Table of Contents
California's need for new capital investments in public works adds up to billions of dollars. We owe our modern prosperity to past investment in infrastructure; our future economic health is no less dependent on continued attention to repairing, maintaining, and developing new public facilities. But the tremendous gap between need for new facilities and the resources available demand creative and cost-effective approaches to meet that need. Contracting out for design and engineering services provides just such an opportunity to use the limited resources to efficiently and quickly deliver important infrastructure projects. Unfortunately, adverse court decisions and an aggressive public-sector engineers union are preventing widespread use of contracting out. Moreover, these court decisions may threaten to diminish the ability of regional and local agencies to take advantage of contracting out design and engineering for their own projects. The Little Hoover Commission recommended in 1995 that a constitutional amendment be placed before California's voters to assure state agencies are able to fairly balance the interests of both civil servants and taxpayers. That recommendation is as pertinent now as it was four years ago. Agencies like Caltrans must be given the flexibility to establish workforce levels that meet long-term, base needs, and supplement that workforce with private consultants and labor to assure that infrastructure projects are delivered in the most timely, cost effective manner, using the best project delivery technologies. California's Infrastructure is Wearing Out Today, Californians face the twin challenges of rehabilitating existing infrastructure and building new public facilities to meet the state's growing population. Much of California's infrastructure -- its highways, water delivery and sewer systems, prisons, schools -- is nearing the end of its intended life. That infrastructure, much of which was built several decades ago, established the foundation for the economic prosperity during the last generation. According to a recent report by the Legislative Analyst, "(t)he state faces a significant challenge over the next decade and beyond to address both the deficiencies of an aging public infrastructure and the need for new infrastructure to sustain a growing economy and population." Take roads and highways as an example. According to the California Chamber of Commerce, between 1968 and 1993, California's spending on capital improvements fell from 20 cents to five cents on the dollar; we are near the bottom of all states in per capita highway spending at 43 percent under the national average. California's lane miles increased only seven percent in the past 20 years, while the state's population increased by 50 percent. Poorly-maintained roads cost California motorists $2.9 billion a year (or $145 per driver) in extra vehicle repair and operating costs. Commuters experience daily gridlock on overcrowded streets and highways. In a recent report, Transportation California, a coalition of business, labor, and others concerned with the future of California's highways, shows that highway congestion increased as much as 33 percent over the last ten years in Los Angeles, Sacramento, San Bernardino/Riverside, San Diego, and San Francisco/Oakland/ San Jose. The total cost of congestion in wasted time and fuel in these five largest urban areas is $14.8 billion annually. A report published by the University of North Carolina's Center for Interdisciplinary Transportation Studies compares data submitted by the states to the Federal Highway Administration and finds that California ranks 49th out of 50 states in urban interstate congestion, with about 70 percent (volume/capacity) vs. national average of 44 percent in 1996. California's future prosperity demands the kind of infrastructure investment made during the last generation. Safer, less-congested highways, schools, and universities are necessary to sustain the quality of life of California's residents. The California Business Roundtable, an organization comprising the largest California companies, compared California's ranking among all 50 states in several areas of public investment, including capital spending on schools, highways, and universities:
California cannot continue at this pace and remain the Golden State. And the people agree. In a recent joint poll by the Roundtable and the California Chamber of Commerce, 71 percent of the state's business leaders and a slightly larger share of voters are concerned about the need for increased public investment.
