Design-build for water and wastewater projects

This article comes from our Spring 2014 Water & Wastewater Newsletter
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Owners of water and wastewater projects, as with all other owners, want three things from a construction project: they want it built right, within budget and on time. Consent decrees often serve to reinforce these goals. Moreover, service interruptions and disruptions can lead to major headaches and public relations problems. Finally, the effect of blown budgets on relationships with rate payers must be kept in mind. The design-build delivery model, which is now available to public entities in Ohio and has always been available to charter cities that have properly exercised their home-rule powers, has many potential advantages including, but not limited to:

• A single point of responsibility for the ultimate performance of the project, if the contracts and owner’s criteria are thoughtfully drafted, keeping the owner out of the middle of design vs. construction defect disputes;
• Ongoing budgetary updates during the design process from the entity that will also ultimately be responsible for providing the guaranteed maximum price for the work, which can help prevent the type of unpleasant surprise that may occur under the design-bid-build delivery model if the bids come in more than 10 percent over the estimate;
• A potentially reduced schedule given the collaboration between the design team and the construction team that are both answerable to the design-builder, who, in turn, is responsible to the owner;
• Given the two-step process of announcing an RFQ (request for qualifications) and then providing an RFP (request for proposals) to only those short-listed firms deemed most qualified to perform the project, less qualified firms can be weeded out more easily and earlier than would be possible under the design-bid-build delivery model;
• Because complete plans and specifications are not required, the short-listed firms can suggest alternative technical approaches and describe the potential cost savings available with each approach as part of their proposals, thus allowing the owner to benefit from a variety of perspectives on how best to proceed with the project.

The Criteria Engineer

Charter cities with the right charter provisions can utilize any project delivery system that the city council may authorize by ordinance. Other statutory political subdivisions must follow the design-build process that was developed as part of Ohio’s construction reform effort. Under that statutory process, the public owner must first select a criteria engineer. That individual must be either a registered architect or, in the case of a water or wastewater project, preferably a P.E. There are two ways to engage that individual. If the owner wishes to utilize an employee who is a P.E. as its criteria engineer, the owner can simply identify that individual to the Ohio Facilities Construction Commission (OFCC) and that person may serve in that capacity. If the owner does not have such an employee or if the owner simply prefers to obtain an outside consultant to perform the criteria engineer role, the owner must follow the qualification-based selection (QBS) process set forth in ORC sections 153.65 through 153.70. Those sections were recently changed so they should be reviewed before the QBS process is initiated.

Pursuant to ORC sections 153.65 through 153.70, if the public owner maintains a current file of qualifications for design professionals and the anticipated fee will be less than $50,000, the criteria engineer can be selected from the firms with current qualifications on file and the first step of the design-build selection process can be accomplished without going through a formal selection process. If either of these requirements is not met, the owner must go through the qualification-based selection process outlined in ORC sections 153.65 through 153.70, through which qualifications are solicited, evaluated and ranked to select the criteria engineer, which will be the individual or firm determined to be the best qualified to provide the required services.

The criteria engineer is not expected to perform a full design. Rather, the criteria engineer is engaged to assist the owner in identifying the nature of the project and establishing the owner’s performance goals for purposes of preparing design criteria for the project to be provided to interested design-build firms and to be used in receiving and evaluating requests for RFQs from design-build firms, RFPs from the short-listed design-build firms, and evaluating and ranking those proposals based on the determination of which proposal provides the “best value” to the owner.

The criteria engineer can do more than assist with defining the project by developing the criteria that will be provided to the design-build firms and assisting with the selection of the design-builder. On many projects, it may make sense to keep the criteria engineer on the project until it is completed to serve as the owner’s eyes and ears and to make sure that the owner gets what it is entitled to receive under the design-build contract (i.e., to review the progress of the design to confirm that it fulfills the design criteria developed for the project and to independently monitor construction to confirm that the project, as built, fulfills the design criteria for the project).

The one activity that the criteria engineer may NOT perform is the final design of the project as a consultant to the design-builder. This service is expressly prohibited, although the extent and detail of the project criteria are not specifically limited under the statutes or the rules.

Design-Builder Selection

The RFQ/RFP Process:

Once the design criteria for the project has been developed, the owner can follow the two-step selection process for (1) advertising and receiving qualifications from design-build companies followed by ranking the entities that have submitted qualifications, and (2) requesting proposals from at least the three top-ranked design-build companies (which can include fee information and other financial data). An open-ended set of expectations can be issued by the owner (i.e., a performance specification), and proposers can propose and price a number of different options. If a simple sewer line installation is desired, for example, a guaranteed maximum price (GMP) can be requested at the time of the proposal and may be a realistic expectation. If a complex plant project with specific owner requirements is contemplated, the GMP may need to await further design development. It will be important in determining the “best value” to compare apples to apples. For example, although the rules do not specifically require them to be included in the proposals, life cycle costs, warranty terms and the like may be requested, compared and weighed against the GMP and/or the fee information provided in the proposal. The owner can monitor the costs of the work compared to the GMP because the design-build model is subject to “open book pricing.” This means that the bid information and actual cost information must be provided by the design-builder to the owner during the project.

For more complex projects, or projects where the owner has not yet settled on key design concepts, the owner is permitted, but not required, to consider paying a modest stipend to the short-listed firms, which can expend significant time and expense in responding to RFPs, especially when an upfront GMP is requested.

Summary

The design-build selection process takes a little more work and thought on the front end and may add some initial cost to the project, but it allows owners to take advantage of broader input with regard to the most cost-effective ways to accomplish their goals, gives owners better tools to ensure that appropriately qualified firms are selected and can pay dividends if problems arise later.