DANIEL F. MCLENNON
Partner
San Francisco
T: 415.394.6688
E: dfmclennon@smithcurrie.com
May 18, 2023
A natural progression in design-build public works procurement is to start collaboration with the design-builder earlier—in the program development process, when the design-builder’s expertise can be harnessed to assist the owner to determine design parameters most likely to deliver the facilities the owner needs, within the owner’s budget. This development is called progressive design-build (“PDB”) procurement.
PDB Basics
For California public works projects, legislation authorizing PDB is required. While details of each of the steps vary according to the terms of the authorizing legislation, generally under PDB, the design-builder is selected in a best-value evaluation process. The design-builder is paid for preconstruction and conceptual design services, with the goal of achieving a fixed price or guaranteed maximum price acceptable to the public entity. If the parties agree on price, the design-builder proceeds to the design-build phase where the design is completed and the construction commences. If the parties do not agree on the price, then the public entity may solicit bids from others or scuttle the project.
PDB Benefits
The proclaimed benefits of PDB are many. Parties may achieve:
- A high level of collaboration between the public entity and the design-builder, early in the project;
- Reduced adversarial relationships common in design-bid-build projects;
- Transparency of costs in developing and constructing the project;
- Reduced time from concept to project completion;
- Fewer change orders;
- Lower barriers to contractor participation due to earlier contractor compensation;
- A single party accountable for all project problems;
- Owner ultimate control over the project budget and sense of cost fairness.
PDB Popularity
The PDB project procurement method is surging throughout the country. In 2018, Tipton County, Illinois, broke ground on a PDB correctional institution project after unsuccessfully attempting design-build.
The San Francisco International Airport recently completed part of a $7.3 billion modernization program including reconstruction of Terminal 1, new gates at Terminal 3, a new hotel, expansion of the AirTran system, and second longterm parking. The Secure Connector Project between Terminal 3 and the International Terminal completed 2 weeks early on a 12-month project and $350k under budget.
The Utah Department of Transportation highway widening project totaling $385 million took only 14 months, 4 months ahead of schedule. Presently, the Maryland Department of Transportation is under way with PDB for a project to resolve congestion and increase throughput on I-270, the “Technology Corridor,” one of the nations’ most heavily traveled highways serving Maryland and the nation’s capital region.
Also, the Jacksonville, Florida utility known as “JEA” recently started PDB for two components of their total water management program, involving an upgrade to the Main Street water treatment plant and segment two of the conveyance system.
Reportedly, a number of other projects have proceeded under PDB for airports, transit systems, and water treatment facilities.
PDB in California
PDB appeared in California via AB-137, effective July 16, 2021. AB-137 established a framework generally for all types of projects, but as enacted it was limited to three projects chosen by the Department of General Services and the Department of Finance. Presently, one of those projects, a $200 million comprehensive remodel of the historical Gregory Bateson Building in Sacramento is underway using PDB.
Under SB-991, effective January 1, 2023, any local agency that provides for production, storage, supply, treatment, or distribution of any water from any source may procure PDB contracts for up to 15 public works projects in excess of $5 million for each project. This measure will be repealed January 1, 2029, unless extended.
AB-1845, effective January 1, 2023, permits the Metropolitan Water District of Southern California to use PDB for no more than 15 infrastructure projects for recycled water and other water infrastructure. These projects may be let only through January 1, 2029.
Presently pending in the California legislature to expand use of PDB is SB-706, introduced February 16, 2023, which would allow all local agencies to use PDB in addition to the water-related projects allowed under SB-991, and would remove the 15 project limit in SB-991.
PDB Wave to Ride!
PDB is gaining momentum throughout the nation and in California. Public contractors would be wise to position themselves to ride this wave into the future, by monitoring the legislature for authorizing legislation, watching for authorized PDB solicitations, and meeting solicitation qualifications. Subcontractors may wish to market to general contractors to become trusted members of the RFQ response team.