Drawing on the work of the state's Department of Finance and Office of the Legislative Analyst, the Roundtable estimates the state's ten year capital facilities need at more than $90 billion, as follows:
Importantly, the numbers for transportation reflect only what the Department of Finance estimated was available for new spending, and do not reflect the many billions of dollars of new transportation infrastructure needed to maintain existing levels of mobility. The Roundtable conservatively estimates the costs of needed transportation capital improvements exceed those projected by the Department of Finance by $15 to $25 billion over the ten years. While the Legislature and governor have committed to confront infrastructure finance issues in 1999, California's voters took a big step last November by passing Proposition 1A, authorizing the sale of more than $9 billion in state general obligation bonds for K-12 schools and higher education. These bonds, when augmented by local bond money and developer fees, will provide a significant portion of the public school and higher education capital outlay investments needed in the next ten years. While public school and higher education facilities needs have been provisionally solved, a redoubled effort must be made for water delivery, transportation, flood control, parks, prisons, and local public facilities. In the transportation area, according to the Roundtable, "(W)hile the long-term outlook for transportation finance is troubling, the availability of cash in the near term is likely to be very good. Unfortunately, the inability of state highway officials to contract out for highway design and engineering services means that this available cash will accumulate while communities wait for the state to prepare new projects for delivery." Funding and project delivery will no doubt be hotly debated, starting with the recent proposal by Senate President Pro Tem John Burton of a $16 billion transportation bond package and a reduction of the two-thirds vote requirement for local sales tax overrides for transportation. In January, Governor Davis announced the formation of a Commission on Building for the 21st Century to develop a plan to meet the state's infrastructure needs. Getting the Best Value for Taxpayer Investment More money is not the only answer to the infrastructure financing challenge. Better management of these resources is imperative to justify any higher spending levels. This means that any infrastructure financing package must include provisions that will assure taxpayers that they will get the most timely, cost-effective project management and delivery. In fact, in his State-of-the-State address, Governor Davis highlighted the need to improve infrastructure project management and administration to expedite project delivery. CalTrans, Department of Water Resources, and any state agency administering these capital programs need the flexibility to deliver these projects in the most efficient manner. The resolution of how much and how to fund the renewal of our state's infrastructure must be accompanied by improvements in the way that state agencies do business. The remainder of this report will focus on one of the most promising and pervasive tools to improve project delivery – using private consultants to provide design, environmental analysis, engineering, and project management of public infrastructure projects. Contracting Out to Achieve Efficiencies and Better Project Delivery In a 1995 report on the state's civil service system, the Little Hoover Commission, the "watchdog" agency responsible for investigating government inefficiency, found that: Contracting out has become a battleground between unions and state managers. The long standing tension has resulted in a complex set of judicial decisions, statutes and administrative rules to narrowly define what work can be contracted. The issues have become a major stumbling block in the relations between labor and management, and is ultimately tying the hands of managers trying to find new ways to stretch tax dollars. Going on to recommend that Article VII of the Constitution be amended to remove the presumption that the State's work must be performed by civil servants and to specifically allow contracting with private firms to do public work, the report says that: The state needs to find more cost-effective ways of doing business -- and it cannot be precluded from looking to the private sector for that efficiency. If managers are to be responsible for developing efficiencies, they need the flexibility to have state work performed in the most economical way possible. Numerous national studies have shown that contracting out for design and engineering services is widely used throughout the country, and provides distinct advantages for project management and delivery, as well as for accountability to taxpayers. These studies also found that:
NCHRP study. Preliminary results from a survey by the National Cooperative Highway Research Program, under the auspices of the Transportation Research Board of the National Research Council, found:
