BMG’s Charlie-on-the-mta asked me, a propos the delays and cost increases in the Green Line extension project, if I would write a primer on the types of public construction approaches available to the MBTA.
This all stems from the fact that I’ve questioned an assertion by the Governor’s Special Panel on the MBTA that the agency doesn’t have the authority to use alternative construction methods such as “design build” and “construction management at risk” (CM at Risk) in order to save time and money on its construction projects.
In fact, as I noted in the post linked above, the MBTA, like any state agency, does have the authority to use both Design Build and CM at Risk, under the state’s public construction law (Chapter 149A), for projects valued at over $5 million. And the Green Line extension project, in fact, appears to be a version of CM at Risk, based on this account of the project in The Globe.
So, what are these alternative project approaches all about? I go into a little more depth on this in my book, Managing Public Sector Projects, with some case studies included, but here is an attempt to boil the issue down a bit:
Public construction projects in Massachusetts and elsewhere have traditionally involved sequential design and bidding phases: First, a public agency selects a designer to prepare 100 percent complete plans and specifications for a project, and then construction bids are solicited, based on those plans and specifications.
Massachusetts and a number of other states allow public agencies to use alternatives to this traditional “design-bid-build” approach to public construction. For instance, “design-build” delivery allows owners to “fast-track” the design and construction process by permitting some construction to proceed before the design is complete. In design-build, the owner signs a single contract for design and construction with a single entity, such as a design-contract joint venture. Design and construction are combined into a single stage, with no separate bid for construction based on complete plans and specifications.
The other major alternative project delivery method, as noted above, is CM at risk. In this method, the contractor is hired early in the project’s design stage and is separate from the designer. During the design stage, the contractor advises the owner on planning issues, including the budget and schedule and the development of the design. Also, the owner and contractor agree during this stage on a guaranteed maximum price for the construction work. Once construction begins, the contractor takes on the role of general contractor and assumes the risk of constructing the project in accordance with the design specifications.
In both design-bid and CM at risk, the public agency usually issues a Request for Qualifications (RFQ) and a subsequent Request for Proposals (RFP) that usually contain preliminary concept designs for the project. Both the owners’ RFPs and the contractors’ proposals often do not contain detailed specifications.
As mentioned, it appears that the Green Line extension project is using a form of CM at risk contracting. The only added twist, as the Globe article describes it, is that the Green Line project has been “broken up into phases,” and that the CM contractor “is allowed to name a maximum price for construction with each phase.”
According to the Globe, “the T can negotiate the price of each phase, with the help of an outside company that gives its own cost estimate. If the T can’t come to an agreement, it can put part of the project out to bid again — but that also causes delays.”
One advantage of the CM at risk over design-build, the other alternative approach, is that by keeping the contractor separate from the designer, the public agency can ensure some checks and balances in the design and construction while at the same time ensuring that the design is constructible from the contractor’s standpoint. However, even CM at risk can be problematic for a public owner if the owner tries to negotiate a guaranteed maximum price for the construction before the plans and specifications are reasonably complete. Also, it seems to me that even though the contractor and designer are separate in CM at risk, the contractor still has an incentive to advocate for a design that provides it with the highest possible payment once the actual construction starts.
For instance, the Globe article quotes Frank DePaola, the interim general manager of the T, as saying the T had plans “to build more complex stations than may be necessary.” As the article describes it, every one of the seven stations involved in the project was initially designed to be completely enclosed, have fare gates, and include escalators, in addition to elevators. But the Globe says that “DePaola pointed out such costs may not be necessary for each station: Some stations may not need escalators, stations could be covered by a roof but not fully enclosed with walls, and they wouldn’t need to include fare gates.”
This appears to imply to me that White-Skanska-Kiewit, the selected contractor, which had input into the design, may have pushed for over-designing the project. As the Globe article states, for one of the largest portions of the project, which includes the construction of three of the seven stations, the T expected to spend $487 million, including contingency costs. But White-Skanska-Kiewit’s cost estimates were about $400 million higher.
