Qualifications:○ Public notice required under 41-2578(C)2 to be in

the same manner as provided by 41-2533(Competitive Sealed Bidding).

○ “The notice may include publication one or moretimes in a newspaper of general circulation areasonable time before bid opening. If the invitation for bidsis for the procurement of services other than those described in sections 41-2513, 41-2578, 41-2579 and 41-2581, the notice shall include publication in asingle newspaper or in multiple newspapers within this state. Thepublication shall be not less than two weeksbefore bid opening and shall be circulated withinthe affected governmental jurisdiction. The noticemay also be posted at a designated site on aworldwide public network of interconnectedcomputers.”


Submittal of Statements of Qualifications:○ Firms with an interest in the project must

submit Statements of Qualifications.

○ Statement of Qualifications generallyprovide the agency with information on theproposed project DB team, capabilities ofthe team, key personnel, size of the firmsinvolved, and past experience.


Evaluation of Statements of Qualifications / Ranking / Develop ShortList of Firms:

○ Procurement agent selects appropriately qualified selection committee;○ Typically either 3, 5 or 7 members; in exceptional circumstances statute

allows maximum of 9 members (best advice is 3 or 5);○ Committee must include agency member, at least one person who is

a senior management employee of a licensed contractor, and oneperson who is an architect or engineer registered pursuant to 32-121.

○ Outside contractors, architects, and engineers serving on a committeemay be reimbursed for travel, lodging, and related expenses – but maynot receive compensation for serving.

○ May conduct discussions with at least 3 but no more than 5 firms asspecified by the RFQ regarding the method of approach to the project.

○ Selection committee evaluates and scores statements of qualifications inaccordance with the criteria established and published in the RFQ.

○ Based on ranking based on published evaluation criteria, selection ofshort list of most qualified firms based on qualifications and demonstratedcompetence only.

○ PROHIBITED from requesting or considering fees, price, man-hours orcost information in the selection of the short list or order of preference.

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Evaluation of Statements of Qualifications /Ranking / Develop Short List of Teams:○ If you care about the mental well-being of your

selection committee members, stronglyrecommend including a maximum allowedpage count (not including resumes, etc.)within the RFQ to eliminate page fluff.

○ Your selection committee members will thankyou and they just may be willing to serve onanother future committee for you.

Design-Build Processes & ProceduresISSUANCE OF RFP TO SHORT-LISTED TEAMS

Description of the scoring method, including factors & points allocation:○ DB entity’s demonstrated compliance with the design requirements;○ DB entity’s qualifications;○ DB entity’s financial capacity;○ DB entity’s compliance with project schedule;○ Compliance of DB entities price with stated project budget, if RFP states agency will

spend its project budget and not more than, or life-cycle budget if the project includesmaintenance or operations services;

○ DB entity’s quality management plan;○ Any other evaluation factors determined by the agency

Required RFP Statements:① If discussions are to be held, requirement that each short-listed firm submit a

preliminary technical proposal prior to discussion.② Statement requiring separately sealed final technical proposal and price proposal

submitted together. Price proposal is fixed or guaranteed maximum price (GMP).③ Statement that final technical proposals will be evaluated prior to opening and

evaluating the price proposals.④ Statement that award will be made to the DB entity whose final proposal receives

the highest number of points under the scoring method.⑤ Percentage to be used in calculating stipend required by statute to be offered to

unsuccessful short-listed DB entities.


Discussions with the Short-Listed Teams: Held with all DB entities that submit

preliminary technical proposals to ensure fullunderstanding of, and responsiveness to, theRFP requirements.

Agency must provide fair treatment to all short-listed DB entities.

DB entities permitted to revise preliminarytechnical proposals prior to final proposalsubmission.

Agency prohibited from disclosing anyinformation from competing DB entities duringdiscussions.

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Evaluation/Ranking of the Short-Listed Teams:

① Evaluation committee MUST open, evaluate, and scorefinal technical proposal FIRST;

② Evaluation committee then opens, evaluates, and scoresprice proposals;

③ Agency notifies short-listed DB entities of rankings;④ Agency enters into contract negotiations with the top-

ranked DB entity;⑤ Agency offers a stipulated fee not less than two-tenths of

one percent of the project budget to each unsuccessfulshort-listed DB entity.

• If a DB entity accepts the stipend, the agency may use anyideas or information contained in their final technical proposal inany contract awarded for the project.

• If the stipend is waived, agency may not use ideas orinformation contained in their final technical proposal.


Negotiation with the Top-Ranked Team: The procurement officer shall enter into negotiations with the

highest qualified (top-ranking) DB entity on the final list. The negotiations shall include consideration of compensation

and other terms that the procurement officer determines to befair and reasonable.

The procurement officer shall take into account the estimatedvalue, the scope, the complexity and nature of the professionalservices/construction services to be rendered.