Fanning study. According to data reported by the states to the Federal Highway Administration, the states with the lowest preliminary and construction engineering costs are states that contract out 50 to 70 percent of the engineering work. This report also found that Caltrans consistently has the highest preliminary and construction engineering (PCE) costs of any state -- 35-50 percent over the 1979 to 1989 period, compared with about 15 percent average for all other states. According to this report, from 1979 through 1989, California would have saved $1.7 billion in PCE costs if the state's PCE as percent of total construction had been same as the average for all other states. SRI study. In this study, initiated by the Legislature in 1992 (SCR 72), the consulting firm of SRI International found that Caltrans had inadequate performance measures, and made some specific recommendations. According to SRI, Caltrans should foster "managed competition with private-sector firms for design, maintenance, and other work." To further the idea of managed competition, and to "(obtain) efficiencies and cost reductions through contracting out," the report recommends a constitutional amendment to allow contracting-out flexibility, and a series of performance measures to encourage management to use the most cost-effective mix of in-house and contract resources to meet delivery schedules and other deliverables. Legislative Analyst report. Upon reviewing Caltrans proposed 1997-98 budget proposal, the Legislative Analyst recommended that "Caltrans should make better use of its contract resources, by increasing competition between consultants and state staff. Accordingly, ... (Caltrans should) present a plan, including specific actions and target dates, to use consultant engineers to foster competition by (1) implementing detailed performance measures to spur internal competition between Caltrans staff and consultant staff, (2) increasing competition between consultant staff, and (3) any other proposals to gain greater benefits from use of consultant engineers." Constraints on Contracting Out Historically, Caltrans staff has planned and designed state freeways and highways; private firms have performed the construction, and Caltrans has inspected the work. During the past 15 years, state transportation managers have tried to use private sector architects and engineers to supplement Caltrans design staff, mainly to meet project workload peaks and to inject some competition into the process. However, these efforts have been rebuffed in several court cases interpreting Article VII of the state Constitution. Article VII says, simply, In the civil service permanent appointment and promotion shall be made under a general system based on merit ascertained by competitive examination. From that sentence, the courts have concluded that contracting work that can be adequately rendered by a state agency or that duplicate existing functions of an agency threatens the civil service system in violation of the California Constitution. PECG v. Caltrans Contracting out of government services is obviously not banned by the civil service mandate. But the case law governing contracting out of state government services has been evolving since the mandate was adopted more than 60 years ago. The past dozen years has seen extensive litigation further defining the limits of contracting out, especially as it applies to design and engineering of transportation services. The Supreme Court has developed several tests that must be used to determine the validity of private contracting. In its far-reaching decision in 1997, Professional Engineers in California Government v. Caltrans (PECG), the Court summarized the state of the law for contracting out, while overturning attempts by Caltrans to use statutes to ease its ability to implement the case law: The "Nature of Services" test was first enunciated in the 1937 case, State Compensation Insurance Fund v. Riley. It prohibited contracting out if the services contracted for, whether temporary or permanent, are of such a nature that they could be performed "adequately and competently" by one selected under the provisions of civil service. The Court has since identified circumstances under which the state may not "adequately or competently" perform the work, such as personnel shortages, emergencies, new functions, specialized skills, or economic efficiencies. Otherwise, if state employees have historically performed a function, the nature of services test generally requires that they continue to perform the function. The "New Function" test was laid out in California State Employees Association v. Williams in 1970. The Court stated that the civil service mandate is aimed at protecting the existing civil services, so the restriction on contracting out is inapplicable if the state is looking to perform new functions. The Court also upheld contracting out for experimental programs in Professional Engineers v. Department of Transportation in 1993. Finally, cost savings were found to be a permissible criteria for contracting out personal services in California State Employees Association v. State of California in 1988, as long as those savings are achieved without ignoring other applicable civil service provisions. The Court found that permitting recognition of cost factors balanced the mandate for a civil service system with the goal of promoting efficiency and economy in government. In order to help implement the decisional law, the Legislature passed statutes in 1993 and 1994 to authorize the Department of Transportation to contract out whenever it found it necessary to do so in order to ensure timely project delivery, and for its seismic retrofit system. The Supreme Court in PECG, and a subsequent superior court holding, found these statutes to be unconstitutional because they did not provide sufficient factual justification to allow for