4/7/2004 Application of the Design-Build Process to NAVFAC Environmental Restoration Projects Karnig...

4/7/2004

Application of the Design-Build Process to NAVFAC Environmental Restoration Projects

Karnig Ohannessian, PERPM, Marine Corps Team, BRAC Operations, NFECSW SDIEGO

Abid Loan, PEEngineering Manager, Tetra Tech FW, Inc. Santa Ana, California

Contributors (NFECSW SDIEGO):

James Sheetz, PE, BLTL

Laurie Patton, Contract Specialist

Keith Elliot, Remedial Project Manager

4/7/20042 NFECSW SDIEGO

Introduction

• Design/Build (DB) well established in private sector and military construction projects

• Limited application to environmental projects• We are going to:

– Review DB process fundamentals for projects in the non-environmental sector

– Describe factors affecting DB for environmental projects– Review proper management techniques

• Review Operating Industries, Inc. landfill for lessons useful to NAVFAC projects

• Review special considerations for Installation Restoration (IR) programs

• Review contracting requirements

– Review other environmental DB projects within NAVFAC


Fundamentals of DB Process

• Application of DB concept in the Non-Environmental Sector– DB concept well known in non-environmental sector– California Assembly Bill 1402 requires school board to

evaluate relative merits of both DB and Design-Bid-Build (DBB)

– DB saved 20 months on $2.4B Alameda Corridor project in Southern California

– Study by Construction Industry Institute of 1,000 projects indicated DB projects submitted by owners showed better performance in cost, schedule, change/rework, and practice use

– Other publications document success for both owners and contractors



Cost Schedule Safety Analytic Subset Owner Contractor Owner Contractor Owner Contractor

Overall1 -- -- DB DBB -- -- Overall2 DB -- DB DBB -- -- Private Sector2 DB N/A DB N/A -- N/A Industrial Projects2

DB -- DB DBB DBB --

Cost Category2 <$15 MM DBB DB DB DBB DBB DB $15-$50 MM DB DBB DB DBB DBB DBB >$50 MM -- DB DB DB DB DB

Project Nature2 Addition DB -- DB DBB DBB -- Grass Roots DBB DB DB DBB DB DBB Modernization DB DBB DB DBB DB DB

1 Significant difference, p<0.05 -- No difference in performance 2 Observed difference N/A Not applicable Source: Thomas, S.R., C.L. Macken, T.H. Chung, and I. Kim. 2002. Measuring the Impacts of the Delivery System on Project Performance - Design-Build and Design-Bid-Build. Construction Industry Institute: Austin, Texas. November.

Performance Summary for Cost, Schedule, and Safety


Changes Rework Practice Use Analytic Subset Owner Contractor Owner Contractor Owner Contractor

Overall1 DB DB DB -- DB -- Overall2 DB DB DB DB DB DB Private Sector2 DB N/A DB N/A DB N/A Industrial Projects2

DB DB DB -- DB DB

Cost Category2 <$15 MM DB DB DB DB DB DB $15-$50 MM DB DB -- DB DB DBB >$50 MM DB DBB DB DB DB DBB

Project Nature2 Addition DB DB -- DBB DB DB Grass Roots DB DB DB DB DB DBB Modernization DB DB DB DBB DB --

1 Significant difference, p<0.05 -- No difference in performance 2 Observed difference N/A Not applicable Source: Thomas, S.R., C.L. Macken, T.H. Chung, and I. Kim. 2002. Measuring the Impacts of the Delivery System on Project Performance - Design-Build and Design-Bid-Build. Construction Industry Institute: Austin, Texas. November.


Performance Summary for Change, Rework, and Practice Use



“It’s very critical to have everyone on site and essentially in the same office. There’s just no substitute for being able to walk down the hall and grab the right guy by the collar and make him address what’s on your mind.”

