'Team Engineered Design' Bidding

'Team Engineered Design' Bidding
July 1997 1998
By Heinrich O. Bonstedt, Executive Director

Central Atlantic Bridge Associates
1042 North Thirty Eighth Street
Allentown, Pennsylvania 18104-3420

Bidding and Contracting Variations
The Need for 'Team Engineering Design'
Definition of 'Team Engineering Design' Bidding
Benefits of 'Team Engineering Design' Bidding
How 'Team Engineering Design' Bidding Would Work
Rules to Make 'Team Engineering Design' Bidding Work
'What Could Go Wrong?' and Other Objections
Why Not The Best Ideas And Design in The First Place?
Why Not Value Engineering After The Bid?

Bidding and Contracting Variations

In highway and bridge construction, there is a continuum of options and variations for designers / contractors / suppliers / owners to be involved in the process of designing and contracting.

The following table shows typical project development steps and phases by the owner and the variety of bidding and contracting options that are available at various points during the development of the project:

Development / Building Phases Bidding and Contracting Options

Project Planning

Prioritizing / Programming

-------------------------------- Design - Build - Point to Point

Preliminary Design

Needs Analysis

Engineering Scope Identification

Environmental Scope Activity

Environmental Class of Action Identification

Preliminary Alternatives Development

Detailed Alternative Review

Environmental Impact

Engineering Evaluation

Pre-Final Design

Right of Way Acquisition

Utility Relocation

-------------------------------- Design - Build - Owner Services Provided

Final Design

TS&L (Type Seize and Location) Study

-------------------------------- 'Team Engineered Design'

Completed Design

Multiple Options
Single Option

-------------------------------- Contractor Alternate Designs

Design Review

Contracting

-------------------------------- Construct As Designed

Shop Drawing Reviews

-------------------------------- Contractor Value Engineering Proposals

QA Inspections

Open Structure to Public Use

Lately, there has been a lot of discussion of Design-Build. The promise of Design-Build for the owner is speedier completion of construction and a certain total price. One of the major difficulties with Design-Build bidding is the inordinate expense incurred by bidders that face competitive bidding or negotiations. Design-Build competitions are notoriously expensive. Experience has shown that the promise of speedy construction and fixed total price is counter balanced with delays and expenses of litigation before the project even gets started.

To overcome these negatives what I am advocating, as an innovative form of contracting, is 'Team Engineered Design' Bidding. This form of Design-Build would occur after the owner has completed conceptual designs during the TS&L phase of a project. It would rely on contractors taking the lead to assemble a team for this total effort.

Contractors seem to be the logical choice: they have traditionally taken the lead and have engaged design professionals. This is especially true in public projects, where competitive bidding requirements exist in law and owners prefer to contract with firms that have a stronger financial status.

This also seems to be appropriate, since contractors will have to provide extensive pre-construction services, such as estimating, value engineering, constructability review, etc. They also will have to manage and bring their comprehensive integration into supply channels to the project. Further, the contractors generally have the risk and liability to the owner for defects and related problems.

In the past, 'Contractor Alternate Design' has been a practice in some areas and has shown to provide significant cost reductions without sacrificing the quality and integrity of the structures. Unfortunately, when a 'Contractor Alternate Design' is bid and constructed, the original design expenses will largely go to waste. I see 'Team Engineered Design' Bidding as a variation of 'Contractor Alternate Design' that would come into play before the owner prepares one or more designs for bidding, or as the basis for a 'Contractor Alternate Design'.

There are many contractors who were raised in the 'build it as you see it' mode. Some like it that way, and that is their choice.

But there are also contractors who would welcome the opportunity of putting a team together to evaluate other design iterations and options. Especially, if doing investigative work to develop a better solution for a specific situation could benefit them directly.

First we have to recognize that the standards by which we design are only minimum hurdles that are high enough to achieve the desired quality yet low enough to allow a sufficient number of competent bidders to get across them. 'Team Engineered Design' raises the level of quality because it value-engineers the solution to unique capabilities that may well exceed the standards.

Value engineering goes on during any design process. Many iterations of the design parameters can be pursued in order to find one that satisfies the designer. It is simply not practical to pursue all options to their conclusion -- any designer must make decisions to not pursue many of them. As a result, the optimum option may have been overlooked.

