02-15-2011
Land Use & Construction Law, Part 2
Nordhavnen: City Regenerative
Going into the lunch session, Richard Anderson, President of the New York Building Congress, was the keynote speaker. Construction spending continues to decline from its 2007-8 high point, but he anticipates it to increase slightly in 2011-12, but only if the MTA capital plan is fully funded at $7.6 billion in 2012. The overall health of the local construction industry remains highly dependent upon government work—62% of all NYC construction dollars in 2010. Investment in the metropolitan region's infrastructure, with a particular emphasis on transportation (MTA) and education (SCA), is crucial to providing essential services upon which the City's growth depends.
After lunch, a high-power panel convened on modernizing public construction law. I missed the second session, which focused on financing, but the first session targeted procurement laws and how they affect the construction of public projects at the State and local level.
Current state law permits only design-bid-build on State projects in order to prevent procurement abuses. These laws evolved to separate procurement from politicians, and they require award on fully designed scopes. Because projects have become increasingly more complex—with numerous specialists, BIM, and sustainability issues—the government needs a broader tool kit to match construction delivery methods to specific projects. The current sequential, fragmented process needs to be re-integrated to get the full team involved early on to reap the benefits of multiple areas of expertise. The existing system impairs collaboration, stifles innovation, and leads to greater costs associated with multiple contracts.
According to Marla Simpson, Director of the NYC Mayor's Office of Contract Services, changes in 2008 to the State law now permits use of "project labor agreements" in lieu of the Wicks Law (multiple prime contracts) in its procurement process, which has saved the City about $350 million, a figure confirmed by Paul Fernandes of the Building & Construction Trades Council of Greater NY. Another procurement innovation, as noted by David Resnick of NYC Department of Design and Construction, is the Design and Construction Excellence Program, which bases selection for procurement of design services on quality rather than lowest bid; this fundamental change in procurement should be extended to contractors as well. According to Thomas Scarangello, Chairman of engineering firm Thornton Tomasetti, building information modeling has allowed them to deliver three-dimensional model information directly to contractors; as an industry, we are just beginning to explore the unintended consequences of this technical change.
John Miller, of legal firm Patton Boggs, presented his research of different procurement methods—design-bid-build; construction manager at risk; operator maintained—and selection methods—competitive sealed bids, competitive sealed proposals, qualification based. New procurement methods will have management implications. For one, public owners must be more flexible and accept a greater degree of team work. Bid proposals must be evaluated on several factors, not only price. Despite these hurdles, Commissioner David Perini, of the Massachusetts Division of Capital Asset Management and Maintenance, described how Massachusetts has revised its procurement regulations and attracted higher quality contractors, consequently experiencing both good team work and delivery of projects on schedule and on budget.
If New York State can implement legislation to change its procurement methods it is anticipated that construction costs would be reduced and higher quality projects achieved. But any change that threatens the Wicks Law will have resistance from labor, unless it can be shown to increase construction jobs. Politics being the art of the possible, it will not be an easy task for Albany to change design and construction procurement laws.
After lunch, a high-power panel convened on modernizing public construction law. I missed the second session, which focused on financing, but the first session targeted procurement laws and how they affect the construction of public projects at the State and local level.
Current state law permits only design-bid-build on State projects in order to prevent procurement abuses. These laws evolved to separate procurement from politicians, and they require award on fully designed scopes. Because projects have become increasingly more complex—with numerous specialists, BIM, and sustainability issues—the government needs a broader tool kit to match construction delivery methods to specific projects. The current sequential, fragmented process needs to be re-integrated to get the full team involved early on to reap the benefits of multiple areas of expertise. The existing system impairs collaboration, stifles innovation, and leads to greater costs associated with multiple contracts.
According to Marla Simpson, Director of the NYC Mayor's Office of Contract Services, changes in 2008 to the State law now permits use of "project labor agreements" in lieu of the Wicks Law (multiple prime contracts) in its procurement process, which has saved the City about $350 million, a figure confirmed by Paul Fernandes of the Building & Construction Trades Council of Greater NY. Another procurement innovation, as noted by David Resnick of NYC Department of Design and Construction, is the Design and Construction Excellence Program, which bases selection for procurement of design services on quality rather than lowest bid; this fundamental change in procurement should be extended to contractors as well. According to Thomas Scarangello, Chairman of engineering firm Thornton Tomasetti, building information modeling has allowed them to deliver three-dimensional model information directly to contractors; as an industry, we are just beginning to explore the unintended consequences of this technical change.
John Miller, of legal firm Patton Boggs, presented his research of different procurement methods—design-bid-build; construction manager at risk; operator maintained—and selection methods—competitive sealed bids, competitive sealed proposals, qualification based. New procurement methods will have management implications. For one, public owners must be more flexible and accept a greater degree of team work. Bid proposals must be evaluated on several factors, not only price. Despite these hurdles, Commissioner David Perini, of the Massachusetts Division of Capital Asset Management and Maintenance, described how Massachusetts has revised its procurement regulations and attracted higher quality contractors, consequently experiencing both good team work and delivery of projects on schedule and on budget.
If New York State can implement legislation to change its procurement methods it is anticipated that construction costs would be reduced and higher quality projects achieved. But any change that threatens the Wicks Law will have resistance from labor, unless it can be shown to increase construction jobs. Politics being the art of the possible, it will not be an easy task for Albany to change design and construction procurement laws.