American Association of State Highway and Transportation Officials

Special Committee on Research and Innovation

FY2023 NCHRP PROBLEM STATEMENT TEMPLATE

Problem Number: 2023-D-02

Problem Title

Guidebook on Progressive Design-Build for Transportation Projects: Project Planning through Project Implementation

Background Information and Need For Research

Transportation agencies started using design-build (DB) over 25 years ago, and it is now considered a standard “tool in the toolbox.” The most commonly used methodology for DB contractor selection involves a best value process, with significant weight accorded to price, resulting in a fixed price contract for design development and construction. Progressive Design-Build (PDB) is an advancement of fixed price DB that allows early contractor involvement, including elements similar to construction manager/general contractor (CM/GC). It transfers design and construction responsibilities to a design-build team starting with a preliminary planning and design phase through construction completion, with negotiation of the price for final design and construction at the end of preliminary design phase, similar to the process used for CM/GC pricing. The qualifications and experience of the DB team are significant factors in contractor selection, and while legislation often dictates consideration of price in the selection, in some cases public owners use a pure qualifications-based selection process.

PDB contracts include procedures for development of the design, schedule/phasing plan and a price for final design and construction which typically is in the form of a Guaranteed Maximum Price for Construction (GMP). The development of the GMP is a key component of PDB as it allows owners to hire a designer-builder without a price commitment for final design and construction until after reasonable design details are defined. In addition, to ensure agencies are able to make the price reasonableness determination required for federally funded projects, the public owner often hires an Independent Cost Estimator (ICE) to develop a full price of construction based upon an agreed upon scope of work and schedule. The negotiated price typically includes allowances and contingencies to account for potential unknowns and risks that are agreed upon by the owner and the contractor. Several state departments of transportation (DOTs) have started to use PDB, based on models that have been successfully used in water/wastewater, airport, municipal street/roadway projects, flood control, and transit sectors.

The documented benefits of using PDB include:

• greater agency control of design decisions, scope, cost, and schedule;

• flexibility of delivery;

• risk mitigation and contingencies;

• innovative project-specific solutions and better scoping of owner needs and expected outcomes;

• accelerated schedule and phasing opportunities;

• increased diversity in contracting opportunities and workforce development;

• increased life-cycle value for money;

• and greater designer and contractor collaboration.

Moreover, in contrast to traditional design-bid-build (DBB) and CM/GC, and like fixed price DB, PDB transfers design liability to the contractor.

Only a few states have implemented PDB to date. For example, Maryland successfully used PDB for their I-270 project and Utah used PDB for their US 89 project. Washington began their first PDB on a grouping of fish passage projects. California, Missouri, Michigan and Florida also are interested in PDB to maximize the dual benefits of DB and CM/GC delivery methods. However, little PDB guidance is available, if any, for state DOTs to implement PDB on their highway projects.

Literature Search Summary

PDB is a project delivery method that is of great interest to many sectors and more specifically to the transportation sector, that has not been the subject of specific research. There has been a few CRP publications (TCRP G-08, A Guidebook for the Evaluation of Transit Project Delivery Methods and ACRP A01-05, A Guidebook for Airport Capital Project Delivery Systems, ACRP Legal Digest 38: Legal Issues Related to Large-Scale Airport Construction Projects) addressing various aspects of PDB whether in terms of selection or legislation requirements. However, to date no detailed guidance has been developed for DOTs to implement it most effectively and accrue many of the pronounced advantages. Specifically, no prior research has been conducted for NCHRP on PDB. At the state DOT level, Alleman and Tran (2021) studied Maryland’s I-270 PDB project and the challenges of implementing PDB in highway construction. However, in most these studies, the thrust of the research was to assist transit and airport agencies in making their project delivery selection decision and included very little detail on the mechanics and implementation best practices of PDB.

