Building Confidence

Design-Build Work Gaining Favor in Heavy/Highway Sector

With nearly 80,000 mi. of roads in the state highway system, TxDOT has established itself as a master road builder over the years. But the seasoned state agency has shown recently that even a master can learn a few new tricks.

By Bruce Buckley

Design-build is driving the progress of SH 130, a major component of the Central Texas Turnpike System. The first 29 mi. will soon open – early and under budget. (Photo courtesy of LSI.)

Design-build has emerged as a viable option for heavy highway work in Texas as early efforts with the delivery method reap positive results. In June Gov. Rick Perry announced that 40 mi. of the 65-mi. Central Texas Turnpike System, a $3.2 billion system of new toll roads in and around the Austin area, will open by the end of fall - nearly a year ahead of schedule and more than $400 million under budget. The core of that project is the $1.4 billion SH 130, a design-build project led by Lone Star Infrastructure - a consortium of Flour Corp., which recently relocated to Irving; Balfour Beatty Construction of Atlanta; and T.J. Lambrecht of Euless.

The early opening of the CTTS includes 29 mi. of SH 130 from Georgetown to U.S. 290, 8 mi. of SH 45 North from Loop 1 to SH 130 and the entire length of the Loop 1 extension from north of Parmer Lane to SH 45 North.

Beyond the successes, funding demands are pushing the design-build trend in transportation. The CTTS project got off the ground due to public-private partnership funding mechanisms passed by Texas voters in 2001. Using a combination of loans from the U.S. Department of Transportation, bond sales, local government contributions of right-of-way and tolls, the road that TxDOT estimates could have taken 25 years under traditional delivery will be online in less than five years.

Meanwhile, concessionaire agreements with private investors, such as those being discussed for the Trans-Texas Corridor, the highly publicized, proposed multiuse network of transportation routes, also indicate that design-build work is finding favor in the state.

Douglas Fuller, project director with LSI, said the successes of CTTS are resonating with state leaders, but the need for funding is driving demand that will lead to more design-build work.

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"With the large design-build projects, one thing the financial markets look for is a strong firm to go in and build the project," he said. "They are looking for a packaged component to justify the financing-and that's design-build."

Given the scenario, many large firms are hungry to gobble up future Texas design-build projects.

Dan Reagan, senior program manager for alternative contract delivery at PBS&J's Austin office, said he expects concession work to dominate the megaprojects, while many future contracts between $30 million and $100 million will be design-build work without the concession aspect.

"It's going to be aimed at those large- to mid-sized projects that need to be delivered quickly," he said. "The driving issue is the huge growth in commercial and personal travel. We're already behind and there's no indication we'll catch up anytime soon. If we can accelerate through things like design-build, we might be able to catch up."

A paving crew lays a 13-in. layer of steel-reinforced concrete on a mainlane of segment two, part of SH 130 that is scheduled to open nearly a year ahead of schedule. (Photo courtesy of LSI.)

Headquartered in Miami, Fla., PJS&J is the construction manager on the SH45 and Loop 1 CTTS projects. HDR Engineering Inc. of Omaha is providing the same service on SH 130.

Although greater capacity is in demand today, design-build may not make a big dent in the near future. Tim Weight, director of turnpike construction with TxDOT, said the delivery method will have a place in the state highway program, but the shift will be gradual.

"TxDOT is like an aircraft carrier; you can't turn it on a dime," Weight said. "By our nature we're a bit conservative and a bit risk averse. There's a time and place for concession projects and a time and place for design-build and a time and place for what we've always done."

Legislators may also be cautious. Jim Andoga, president of Dallas-based Austin Bridge & Road LP, has been keeping a close eye on the trend. Andoga, president-elect of the Texas AGC Highway, Heavy, Utilities & Industrial Branch and a member of the highway funding task force, said he sees apprehension from lawmakers when it comes to concession work.

"The idea of finance-design-build-maintain-operate is new to Texas," he said. "We're seeing a lot of questions involved on the financing side. That's slowing the process down. There have been a number of firms that have invested a lot of time and money into trying to bring concession projects on board and there has not been one yet with dirt moving."

