Progressive Design-Build Project Delivery

PROGRESSIVE DESIGN-BUILD PROJECT DELIVERY

Procurement Guide

WDBC No. W-1100-2013

WaterDesignBuild.org

Introduction...... 1

The Progressive Design-Build Method...... 3

Information Availability with Progressive Design-Build Procurement...... 4

Key Considerations with Progressive Design-Build Procurement...... 4

Existing Legal Authority...... 4

Basis for Selection...... 5

Qualifications-Based Selection...... 5

Best-Value Selection...... 6

Required Contents of Submissions...... 7

Statement of Qualifications (SOQ)...... 7

Proposals...... 8

Evaluation Criteria and Scoring Methodology...... 10

Evaluation Criteria...... 10

Scoring Methodology...... 10

Progressive Design-Build Contract...... 11

Exhibit A — Term Sheet...... 11

Progressive Design-Build

Procurement Guide

Introduction

The progressive design-build method of delivering infrastructure projects combines the owner’s direct control over project concept and detailed design with the design-builder’s innovation – and creates a single point of accountability. Given the growing popularity of the progressive design-build (PDB) delivery method, the Water Design-Build Council (WDBC) has developed this user-friendly procurement guide, along with a suggested set of request for qualifications (RFQ) and request for proposal (RFP) model documents for conducting PDB procurement effectively and in accordance with best practices.

Owners may choose among a variety of approaches to procuringa design-builderusing the PDB method. Owners may choose to evaluate only non-price factors, basing their selection solely or primarily on qualifications; or they may evaluate a combination of price and non-price factors to determine which design-builder offers the best value. An owner may conduct a single-step process, using either an RFQ with only non-price selection factors or an RFP with both price and non-price selection factors. Alternatively, an owner may conduct a two-step process, first soliciting statements of qualifications (SOQs) and then requesting proposals from a shortlist of pre-qualified proposers. In the two-step process, the owner may limit the RFP to project-approach elements(non-price factors only) or may request a fee and rate proposal as well (both price and non-price factors). In any event, each owner needs to decide at the outset, on a project-by-project basis, which PDB procurement approach best fits its needs and preferences.

By discussing key considerations in preparing RFQs and RFPs, this procurement guide will assist owners in identifying the most appropriate procurement process for a particular PDB project and in preparing RFQs and RFPs that will promote each owner’s interests and objectives.

This guide addresses the following approaches to PDB procurement:

Single-step, with selection based on qualifications;
Single-step, with selection based on best value; or
Two-step, with a short list based on qualifications, and selection based on best value or qualifications.

The table, Progressive Design-Build Procurement Approaches, summarizes the model documents provided by the WDBC, as well as key considerations for each approach.

Progressive Design-Build Procurement Approaches

Option / Model Documents(1) / Considerations for Selecting Procurement Option
Single-Step Process
Request for Qualifications / WDBC No.
W-1200-2013 / • If schedule is a critical driver
• If design-build qualification factors are decisive,
• If owner prefers – and if state and local laws allow – selection based solely on non-price factors
Single-Step Process
Request for Proposals / WDBC No.
W-1300-2013 / • If schedule is a critical driver
• If owner prefers – or if state or local law requires –
inclusion of price as a selection factor
Two-Step Process
Step One
Request for Qualifications
Step Two
Request for Proposals (2) / WDBC No.
W-1400-2013
WDBC No.
W-1500-2013 / • If schedule can accommodate the time required for two procurement steps and short-listing is required or desired
• If owner prefers – or if state or local law requires – inclusion
of price as a selection factor(2)

(1)Progressive Design-Build Contract model documents are also being developed by the WDBC and will be made available as a starting point. Upon making any revisions that owner and its legal counsel may determine necessary or desirable, such draft contract documents should be attached to the RFQ and RFP. In the meantime, a draft Term Sheet is included, for consideration by owner and its legal counsel, in this Guide.

(2)The Step Two RFP could be modified – by removing all references to a fee and rate proposal – such that selection would be based on non-price factors only.

The RFQ and RFP model documents are available as ready-to-go Word files. After deciding which procurement process is best-suited to its project and objectives, the owner can use the model documentsas starting points to prepare RFQ, RFP and draft contract documents tailored to its project.

WDBC is making these materials available to assist owners who may choose PDB by promoting suggested best practices, introducing terminology and offering perspective on the various approaches to the PDB procurement process. All of the model documents are posted on the WDBC Website ( and will also be available on CDs at conferences, workshops and other events.