NCHRP 10-85: A Guidebook for Construction Manager-at-Risk Contracting for Highway Projects (published as the AASHTO CMGC Guide) is related to this research project in that CM/GC uses a negotiated pricing structure similar to that used in PDB. This research would provide guidance that is also relevant to the DB contractual environment. ACRP Legal Digest 38: Legal Issues Related to Large-Scale Airport Construction Projects address the legal framework upon which PDB could be implemented effectively within the regulatory constraints.

Research Objective

Because of the benefits offered by PDB, combined with the growing reluctance of the contracting community to bid on fixed price DB contracts due to the risk of cost overruns, there is a need to investigate how PDB can be most effectively implemented on highway projects. This will require research into key issues such as statutory authority and permits needed for PDB, availability of and effects on the owner’s in-house staff, level of design detail and control, and level of risks, among others. The main objective of the proposed research is to develop guidelines that will assist state DOTs in the effective and efficient use of PDB for highway projects. The research will answer the following questions:

1. What is the current state-of-practice for successful implementation of PDB? How could the current state-of-practice and lessons learned of PDB from other sectors’ projects apply to highway projects? What are the benefits and challenges of PDB beyond fixed price DB, specific to highway projects?

2. What are the critical skill sets, knowledge, resources, legislation, etc., that agencies need prior to executing PDB projects? How do traditional agency functions and responsibilities change under PDB? How do these changes impact staff requirements and roles? How does an agency representative become a champion for PDB? What type of training is needed to implement PDB?

3. To maximize the likelihood of selecting the best PDB contractor for a specific project, what evaluation elements should be emphasized when developing and implementing a PDB procurement? These elements include team qualifications and availability, selection criteria, and procurement processes, among others.

4. What are the skill sets, knowledge, team structure and experience (i.e. qualifications) expected of a contractor team (builder and designer) to successfully deliver a PDB project?

5. What are the challenges in administering a PDB contract and how can they be overcome?

6. What are the inherent conflicts between PDB delivery and NEPA (National Environmental Policy Act) requirements? How can they be addressed?

7. What are the funding restrictions from a timing and scoping perspective?

8. What other barriers exist to utilizing a PDB delivery method?

How are risks allocated and effectively managed on PDB projects? How should contractual “off-ramps” be structured to ensure that the owner has appropriate alternatives if issues arise during the preliminary design phase or pricing is too high? What are the risks and benefits of exercising an “off-ramp,” including the timing of “off-ramp” and professional liability? How can the risks be mitigated?

Urgency and Potential Benefits

This research would result in an NCHRP research report providing updated information about successful practices, case law and statutes relating to PDB project delivery to assist agencies in evaluating when PDB should be considered for a project, and how to develop the framework for successful use of PDB. If added to the DOT project delivery standard “toolbox,” PDB also represents a possible solution to reducing the costs of unrealized risks found in fixed price DB projects, and increases the pool of contractors interested in proposing on DB projects, by permitting a negotiated construction cost based on more design detail with public owner control of the design decisions.

Implementation Considerations

This research will be utilized by Planners, Engineers, and Contractors involved in highway construction planning, scoping, development, construction, and maintenance activities. This guidebook share lessons learned from agencies that have already utilized PDB, and will identify all of the necessary tools to guide an agency from the planning phase to implementation phase.

Recommended Research Funding And Research Period

$300,000 for 24 months.

Problem Statement Author(S): For each author, provide their name, affiliation, email address and phone.

• Eric Kahlig, PE, Ohio Department of Transportation – eric.kahlig@dot.ohio.gov; 614-387-2406

• Douglas Gransberg, Ph.D. Chair AFH 15 – dgransberg@gransberg.com; 405-503-3393

Potential Panel Members: For each panel member, provide their name, affiliation, email address and phone.

• Eric Kahlig, PE, Ohio Department of Transportation – eric.kahlig@dot.ohio.gov; 614-387-2406

• Ryan Mitchell, Michigan Department of Transportation – mitchellr13@michigan.gov 517-614-7025

Person Submitting The Problem Statement: Name, affiliation, email address and phone.

Jason Humphrey, P.E. South Dakota Department of Transportation; AASHTO COC Research Chair; Jason.humphrey@state.sd.us; 605-773-4391