The idea of team cooperation is not new in highway and bridge construction. But, the degree of use and the intensity of cooperation is new today. The linking of core competencies to achieve a particular result is changing the face of business permanently:

Recognizing that cooperation can enhance competitiveness is a powerful motivation for the suppliers.

Migrating from buying products to buying solutions creates new opportunities for the owners.

Team engineering creates a desirable environment where, for a time, limited by their common goal, a group of people with specific skills, and the complex of equipment and facilities they need to exercise those skills, are assembled into a single productive resource to offer solutions for the owner.

A contractor bidding a design, prepared by the contractor’s team, including a contractor selected design engineer, essentially meeting the requirements as defined by the owner’s TS&L and based on the owner’s design standards.

'Essentially meeting the requirements' would be defined as:

Having the same:

Load carrying capacity,
Number and size of traffic lanes, shoulders, curbs, sidewalks, etc.,
Accommodation of utilities,
Clearance to underlying roads, utilities, railroads, streams, structures or wetlands, or
Meeting the requirements for:
Vertical and horizontal clearance requirements
Roadway geometry requirements
Other project specific considerations that might be discovered during exploratory drilling.

For the Owner:

A contractor who wins a job with skill and knowledge is much more likely to produce a quality product than one who had to cut profits to the bone to get the job.

Serves the public’s best interest by reducing bids without a reduction in quality.

Improves customer service by reducing construction time.

Creates a sense of 'Partnering' between owner and contractor.

Prevents 'crippled' designs from being executed.

•Taps industry design methodology and technology
• Considers that changes in economics occur in the period from initial design to release for bid
• Considers the changes in capabilities and technology in the construction industry. Consultant prepared designs frequently use information that is as much as three years old or rely on published cost data that may be inaccurate or tainted.
• Fits one contractor to one pile driver to one subcontractor to one deck pan supplier to one beam fabricator and so on. The result is a combination of the best team approach and best fit all the participants have to offer.
• Rewards contractors agility and ability to solve problems
• Takes advantage of the latest materials and equipment available

For the Contractor:

Creates a basis for competition on the basis of the best solution rather than the cheapest price.

Rewards innovation, agility and originality.

Rewards the contractor’s ability to match conforming solutions with the problem at hand.

Fosters a sense of 'partnering' with the owner and with his suppliers.

• Considers workload, efficiency and best fit in fabricating plants and at suppliers
• Considers latest improvements in safety procedures
• Moves competition further back into the contractor’s supply channels
• Considers the availability of suitable equipment and allows contractors to benefit from equipment they own that others may not have
• Accommodates contractors best construction operations

How 'Team Engineered Design' Bidding Would Work.

The key, to making 'Team Engineered Design' Bidding a success, is that the bidder has to be kept in check and control must be exercised through the specifications. These provisions must afford the widest possible range of construction methods but must assure the retention of quality and integrity of the structure. The specifications must retain the basic parameters, such as alignment, width of bridge, vertical and horizontal clearances, etc.

Owner:

Provides common design criteria

Establishes a policy that lowest bid will take the contract

Allows 'Team Engineered Design' Bidding

Provides rules for 'Team Engineered Design' Bidding, including a reasonable schedule for the submission of the required design computations and documentation.

Provides design development information for use by bidders

If the contractor submits a 'Team Engineered Design' Bid that is successful:

1. Contractor submits conceptual plans and schedule of proposed design for approval.

2. Owner reviews proposed design concept for essential functional equivalency, based on specifications, and approves or rejects if it is not met.

3. When approved, contractor:

Prepares final plans

Provides all design calculations

Establishes a 'Required Items' schedule

Rules to Make 'Team Engineered Design' Bidding Work.

To ensure that the owner will have control over the 'Team engineered' Design and to prevent the public from being inconvenienced, some additional rules will have to be agreed to by the contractor. By submitting a 'Team Engineered Design' Bid the contractor agrees that:

Anything additional that is required to complete the 'Team Engineered Design' falls on the shoulders of the contractor: From environmental permit approval to coordination with the utilities, etc.

Any delays in submission or approval of the 'Team Engineered Design', which may effect the project completion, are entirely the contractor’s risk.

