Teaming for success on design-build (D-B) and public-private partnership (P3) projects
By Lanford B. Pritchett
The traditional method of construction project delivery in many industries, such as the rail industry, is the design-bid-build method (DBB), where design and construction are separate contracts. Newer procurement methods such as Design-Build (D-B) and Public-Private Partnerships (P3s) recognize the synergies of design and construction, combining them into one contract. The prime contractor, now responsible for both design and construction, also inherits more risks from the project owner and should resolve the following “BIG 4” before making any major decisions or developing a team to enhance the project’s long term success:
The first step to identifying the demands and challenges of a project is to understand each of the major contracted work elements, tasks, activities and goals. Team members who can develop this understanding in the local market, have a track record of delivering these elements and build a rapport with the project owner are ideal candidates to an owner because that understanding enables the team to price their scopes without adding unwieldy contingencies to their price.
Team members need the financial capacity to sustain the project to completion. Insurance and bonding agencies can help identify candidates with adequate capacity, as only these prime candidates can be insured and bonded to the project requirements. In general, the more cost-effective proposals will come from teams including smaller, local companies who are comfortable with their respective scopes while including lower contingencies in their pricing.
Procurement Schedule – During proposal development, team members need to assign the proper resources to understand and address the project. These resources include not only design and estimating, but also project management, constructability, scheduling, and proposal development. The team pursuing a project that includes an adequate balance of resources greatly increases its chances of submitting a winning proposal.
Delivery Schedule – If the project has a more demanding delivery schedule team members should have more depth. In these cases, regional or national companies tend to fare better than local companies because they have a greater pool of resources. The team with the best understanding of the delivery schedule increases its success potential by developing their team with these resources.
The project owner’s financing sources often affect the team makeup. Publicly financed projects are usually more demanding from regulatory and accountability standpoints than projects using private financing. Some federal agencies even mandate that small and/or disadvantaged business enterprises must perform 62 percent of the work not self-performed by the prime contractor. Being aware of such situations in advance avoids expensive and disruptive fundamental team changes later.
Further P3 Considerations
In a P3, the prime contractor (aka developer or concessionaire) often operates, maintains and finances certain components of the project in addition to designing and building it. The prime contractor then needs to augment the design-build team with capable operations and maintenance companies along with financial advisors. The operations, maintenance and financial team members become just as integral to the team’s success as the design-build members. Many American companies have been part of Canadian projects that have successfully applied the aforementioned P3 model.
History will show on unsuccessful D-B and P3 pursuits, two major but completely surmountable trends have consistently been noticed: teaming and neglect. The prime contractor can engage the right team if it resolves the BIG 4 early in the process preceding the team’s development. The prime contractor must also resolve the neglect issue by assigning the proper resources to address the project.
The number of D-B and P3 projects will only continue to rise. The continued success of these projects depends on the prime contractor’s understanding the BIG 4 and communicating that knowledge to their team candidates and eventual team members. Owners who are able and willing to assist the Prime’s in their interest to quantify these project elements will also help their agency/department in delivering a successful project that will serve them well in years to come.
Lanford B. Pritchett is the Director of Business Development for J.L. Patterson & Associates, Inc., a civil, structural and environmental engineering firm headquartered in Southern California. His email is [email protected].