an exemption from the civil service mandate, according to the criteria in the decisional law. Importantly, the court found that the ability to contract out must be decided on a case-by-case basis. As a practical matter, that requirement prevents large agencies like Caltrans from effectively contracting because they manage their project delivery through a statewide program delivery mechanism. While the case law may not seem overly burdensome, the effect of the decisions -- and especially overturning the statutes that would provide a process for contracting out these functions -- makes the practical use of contracts for design and engineering services very difficult. In fact, the lack of a statutory scheme has left most of the decisions on proper contracting procedure (at least in the case of Caltrans contracts) in the hands of a superior court judge. Responding to recent court decisions and increasing project backlog, Caltrans recently hired 2000 permanent staff, is hiring at least 222 more employees, and is concluding many of its consultant contracts, taking the work in-house, when prudence suggests they should do the opposite. In addition, Caltrans interprets these cases and related statutes and administrative guidelines to preclude them from using consultants to meet peak workload situations, to provide competition against which to measure the performance of in-house design staff, and to employ design-build and other time- and money-saving project delivery concepts where appropriate. Moreover, as evidenced by the current explosion in Caltrans hiring to meet current building demands, the effect of these court decisions is to require Caltrans to endure the difficulty and expense associated with hiring, training, and ultimately laying off civil service employees. Ideally, Caltrans and any state agency should have the flexibility of setting stable staff levels, and employing the appropriate mix of contractors to accommodate fluctuating workloads and to deliver projects in the most cost-effective timely manner. Since the 1997 Supreme Court decision and subsequent settlements, Caltrans' position on contracting out design and engineering services has become far more circumscribed. Having hired 2,000 engineers last year, and planning to hire at least 222 for the seismic retrofit work, the Department is less willing to commit to embrace an expansive role for private sector contractors, limiting them instead to unusual, exotic, or experimental projects, such as the Bay Bridge or disaster response. How California Delivers Large Capital Projects Large public capital projects are managed differently by the many state and local agencies. For example, construction of state universities, state buildings, and prisons are generally managed by the relevant state agencies, which typically provide overall project management, but which often contract out both the design and construction to private firms. Given the historical practice of contacting out, it is unlikely that these functions would be subject to the constitutional contracting out restrictions. However, these agencies would become vulnerable to the restrictions enunciated in the PECG v. Caltrans decision should they bring on a staff of in-house architects or engineers. In its heyday of building the state water projects, the Department of Water Resources handled much of the design in-house, contracting the construction to private firms. Given this history, it is likely that a contracted-out water project would be vulnerable to legal challenge. At its peak in the 1960s, the Department employed more than 4,500 engineers to design the massive State Water Project. After the project was completed, the design and engineering staffing was immediately cut to about 2,000 engineers. The layoffs were devastating to Department morale, and have served as an object lesson to this day. Department management believes that they would be bound by the PECG decision to hire new engineers to design any major additions to the State Water Project (such as any new facilities emerging from the Cal-Fed negotiations). But they are leery about this requirement since they know, based on past experience, that once those new facilities were designed, they would likely need to lay off those same engineers, since nobody anticipates an ongoing construction of massive state waterworks. Similarly, Caltrans staff historically has planned and designed state freeways and highways, private firms have performed the construction, and Caltrans has inspected the work. The courts have consistently ruled against Caltrans practice of contracting out. There is little doubt that Caltrans' ability to contract out or to use more cost- and time-effective project management methods is severely limited. In November, 1998, the Wilson Administration settled another lawsuit with the PECG union over the use of private consulting engineers for 80 projects in the seismic retrofit program. In return for PECG's halting litigation over the retrofit of these top priority safety projects and not seeking attorney's fees for prior lawsuits, the Business, Transportation, and Housing Agency agreed to:
The Legislative Analyst writes that, even though this settlement ensures that the seismic retrofit program will not be delayed further by litigation, "Caltrans delivery of highway projects may still face some delays." In particular, Caltrans must immediately hire at least 222 staff to have sufficient personnel to perform all of the construction inspection and bridge design work that otherwise would have been performed by private consultants. According to the Analyst, Caltrans has indicated that if it is unable to hire sufficient additional staff for the seismic program, it will redirect existing engineering staff to perform the retrofit projects to minimize delays. "This would in turn delay the delivery of other nonseismic retrofit projects, including highway rehabilitation and expansion projects." In fact, delays are inevitable as Caltrans replaces the private firms in mid-project and brings new staff up to speed. For many of the newly-hired engineers, these projects will be their on-the-job training. Vulnerabilities for Regional and Local Agencies Regional and local agencies, on the other hand, have historically contracted out both the design and construction of their large transportation projects. However, there have been some recent challenges, and there may be some vulnerability for these agencies to use private sector contractors. Most of the major interstate and state highway construction is programmed through the State Transportation Improvement Program (STIP). As a result of legislation passed in 1997 (SB 45, Kopp), local and regional agencies have effective control over setting priorities for 75 percent of the funds that are programmed through the STIP. This change comes on top of the 15-year old trend of "self-help counties" to raise significant funds from local sales tax overrides for transportation purposes. As a result, substantial amounts of transportation funding is raised and controlled by local or regional agencies. The proliferation of new locally-generated transportation projects gave rise to an informal policy used by Caltrans that permits counties to contract out for design, engineering, and environmental services for state highways, if the State contributes less than half the money to the project. This "50 percent" rule enabled many self-help counties to accelerate projects on the state highway system that otherwise would have been subject to Caltrans design, engineering, environmental analysis, and project management. Unfortunately, the Supreme Court decision and greater pressure by Caltrans district offices to gain influence on local projects may result in erosion of the 50 percent rule. This threat will be discussed in more detail, below. Local Agencies and Projects May Now be At-Risk The Supreme Court decision, combined with increased activity by employee unions, may threaten the ability of local agencies to contract out for design and engineering services. City of San Diego In a disturbing development in San Diego, the City Attorney opined that the City may go forward with its program for contracting out design and engineering services, but only under the conditions specified by the Supreme Court in PECG v. Caltrans. Even though the Supreme Court decision is not binding on the City of San Diego -- indeed, it is a charter city with vast inherent powers -- the City Attorney believed that there are enough similarities between the State Constitution and the City Charter that an analysis by a court might reach the same conclusion for the city as the Supreme Court did for the State. Indeed, the City Attorney as much as concluded that the case law associated with the State Constitution's civil service section applies to the City of San Diego, and would limit the ability of the City to contract out for various services. As a result, the City Attorney recommended that RFPs for consultant contracts be drafted with the criteria enumerated by case law (set forth above) carefully considered and addressed. The RFP should also contain a factual basis supporting contracting out. While this may seem a prudent approach, the City Attorney's opinion in fact sets up a new series of factual and legal tests by which an aggrieved City union could challenge a consulting contract. And even more ominously, it suggests a precedent by which municipalities would consider themselves bound by a Supreme Court decision that never addressed either a city charter or any case law regarding municipal contracting out. Self-Help Counties Senior managers at several self-help counties with successful project delivery records have expressed concern that a more emboldened PECG will pressure Caltrans to bring more design and engineering work back to state engineers, rather than continuing to allow local and regional agencies to contract out the work. Their concern is that the orders by Sacramento Superior Court Judge Eugene Gualco, who is monitoring the state contracting out decisions and orders, center on the ownership of the facility, not the character of the financing of the improvement (state or local). Several local officials suggested that the decision by Judge Gualco implementing the Supreme Court's ruling would allow Caltrans to insist on in-house design of previously contracted out projects. Should this come to pass, it would be devastating on project delivery. The Supreme Court decision may have provided the basis for state and local officials to implement anti-competitive policies. Following are some examples of well-known California projects using creative and flexible project management and delivery methods. These innovative and flexible approaches should be tools available to any project manager, but may wither away if the constraints on contracting out are extended to local transportation agencies: Santa Clara County Transportation Authority In 1984, Santa Clara County's voters approved a