So, the bottom line, as I note in my book, is that while so-called fast-track, alternative construction approaches are becoming more common in public projects, they do come with risks to public agencies, and the Green Line extension projects appears to demonstrate some of those risks.
So in your view, what structure is most likely to lead to on-time, under budget results? What gets the trains running, uh, on time?
I find the dollar values chucked around to be completely mind-boggling. How does a little kiosk, even with elevators and fare gates, cost tens of millions? I mean, this is not South Station we’re talking about – not even Harvard.
approach will get the best results. It does depend on the type and complexity of the project. I think experience has shown that if public agencies do use the alternative methods, which don’t require complete design before construction and allow for negotiated prices, they need to exercise diligent and competent oversight of the contractors and designers. It doesn’t appear the MBTA has done that with the Green Line extension project.
Dave, question about school construction costs.
I’m a finance board member in my town, and we are embarking in a mega-project at multiple schools north of $150M.
Where can I find cost comparisons to get an idea of school construction costs in the state? I can’t seem to find that on the MSBA web site. All MSBA reports I find seem to be very high level, missing basic things like per square foot construction costs and yearly trends.
Looking through old town reports, I collected the information for old projects in my town at School Construction Costs Inflation (2015). This indicates an average new construction cost inflation rate of 8.85% per annum between 1997-2015.
That number is scary. And since no town is an island, I suspect the same cost inflation may be happening in the rest of the state also.
What could be the root cause of this, and where could I find more data to compare with the state trend?
an expensive proposition. A few other sites that come to mind that may have more info about specific costs of construction include:
R.S. Means, which tracks building construction cost info: http://rsmeans.com/
The Mass. Chapter of the Associated Builders and Contractors: http://www.abcma.org/
Construction Management Assn. of America: http://www.cmaa.org/
National Clearinghouse for Educational Facilities: http://www.ncef.org/ (Although they seem to have gone out of business as of 2012, but they have a separate resource list)
Aside from the MSBA, you might also try calling the Massachusetts Attorney General’s and Inspector General’s offices, which might be able to give you some more information.
You should have an OPM (owner’s project manager) on board by now – they should be able to give you comparable costs – if they can’t get another firm.
It’s also very hard to separate hard and soft costs and properly benchmark projects.
BTW – construction in eastern massachusetts is very busy – prices are rising quickly.
I live in Green Line above-ground land, where there are no fare gates. That makes the Green Line boarding like a bus — super slow when there are more than five people boarding. Unlike a bus, where everyone gets on in the front, for the Green Line during rush people board in every door — resulting in lost revenue.
If all the costs of the project, fare gates are short money. They allow more revenue collection, faster boarding and alighting, and reduce schedule variance associated with unexpectedly slow fare recognition at the front door.
Given the system we have, fare gates are absolutely required in new construction.
An alternative is to replace the current system we have with combination of paper chits, one or two mid-car validators in each train car or bus, a small team of fare inspectors, and a steep charge for not having a validated chit. DON’T treat riding without a chit as crime — treat it as a very expensive convenience. The system costs less, riders can get on and off much more quickly, and the T makes more money.
What we DO need:
– Accessible for riders with disabilities
– Shelter from snow, rain, and wind
– Raised platforms
What we do NOT need:
– Acres of glass
– Enclosed pedestrian walkways
– Enclosed “plaza” for riders
I was rightly criticized recently for making similar criticisms of the proposed College Avenue station, because that design was enlarged to to accommodate an arrangement with and paid for by Tufts.
This is the proposal for Ball Square, a simple stop comparable to Brookline Village. Lest anyone think I’ve cherry-picked, I invite you to examine any of the other proposed station designs. The proposed design for the new Lowell Street station, for example, includes a multi-story building, large raised plaza, long fully-enclosed building, and so on (page 33).
We desperately need the Green Line extension. We do not need the extravagant and expensive designs that are currently proposed.