By Michael Petro, originally published in Buffalo Business First on 7/10/15.
Construction teams can save time, money
New York state has integrated the design-build method on a limited basis into some larger, unique public infrastructure projects.
Under the right circumstances, the method allows construction project delivery to get done at reduced cost and in less time, according to Buffalo attorney James Whitcomb. He’s followed as it has been used in the downstate Tappan Zee Bridge reconstruction, the largest design-build undertaken in New York.
The subject even found its way into a discussion Whitcomb had with a client and construction professional after a recent golf outing. He said the conversation touched on how the method has changed the dynamic from the traditional way projects had been contracted.
In 2011 was when New York first allowed limited design-build authority by five state agencies: the Department of Transportation, the Thruway Authority, the Office of Parks, Recreation and Historic Preservation, the Department of Environmental Conservation and the state’s Bridge Authority. After three years as a pilot program, it was renewed in similar fashion at the beginning of 2015. Expansion of its use was taken out of the 2014-15 budget, however.
Design-build streamlines the contract process by using the same entity to do both the design and build aspects, Whitcomb said. It combines multiple contract pieces into one by creating a team, which includes the contractor and architect/engineer. Most projects use the design-bid-build method, which under the Wicks Law requires separate contracts with the major trades involved.
The use of design-build in the Tappan Zee Bridge project is said to have saved $1.5 billion in construction costs, according to the Thruway Authority. Among local design-build projects in the works are the I-190 and Route 265 in Niagara County.
Bridge projects nationally have used this method for years, Whitcomb said. A year before the state approved it, studies showed that 40 percent of non-residential construction projects put design-build to work.
In 44 states, local governments are granted some authority over design-build. In those states, it is being used in such building projects as schools, streets, fire stations, health care facilities and wastewater treatment plants.
“Unfortunately, New York is somewhat late to the party,” said Whitcomb, a partner in civil litigation, including construction law, at Phillips Lytle. “Looking at what is done in probably three-quarters of the country, design-build has been widely used in procuring government contracts.”
Brian Gwitt, a partner at Woods Oviatt Gilman, said contractors doing work for a long time are typically aligned with architects or engineers they know well. Some larger contractors even have their own architect on staff. So the concept is not new.
Alternative delivery models are helpful to owners in ensuring a project is built as cost-effectively as possible, according to Terry Gilbride of Hodgson Russ. However, public construction has been unable to take advantage of most of these methods due to state restrictions, he said.
Gilbride, who focuses on commercial real estate development, said it is important to develop ways to allow public sector contracting to catch up to what has been done privately for years. An increase in the design-build methodology could only help.
“I applaud any attempt by the public sector to try to embrace these delivery models because they provide ways you can achieve efficiencies,” he said. “You can get there better, faster and cheaper, and the private sector has been using them for years.”
Whitcomb said he was encouraged by the fact that one of the state authorities collected several bridge projects into one design-build contract, a concept that that be useful in Buffalo given the number of bridges in need of attention.
The Tappan Zee Bridge has become a prime example of design-build at work, said Peter Abdella, a partner at Harter Secrest who practices building and construction law. But he said there seems to be some debate about the actual level of savings.
Phillip Delmont, also a partner at Harter Secrest, said that according to surveys, design-build can save more than 5 percent and the project speed is generally quicker. Gwitt said when a change in design occurs, the project may be put on hold, awaiting a final response as plans go through the owner to contractor to architect.
“From a contractor’s or owner’s standpoint, you can see how it might make the project run more efficiently,” he said. “It would all be in one place and you’re not going back and forth between two firms.”
Instead of bidding on a discrete scope of work, contractors are bidding on a range of services and value that they can bring to the table using a project team, according to Gilbride.
Whitcomb said the process also reduces the need for change orders and may help to avoid disputes, both of which can delay projects.
Abdella sees the design-build concept gaining traction, especially in the private sector. While there may be some pushback from design professionals, owners and contractors have noticed the advantages.
“Those competitive contractors changing with the time are doing it and that’s why we’re seeing more of it,” Abdella said.
Some business organizations oppose the method because it requires a project labor agreement with a trade union, which could freeze out non-union contractors around the state, according to Whitcomb.
Also, there may be increased liability issues for the single contracted entity, which he said no longer shares in the responsibility of performing the work with an entity from the engineering or architecture industry.
“There are types of projects where design-build makes sense and there are types of projects where it probably doesn’t,” Whitcomb said. “What we counsel clients to do is determine what is best for the project at hand and go from there.”