half-cent sales tax hike to create the Santa Clara County Traffic Authority to improve three state highways in Santa Clara County to relieve traffic congestion. Caltrans initially estimated a 17-year completion for design, engineering, environmental clearance, and construction. Since the authorization for the sales tax was only ten years, and believing they could improve on the Caltrans estimate, the Authority assumed control of the projects. Wanting to work within the Caltrans umbrella, the Authority initially attempted to team private engineers with state staff. This forced marriage of cultures and styles did not work, and was abandoned. Instead, the Authority used a then-unique partnership of Caltrans oversight, project management by Bechtel, and administrative and financial responsibility by the Authority to provide aggressive project delivery methods. As a result, some seven years was carved off the project delivery: design, engineering, and environmental clearance, and right-of-way acquisition took seven years; construction was completed in about three years. San Joaquin County At a policy level, this self-help county does not care who does the design and engineering work: Caltrans or private consultants. Their key issue is meeting the schedule that the county sets. Their experience has been that private contractors better meet their scheduling needs than does Caltrans. Highway 99 widening. The county wanted this contract under construction by 2001; under the best circumstances, Caltrans could not begin construction until 2004. The county decided to shift its funding priorities so they could control the project development costs and schedule for this project (by providing more than half of the financing from local sources). I-205 improvements. As a consequence of changing their funding priorities, the County has relinquished control for the delivery of the I-205 project. According to the local agency, this project will not be delivered until at least 2005. With private contractors, they believe the I-205 project could be delivered in 2002 or 2003. In short, the agency management believe that private design and engineering consultants can shave up to 30 months off of a Caltrans delivery schedule. The project delivery schedule is not just a question of personnel resources. According to the county, Caltrans will not guarantee environmental clearance on a project in less than three years. It took the county two years to get environmental clearance on the I-205 project. I-5 widening. Caltrans has proposed to widen I-5 in the Stockton area. The Department cannot deliver the project within 6 years, but still wants to do the environmental work. So far, the County has declined to program this project, because they would rather shift available money into local projects that could be delivered more quickly. Manteca Bypass. On the other hand, according to agency staff, when Caltrans steps out of its traditional, conservative design mode, they can provide timely, creative work. The Manteca Bypass was designed in three years, but Caltrans used a creative, multi-track design process. The Department used two design teams on parallel projects while undergoing the environmental clearance. The project development was completed in five years, rather than the typical seven years. The bottom line is that, absent an extraordinary commitment by Caltrans, San Joaquin County will usually prefer to program projects that they can control within their delivery schedules, which will tend to be projects mostly financed by local sources, which can be designed by private contractors, rather than Caltrans. They are concerned that if the policy changes on permitting local control of 51% local share projects, this could delay any new projects. Santa Barbara County This self-help county wanted to accelerate the project delivery schedule for its sales tax-financed projects. Soon after the sales tax measure passed, the County solicited Caltrans for design and engineering work, but the Department could not meet the local delivery schedule because, in the early 1990s, it did not have sufficient resources. Recently, Caltrans has indicated an interest in pursuing some of the design work, but the County concluded that using outside consultants would result in faster delivery than using Caltrans staff. They also have better cost control and more effective management with private design and engineering consultants. The use of outside contracting in Santa Barbara has been a big success, according to agency staff. County voters approved the sales tax hike in November of 1989. The original proposal was to deliver 15 projects in 20 years – the life of the tax override -- but county officials wanted to complete delivery in just 10 years. As of the end of last year, ten projects have been completed. Of the eleven private contracts, six are on time or accelerated; five are delayed. All three projects designed by Caltrans were delayed by at least a year. Ten years ago, the cost of these projects was estimated at $133 million; now the cost is estimated at $125 million. Agency staff give some credit to consultants, who they believe are more motivated to work within budgets and find value engineering. One of the big differences in cost control and delivery has been in the area of construction management. Prior to 1996, Caltrans did construction management of projects. Since they are not now doing work that is reimbursable from local agencies, the county has hired construction management