Andoga, whose firm is part of the construction team on the SH 45 stretch of the CTTS that was a traditional-bid job, said there is a concern that small- to medium-sized contractors who don't have the resources to partner on big design-build projects could get squeezed out.

"We need to make sure this is an industry that isn't dominated by the big guys," he said.

LSI crews work on segment two, one of the portions of SH 130 that is scheduled to open early. (Photo courtesy of LSI.)

The Federal Highway Commission has chimed in to offer some answers to questions and concerns at DOTs nationwide about design-build. In January the Federal Highway Administration published the results of its Design-Build Effectiveness Study, which investigated factors such as cost, timeliness, quality and impact on small business. FHWA reported that on average, the managers of design-build projects surveyed in the study estimated that design-build project delivery reduced the overall duration of their projects by 14 percent, reduced the total cost of the projects by 3 percent and maintained the same level of quality as compared to design-bid-build project delivery.

The study illustrated how much design takes place while construction is under way. Among the design-build projects surveyed, the study showed that design averaged 27 percent complete prior to design-build contract award.

The study also suggested that small business isn't taking a hit. The percentage of design-build project costs going to small businesses was about the same on average as for design-bid-build projects with only a small reduction indicated for design-build projects. Moreover, results indicated that design-build contracts spread more of the design work among subconsultants than comparable design-bid-build contracts.

Meanwhile, TxDOT is doing its own studies. Weight said the department is compiling a manual of procedures and lessons learned about using the design-build process. The University of Texas is aiding in compiling the data.

"It's not necessarily meant to provide answers - it serves as a guide to what problems we've faced and how we addressed them," Weight said. "We hope it will keep the next guys that go through this from going through the same agony."

Among Weight's biggest concerns is proper contracting from the outset. The department believed it had the perfect contract for SH 130, but Weight said TxDOT discovered that some areas of risk and responsibility were overlooked.

"We were a little optimistic," he said. "There have been several things that were gray in the contract or weren't addressed at all."

One of the big areas was handling traffic in high-volume areas.

"If we've got a big home football game weekend coming up [at the University of Texas at Austin], we're not going to shut down the interstate for work," he said. "That caused some consternation on Lone Star Infrastructure's part. They said they couldn't have anticipated that and we agreed that, the way the contract was written, they couldn't. So we've had to kick in at times to pay some additional costs to ease the pains for our travelers who are using the existing roads."

Weight said he has had to adjust to the shift of responsibility. During traditional design-bid-build projects, the department would have to fix any design problems and bear the costs. But on SH 130 the responsibility is largely on the design-builder.

"When something needs to be fixed now, our response [to the design-build team] is, what do you intend to do about it?" he said. "That's a huge paradigm shift for us."

But Weight added that, overall, the main advantage he's seen has been the tremendous flexibility.

"As you run into a problem in one area, you've got an ability to go work somewhere else while you resolve the first problem," he said.

In many cases, the team is finding that it's heading off problems before they start because a complete team is on hand to address issues. During the design and preconstruction phase, the team included nearly 350 professionals. Even right-of-way and acquisition, which were included in the scope of the LSI deal, were made easier.

"We were able to target certain properties and discuss with the property owners a right of entry while they were in their negotiations or the condemnation process," LSI's Fuller said. "We could get on those properties early."

While the team on SH 130 strives to avoid mistakes, TxDOT is trying to come to terms with the fact that they are sometimes unavoidable. Weight said he's come to accept the advantages that go along with the uncertainty of designing as you build.

Design treatments for elements such as abutments and retaining walls have a decidedly Texas feel. (Photo courtesy of LSI.)

"I don't care what the verbiage is on a sign when I move the dirt - I only care that I've got enough dirt to put the sign in," he said. "Some things we can decide on later. We're building bridges where we don't have all of the designs, but we have enough done to know what size foundations we'll need. We can finish the deck design later."

He said it's worth it to see such dramatic reductions in schedules on critical highway projects.

"There's a certain amount of understanding that there will be mistakes because you won't have all of the information you would normally have when you make a decision," he added. "Sometimes a bad decision made timely is better than a good decision made too late. We don't want to push so hard that we cut corners and cause safety problems, but we want to push hard to make timely decisions."