Procurement
The following was excerpted from the comments of four experts from the construction industry, Jerry Milstead of Milstead & Associates, Inc., Brent Schafer and Ken Dixon of Todd Construction, Inc., and Gerald H. Williams, Jr. of R. Brown Consulting Group, LLC. Each individual offers his own unique, expert view on the procurement process and the brief does not reflect any one viewpoint in totality.
Introduction
While there are multiple ways to procure public works (design/bid/build, CM/GC, design/build, pre-qualify/bid, etc.), the law in Oregon only provides for two tracks on public improvements. The first is the default method and is design/bid/build. It is the traditional method and deservedly so because it is easy to understand plus the results are based solely on one quantifiable factor – cost to the public entity. The second method requires the project be exempt from the default or traditional method and falls under the the heading of alternative contracting.
For bidding, the standards and solicitation process are documented in statute and well tested in case law. They are covered in the ORS 279C 300 series. Here is a link if you would like to look further: http://landru.leg.state.or.us/ors/279c.html. Basically, once a state or local governmental entity decides they want to bid a project it’s a fairly simple process of drawing up plans, advertising according to dates and places defined by statute, and accepting bids. The details for advertising are in the ORS 279C 300 series.
For alternative contracting, there is more effort required to select the method and choose the contractor. Again the ORS 279C 300 series talks about how to make the exemption and the ORS 279C 400 series talks about the procedures for competitive proposals: http://landru.leg.state.or.us/ors/279c.html. The selection of the method is where the challenges occur. The bottom line is that in Oregon public improvements must be made at the least cost to the taxpayer. This is easily demonstrable with design/bid/build because the lowest responsive price is selected. However in competitive proposals the full price cannot be known until after the project is complete so a careful observer would recognize it’s impossible to meet statutory criteria for least cost. Whether the process is design/build or CM/GC or pre-qualify/bid, the process is the same. The public entity must undertake a study to create findings the exemption will not promote favoritism/diminish competition and will save the entity substantial money. Then a public hearing must be held where the findings are presented and a vote of the governing body taken to exempt the project from statutory bidding requirements. Once this is done the competitive proposal process must be advertised and undertaken. All this is covered by statute. Once exempted, the process, the scoring and most everything else are at the discretion of the local governing body.
Overview[1]
When considering procurement services for a construction project, cost effectiveness is best served by selecting a procurement method that best suits the 1) type and complexity of the project and 2) the knowledge and experience of the owner. The first step is to identify the overall goal of the project, followed by the establishment of a timeline to complete the project. In addition, a company or project manager should address any potential issues that could hinder the construction process, namely around time, cost, environmental factors, and preserved land to name a few. All of these factors must be considered before choosing the correct procurement strategy for your construction project.
There are three, basic methods of procurement: Design-Bid-Build, Design-Build, and Construction Manager/General Contractor (CM/GC). Each method begins with the property owner establishing a budget and building criteria for the project. The three procurement methods each have their strengths and drawbacks. As indicated by industry experts, it is clear that there are differing opinions on which methods are most appropriate for certain projects. When selecting a procurement method, it is important to consider the breadth of the project and the qualifications of the owners. Additional information about each procurement process, as well as project characteristics can be viewed by accessing the Milstead & Associates presentation on Procurement Strategies for Construction Services (.pdf here); Todd Contruction, Inc.’s research on CM/GC, A CM/GC Perspective (.pdf here); and Gerald H. Williams, Jr.’s presentation on An Evaluation of Contracting Methods for the Public Building Sector in Oregon (.pdf here).
In the Design-Bid-Build track, the owner selects a team to complete the design process. When the design is finalized, it is advertised for bid on the open market. In the end, the construction project is awarded to the lowest bidder. Participation can be limited to a pre-qualified list of bidders or a predetermined set of criteria.
If the Design-Build method is chosen, the design and construction firm are selected as one team, and take complete control of the project through completion. The selection of the design and construction team is based on criteria set forth by the property owner.
The CM/GC method begins with the selection of the architectural design team. During the preliminary stages of the design process, a construction firm is selected to join the owner/design team. The construction firm assists in finishing the design, and sets a guaranteed maximum price (GMP). The actual trade work is competitively bid by the CM/GC team and subcontracted to them.
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