Additional references for owners using the PDB method of project delivery include:

The Municipal Water and Wastewater Design-Build Handbook, Second Edition (WDBC, 2010)

Design-Build for Water and Wastewater Projects (American Water Works Association, 2012)

Water Design-Build Council Website at .

The Progressive Design-Build Method

With PDB procurement, the design-builder is typically selected primarily on the basis of qualifications – and before significant development of the project’s design is completed. Upon contract award, design-build services are provided in two phases.

In Phase One, the owner and design-builder work together to advance the design, incorporating design concepts and details desired by the owner and to ensure that the owner’s equipment and facility performance requirements and standards are satisfied.This collaborative approach offers the owner the benefit of detailed cost estimating and schedule information, facilitating well-informed decision-making about project scope and design.The design-builder can also take steps during Phase One (such as ordering long-lead time equipment, permitting and site investigations) to reduce owner risks and costs for construction of the project during Phase Two.

During Phase One, the design-builder completes the project’s design to the point desired by the owner (which often ranges from 60 to 90 percent, but can be less if schedule dictates) and typically submits to the owner a guaranteed maximum price (GMP) or lump-sum price for final design and construction, along with a detailed breakdown of estimated construction costs and a proposed schedule. The owner can also participate in the design-builder’s selection of key subcontractors and equipment suppliers. Once the owner approves the proposed schedule and GMP or lump-sum price, the project proceeds to Phase Two, which includes final design and construction. If the parties cannot agree on an acceptable price and schedule, the owner can finish the partially-completed Phase One design and complete the construction with a separately-procured construction contract.

There are a number of circumstances in which PDB might be the preferred project delivery method, such as when the owner wants to:

accelerate the schedule
maximize design-builder input during the project’s design development
engage in a highly collaborative approach with the design-builder
emphasize qualifications in selecting the design-builder
minimize procurement cost and time
capture construction cost savings by using a GMP, or
achieve a high degree of construction cost certainty before design is complete

The following factors promote cost certainty and competiveness with the PDB method:

The GMP or lump-sum price proposal tends to be accurate, since it is established with the benefit of a relatively detailed level of design (typically between 60 and 90 percent design development) by an experienced design-builder, coupled with a high degree of owner input that avoids costly design-related change orders.
The design-builder provides detailed cost estimates along with design development, allowing the design engineer to design to the owner’s budget (as opposed to obtaining an engineer’s opinion of probable cost upon completion of biddable plans and specifications along with the risk of bidding uncertainties).
The GMP or lump-sum price proposal can be prepared through bidding certain material purchases and/or subcontracted work thus providing greater cost certainty and demonstrating design-builder competitiveness.
The design-builder can include detailed cost estimates of self-performed work in the GMP or lump-sum price proposal providing the owner with increased transparency in pricing to promote cost certainty and competitiveness of the design-builder.

Information Availability with Progressive Design-Build Procurement

The owner should provide during the procurement process any available design work product and other project-related engineering and other information and should clearly spell out in the procurement documents the extent to which the design-builder may rely on such information. The ability to achieve cost and schedule certainty dependson the timely availability and reliability of certain project information, such as raw-water or influent conditions (in the case of a water or wastewater treatment plant project) and subsurface conditions, including soil and rock characteristics, underground utilities and obstructions, and the presence of hazardous or archeological materials as well as any equipment or manufacturer preferences. PDB reduces the likelihood that the owner will provide inaccurate or incomplete project information to respondents or proposers – a risk commonly associated with lump-sum design-build procurement – since it is not necessary to share such information (typically generated by third parties) before awarding the contract. PDB gives the owner the option to develop this information in concert with the design-builder during Phase One design development – prior to preparation of the GMP or lump-sum price. If such information is not available when the owner decides to initiate the PDB procurement process, this option enables the owner to accelerate procurement and project delivery.

Key Considerations with Progressive Design-Build Procurement

Owners should focus on five key areas when designing a process and preparing RFQ and RFP documents for PDB procurement:

Existing legal authority
Basis for selection
Required contents of submissions
Evaluation criteria and scoring methodology
Progressive design-build contract

Existing Legal Authority

[Note: The following discussion does not constitute legal advice, and readers are advised to consult with their own legal counsel for a determinative ruling on their authority under applicable state and local laws.]

Before electing to use the PDB method and embarking on project procurement, owners should verify that state and local procurement laws allow for its use. Owners should also pay careful attention to the specified requirements for procurement, as these will affect not only the type of process used (i.e., one-step or two-step process, and qualifications-based or best-value-based selection) but also often the required content of the SOQ and proposal submissions.

