Category:149 Project Delivery Determination and Initial Risk Assessment

Forms

Risk Assessment Brainstorm Sheet

Risk Assessment Worksheet

Figure

Project Delivery Method Determination Flow Chart

149.1 Project Delivery Method Determination

MoDOT uses innovative contracting to ensure that the public receives full value for every tax dollar invested in Missouri’s transportation system. Innovative contracting methods provide the ability to accelerate project delivery, reduce cost, improve quality and minimize impacts to the traveling public. A discussion of MoDOT’s various innovative contracting methods can be found in EPG 147 Innovative Contracting.

Project Delivery Method Determination Flow Chart

In order to select an appropriate project delivery method, a project must be evaluated to determine how the project aligns with each available delivery method. This evaluation is accomplished as shown in the Project Delivery Method Determination Flow Chart. A Project Delivery Determination (PDD) Tool has been established to guide project teams through the evaluation to determine appropriate delivery methods. This PDD is considered a national best practice to weigh project characteristics against key factors for consideration. Although all projects benefit from this review, it is especially important that large and/or complex projects be considered in order that the most appropriate delivery method is used. Examples of large and/or complex project types that should be considered include but are not limited to: bundled projects, major river bridges, complex corridor projects, and complex interchange projects.

The project delivery determination document provides a formal approach for selecting project delivery methods for highway projects. By using the PDD Tool, a project delivery selection report can be generated for each individual project. The primary objectives of this tool are:

• Present a structured approach to assist MoDOT in making project delivery decisions;
• Assist MoDOT in determining if there is a dominant or optimal choice of a delivery method; and
• Provide documentation of the selection decision.

149.1.1 Background

The project delivery method is the process by which a construction project is comprehensively designed and constructed including project scope definition, organization of designers, constructors and various consultants, sequencing of design and construction operations, execution of design and construction, and closeout and start-up. Thus, the different project delivery methods are distinguished by the manner in which contracts between the agency, designers, and builders are formed and the technical relationships that evolve between each party inside those contracts. Currently, there are several types of project delivery methods available for publicly funded transportation projects. MoDOT generally uses two primary delivery methods: Design-Bid-Build (DBB) and Design-Build (DB). Design-Bid-Build can include other alternative contracting methods such as: A+B Bidding, Fixed Price Variable Scope (FPVS), Indefinite Delivery Indefinite Quantity (IDIQ) and Alternate Technical Concepts (ATC). No single project delivery method is appropriate for every project. Each project must be examined individually to determine how it aligns with the attributes of each available delivery method.

149.1.2 Primary Delivery Methods

Design-Bid-Build is the traditional project delivery method in which an agency designs, or retains a designer to furnish complete design services, and then advertises and awards a separate construction contract based on the designer’s completed construction documents. In DBB, the agency “owns” the details of design during construction and as a result, is responsible for the cost of any errors, omissions, and unknowns encountered in construction.

Design-Build is a project delivery method in which the agency procures both design and construction services in the same contract from a single, legal entity referred to as the design-builder. This method uses Request for Qualifications (RFQ)/Request for Proposals (RFP) procedures rather than the DBB Invitation for Bids procedures. The design-builder controls the details of design and is responsible for the cost of any errors or omissions encountered in construction.

149.1.3 Facilitation of the Tool

When embarking on using the project delivery determination tool for the first time, it is recommended that a facilitator is brought in for the workshop. The facilitator will assist with working through the tool and provide guidance for discussing the project and selection of a delivery method. This individual should be knowledgeable about the process and should be consistently used. The facilitator also helps to answer questions and make sure the process stays on track and the team moves towards a formal selection.

Participation

Using the Project Delivery Determination Tool is only as good as the people who are involved in the selection workshop. Therefore, it is necessary to have a collection of individuals to participate in the selection of the delivery method. The selection team may include members of district and division leadership, the area team, applicable discipline leads from both district and division levels, and staff from previous Design-Build teams and FHWA. When crafting the invite list, it is important to include both a variety of personnel and keep the numbers low to promote a collaborative discussion.

Potential Bias

The best approach for the participants of the project delivery determination workshop is to keep an open mind about the delivery method to choose. Failure to maintain an objective approach by everyone in the workshop will result in an inaccurate outcome.

149.1.4 Project Delivery Selection Process

The process is shown in the outline below. It consists of individual steps to complete the entire process. The steps should be followed in sequential order.

