MEGAPROJECT PROCUREMENT: BREAKING FROM TRADITION

One of the most important factors in bringing large highway and transit projects to successful completion is the selection of the best, most appropriate project delivery method or combination of methods; a system that sets contractual arrangements for project design, construction, and operations and maintenance. It is vital that megaproject managers establish an acquisition strategy early in project development because of the direct bearing on both the management's organization of roles and responsibilities and risk ownership allocation between the public and private sectors. Under traditional design-bid-build (DBB) contracting, the agency, or its designated engineering consultant, designs the project and prepares the construction contract documents. The construction contract is then bid publicly and awarded to the low responsive bidder. Over time, some in the industry have raised concerns with the efficiency of DBB in terms of project cost, schedule, and productivity. In response, the Federal Highway Administration (FHWA) began an experimental program in 1990, termed the Special Experimental Project No. 14 (SEP-14) Innovative Contracting Practices. The program allows States to evaluate nontraditional contracting methods that are not in full compliance with FHWA's contracting policies but provide an open, competitive procurement. Under SEP-14, project owners seeking Federal aid may apply for approval to use nontraditional construction contracting techniques (methods of award other than the lowest responsive bid) to implement value-oriented procurement processes.