Design Build Magazine, December 2003


Factors Affecting DB for Environmental Projects

• Regulatory, mandated legal agreements– Most important factor in limiting effectiveness of

DB process– Legal agreements often very specific– Limits flexibility needed for DB project delivery

• Conflicts of interest– Traditional approach in defense environmental

restoration has been separate design and construction contractors

– Intent of separate contractors is to avoid scope growth

– DB process requires single contractor or team to be responsible for all aspects of project


•Contractor capabilities– Environmental firms can offer wide range of

services– DB process can be limited to contractors/teams

with DB capabilities and experience

•Contractual requirements– Contract terms should be structured to facilitate

the DB process

Factors Affecting DB for Environmental Projects


Management Techniques

•DB is not for the timid or risk-averse manager•DB is referred to as both “easier” and “harder” (Design Build Magazine, December 2003)

•To capitalize on the benefits of cost and time savings of DB requires an aggressive and proactive management approach


Management Techniques

• Obtain up-front buy-in from stakeholders and regulators to implement DB process

• Establish clear lines of communications between regulators and other stakeholders

• Determine the level of detail necessary to start construction and reduce the number of design deliverables

• Team building

• Clearly define roles and responsibilities

• Keep track of key issues and their timely resolution

• Streamline the field change approval process

• Structure contract terms and conditions to facilitate implementation of the DB process


Environmental DB Projects

• Operating Industries, Inc.– Background

• 190-acre Class I hazardous waste landfill CERCLA site

• Located in densely populated metropolitan Los Angeles

• Received 300 to 500 million gallons of liquid waste and 38 million cubic yards of refuse

• EPA reached legal agreements with 4,000 responsible parties for site cleanup



• Operating Industries, Inc.– Contract Award

• In July 1996, an Engineering, Procurement, Construction (EPC) type contract was awarded to Tetra Tech FW, Inc. for site cleanup

• Contract provisions based on cost plus fixed-fee as well as incentive-fee for various milestones

• Client acceptance of work based on successful demonstration of “mechanical completion” of all constructed systems



• Operating Industries, Inc.– Scope of Work

• Install cover, landfill gas extraction, conveyance and treatment; and storm water management systems

• Project costs $100 M to include approximately 400 wells, 10 miles of drainage, 23 miles of piping, two thermal oxidizers, and 6 M cubic yards of soil handling

• With client and regulatory approval, TtFW develops plans for using an aggressive DB approach for project execution



• Operating Industries, Inc.– DB Approach

• Establish a regular Technical Exchange meeting process with regulators to expedite resolution of issues and approval process

• Streamline design submittal process by dividing overall design into five "site area" packages

• Obtain regulatory buy-in to start construction at 60 percent design completion level for each area

• Assure compliance with Consent Decree at each step



• Operating Industries, Inc.– DB Implementation Results

• Saved nearly a year off the total project schedule• Significant cost savings• Mechanical completion requirements shifted

responsibility of obtaining agency acceptance to the Contractor

• Greatly reduced client management effort and related costs

• Amount of “rework” very minimal

• Excellent Safety record


Special Considerations for Installation Restoration Projects

• At what point in the CERCLA remedial response process is a DB acquisition strategy feasible for Installation Restoration projects?

• DB is not recommended– When there is no way to articulate a performance– When full design documentation is available


Special Considerations for Installation Restoration Projects

• Risk management decision-making under uncertainty

CERCLA Remedial Respons Process

Pre-Remedial Process RI/FS

Proposed Plan and Public Comment ROD

Long-Term Remedy Maintenance

PA/SI Data gathering RAOs Stakeholder input 5-year reviewNPL Listing Evaluation Preferred remedy Remedy selectionFFA Iterative process Potential dispute