Step 1:

A. Project overview and status

B. Establish draft project goals

C. Document project constraints

Step 2: High-level initial risk analysis

A. Brainstorm major risk areas

B. Analyze and compile risk factors

Step 3: Primary factor evaluation

A. Assess the primary factors (these factors most often determine the selection)

• Complexity and innovation
• Delivery schedule
• Project cost considerations
• Level of design
• Project risks (high / medium)

Step 4: Secondary factor evaluation (if necessary)

A. Perform a pass/fail analysis of the secondary factors to ensure that they are not relevant to the decision.

• Staff experience/availability (agency)
• Level of oversight and control
• Competition and contractor experience

B. If pass/fail analysis does not result in clear determination of the method of delivery, then perform a more rigorous evaluation of the secondary factors against all potential methods of delivery

149.2 Draft Project Goals

An understanding of project goals is essential to selecting an appropriate project delivery method. Therefore, draft project goals should be set prior to using the project delivery selection tool. Typically, the project goals can be defined in three to five items and need to be reviewed here. Example goals are provided below, but the report should include project-specific goals. These goals should remain consistent over the life of the project.

Schedule

• Minimize project delivery time
• Complete the project on schedule
• Accelerate start of project revenue

Cost

• Minimize project cost
• Maximize project budget
• Complete the project on budget
• Maximize the project scope and improvements within the project budget

Quality

• Meet or exceed project requirements
• Select the best team
• Provide a high quality design and construction constraints
• Provide an aesthetically pleasing project

Functional

• Maximize the life cycle performance of the project
• Maximize capacity and mobility improvements
• Minimize inconvenience to the traveling public during construction
• Maximize safety of workers and traveling public during construction

149.3 Purpose and Objective of Project Goal-Setting

The draft project goals for a particular project and potential risk to attaining those goals will be the basis by which the project delivery method will be determined and the project specific procurement requirements will be developed. These goals allow decision-makers to evaluate the advantages and challenges of various procurement methods and to select a project delivery method that provides the best opportunity for success.

In order to effectively use project goals to guide the project delivery method selection, the goals must be prioritized in order of importance to MoDOT. The determined "priority order" allows project delivery decisions-makers to use the most important goal as the “pivot point” to analyze all delivery choices. The remaining goals, listed in descending order of importance, further define and shape the project’s procurement/delivery strategies.

149.4 Project Delivery Constraints

There are potential aspects of a project that can eliminate the need to evaluate one or more of the possible delivery methods. A list of general constraints can be found below and should be referred to while completing the project delivery determination.

Schedule

• Utilize federal funding by a certain date
• Complete the project on schedule
• Weather and/or environmental impact

Cost

• Project must not exceed a specific amount
• Minimal changes will be accepted
• Some funding may be utilized for specific type of work (bridges, drainage, etc.)

Quality

• Must adhere to standards proposed by the agency
• High quality design and construction constraints
• Adhere to local and federal codes

Functional

• Traveling public must not be disrupted during construction
• Hazardous site where safety is a concern

149.5 Initial Risk Assessment

Risk is an uncertain event or condition that, if it occurs, has an effect on a project’s objectives. Risk allocation is the assignment of unknown events or conditions to the party that can best manage them. An initial assessment of project risks is important to ensure the selection of the delivery method that can properly address them. An approach that focuses on a fair allocation of risk will be most successful.

Performing an initial high-level project risk assessment is necessary to determine and document the most appropriate delivery method for a project. The initial risk assessment is also used in the development of draft project goals. A good initial high-level risk assessment allows MoDOT to clearly identify, prioritize and assign resources to risk avoidance and mitigation opportunities in order to help eliminate or reduce risk to the project. The resultant risks and an understanding of the efforts required to properly manage the risk, provide the necessary perspective by which the appropriate project delivery method should be selected.

For each project initial risk assessment, the assessment team is composed of MoDOT staff from all applicable functional units. Typically, this team consists of traditional core team members, with each member having different areas of expertise, such as design, construction, right of way, utilities, geotechnical, traffic and maintenance. Depending on the project, you may include staff from other expertise areas including FHWA, environmental and customer relations. Each of the core disciplines applicable to the project should be included in the initial risk assessment meeting. It may also be helpful to include a facilitator to organize, streamline and expedite the process.

149.5.1 Content of Risk Assessment

The first step of an initial risk assessment is to brainstorm project risks. A brainstorming spreadsheet can be used to capture all project risks. Examples of areas of risks that should be evaluated during a risk assessment include:

Risk Assessment Brainstorm Sheet

1. Environmental: Are there environmental permits that MoDOT can obtain? How can the NEPA document allow for flexibility in the ultimate project solution?
    Noise Walls: Can MoDOT agree with the public to a height, elevation, etc. of a noise wall or to a process to reach agreement on a noise wall?

2. Right of way: Are there parcels that acquisition can be avoided? Can the amount of right of way acquired be minimized?

3. Utilities: What utilities are possible conflicts? Are there utilities with long relocation schedules? Should a Subsurface Utility Engineering (SUE) be pursued?

