Saturday, December 24, 2011

NYS Passes Historic Design-Build Law

New York State has passed legislation to allow design-build project delivery for certain infrastructure projects. Industry groups, including the Design-Build Institute of America, praised the measure, however detractors contend that design-build typically eliminates competitive bidding, allows contractors to inspect their own work, and in many instances has greatly increased project delivery costs.

Governor Cuomo signed the “Infrastructure Investment Act” into law on December 9, 2011. The new legislation temporarily suspends current restrictions on the use of “design-build” project delivery methods. Citing ”the potential to achieve projects delivered on guaranteed or accelerated schedules, lower costs and risk shifting to the private sector generally retained in conventional design-bid-build projects as well as to accelerate capital investments throughout the state,” the bill authorizes several state agencies and authorities, including the Department of Transportation and the Thruway Authority, to utilize this alternative delivery method for a wide variety of capital projects related to building, repairing and extending the life of the state’s physical infrastructure.

Design-build is a method of project delivery in which one entity - the design-build team - works under a single contract with the project owner to provide design and construction services. One entity, one contract, one unified flow of work from initial concept through completion. Design-build is also known as design/construct and single-source responsibility.

Across the country and around the world, design-build successfully delivers office buildings, schools, stadiums, transportation and water infrastructure projects with superior results.
Design-build is an alternative to design-bid-build. Under the latter approach, design and construction are split - separate entities, separate contracts, separate work.
Design-build, design-bid-build and construction management are the three project delivery systems most commonly employed in North America. Over the past 15 years, use of design-build has greatly accelerated in the United States, making this delivery method one of the most significant trends in design and construction today.
Under the new law, several state agencies—the N.Y. State Dept. of Environmental Conservation; Dept. of Transportation; Thruway Authority; Office of Parks, Recreation and Historic Preservation; and Bridge Authority—are now authorized to use design-build. It will apply to authorized state agency projects with a total cost of more than $1.2 million while having no minimum project cost requirement for authorized state authorities.

The law is set to sunset three years after the date of enactment. That is because the state “wants to see how this works” before making a further commitment, says Mike Elmendorf, president and CEO of the Associated General Contractors of New York State, who supports the law. “The flexibility that this is going to give a handful of state agencies to deliver projects more quickly, more efficiently and, in many cases, less expensively, is a very significant step forward,” Elmendorf says. He says that the Tappan Zee Bridge project will be done as design-build and that RFQs are already out. “They already started doing that in anticipation of this law happening,” he adds.

Under the infrastructure fund program, $700 million in state capital investments would be earmarked to accelerate capital projects planned wherever possible, and the Port Authority of New York and New Jersey would provide an additional $300 million for New York City infrastructure project funding. Separately, a new public-private infrastructure fund of up to $1 billion would be established from pension funds and private investments. 

Potentially funded projects include: replacing deficient state and local bridges; rehabilitating dams and flood-control infrastructure; renovating parks; rebuilding water systems; conducting energy retrofits on homes, farms, businesses and schools; and accelerating major SUNY and CUNY projects, the state says.
Richard Thomas, Design-Build Institute of America
vice president of advocacy, calls the legislation a major victory as New York currently allows design-build only for dormitory construction and, more recently, for emergency infrastructure repairs after Hurricane Irene. He notes that earlier this year Ohio also expanded its use of design-build for certain transportation sector work. “New York and Ohio are probably the two biggest victories for design-build in the last decade,” Thomas says.