Final Scope

The use of open-books pricing practices in Construction Manager General Contractor (CMGC) and Progressive Design-Build (PDB) projects is becoming increasingly popular due to its benefits, such as increased price transparency. It also provides an opportunity for price-informed decisions, which can potentially retire major risks prior to establishing the negotiated contract price and reduce the size of the contingency pool carried into the final agreement.

Many state departments of transportation (DOTs) have experience using open-books negotiations in alternative contracting and have developed diverse approaches for CMGC and PDB projects. However, there is currently limited guidance on how to configure the procedures for open-books price negotiations, how to articulate those procedures in procurement documents, and the effectiveness of the procedures in use. Additionally, there is a gap in identifying effective practices for executing the "off ramp" if negotiations fail or if the estimated project price exceeds available funding.

The objective of this synthesis is to document state DOTs policies and procedures for developing open-books pricing practices for CMGC and PDB.  

Information to be gathered includes (but is not limited to):

·       DOTs procedures for open-books pricing practices in CMGC and PDB processes;

o   Differences between open-books pricing practices in CMGC vs. PDB

o   Negotiations and opinion of probable construction cost (OPCC)

o   Definitions and types of price structures (ex: fixed price and reimbursable GMP, lump sum, etc.)

o   Self-performance limitations and subcontractor procurement, inclusion, DBE requirements, and timing

o   Estimation transparency between owner, contractor, and ICE.

·       DOTs procedures for open-books pricing practices related to risk

o   Risk allocation

o   Risk mitigation tools

o   Determination of contingencies and allowances

·       Open-books implementation policies and procedures in DOTs (including utilization of an Independent Cost Estimator (ICE));

o   Establishment of pricing methodology or cost breakdown structure

o   Reconciliation responsibility, process, and timing

o   Negotiation practices for specific items, costs, rates, burdens, overhead, etc.

o   Protection of proprietary pricing information

·       DOTs procedures for utilizing the “off ramp” in CMGC and PDB if an impasse on price is reached or if the agreed price exceeds the available funds.

o   Trigger point criteria and decision authority level

o    Analysis of financial impact  

Information will be gathered through a literature review, a survey of state DOTs, and 5-8 follow-up interviews with selected DOTs for the development of case examples. Information gaps and suggestions for research to address those gaps will be identified.

 Information Sources (Partial):

• NCHRP Synthesis 402 “Construction Manager-at-Risk Project Delivery for Highway Programs”
• NCHRP Report 787 “Guide for Design Management on Design-Build and Construction Manager / General Contractor Projects”
• NCHRP 10-85 “Final Report, Guidebook for CMGC Contracting.”
• Gransberg, D.D. and Molenaar, K.R., “Critical Comparison of Progressive Design-Build and Construction Manager/General Contractor Project Delivery Methods,” Transportation Research Record, Journal of the Transportation Research Board, No. 2673, National Academies, 10.1177/0361198118822315, 2019, pp. 261-268.
• Gad, G., Davis, B., Shrestha, P.P., Harder, P, “Lessons Learned from Progressive Design-Build Implementation on Airport Projects”, Journal of Legal Affairs and Dispute Resolution in Engineering and Construction, 2019.
• Gransberg D.D., Pinto-Nunez, M. and Gransberg, N.J., “Pricing Construction Manager/General Contractor Projects: With or Without ICE (Independent Cost Estimator),” Compendium, Paper # TRBAM-22-02177, Transportation Research Board of the National Academies, Washington, D.C. January 2022.
• FHWA Report, Disadvantaged Business Enterprise Program: Administration and Oversight on Projects with Alternative Contracting & Procurement Methods Handbook, available online at: https://www.fhwa.dot.gov/civilrights/programs/dbe_acm_handbook_20180820.pdf

TRB Staff
Arefeh Nasri
Phone: 202-334-2763 
Email: anasri@nas.edu

Meeting Dates
First Panel: September 28, 2023, Washington, D.C.
Teleconference with Consultant: November 7, 2023, 1:00-2:00 pm EST
Second Panel: June 13, 2024, Washington, D.C.

Panel Members
Matthew Corrigan, Federal Highway Administration (FHWA)
Paramvir Bhalia, Washington State Department of Transportation
Lisa Choplin, Whitman, Requardt and Associates, LLP
Eric K. Kahlig, Ohio Department of Transportation
Suril Shah, Virginia Department of Transportation
Kenneth Sullivan, Arizona State University
Alison Pedigo, Delaware Department of Transportation
Joseph Dongo, California Department of Transportation
Robert Shea, Transportation Research Board