Public Hearing to Examine Alternative Project Delivery Methods

1 BEFORE THE NEW YORK STATE SENATE

STANDING COMMITTEE ON HIGHER EDUCATION 2 ----------------------------------------------------- 3 PUBLIC HEARING 4 TO EXAMINE ALTERNATIVE PROJECT DELIVERY METHODS 5 ------------------------------------------------------ 6 Van Buren Hearing Room A - 2nd Floor

Legislative Office Building 7 Albany, New York 8 January 9, 2012

12:00 p.m. to 2:00 p.m. 9 10 11 PRESIDING: 12 Senator Kenneth P. LaValle

Chair 13 14 15 SENATE MEMBERS PRESENT: 16 Senator Toby Ann Stavisky (RM) 17 Senator Lee M. Zeldin (RM) 18 Senator David Carlucci 19 Senator Kevin S. Parker 20 21 22 23 24 25 1

SPEAKERS:PAGE QUESTIONS 2

Thomas P. Quaranta, FCMAA 6 18 3 VP, Program & Construction Mgmt. Practice

AECOM 4

William Gillbane III 28 35 5 Vice President

Gillbane Building Company 6

Burton L. Roslyn, AIA 39 45 7 President

Roslyn Consultants 8

Ed Farrell 39 45 9 Executive Director

AIANYS 10

Richard Thomas 48 58 11 Vice President

Design-Build Institute of America 12 13 14 15 16 17 18 19 20 21 22 23 24 25 1 SENATOR LAVALLE: Okay, are we all set? 2 Okay, I'd like to begin. 3 Good afternoon. 4 First, let me introduce people on the panel 5 here. 6 To my left is the ranking members, 7 Senator Toby Stavisky; to my right is 8 Senator Lee Zeldin; 9 Going back to my left is Senator Carlucci. 10 We're here today to discuss the benefits of 11 alternative project-delivery methods. 12 I'm sponsor of the bill, and -- that is 13 currently in the Education Committee. We're trying 14 to get that bill reassigned to the 15 Higher Ed Committee, because, in the Assembly, it is 16 in Higher Education. 17 This bill, I think, is very, very critically 18 important at this time, because we're looking for 19 ways to streamline processes. 20 And I know the Governor is very interested in 21 this. 22 This would allow our State agencies to 23 utilize alternative methods, such as design-build 24 and management-at-risk, for construction, 25 reconstruction, alteration, repair, improvement, of 1 State buildings. 2 And today we're going to have a dialogue. 3 We're going to hear from individuals who will, 4 hopefully, tell us that this methodology is going to 5 yield cost savings and increase project efficiency. 6 We also, hopefully, will hear, and we need to 7 explore, what are the disadvantages of this 8 methodology. 9 We're holding the hearing this early in the 10 process because we want to make sure -- this has 11 very far-reaching impact across state government, 12 and also local government, in terms of school 13 districts. 14 So, we need to know if there are any problems 15 with the bill, what changes do we need to make, so 16 that we can move this as quickly as possible. 17 Obviously, as the sponsor, I think it's a 18 great thing. I think its time has come. I think it 19 has great potential to save money and have project 20 efficiency. 21 Senator Stavisky. 22 SENATOR STAVISKY: I thank you, I thank you 23 on behalf of all of our colleagues, for calling the 24 hearing. 25 And I think it's important that we get 1 started early because I think that's the key to 2 resolving disputes; we try to bring people together, 3 and come out with almost a synthesis of everybody's 4 opinions. 5 So, I look forward to hearing what the 6 various stakeholders have to say. 7 SENATOR LAVALLE: Senator Zeldin. 8 SENATOR ZELDIN: Well, thank you for the 9 invitation. It's been an honor to serve on the 10 Higher Education Committee with you. 11 I had the honor of working for 12 Senator LaValle for a few years, so, to be next to 13 you here for this hearing is great. 14 Welcome to all of my colleagues, back for a 15 new legislative session. 16 And, thank you all for attending. 17 SENATOR LAVALLE: Senator Carlucci. 18 SENATOR CARLUCCI: Thank you, Chairman. 19 I look forward to working with you and the 20 members, and the people here, to really come up with 21 the best idea possible on how we can increase 22 efficiency in New York State, and I think this is a 23 great way to do it. 24 I look forward to starting early on this so 25 we can really get this package done. 1 So, thank you, Senator LaValle. 2 And, thank you to the rest of the members of 3 the Committee. 4 SENATOR LAVALLE: I'd like to, both, 5 introduce, and ask if he has any remarks, 6 Senator Parker. 7 SENATOR PARKER: Thank you, Senator LaValle. 8 We've got to the part of the program where 9 everything has been said, but not everyone has said 10 it. 11 But, I do want to thank Senator LaValle for 12 including me, and always kind of being bipartisan in 13 how he does this. 14 I think that this legislation is a good 15 start, in terms of talking about best practices, 16 especially in light of the Governor's "State of the 17 State" last week, and all of the kind of 18 construction projects he's suggesting, that this 19 might become a best practice. 