If unable to negotiate satisfactory contract with top rated DBentity, procurement officer may formally terminate negotiationswith that firm and commence negotiations with then nexthighest rated firm on the final list.

There is no going back once negotiations are terminated with afirm.

Design-Build Dogma & Trends The Dogma:

Design-Build is always faster. Design-Build is always cheaper. Design-Build always reduces likelihood of project

disputes.

The Reality Check: Single point of responsibility for owner. More unsophisticated teams moving into D-B due to

growth in DB projects by owners. DB may be a little faster and/or cheaper - if done correctly. Increased risk of project misunderstandings and

ambiguities related to DB.

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From the Trenches:Select the Right Owner’s Team! Issue:

The most common complaint from design-buildfirms is unsophisticated owners.

The agency – unsophisticated or otherwise – ison its own.

Like Design-Bid-Build, no substitute for in-housestaffing and oversight --- $$$$$.

Solution: Realistically assess in-house capabilities and

experience. Educate all stakeholders prior to using design-

build. Assign roles specific to design-build project.

From the Trenches: Draft Well-Written D-B Documents! Issue:

DB hands over more control much earlier than intraditional design-bid-build.

The less involvement and control the owner has, the morecritical the documents become.

Some forget the basics with “new” project deliverymethods.

Solution: Understand DB under statute. Documents: Who is responsible for what? Money: What is the maximum budget? Performance: What is the minimum performance expected

from the completed project? Don’t necessarily rely on standardized forms (one size

does not necessarily fit all).

From the Trenches:Tie Scope to Budget & Schedule! Issue:

Owner hasn’t established a project program orbudget.

DB team doesn’t set limitations. Owner establishes unrealistic budget or

schedule. Solution:

Make certain both sides have realisticexpectations.

Owner understands and provides succinctproject program and performance specs.

Everyone shares in refining the budget andschedule.

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From the Trenches: Document & Track D-B Project! Issue:

Lack of decision making documentation / issueescalation procedures.

Stakeholders do not sufficiently documentduring the project.

Solution: Everyone’s participation role is understood. Set mutually agreed and realistic project

milestones. Maintain accurate documentation during the

project to speed future decision making. Ensure project is adequately documented

throughout the project cycle (e.g., QA/QC, etc).

From the Trenches: Don’t Continuously Tinker w/ Design! Issue:

Owner and DB entity are working independentlyand not as a true partnered team.

Owner does not make timely decisions. Design phase of project is never allowed to end.

Solution: Owner sets well-defined project program/

performance specs/substantiation criteria all upfront.

Team efforts provide decisions that everyonelives with throughout the project.

No going backwards.

From the Trenches: Select the Right D-B Firm! Issue:

Belief that DB will solve all problems. Inexperienced DB firms out there. Owners & inexperienced DB firms agreeing

to bad contract terms due to their desire todo design-build.

Solution: Know the true capabilities, experience &

track record of the design-builder. Understand your in-house capabilities.

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From the Trenches: Understand D-B Principles! Issue:

One party conducts the job as design-build,while the other party does not.

Failure to accurately communicate thedesign-build.

Common inaccurate attitudes of theparties…

Common Inaccurate Attitudes of the Parties:When only THE D-B FIRM is Familiar with D-B

Design-Builder: You have had your chance

to make design changes, now no tinkering allowed.

I’m building to meet your aggressive schedule, please don’t bother me.

Owner: It’s design-build, so I can

change anything I want at any time.

The DB contract says I have design approval.

Our design changed, but we believe it’s still within the scope.

No matter what design changes I want to make, you are still on the hook to comply with budget and/or schedule.

Common Inaccurate Attitudes of the Parties:When only THE OWNER is Familiar with D-B

Design-Builder: Here is a change order,

because we had more design costs than planned.

Here is a change order for changed quantities of concrete.

Owner: Sorry, that’s your risk.

Sorry, that’s your risk.

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Project Life Cycle Must Still Be FollowedSTRATEGIC STAGE(Program Execution Plan)

All Projects have these same stagesCONCEPTUAL STAGE (The tool for implementation is shown in the box)(Project Manual/Performance Specs)

DESIGN(Construction Documents)

PROCUREMENT(Contracts & P.O.’s)

CONSTRUCTION(Project Construction)

PROJECT TURNOVER(Commissioning, Start-up & Testing)

OPERATIONS(Product Manufacturing)

PROJECT LIFE CYCLE – WORK STEPSStrategic - Concept - Design – Procurement - Construction - Turnover – Operations

Owner ------- Designer ---------- Constructor------------ Designer --------- Owner

From the Trenches: Understand D-B Principles! Solution:

Follow the same project life cycle steps, butacknowledge different overlaps required bydesign-build.

Have all parties understand design-buildproject delivery methods and what it meansto use it.

From the Trenches:Define the Program Appropriately! Issue:

“The D-B Agreement is silent…” (Yikes) “The D-B Agreement is ambiguous…” (Yikes) Ongoing disputes over performance and/or

prescriptive specifications.

