Alternative Project Delivery - Texas Water Development Board

Section 3
One of the critical areas of concern from a public policy perspective is addressed by
the procurement objective to assure a fair, open market solicitation process. The costs
of developing proposals for alternative procurement methods that involve the
development of multiple concept designs by each vendor can be very expensive. The
aggregate contract value for the design, construction and 15 to 20 years of operations
can be hundreds of millions of dollars. The selection of some combination of
engineer- contractor-operator, not principally based on lowest cost presents the
opportunity for abuse of discretion. The procurement process should safeguard
against these possibilities through specific limitations on vendor contact with elected
officials and sponsoring agency staff during the procurement. In addition, the process
needs to provide for clearly articulated and transparent evaluation criteria. A
procurement process that addresses these issues can be effective at achieving the
owner’ s objectives.
Benefits
There are three interrelated elements of any project that an owner has the
responsibility to control: cost, schedule and quality. For an owner to pursue an
alternative project delivery method, there typically has to be a benefit in at least one of
these areas. If one considers that "performance", defined as either on-budget
construction or meeting an owner’s operating needs efficiently, then it may be more
clear where DB and DBO/BOOT type project delivery offers an advantage. Potential
benefits come from different features of each of the alternative project delivery
methods, which provide opportunity to derive efficiencies beyond a traditional project
delivery approach. The efficiencies from the designer /contractor relationship in a DB
contract and the designer/operator relationship in a DBO contract are identified below.
In addition, listed below are some commercial factors that continue to afford owner
benefits in selecting DB and DBO/BOOT project delivery.
Design/Build efficiencies (perhaps in the 10 to 20% range of the project capital cost)
are possible when:
• Design services may be competitively procured;
• The close working relationship of the designer and contractor can lead to the
incorporation of more economical design and the application of cost saving
construction techniques;
• The owner’s burden to mediate disputes between the designer and constructor is
eliminated, with the design/builder required to resolve design issues as they
surface during construction. Thus, the owner gains the ability to fix project costs
earlier in the procurement process than in other project approaches; and
• With construction and purchase of equipment undertaken prior to final design
completion, "fast track" procurement can be accomplished.
3-2 Texas Water Development Board B1381-Sect3