20 So, I'm looking forward to hearing the 21 testimony, and moving this bill forward. 22 SENATOR LAVALLE: Thank you, Senator Parker. 23 Our first person to testify is, 24 Thomas P. Quaranta, vice president, program and 25 construction management practice, AECOM. 1 THOMAS P. QUARANTA, FCMAA: Good afternoon. 2 SENATOR LAVALLE: Put the mic nice and close 3 to you; speak up, so the people in the back of the 4 auditorium can hear you. 5 THOMAS P. QUARANTA, FCMAA: Thank you for the 6 invitation to participate in this hearing today. 7 Having a choice in how a project is delivered 8 is a benefit for project owners. 9 And by "project owners," I mean, the entities 10 funding a project, sponsors, State agency. 11 In choosing how a project is delivered, 12 certain elements should be considered, such as, the 13 owner or State agency's project priorities, their 14 internal organization, and owner risks. 15 In determining the method to deliver a 16 project, it should be noted that there is no one 17 best method overall, as each project is unique with 18 its own characteristics. 19 Results and benefits of a particular delivery 20 that have been experienced by a certain owner on 21 past projects may not be the same for a particular 22 State agency embarking on their respective project. 23 A State agency's project priorities can vary, 24 project to project, whether they be schedule, access 25 to funding, innovative technologies and systems, 1 tolerance for risk, or community and local business 2 concerns. 3 In selecting the delivery method, the 4 internal organization of the owner or State agency 5 must be examined as it pertains to their 6 relationships with the project stakeholders, and, 7 very importantly, their ability to make timely 8 decisions. 9 In determining a project-delivery method, 10 complete risk transfer is neither required nor 11 suggested. 12 Industry movement to optimize 13 project-delivery models and to introduce alternative 14 project delivery presents a new array of risk 15 considerations, most times, not previously faced by 16 agencies: Considerations, such as, the role of the 17 State agency on that project, and, the use of new 18 contract provisions for design and construction. 19 Two delivery methods which are alternative 20 to the traditional design-bid-build delivery are, 21 design-build, and, construction management-at-risk; 22 or, "CM-at-risk." 23 Design-build delivery was used, for examples, 24 on the new Meadowlands Stadium project for the 25 New York Jets and New York Giants. 1 A CM-at-risk is being used, for example, on 2 certain projects at JFK Airport right now. 3 There are advantages and disadvantages to 4 both methods. 5 When a project requires an aggressive 6 construction schedule for completion, design-build 7 should be considered because the delivery employs 8 fast-tracking design and construction overlap in 9 phases. 10 Design-build works well when team members -- 11 the owner, the designer, the contractor -- have had 12 experience working together. The likelihood of not 13 understanding owner needs is diminished, thus 14 increasing the likelihood of project success. 15 An example of this was on AECOM's Bay Street 16 connector project in Lower Manhattan. 17 The advantages for implementing design-build 18 are that this method accelerates project completion; 19 and, thus, reduces cost-escalation risk. 20 Design-build aggressively develops a 21 cost-effective design. 22 There are single-point responsibility within 23 the design-and-construction team: facilitating 24 communication with ownership. 25 This process, however, thus creates a greater 1 degree of responsibility and liability with respect 2 to customer satisfaction. 3 As the contractor and designer are one entity 4 working together, though they are most likely 5 comprised of numerous firms, contractor contract 6 changes due to design errors, omissions, and 7 inconsistencies are minimized. 8 Design-build introduces the team members at 9 the early stages of a project, and encourages 10 coordination of goals and objectives. 11 Early involvement in the project by all team 12 members allows for well-defined roles and 13 responsibilities among the team members, thus 14 minimizing disagreements during the course of the 15 project. 16 That leadership roles be understood and 17 coordinated as early as possible facilitates project 18 execution. 19 As the project team is assembled early on in 20 the project, strategies, in turn, can be developed 21 early on, to identify and address costs and schedule 22 challenges associated with the project. 23 Establishing realistic budget, work 24 sequences, and schedules early in the game, as well 25 as coordinating constraints with design process, 1 strengthens the chances for project success. 