IN AN ECHO of the recent debacle over ballooning costs for the Green Line extension, the MBTA is eyeing yet another public construction method the agency has little experience with to salvage a scaled-back version of the project.
A report by the interim project management team tasked with presenting options for building the stalled extension says the cost can be reduced from nearly $3 billion to $2.3 billion by eliminating a number of amenities as well as by using the so-called design-build approach to construction.
But Secretary of Transportation Stephanie Pollack told reporters Monday morning that the T has no experience with the method or with overseeing such a large project and would have to hire as many as 50 people to shepherd the project to completion.
“There is no one at the T right now that could manage this project,” she said.
Under design-build, an alternative method state lawmakers approved in 2004 for large public works projects, the design and construction aspects of a project are handled by one entity selected through a competitive process. Unlike the traditional design-bid-build method, where a contractor is selected from the lowest bid based on a design approved by the state, the project cost is not defined until the design-builder is chosen.
It’s similar on the surface to the construction manager/general contractor method the Legislature approved as a pilot program for the extension in which the winning contractor was selected and then the cost was negotiated to what is termed the “guaranteed maximum price.” Officials point to that as one of the leading problems that caused the project to go from an initial estimate of $1.4 billion to $2.99 billion, as the contractor continued to hike estimates to cover the risk of cost overruns.
According to the report, the solicitations for contracts should include a “not-to-exceed price” in order to build in cost certainty. The report included a list of projects around the country that it says have successfully used the design-build method.
But the list is not full of encouragement. It includes the California High Speed Rail Authority, which is building a $64 billion bullet train system from San Francisco to Los Angeles, but which has come under fire for shifting cost estimates and lack of transparency. The list also includes the Honolulu Authority for Rapid Transit, which is building a 20-mile elevated train running from one end of Oahu to the other. But the project, which is being overseen by former MBTA general manager Dan Grabauskas, has seen its cost go from $4.9 billion to $7.1 billion and is at least two years behind schedule. Neither project, though, used the so-called “affordability limit” proposed by the T.
Contrary to Pollack’s assertion, the T has used the approach on several projects in the past, though none as large as the Green Line extension. According to the state Inspector General’s website, the MBTA has received the OK to use design-build on three projects between 2010 and 2013, though the largest one was the garage and busway at the Wonderland Station in Revere. That project cost $53 million, a drop in the bucket compared to the Green Line extension.
The T in recent years was granted an exemption by the Inspector General’s office to use the design-build method without project approval from that office. The authority joined other agencies such as Massport, the University of Massachusetts Building Authority, and the state Division of Capital Asset Management and Maintenance as exempt entities, meaning they do not require permission from the Inspector General to use the design-build method. They are required to have approval for the procurement procedures they intend to use, which Inspector General Glenn Cunha granted at the end of April.
Charles Chieppo, a senior fellow at the Pioneer Institute, was a member of the panel that a decade ago helped write the law creating alternative construction methods, including the design-build process. He said that, unlike the traditional design-bid-build process, the builder is in on the design on the ground floor and can adapt as changes are needed.
“The advantages of the design build is that it’s more streamlined, you take out unnecessary steps,” he said. Under the old method, “if you design it, you’re automatically prohibited from building it. That makes no sense. If you design it, you should have something to do with [building] it.”
Chieppo, who was an advisor to then-Gov. Mitt Romney when the law was formed, said the approach is solid but it remains an open question whether the T has the capacity to pull it off. He says he’s not encouraged by the initial effort.
“The T has made all of us now ask the question, are they going to be able to, in technical terms, not [screw] this up,” he says. “It’s a bit of a gamble… History is not on their side.”
First off, design/build is NOT a new approach to undertaking construction projects.
For example, such was pretty much the guiding ethos behind the Big Dig – and we all know how that played out.
Granted, the design/build approach has pluses in its favor; HOWEVER, it is far more appropriately used in more certain and straightforward situations.
For example, building a rather standard sort of 15 story open floor office building in a readily accessible and geologically well-understood site – say, an suburban office park outside of Houston.
The Big Dig and the proposed Green Line Extension, however, are the exact opposite of the sort of projects that are effectively undertaken per design/build approaches.
Next, the notion of applying a “not-to-exceed price” contracting approach as a cost control is ultimately but putting a band-aid on severed main artery.
Among other all but certain consequences, construction companies are not fools and will thus opt to bid high so as to protect themselves. That or hire more attorneys to subsequently challenge contract terms.
There are solid ways to shorten the design and construction process; however, key is to be certain that solid planning efforts identify and then EFFECTIVELY address potential problems ASAP rather than deal with them later in the process as it ultimately inherent in the design/build approach.
Such was not done during the Green Line Extension’s planning and that is why the project’s projected costs spun out of control.
Finally, be sure to note the considerable financial waste as well as interminable delay that has been inflicted by now having to do a do-over given previous poor project planning.
That and how now opting for design/build could be readily be seen as a doubling down with more of the same so as to try to make up for lost time and money.