Solution: Well-written D-B contract documents. Invest time to create Project Program,

Performance Specifications & SubstantiationCriteria.

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D-B Project Program

D-B Program: “Defines which spaces arerequired, how big those spaces must be,and any specifics for the spaces.”

How many people will occupy.

General FF&E required.

Utility requirements.

Relationships between spaces (need to betogether due to work duties, etc.).

D-B Performance Specifications Performance Specifications: “Define only the end

product or performance for the project, not themethods required to achieve results.”

Satisfy Owner’s quality concerns withoutcommitting the project or DB entity to particularmaterial or system choices.

Accurately define Owner’s project expectationswhile providing DB entity the greatest possibleflexibility to devise the most cost-effectivesolutions to the Owner’s needs.

D-B Performance Specifications (cont.) Allow innovation without compromising the

Owner’s performance and quality requirements,especially when on a tight budget.

Help to avoid scope creep or losing control of thebudget without specifying too much detail.

Help to establish credible performance criteria byreferencing accepted industry standards.

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D-B Substantiation Criteria Substantiation Criteria: “Any form of evidence that isused to: (A) predict whether the proposed design willcomply with the requirements or, (B) to verify that theconstruction based on the approved design actuallydoes comply.”

During Preliminary Design, Design Development, andConstruction Documents, requirements to submitsubstantiation criteria are primarily intended to forestallthe proposed use of non-compliant designs orconstruction solutions.

While construction is ongoing, substantiation criteria arepresumed to be only a prediction of design and maysubsequently be invalidated by actual results.

During closeout, substantiation criteria confirm thatfunctional performance complies with the project program.

Substantiation Criteria Example 1 FIRE SPRINKLER AND EXTINGUISHER SYSTEMS

Performance - Basic Function:1. Provide fire sprinkler or fire extinguishing systems for all interior spaces.2. Provide wet pipe sprinkler systems unless otherwise required by code.3. Fire Sprinklers: Design and construction in accordance with code and

NFPA 13-2002.4. Standpipes and Hoses: Design and construction in accordance with code

and NFPA 14-2003.5. Accessibility: Provide fire department connections as required by code.6. Nozzle Performance: As required by code and NFPA 17-2002.7. Sprinkler Head Performance: As required by code and NFPA 13-2002.8. Determine minimum water supply requirements using the hydraulic

calculation method defined by NFPA 13-2002.Substantiation:1. Preliminary Design: Identification of water source.2. Design Development: Water supply for sprinkler systems shown on the

drawings.3. Construction: Tests of each sprinkler system in accordance with code and

requirements of design standard.

Substantiation Criteria Example 2

NATURAL GAS SUPPLYPerformance - Basic Function:1. Provide natural gas for use by HVAC and plumbing

equipment in accordance with code and as follows:2. Comply with ICC International Fuel Gas Code-2003.3. Comply with ICC International Mechanical Code-2003.4. System Design Pressure: 125 psig, minimum.5. Natural Gas System Working Pressure: 5 psig, maximum.6. Natural Gas Entrance into Facility: Locate service meter

minimum 3 feet from ignition sources.Substantiation:1. Design Development: Distribution system and equipment

connections shown on drawings.2. Construction: Functional performance testing; proper fuel

supply, combustion, and venting.

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Substantiation Criteria Example 3 VOICE AND DATA

Performance - Basic Function:1. Comply with ANSI/TIA/EIA-568 and -569 Standards, latest additions, including

for installation and labeling.2. Operational computer network is PC-based.3. Connection between Internet and internal network will be via T-1 line.4. Wiring shall support Gigabit Ethernet to RJ45 data connections.5. Provide CAT 6 cable with RJ33 connectors for fax machines, modems, and

other analog devices.6. Wiring shall terminate at CAT 6 certified jacks and patch panels.Substantiation:1. Preliminary Design: Outline description of systems, inter-system interfaces, and

functions provided.2. Design Development: Details of each type of input and output device;

capabilities of systems; manufacturer data.3. Construction Documents: Detailed layout of input and output device locations.4. Closeout: Complete functional performance testing under Commissioning. Test

and certify all network wiring is in compliance with CAT 6 Standards perANSI/TIA/EIA-568-B.2-1.

In Conclusion Projects should be appropriately matched to

the design-build delivery method. One sizedoesn’t fit all.

Well-written contract documents are crucial: Communication is key to project success. Project program is appropriately defined. Strongly recommend performance specs &

substantiation criteria in addition to project program. Owners need to:

Utilize people on both sides of the project that areexperienced in design-build project delivery method.

Understand DB principles and accept that DB is nota cure all.

Pennington Street GarageTucson, Arizona

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County Administration BuildingCounty of Mohave, Arizona

MCSO Adult Detention CenterCounty of Mohave, Arizona

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