There are a lot of lessons to be learned from projects that go smoothly and according to plan and budget. But what about those projects that don’t go so well? The lessons gleaned from budget mishaps, contract issues, and first-time design-build experiences can be just as valuable. While not easily covered in 700 words or less, let’s look at a few of the reasons we have seen DB projects go wrong.
Project budgets are impacted by market conditions. Many times, the original budget is derived from historical information or is not updated annually to reflect current market situations. When the work scope is developed without adequate attention to current market conditions, invariably additions to the project that were never envisioned occur later in the project design. To prevent projects going wrong, this critical information needs to be analyzed so that an accurate scope of work can be produced. It is also essential data for developing a guaranteed maximum price (GMP) for the project. Without clear expectations of the project and realistic costs identified, the good old process of “scope creep” is bound to occur.
Another scenario affecting budget expectations occurs when the design-build or CMAR firm is retained without the owner performing adequate analysis of the project drivers. Without sufficient knowledge of the advantages of the various delivery methods during the scope of work discussions, perceptions about savings or benefits of each delivery method can be misconstrued.
A frequently cited cause of a project gone wrong relates to contract conflicts both before and after a design-builder or CMAR firm is retained. Contract conflicts often exist when organizations use outdated contracts that are not in alignment with newly approved state regulations pertaining to design-build delivery. WDBC education sessions emphasize that best practice is to ensure that the organization’s procurement policies are updated relative to state regulations enabling the use of design-build or CMAR delivery methods. Another best practice is to use contract templates for design-build projects that already exist. DBIA and WDBC can provide valuable resources for this.
Another step toward mitigating contract conflicts is to share the draft contract with industry proposers on the project in advance of interviews. Within the contract should be a clear message about the organization’s expectations, the project’s drivers, and technical characteristics. With this knowledge, industry practitioners can respond with a clearer understanding of the organization’s needs and, at the same time, provide key feedback on the technical characteristics of the project relative to the budget and ability to ensure it is a success for both parties. As one of the most important steps in contract negotiations, this approach is the foundation for establishing the collaborative process.
When an organization decides to embark upon the use of a design-build or CMAR approach without adequate knowledge about the different characteristics of the delivery methods, conflicts materialize, leading to frustrations and eventually disappointment. The most important message in WDBC’s “Lessons Learned” research – from owners and managers of water and wastewater organizations -- is to educate project participants about the differences in the design-build delivery methods and their best practices. The education process needs to include managers, operators, legal, and procurement members, taking into consideration existing skills and resources.
Using an owner’s advisor is another resource not taken advantage of often enough. The advantages that the OA can bring to an owner are many and varied. Why recreate the wheel when there are knowledgeable mentors out there willing to show you how it’s done?