2013 Session: 244

• Critical Analysis of Value Added by Independent Cost Estimate Consultant to Construction Manger-General Contractor Project Delivery Method
  Abstract: The Construction Manager/General Contractor (CMGC) project delivery method is an emerging project delivery method in the transportation industry. As part of its Every Day Counts (EDC) program, the Federal Highway Administration (FHWA) is promoting the use of CMGC through Peer Exchanges. One recurring theme of the Peer Exchange was the fact that value was added to a construction project during the preconstruction phase by the early involvement of the contractor and the Independent Cost Estimate (ICE) consultant. A content analysis of the presentations given at the most recent Peer Exchange in Boston, Massachusetts, along with four case studies from ICE consultants were reviewed along with literature on the topic to determine the extent of the value added to the CMGC process by involving the ICE consultant.
  Authors: Schierholz, Jeanna; Gransberg, Douglas D.
  Authors: Schierholz, Jeanna; Gransberg, Douglas D.
  Year: 2013
  Document Type: Paper
  Subject: Construction; Design
  Session: 244
  Paper Number: 13-0613
• Costs and Benefits of Price Adjustment Clause in FIDIC MDB
  Abstract: Project owners, bidders, and construction supervision engineers continue to grapple with questions on the price adjustment clause in the Conditions of Contract developed by the International Federation of Consulting Engineers for Multilateral Development Banks. The first question faced by a project owner is whether the adjustment provision should be retained, and if not, why? If retained, the questions that ensue have to be dealt with by both the project owner and the bidders. These are about the adjustment terms and conditions—start date, base date, thresholds, and the adjustment formula parameters such as cost elements, indices, and weightings. Although answers to these questions are available from different sources and been legislated in some countries, clear, empirical evidence of the benefits of providing for adjustment—increased competition, lower bid prices, market stability, and less risk of contractors defaulting—is lacking. Also, the effect of changing default adjustment parameters is largely unknown. This paper first examines literature and experts’ views on the above questions in relation to Asian Development Bank financed road construction contracts in Central Asia and the Caucuses. Then, Monte Carlo simulation is used to evaluate alternative answers to the questions. Simulation results show that project owners and bidders can both benefit from the adjustment provision. Bidders can increase their competitiveness by not adding an inflation risk premium while the owner can expect more realistic bid prices and benefit from price drops during construction unlike in fixed price contracts. However, neither party will gain from changing the default parameters, which increases uncertainty and cause bidders to add risk premiums.
  Authors: Seneviratne, Prianka Nalin
  Authors: Seneviratne, Prianka Nalin
  Year: 2013
  Document Type: Paper
  Subject: Construction; Design
  Session: 244
  Paper Number: 13-2312
• Mitigating Financing of Major Public Infrastructure Projects: Bidding by Net Present Value
  Abstract: The construction of major public infrastructure projects requires long term investment of substantial amounts of working capital and the financing costs is a major risk that is mostly shouldered by the contractors. The financing capabilities and high level of risk results in limiting competition and the higher financing cost will eventually be paid by the project owner and ads up to the total project capital cost. This paper will examine the financing cost of major public projects and will explorer methods that can be adopted to shift the financing burden and the risk to the party that is most capable to manage it. We will introduce methods to measure project cost elements that are contributing to the financing cost of the project. We will illustrate that the inclusion of the time-value of money in the bid evaluation process is the vehicle for measuring the financing cost of the project that allows equitable shifting of the financing risk to the owner, thus reducing the financing cost, increasing competition and reducing total project capital cost. The entire contracting methodology, financing and construction process in the twenty first century requires a fresh approach that ultimately leads to the best possible project for the best possible price. Letting contracts out based upon the Net Present Value (NPV) is just such an approach.
  Authors: Abadi, Djalil H.
  Authors: Abadi, Djalil H.
  Year: 2013
  Document Type: Paper
  Subject: Construction; Design
  Session: 244
  Paper Number: 13-0249
  Practice-Ready: Yes
• Case Studies of Early Contractor Design Involvement to Expedite the Delivery of Emergency Highway Projects
  Abstract: In the past decade, events such as Hurricanes Katrina and Irene and the sudden collapse of the Interstate 35W Bridge in Minnesota forced state departments of transportation (DOT) to step into the public spotlight and implement expedited procurement procedures to restore vital links in the transportation network with the media scrutinizing their work every night on the evening news. This paper presents the results of case studies of Florida, Maine, Minnesota, New York and Utah where the DOT brought the construction contractor into the design process as the primary means to expedite the delivery of emergency projects. The case studies include the use of indefinite delivery/indefinite quantity (IDIQ), construction manager/general contractor (CMGC) and design-build (DB) contracts as mechanism to gain substantive contractor input on materials, means, and methods during design. The paper concludes that completing the design is the first obstacle to surmount in emergency procurements and the surest tool to expedite emergency project delivery is to design around immediately available materials, equipment, and proven accelerated construction methods, information that is best developed by the contractor that will eventually complete the construction. The paper recommends that agencies develop expedited procurement procedures for ID/IQ, CMGC, and DB contracts before emergencies occur and furnishes case study information for specific methods for streamlining routine procurement procedures.
  Authors: Gransberg, Douglas D.
  Authors: Gransberg, Douglas D.
