Friday, December 9, 2016
Municipalities face a number of choices and key decision points when approaching a large construction project such as a school building, public safety complex or community center.
One of the most important decisions – because it can mean the difference in saving millions of dollars – is how the project will be procured by the community and paid for by taxpayers.
There’s more than one way for a project “owner” such as a city or town to procure a building project. But reliable data suggests that one procurement method offers the best value for municipalities: the traditional “Design Bid Build” (DBB) process.
Design Bid Build falls under the traditional “competitive-bid” category. A design team working closely with a municipality and their Owner’s Project Manager creates construction documents that represent the vision for a project and a very specific design plan for executing it. Those documents become the key component of a bidding package that is used to solicit competitive bids or sealed proposals. Cities and towns can also include pre-qualification criteria and a review of references and past projects to ensure that winning bidders can meet all work obligations and standards.
According to the Massachusetts School Building Authority (MSBA), competitive bidding is the hallmark of DBB and can offer a clear advantage in producing “the best available price” for cities and towns.
CTA Construction became a leader in school construction across Massachusetts by competitively bidding municipal construction work – and offering not just value but real accountability to cities and towns. Our company has completed more than 35 school building projects – representing the high-quality end product of more than $1 billion of public investment in municipal projects.
Many municipalities prefer to avoid this type of competition and have sought to procure their projects under what is called the “Construction Manager-at-Risk” (CMR) mode, where decision making is made in a more subjective manner. This approach to design and construction – where the general contractor is involved beginning with the design process – places total cost as a secondary factor in choosing the construction manager. In theory the idea is that CMR makes project owners less exposed to potential cost overruns or change orders, and that there is more focus on qualifications when choosing a construction manager.
But the reality is that traditional DBB provides transparency from start to finish on a project – and the bidding process requires competitors to demonstrate their qualifications and track record. Analyses, such as those by the MSBA and other organizations, show that the number of change orders are not actually reduced on CMR projects.
Most important: the cost savings to municipalities is significant with DBB. An analysis by the Massachusetts School Building Authority of public school construction found that CMR is consistently more expensive than DBB by over 10 percent. In fact, some of the most expensive schools ever built in the Commonwealth utilized CMR, including Newtown North High School – which saw costs soar from $109 million to nearly $200 million in the seven year period when the project was proposed and completed.
In 2009 and 2010, Massachusetts communities that built schools using DBB generated nearly four times the savings of projects that used CMR, according to a study by the Associated Builders and Contractors of Massachusetts. And a recent study by the Beacon Hill Institute found that CMR projects cost about $26.49 more per square foot than DBB. Massive cost gaps like these mean CMR often results in added dollars for cities and towns.
Project owners should closely examine qualifications for their general contractor/construction manager as well as the design team. Due diligence at each stage will help ensure a quality outcome and a smooth process. If the project is being managed through a Design Bid Build process – it’s also very likely it will come in at the lowest possible cost.