Risk management Public involvementRegulatory review Possible revisions


NFECSW DB Study

• DB Survey– Conducted as an Intern project and MBA degree project by

Laurie Patton and Keith Elliot– Research on barriers to acquisition using DB process for

environmental projects– Selected respondents with experience with the federal

installation restoration program

• Survey results– Most perceived significant barriers to application of DB

process to fixed price environmental projects– Barriers were perceived as mindset and policy– Most respondents positive that barriers could be

overcome and use of fixed price DB contracts has potential for success


NFECSW DB Study

Perceived Benefits• Shorter duration• Lower costs• Improved resource utilization• Increased flexibility in

services to clients• Improved quality• Better value for government• Streamlines contracting

process• Avoids contractor transitions

between phases• Reduces regulatory delays• Fosters project team culture

between government and contractors

Perceived Barriers• Resistance to change

• Need for training in D/B process

• Concern about unknown costs

• Concern about small business participation

• Need for involved client

• Need for reliable contractor


NFECSW DB Study

• Conclusions:– No legal or regulatory barriers identified to using DB

process for environmental restoration contracting– No inherent organizational barriers identified– Management challenge: human resistance to change

• Recommendations:– Attain command buy-in through change management– Develop templates for scopes of work for DB fixed-price

environmental projects– Develop projects involving partnering of large and small

businesses on environmental DB projects to demonstrate role of small business


Contracting Requirements

• Performance based• Track cost, production rate, mechanical

completion• Pay based on progress, not cost incurred• More ability to incorporate incentives and

achieve better cost containment, e.g., cost-based or schedule-based milestones

• Flexibility to select contract structure, e.g., fixed-price, cost-reimbursable, etc.


Measurement and Payment

Description Pricing Unit Completion Criteria Measurement Payment Schedule

Meetings Lump Sum EA Minutes Number of meetings attended

Lump sum payable monthly as a percentage of completion through submission of deliverables to Navy

Draft, draft final, and final remedial action work plan

Lump Sum LOT RPM approval Measurement by milestones: submittals to Navy and approval by Navy. Forty percent at draft, 30 percent at draft final, 30 percent at final.

Lump sum payable monthly as a percentage of completion through submission of deliverables to Navy

Trench - labor, equipment and materials to perpare, excavate, backfill, and resurface trench

Unit Price LF Completion according to design specifications and drawings

Actual length to be measured during construction. Documentation of completion of activity in Construction Logs

Payable monthly on a prorated scale based on linear feet of trenching completed



•Camp Pendleton Wastewater Treatment– Major environmental DB project for NAVFAC

Southwest Division– Combination fixed price/indefinite quantity

design, build, operate, and maintain (DBOM)– Largest environmental DB project for SWDIV– Total estimated project $260M over ten-year

period– Two step selection process



• Camp Pendleton Wastewater Treatment (cont)– Phase 1 will select up to five firms/teams based

on• Past performance• Support of small business• Experience• Technical approach

– Phase 2 will select winner based on• Phase 1 factors• Design and engineering solutions• Price



• Site 24 MCAS El Toro– BRAC Base in Southern California– FFA with EPA, DTSC, RWQCB– Site 24 is VOC source area (groundwater plume)– Settlement Agreement with local Water Districts– ROD signed June 2002– FFA scheduling constraints necessitated

bringing on the remedial action contractor before design was completed

– DB approach determined to be the preferred acquisition strategy



• Site 24 MCAS El Toro– Transition from current contractor to DB

contractor– Definition of roles and responsibilities of the

current design contractor vs. the future DB contractor

• Reap the benefit of the initial design contractor’s institutional knowledge (reflected in their 30 percent design)

• Assign singularity of responsibility to DB contractor• Avoid duplicating previous work, while at the same time

adding value engineering to the initial design



• Site 24 MCAS El Toro– Scope of Work (SOW) needed to clearly state the owner’s

(Navy’s) desire to execute this project using a DB approach • Described roles and responsibilities: Design Basis and Final Design• Lump sum costs with unit pricing to address future change conditions• Estimates based on the available 30 percent design • Performance specifications: what the product should do and how it

should perform • Measurement and payment

– Contract award based on best value• Technical approach• (Similar previous experience)• Management and key personnel• Price



• Site 24 MCAS El Toro– Higher quality:

• More services and features offered than Navy anticipated• Better process offered: opportunity for schedule reduction• Tangible constructability and operational efficiencies

offered

– Lower cost:• DB strategy has projected cost savings compared to DBB

government estimates• Construction savings• First-year operation savings• Design savings• Total cost savings (through 1st year)


Questions

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