Government Issues

Pub Perspective: Alternative delivery depends on good outside expertise

Posted on June 17, 2015 by James Blue, GM

This issue contains our annual rail projects survey as well as our annual focus on consultants. Great rail projects have always depended on good outside expertise that the best engineering and planning consultant teams have provided to project owners. Industry experts tell me the growing use of alternative delivery methods, such as design-build, and the growing interest in public-private partnerships (P3s), makes the role of good consultants exponentially more critical.

What is “alternative delivery”?
First let’s define what I mean by “alternative delivery.” Traditionally, projects in the U.S. will procure a design team for a rail line or other capital investment after it has gone through planning and environmental review phases. Following a design phase, it then selects a contractor to build the system; hence the term “design-bid-build.” Alternative project delivery methods, on the other hand, range from a combined design-build method, which has both design and construction performed by the same team, to a P3, which combines design, construction, operations, maintenance, and sometimes, partial financing of the project. I’m told that there are many more extreme P3 methods outside the U.S., and several other examples of alternative delivery that are growing in use and are somewhere in between the extremes I described above, such as construction manager at risk, but I will discuss these another time.

While the list of rail projects that are being delivered through design-build is growing steadily, only one, the Eagle commuter rail project in Denver, is doing so through a P3. Accordingly, it is being watched with great interest by everyone even thinking about rail, because it looks as though it will be delivered faster, and therefore, with less cost than any other rail project Denver has undertaken. Many innovations, such as the first electrified U.S. commuter rail line in decades, have also been included.

Why outside expertise is essential
In the U.K. and other countries, the team responsible for ensuring that the P3 team achieves its promises is called the “delivery partner.” This team is sometimes known as the “general engineering consultant” (GEC) in the U.S., but for P3 and other types of alternative delivery, the team is entrusted with more than the usual design oversight, construction support and testing and commissioning responsibilities of the GEC. In addition to those duties, the delivery partner team typically will write the specifications for design and delivery of the project that are more performance-based than what has been typically asked of GEC teams, but also performance-based requirements of the operations and maintenance phases of the team that will be responsible. In other words, while a GEC helps the project owner oversee work of other contractors through the phases of project development up through opening day, a delivery partner’s responsibilities go much farther, not only well beyond revenue opening, but also including assistance with how the whole contractual relationship of the P3 team will be defined and how it will perform. Assigning risk is a defining issue for these relationships to be successful.

This is why getting the right outside help is so essential to those looking to alternative delivery methods. Experience is perhaps the number one criterion: have they done it before? How did it go? Phil Washington, the new CEO at Los Angeles Metro, said that getting the right legal help was perhaps more important than any other outside help his former agency in Denver obtained when it started thinking about the Eagle P3 project.
Like surgery, having the right talent with experience matters with complex rail projects.

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