firms for the last three projects. According to agency staff, there has not been a single claim by a contractor for those three projects, a major difference from the claims and resulting delays when Caltrans managed the projects. Agency staff credited the superior performance of private contractors to Caltrans staffing being spread too thin, using inexperienced resident engineers, and a "by-the-book" attitude. This inability to be flexible with construction contractors is probably a result of the Department having so many contracts. Outside consultants are also making a difference in right-of-way acquisition. According to agency staff, the outside consultants are more aggressive and more flexible. Again, Caltrans is very conservative, which unnecessarily adds time to the delivery schedule. US 101 south of Milpas. Five projects to make $51 million of operational improvements is being delivered by Caltrans. The schedule has slipped by a year, in large part because of the lack of a local Caltrans presence. It was supposed to be delivered by 2002-03, but will likely slip by at least a year. Route 154. On the other hand, a private contractor has designed and engineered this operational improvement on time and under budget. The agency staff believe that when a binding commitment is established with a contractor, then the contractor must deliver. They have no authority to make Caltrans deliver on time. Contra Costa County Route 4. The county transportation authority was prepared to finance more than half of this project to close gaps on State Route 4. As a result, the local agency was able to control the project, take some risks in preparing the design – with private sector consultants – and save six to nine months in delivering the project, compared with the Caltrans schedule. San Bernardino County Route 30. This self-help county is delivering State Route 30 -- a new, 22-mile, six-lane freeway with two HOV lanes. The County and Caltrans were working jointly on the design and engineering of the eleven segments of this project. When it was determined that Caltrans could not deliver the final two segments within the STIP period, the County contracted out the design work, and will deliver the project a year ahead of the Caltrans schedule. Orange County's Toll Roads The Transportation Corridor Agencies (TCA), in 1986, set out to build three new corridors -- a total of 67 new miles of toll roads in Orange County. Since then, Orange County motorists have seen the completion of the first phase of the Foothill Transportation Corridor and the opening of the San Joaquin Hill Transportation corridor. As the following demonstrates, when the barriers of conventional thinking are removed, remarkable things can be accomplished. In this case a combination of privatization using design-build project delivery methods produced the results.
Our Infrastructure Need Demands a Responsive System Improving project management and implementing many of these recommendations will require eliminating the problematic constitutional provisions as well as related legislative and administrative restrictions to give state project managers the flexibility to use contractors, balance in-house staff with consultant staff, inject competition into construction management, and employ performance-based metrics. The description below describes and compares the most common forms of project delivery methods. The purpose here is not to promote any one form of project management or delivery method over another. In fact, each form is legitimate and have their advantages when applied on a case-by-case basis. What is evident, however, is that in project after project, other forms of project delivery beat the methods now used in most of Caltrans' projects and some other state agencies. For example, the largest and most recent study of its kind, using data from 350 construction projects of varying size and type to compare project delivery systems, found distinct advantages among certain systems, yet some California agencies are constrained by court decisions and statutory and administrative guidelines from using the most efficient delivery methods. At the request of the Legislature, the University of California identified areas of potential prison construction cost savings of 16 percent. The study identified an estimated 4 to 5 percent cost savings resulting from the use of the design-build method over the traditional design-bid-build method. A separate review by California's Department of Finance identifies several areas in which, in their opinion, design-build would offer some advantages over the construction management currently being used by the Department of Corrections new prison construction program. The report recommends some legislative changes to authorize the use of design/build project delivery on at least one of its projects. The state of Florida recently completed a study concluding that design/build is an important contracting alternative. The study compared the results of 11 transportation projects of varying sizes and types with the average performance obtained on Florida DOT's non-design/build projects during the same period. Design/build projects won hands down in time performance and after-bid-change-order categories. The design/build projects were completed in about 35 percent less time, and with about one-half the change orders. a coalition of taxpayers, engineers, and business and the California Tax Foundation. |
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