4. Public Information: Are there research efforts that can assist in formulating a public information plan or method of handling traffic plan? Are there key audiences that could derail the project?

5. Third Party Agreements and Permits (other than environmental): Are there local IGAs, railroad agreements, process agreements, standards agreements that need to be obtained?

6. Drainage: Are there third party approvals necessary for drainage design?

7. Method of Handling Traffic: Can MoDOT agree to detour routes with a public entity?

8. Roadway design: Are there variances or exceptions that will be required? Is an AJR required?

9. Structures: Are there approvals or variances that need to obtained?

149.5.2 Initial Risk Assessment Process

A Risk Assessment Worksheet should be used to document the risk and the resultant mitigation efforts, if any, that will be performed. Traditionally the steps in the risk assessment process are as follows:

Risk Assessment Worksheet

• A broad area of risk is identified and listed on the form as a “Risk Category”.
• For each risk category, all associated specific risk elements are identified and listed on the risk worksheet under the heading “Risk Element”. If a project has several risks, multiple risk worksheets can be filled out for each risk category.
• The risk assessment team evaluates each risk elements “impact factor”. The impact factor is the significance of the impact that each risk element could have to the goals of the project, rated on a 0 to 6 scale (6 being the greatest impact – 0 being no impact). The impact factor is recorded in column A.
• Next, the risk assessment team evaluates the magnitude or “level of the effort factor” required to avoid or mitigate each specific risk element. This level of effort factor is rated on a 0 to 6 scale (6 being the greatest effort – 0 being no effort) and is recorded in column B.
• Next, for each risk element the risk assessment team determines the probability of the risk impact occurring if no action to avoid or mitigate the risk is taken. The probability factor rated on a 0 to 1.0 scale is recorded in column C.
• As a result of the ratings, a Risk Factor is calculated (Column A * Column B * Column C) for each risk element. The greater the Risk Factor, the higher the priority for MoDOT to identify the appropriate mitigation efforts necessary to reduce the risk and the greater the level of resources that must be employed to mitigate that risk.
• The final step in the initial risk assessment process is to identify the risk mitigation tasks that need to occur to reduce the risks to the project goals.

149.5.3 Assigning Risk Elements to Delivery Method

Following evaluation of all of the risks, the team should identify the medium and high risk items from the evaluation. The team should then assign these risk items to the delivery method that provides the best advantage to mitigate given the information known about them at that time. If no clear advantage is evident, document those risk items accordingly.

149.6 Project Delivery Determination

In order to determine the best delivery method for a project, it is helpful to consider the advantages and disadvantages (i.e. the pros and cons) of each delivery method. This may include a review of likely risk allocations which would occur if the design-build delivery method were pursued, as discussed in EPG 139 Design - Build. After reviewing the project goals, the project specific risks and the advantages and disadvantages of each delivery method, the project core team recommends a delivery method to their district management.

Some advantages of design-build are:

• Projects with multiple solutions
• Allows significant opportunity for innovation
• Permits extreme cost control
• Designs tailored to a contractor’s strengths
• Establishes single point of responsibility between MoDOT and contractor
• Coordinates design & construction expertise
• Allocates risks to best party
• Bases contract on performance requirements & specifications
• Saves time.

Some advantages of traditional design-bid-build are:

• Maintains MoDOT’s control of design process and solutions
• Designer works directly for MoDOT
• Works well for projects with tight constraints that may limit innovation (i.e. floodplain, schedule, environmental issues ROW)
• Allows for “on-the-shelf” plans being developed in advance, i.e. an upfront construction funding allocation is not required
• Applies best for use on routine projects, such as overlays.

Some advantages of traditional design-bid-build with Alternate Technical Concepts (ATCs) are:

• Allows implementation at any stage
• Allows opportunity for contractor innovation, but MoDOT maintains control of ultimate design solution
• Tailors designs to a contractor’s strengths to achieve the most economical design
• Entices smaller contractors, increasing competition
• Uses plans that have been developed to an advanced stage
• Maximizes competitive bidding.

149.7 Documentation and Approval

Documentation of the project delivery method determination must include the following:

• Project background
• Project overview and status
• Project goals
• Project constraints
• High risk elements
• Delivery method comparison (pros/cons)
• Obstacles and opportunities for each delivery method
• Summary and recommendation
• Attachments/Exhibits.

If design-build is the recommended delivery method, the District Engineer or the District Engineer's designee should present the project to the Chief Engineer and Assistant Chief Engineer for approval to move forward. Approval is required to ensure MoDOT is using design-build on the most appropriate projects and to ensure that MoDOT does not exceed its legislative authority of 2% of the number of projects per year.

If DBB with ATCs, A+B Bidding, or Fixed Price Variable Scope is the recommended delivery method, the project team should contact the Bidding and Contract Services and their Design Liaison for further guidance.