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https://nap.nationalacademies.org/catalog/27432/critical-issues-in-transportation-for-2024-and-beyond

Project Delivery (Design-Build) Guidance

Departments of Transportation (DOTs) across the country have traditionally used a Design-Bid-Build procurement method in building highways and other transportation infrastructure improvements. The Design-Bid-Build method is when the DOT—or a consultant hired by the DOT—designs the project, after which bids from contractors are solicited, and, finally, the project is awarded to a contractor to build that project. This process encourages competitiveness among bidders; however, it often requires a high expenditure of resources and time in the DOT’s project-design phase. Further, any innovation in construction or materials for a project must be identified, defined, and included in the contractor’s bid package, which restricts flexibility to develop additional innovations after award. The Arizona DOT has been very aggressive in seeking alternative methods of project delivery. Two such prominent methods are Public/Private Partnership (P3) initiatives and the Design-Build (DB) method. Arizona legislation has been enacted to provide ADOT the authority to initiate either of these project-delivery methods. A P3 refers to a contractual agreement that allows a private-sector entity to have greater participation in the delivery of a transportation project. Using traditional Design-Bid-Build project-delivery methods, ADOT bears all of the risks and responsibilities for a project. However, under a P3, the private partner takes on some or all of the project's risks and responsibilities. For roadway and bridge projects, P3s typically involve an initial investment by a private partner who then designs, builds, finances, operates, and maintains the facility in exchange for future revenues generated by the facility. ADOT retains control and ownership and sets the standards and rules of the P3 facility. The DB method involves a collaborative effort between ADOT and its contractors and subcontractors. It combines into a single contract the design, construction, construction engineering, and inspection and testing requirements for a project, all in accordance with standard ADOT design criteria, construction specifications, and contract administration practices. The DB method allows the contractor to participate in project design, which can reduce project costs and expedite construction. In 1996, the Arizona State Legislature authorized ADOT to use the DB process on two pilot projects. In 1998, the pilot program was expanded to include three more projects. Later, in the year 2000, the Arizona State Legislature approved DB as a permanent program until 2007 with the following criteria: The limitation of two Design-Build contracts per year at a minimum cost of $40 million each. The ADOT Director must submit an annual report to the Governor and the Legislature regarding the benefits associated with the Design-Build program. The score for each Technical Proposal must be publicly announced. At least three but no more than five firms are required to be short-listed from the request for qualifications. The Department must pay a stipend of 0.2 percent to each short-listed firm of the Department’s estimated cost for design and construction cost of the project. Subsequent legislation has removed the requirement for annual reporting, the limitation on minimum cost, and the limitation on the number of projects. Current legislation has stipulated that the current DB program will expire in 2025. In the interest of maintaining ADOT’s continued authority to use the DB procurement method, it is important—and timely—to gather information on what other states have used in their legislative documents that could prove helpful for ADOT to consider. This research will focus on the DB procurement method and seek data to inform ADOT on DBs policies and procedures for future project delivery and legislative efforts. This research will include information from other state DOTs on their DB efforts, state legislative authority, policies, contractual documents, etc. It will also include how DB is implemented in other states as well as any notable practices they use when utilizing DB. The research objectives will include the following: (1) Identify the state DOTs that utilize DB as a project-delivery mechanism. (2) Compile and synthesize information from the state DOTs that utilize DB for their legislative language authority, policies, contractual documents, RFP/RFQ examples, schedule templates, evaluation criteria, scoring and weights for DB consultant team selection, and any other pertinent information relating to DB. (3) Develop a document that provides any notable practices from state DOTs’ DB efforts as well as how those states implement and administer DB, including case studies if any are available. (4) Develop a synthesis of other state DOTs’ training efforts to educate participants that will be engaging in DB projects, including training, workshops, videos, and lessons learned. (5) Define notable practices for the use, integration, management, and negotiations of Independent Cost Estimates (ICE) in DB.