2 The design-build process allows owners to 3 focus on their areas of expertise instead of 4 responding to project activities covered by the 5 design-builder; for example, cost and schedule 6 control. 7 The disadvantage of design-build, or any 8 delivery alternative to the traditional method, is 9 that, many times, ownership is not familiar with its 10 execution. There is less owner control over project 11 scope and execution, as the project is time- or 12 schedule-driven. 13 The design-build methodology allows the 14 increase in risk through cost and schedule 15 guarantees offered by the design-builder, to be 16 offset by the decrease of risk, many times, 17 associated with tight management controls imposed by 18 the owner. 19 In design-build, there must exist a 20 significant amount of commitment to trust and 21 teamwork in the process. 22 If such is not exhibited among the team 23 members, the chances for success are decreased 24 significantly. 25 Some argue that design-build delivery curbs 1 innovation of the architectural and engineering 2 design process because depravity between designer 3 and the owner does not exist in this method. 4 Such an outcome can occur; however, proper 5 identification, understanding, and management of the 6 project priorities mitigate the risk of stifling 7 creative design. 8 Carefully assembling the 9 design-and-construction team, and effective use of 10 team building, most likely will result in 11 identification and understanding of common project 12 goals; thus, minimizing compromises. 13 Concern has been expressed that 14 communications between designer and owner are 15 suppressed under design-build. This can occur 16 particularly when the design expertise does not 17 exist within the construction firm. 18 This can impact the quality of the design to 19 reflect the true needs of the owner, and has 20 potential to adversely affect the ability of the 21 designer to advance their long-term relationship 22 with the owner. 23 Partnering and other team-building techniques 24 will, however, maximize communication levels among 25 all project participants. 1 There is also a concern, at times, that the 2 assurance of quality control is not obtained for 3 work in place, as the design is not well defined in 4 detail when a design-builder is selected. 5 Streamlining the traditional 6 design-and-construction process, however, does not 7 have to compromise quality if the process combines 8 common sense with procedures. 9 Another concern that has been expressed, is 10 that small contractors may be limited in their 11 ability to compete in design-build, as, many times, 12 they do not have the level of experience of larger, 13 long-established firms who generally are awarded 14 design-build contracts. 15 At AECOM, we're seeing as much, if not more, 16 small businesses participating in alternative 17 delivery. 18 The keys to success of design-build: 19 Establishing trust among the project members. 20 Design-build should not be considered if this is not 21 evident; 22 Establishing a dispute-resolution process, to 23 ensure cohesiveness of the team; 24 The owner must have an effective process in 25 place to explain its program requirements; 1 Owner expertise should be used when it 2 exists; and, if not, outsourcing such expertise 3 should be undertaken as appropriate; 4 Most importantly, the owner must be quick to 5 respond to issues when they arise, and their input 6 is needed, as they must be flexible with procedures, 7 in achieving the desired outcome. 8 In other words: An owner must be willing to 9 do things differently. 10 CM-at-risk, in many ways, is similar to the 11 traditional design-build -- design-bid-build 12 delivery method, in that, the construction manager 13 acts as a general contractor during the project's 14 construction phase, and the owner contracts directly 15 with the designer. 16 In CM-at-risk, the construction manager holds 17 the risk of subcontracting the work with trade 18 contractors, and guarantees project completion for a 19 fixed negotiated price following completion of the 20 design. 21 During the preconstruction phase of the 22 project, however, the construction manager plays the 23 traditional construction-manager role, agency CM 24 role, of advising the owner, and providing to the 25 owner, professional management assistance relative 1 to schedule, budget, and constructability. 2 Like design-build, CM-at-risk offers the 3 opportunity to begin construction prior to 4 completion of design. The construction manager can 5 bid, and subcontract segments of the work in 6 accordance with the overall project schedule. 