The authority for public owners to engage in alternative methods of project delivery is generally controlled by applicable state legislation. Some general information regarding state legislation relating to alternative project delivery is summarized below:

Many states permit the use of project delivery methods other than traditional design-bid-build for water and wastewater infrastructure; most of them permit design-build, while some also permit design-build-operate or design-build-operate-finance. (Brief descriptions of design-build-operate and design-build-operate-finance can be found in the WDBC Handbook and online at
Some states have uniform rules for alternative project delivery that apply both to state agencies and also to municipal and special-district projects. Others have a specific rule for state agencies and different or parallel rules for municipal and special-district projects.
Some states are prescriptive in defining the selection process and selection criteria, while other states give municipalities and special districts considerable discretion in their procurement process.
A limited number of states allow only construction management at-risk or construction management-general contracting as the permitted form of alternative project delivery – sometimes with specific rules on the permitted amount of work that the constructor may self-perform. (A discussion of construction management at-risk, as well as a brief description of construction management–general contracting, can be found in the WDBC Handbook and online at
Some states have different rules for charter cities vs. general-law cities, with charter cities generally having broad discretion and general-law cities having restricted discretion in the use of project delivery methods.
Some states limit the use of alternative project delivery to projects in a certain size range, or to a specific number of projects in a given year; some may require annual reports to a state procurement commission or to the state legislature.
A number of states do not permit qualifications-based selection of design-builders for water and wastewater projects, requiring that price be included as a selection factor. Some states specify the weighting to be allocated to price.

The WDBC web site ( contains additional information concerning state legislation.

Basis for Selection

Progressive design-build procurement enables an owner to select the design-builder on the basis of qualifications. It is recognized, however, that some owners may not want, or may not have the ability (due to applicable law), to base selection solely on qualifications. The WDBC model documents, therefore, include RFQ and RFP templates for best-value (incorporating both price and non-price factors), as well as qualifications-only, selection.

Qualifications-Based Selection

Qualifications-based PDB procurement offers certain advantages. It enables an owner to employ evaluation criteria that are routinely used for any qualifications-based selection, such as design engineer, legal counsel or other professional services. Using a familiar process can help ensure that the owner is able to conduct the procurement effectively to select the best-qualified design-builder. Qualifications-based selection can substantially reduce procurement time, an important factor for projects facing tight schedules. It also reduces the complexity and cost of the PDB procurement process (both for owners and design-builders) and often generates a larger pool of qualified firms – including smaller, local firms that might otherwise be reluctant to participate due to the high cost of engaging in the proposal process.

Best-Value Selection

If an owner prefers (or if applicable state or local law requires) that cost be considered in selecting the design-builder, a fee and rate proposal (as described below) is used in conjunction with the qualifications-based procurement process. With PDB procurement, however, the total cost of construction is not a factor in selecting the design-builder, since this cost is established after contract award.

A fee and rate proposal generally includes a combination of fixed fees and hourly rates for specific components of the design-build services, as determined by applicable state or local procurement law and owner preferences. The owner may want to include some combination of:

Fixed fees or hourly billing rates with associated labor classifications for Phase One services (such as preconstruction services and design development) and certain Phase Two services (such as engineering services during construction), based on a detailed scope of work described in the RFP.
The design-builder fee or markup as a percentage of allowable costs of the work (such as trade subcontracts, equipment purchase orders and engineering subconsultants) as defined in the progressive design-build contract. To compare the fee percentages included in the rate and fee proposals, an assume value or estimate of the project’s cost of the work should be provided and utilized for all proposals. (As an alternative to a fee percentage, a fixed fee amount could be requested as long as the actual cost of the work turns out to be within a reasonable range of the cost estimate utilized when such fee is requested.)
A fixed fee or cost cap with hourly rates for providingsome elements of general conditions (such as project management and construction supervision) over a stated or implied time period, based on a definition of general conditions contained inthe RFP. If an owner wishes to include a fee or a cost cap for providing general conditions, it is recommended that the RFP specify the assumed schedule durationand project staffing requirementsthat all proposers should use (i.e., 24 months project durationwith a full-time project manager, etc.) and include a clear definition of the general conditions. A sample definition of general conditions is included with the WDBC’s Progressive Design-Build Contract.

In general, when requesting a fee and rate proposal in the RFP, it is important to recognize that the intent of PDB is that selection of the design-builder bebased heavily on qualifications. It is also important to recognize that fees and rates account for a relatively small percentage of the overall project cost. The weighting of the fee and rate proposal in the overall evaluation and scoring should therefore be kept to a minimum, recognizing that some state procurement laws may dictate minimum percentages. The model RFP documents provide suggestions for weighting fee and rate proposals as part of the overall proposal score.