  Year: 2013
  Document Type: Paper
  Subject: Construction; Design
  Session: 244
  Paper Number: 13-0403
  Practice-Ready: Yes
• Experiences of Two Colorado Transportation Agencies with Their First Construction Manager-General Contractor Projects
  Abstract: Construction Manager/General Contractor (CMGC) project delivery system is beginning to be recognized as an effective way of accelerating the delivery of transportation projects and gaining popularity among transportation agencies. This research documents the experiences of two transportation agencies in Colorado and provides information with respect to the practices utilized by each agency in implementing the CMGC project delivery system for the first time. The first project is the Eisenhower-Johnson Memorial Tunnel Motor Control Cabinets Replacement project whose agency owner is the Colorado Department of Transportation. The second project is West Rail Line project whose agency owner is the Regional Transportation District. To provide findings that can benefit transportation agencies, researchers used multiple sources of information including structured in-depth interviews, questionnaires completed by key individuals working in the investigated projects, and published documents about the investigated projects. The findings provide a broad perspective on the different practices in implementing this project delivery system; and are presented under eight different areas: (i) rationale for choosing the particular project to utilize the CMGC project delivery system, (ii) procurement phase, (iii) preparation of the agency for the CMGC project, (iv) design contract for the CMGC project, (v) guaranteed maximum price and contingency, (vi) subcontracts, (vii) preconstruction services, and (viii) lessons learned. It was concluded that while both owners are Colorado transportation agencies, they utilized significantly different practices in implementing the CMGC project delivery, which eventually resulted in differences in opinion with respect to the potential of this system to be used in subsequent projects.
  Authors: Ozbek, Mehmet Egemen; Lopez Del Puerto, Carla; Gransberg, Douglas D.
  Authors: Ozbek, Mehmet Egemen; Lopez Del Puerto, Carla; Gransberg, Douglas D.
  Year: 2013
  Document Type: Paper
  Subject: Construction; Design
  Session: 244
  Paper Number: 13-0466
  Practice-Ready: Yes
• Case Studies in Innovative Quality Assurance Methods for Alternative Delivery Projects
  Abstract: This paper presents the results of a multiple-case study, designed to explore, reveal, and consider evolving techniques used for managing quality assurance systems, especially in cases of alternative forms of delivery, such as construction manager/general contractor (CMGC), Design-Build (DB), and Pubic Private Partnerships (PPP) forms. The study discovered many notable quality assurance methods, including methods that take advantage of design-phase contractor involvement and methods that respond to the increasing use of non-agency designers.The study of ten distinct projects that cross four different project delivery methods found eighteen notable quality assurance methods that generally are not applied in the traditional Design-Bid-Build (DBB) form of contracting. These methods exist in both the pre-award and post-award phases of the projects, and several of the methods were found to be used on more than one form of project delivery. These innovative quality assurance methods may be viewed as tools that a project manager should consider when developing a whole quality assurance system on either a traditional DBB project or on a project that uses one of the alternative forms of contracting. Or—these methods may be used as starting points for further quality assurance innovations.
  Authors: Sillars, David N.; Harman, Landon
  Authors: Sillars, David N.; Harman, Landon
  Year: 2013
  Document Type: Paper
  Subject: Construction; Design
  Session: 244
  Paper Number: 13-1695
  Practice-Ready: Yes
• Roadmap for Implementing Construction Manager General Contractor Project Delivery in Transportation
  Abstract: Transportation agencies are increasingly interested in the use of new strategies for project delivery. Over the last decade, many have focused on adding Design-Build (DB) to their project delivery toolbox. As a result, a large majority of state agencies have already used DB at least on a pilot basis and many have obtained, and widely used, legislative authority to implement it on many projects. Previous research has shown that the goal is not to replace the existing paradigm of Design-Bid-Build project delivery with another paradigm, but, instead of replacing a single-delivery method model of delivery with another that includes several options. As a result, some of the early implementers of DB are now experiencing the implementation of another project delivery model in transportation, Construction Manager General Contractor (CMGC) and/or Construction Management at Risk (CMR). First, this paper reports results from a survey on the status quo in terms of CMGC utilization and then compares it against DB utilization. Then, it utilizes a previously-developed implementation framework to map the current status of different agencies and outlines a roadmap toward implementation. This paper relies on the argument that efforts for adding new project delivery methods (e.g., CMGC, DB, etc.) to an agency’s delivery toolbox follow the same process and encounter similar challenges. Therefore, agencies that are interested in exploring and implementing CMGC may gain from lessons learned of other agencies that have already implemented it, and also from their own (or others’) lessons learned from implementing DB.
  Authors: Migliaccio, Giovanni Ciro; Minchin, R. Edward; Gatti, Umberto Carlo; Ptschelinzew, Lourdes
  Authors: Migliaccio, Giovanni Ciro; Minchin, R. Edward; Gatti, Umberto Carlo; Ptschelinzew, Lourdes
  Year: 2013
  Document Type: Paper
  Subject: Construction; Design
  Session: 244
  Paper Number: 13-5161
  Practice-Ready: Yes
• Case Studies of Early Contractor Design Involvement to Expedite the Delivery of Emergency Highway Projects
  Authors: Gransberg, Douglas
  Authors: Gransberg, Douglas
  Year: 2013
  Document Type: Presentation; Poster
  Subject: Construction; Design
  Session: 244
  Paper Number: 13-0403
• Mitigating Financing of Major Public Infrastructure Projects: Bidding by Net Present Value
  Authors: Abadi, Djalil
  Authors: Abadi, Djalil
  Year: 2013
  Document Type: Presentation; Poster
  Subject: Construction; Design
  Session: 244
  Paper Number: 13-0249