7 Owner and construction manager negotiate a 8 guaranteed maximum prize, "GMP," based on a 9 partially completed design and the construction 10 manager's estimate of the construction cost of the 11 remaining design. 12 Performance specs may be used. 13 Performance specs, or reduced specs, that 14 would, as an example, identify the size of a 15 facility, or the number of rooms, and certain 16 materials and equipment. "Performance specs." 17 In CM-at-risk, tensions can arise over 18 quality of work in place, the completeness of the 19 design, and its impacts to cost and schedule. 20 Disputes can also arise due to assumption of 21 what remaining design features could have been 22 anticipated at the time of the GNP. 23 Thus, it is imperative that reasonable 24 contingencies, based on a risk analysis, are 25 incorporated into the overall project budget. 1 The key benefits of CM-at-risk are: 2 Obtaining the contractor's perspective, early on, 3 during the planning-and-design phases of the 4 project, and fast-tracking construction before 5 design is fully completed; 6 Studies by the Construction Industry and 7 Institute show that the better -- that better 8 scheduled performance is achieved by using 9 CM-at-risk over traditional delivery, preliminary -- 10 primarily because of fast-tracking. 11 A CII study also makes a case that quality of 12 a CM-at-risk project is generally higher than a 13 general-contract lump-sum bid. 14 Poor work performed by a subcontractor for an 15 at-risk construction manager would not give that 16 subcontractor future work on other projects of the 17 at-risk CM; thus, at-risk CMs generally discourage 18 poor subcontractors from bidding on their projects. 19 CM-at-risk delivery also affords an owner to 20 review contractor change requests with the support 21 of the owner's designer. Such an advantage is not 22 available in design-build unless the owner employs 23 an independent owner's rep to assess changes. 24 There is no one right project delivery. 25 Traditional design-build and CM-at-risk 1 deliveries have all been used successfully on many 2 projects; but, all deliveries have weaknesses as 3 well, which, many times, adversely affect project 4 outcomes. 5 At the inception of a project, each delivery 6 method should be explored carefully to determine the 7 best fit, after assessing the type and size of the 8 project, owner capabilities, likelihood of 9 considerable project changes, and time constraints. 10 While some form of cost-based evaluation is 11 fair, it's often not in the owner's best interests 12 to base alternative project-delivery selection 13 entirely on price. 14 A price developed by a CM-at-risk or a 15 design-build firm that is based on an incomplete 16 scope will most likely yield incomplete results and 17 diminish owner satisfaction. 18 As an example: State agencies should be 19 allowed to select the project team whose bid is 20 slightly higher, if, say, the team shows project 21 completion ahead of schedule, or with significantly 22 reduced impact to local businesses and the 23 community. 24 Regardless of the project-delivery method, it 25 is important to note that successful projects 1 generally have common traits: 2 Demonstration of excellent communication 3 among the project stakeholders; 4 Using the strengths of each of the 5 stakeholders in addressing project challenges; 6 Having a fair dispute-resolution process; 7 Implementing an insurance program that is in 8 concert with project needs; 9 And, the ability of the project stakeholders 10 to make hard decisions in a timely and efficient 11 manner. 12 Thank you for the opportunity to be here 13 today, and I'd be glad to answer questions that you 14 may have. 15 SENATOR LAVALLE: Thank you very much. 16 Seems like 100 years ago, when my father was 17 in construction, did mostly school construction, 18 and, he roped me into six months of duty, being a 19 labor scheduler. That was my job. 20 And, as you were going through, I was getting 21 chills. 22 Why don't you tell me something about you. 23 What is your background? 24 THOMAS P. QUARANTA, FCMAA: My background is 25 in construction management. 1 I'm currently a practice leader; which means, 2 that, it's a use of best practices in construction 3 and project management for AECOM projects throughout 4 the country. 5 Also, been involved in work overseas, as a 6 project manager, as a construction manager, as a 7 project principal. 8 I currently sit on the Industry Advisory 9 Board at Columbia University, for construction 10 engineering and management; as well as an adjunct 11 professor at Columbia, teaching project management. 12 I'm a past president of -- past national 13 president of the Construction Management Association 14 of America, which is a professional organization 15 which promotes education for the construction and 16 program-management industry. 