The design must be prepared by a Registered Professional Engineer who is familiar with the standards and criteria of the owner. The owner may also reserve the right to approve or reject the contractor’s designer.

The contractor will cover the owner’s administrative costs by paying a 'review fee'.

'What Could Go Wrong?' and Other Objections.

Outsiders point to wasted design fees, construction delays, loss of control, increased claims, and a host of other hypothetical problems with any concept that involves contractor design. These are perceived problems, borne mostly out of the adversarial relationships between owners and their contracting community. All of these perceived problems can be eliminated with a well designed 'Team Engineered Design' Bidding process.

It is amazing that in this age of Total Quality Management, Partnering and Customer Service emphasis, 'Team Engineered Design' Bidding in the format we are proposing, is still something to be feared or at least avoided.

Does anyone really believe that a Professional Engineer in the private sector would propose something unsafe just because he or she does not work for the owner?

Wasted design fees.

'Team Engineered Design' Bidding does not start with a blank sheet of paper. Typically, it is simply an adjustment to an original conceptual design prepared during the TS&L phase to better fit the contractor and his suppliers - the waste would be greater if an inefficient design were built. The contractor bid includes the costs of preparing the design and the necessary review. And since the final design is not completed until after the award of a contract there is no waste as the result of 'Team Engineered Design' Bidding.

Delays and timing.

Job delays should be rare because much of the design work is conceptually done before the bid and most can be completed before the contract is awarded. A thirty five year history of the basic concept in Pennsylvania (locally called 'Contractor Alternate Design') has shown that this is not true.

Review and approval times are generally within the shop drawing turn-around time because most of the designs are fairly routine and typical.

Concepts of the partnering process can and should be employed to help smooth the review and approval process.

Loss of control.

Control can be maintained by spelling out the rules clearly in the bidding documents. They need to spell out the essential function requirements of the structure and noting any special considerations that are required, just as is done in putting the prospectus together for a designer in the normal course of creating any original design.

Liability.

As long as we continue to design and construct our bridges using the best available information and exercising professional judgments, the bridge will never know whether it was designed by a consultant hired by the owner or by a contractor. And since it is common practice for consultants to hire sub-consultants to design specific aspects of a job, the contractor’s consultant becomes just another sub-consultant.

Limiting of contractor design options.

Options that were investigated by the original designers during the TS&L phase but not pursued should not be precluded. As long as such an option does not impair the essential function of the structure, its use for consideration should be maintained.

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Why Not The Best Ideas And Design in The First Place?

Standards and specifications by which designs are executed are, at best, a compromise between the minimum acceptable while keeping the doors sufficiently open to allow for the maximum competition for the execution of the design. This is the primary reason behind not specifying proprietary products: that would result in only one potential bidder.

Consultant designs are therefore aimed at the lowest common denominator so that even the least sophisticated contractor (who is non-the-less qualified) can bid the job. The same holds true for all the supply and subcontracted items.

Design engineers tend to think, after spending two or three years developing a project, that there is only one solution. They lose sight of the fact that it was just one of many possible iterations of the owner’s design parameters that was used to arrive at their final selection. Sometimes a fresh set of eyes of a contractor looking for a way to get a good, profitable job, can find an additional iteration of the design parameters that can meet the owner’s needs at a better price.

'Team Engineered Design' Bidding leads to improvements and innovations that carry over and eventually may become the preferred iteration. As an old pundit observed: 'Necessity is the mother of invention'.

Why Not Value Engineering After The Bid?

The contractor’s competitive creativity and adrenaline peaks at bid time, when he has to assemble the team that will support him during the project.

Value engineering after the bid is generally not very attractive for the contractor, now in the 'build it as you see it' mode, unless there is a major blunder in the original design or some significant new method becomes available in the time period between design and actual construction.

Should the contractor have an innovative idea, he has to decide if the job effected by the value engineering proposal can stay in limbo for the period of time needed to negotiate the division of the savings and get approvals and reviews for the proposal.

The owner reviews a proposal and has to make two judgments:

• Is the proposal technically valid? In most cases it will be, else it would not be submitted, and
• Are the projected savings worth the effort to obtain them? In most cases that will be a steep threshold to justify since much effort has just been expended to get the as designed project out the door and limited resources are needed just to drive the project forward.

In all probability the less than optimum design will be executed.