17 SENATOR LAVALLE: Are you an engineer? 18 THOMAS P. QUARANTA, FCMAA: I am an engineer, 19 by education. 20 SENATOR LAVALLE: By education. Okay. 21 There are a couple of things here, just 22 briefly. 23 I want to know where -- you've had projects. 24 Where was it unsuccessful? 25 What -- 1 THOMAS P. QUARANTA, FCMAA: Well, I've seen 2 design-build be unsuccessful, where, the operations' 3 side was not keeping in tune with the delivery side. 4 And by that, I mean, that, facility was to be 5 built; ownership had many changes; the operations of 6 the facility had a lot of input. 7 And, because there was so many changes, the 8 benefits -- 9 And this was with respect to a bus-depot 10 project in New York City, that I was familiar with. 11 -- the owner had so many changes, that they 12 were not able to keep up with the schedule that was 13 put in place by the design-builder, which would have 14 reaped benefits, had that schedule been attained. 15 And, the benefits, of course, of 16 design-build, are to achieve a schedule that is -- 17 that comes in ahead of a traditional delivery. 18 That wasn't able to be realized in this case, 19 because ownership was placing so many changes into 20 the process, that the design-builder was unable to 21 deliver the project at the completion time that was 22 originally envisioned. 23 That was one case where I saw that the 24 benefits were not reaped. 25 SENATOR LAVALLE: One of the -- once again, 1 just thinking back, my own experience, one of the 2 biggest challenges is always the labor side. 3 And, this is at a time when you, kind of -- 4 you're going by the seat of your pants every day. 5 Here, we have a process that you can kind of 6 plan for. 7 And you mentioned several times: dispute 8 resolution processes. 9 Everything doesn't always go smoothly with 10 the project. And, labor has some issues. 11 Are they involved up-front in the process, to 12 define their role in the construction project. 13 THOMAS P. QUARANTA, FCMAA: Yes. 14 Yes. And, generally, that doesn't, in any 15 experience, enter into, uhm -- it's more an 16 exception than the rule, into a situation, where 17 there would be, say, a significant delay on the 18 project. 19 If there's a project labor agreement that's 20 established at the beginning of a major program, 21 those issues are sorted out with labor at the 22 outset. 23 SENATOR LAVALLE: At the outset. 24 THOMAS P. QUARANTA, FCMAA: It's more the 25 ability to make timely decisions by the other 1 project stakeholders: the owner or the sponsor of 2 the project or the agency; the constructor/the 3 contractor; and the design team. 4 Those are the ones, those are the players -- 5 and the community, those are the players that need 6 to make the significant decisions, in a timely 7 fashion, to expedite the work. 8 SENATOR LAVALLE: As government officials in 9 the environment that we are today, cost savings are 10 essentially important. 11 We understand that the efficiency of the 12 project, this probably plays a very important role: 13 Getting the project built on time, or ahead of time, 14 and done by the highest standards possible. 15 Do you want to comment on the "cost savings" 16 piece of it? 17 THOMAS P. QUARANTA, FCMAA: For CM-at-risk, 18 for example, and design-build, there can be 19 significant savings having the construction 20 contractor on board early on. 21 In the traditional method, you don't see the 22 contractor come on until the design is completely 23 finished and the contractor submits a low bid. 24 There's absolutely no input from that entity 25 until that point in time. 1 The benefit of design-build, is that the 2 contractor is working hand-in-hand with the design 3 team. 4 Cost savings, or what we call 5 "value engineering," are, many times, employed 6 during the design process, with the contractor's 7 input, which, many times, with respect to, 8 constructability issues, phasing issues, which the 9 designer would not have the insight, many times, and 10 that perspective from the entity actually carrying 11 out the work to be put in place. 12 That alone saves, and that's the 13 implementation of the fast-tracking approach, time. 14 Time saves money. 15 If certain packages are let early for 16 construction, while other pieces, other segments of 17 the design, are still in progress, owners can take 18 advantage of cost savings at today's prices, for 19 those segments of the overall project that can be 20 let out for construction. 21 Unlike traditional delivery, those segments 22 would be bid at the same time, later in the 23 evolution of a project, which might, many times, 24 cause prices to increase because time has elapsed. 25 That's where the real cost savings are: in 1 the early implementation of construction, in 2 segments, in that delivery -- in both deliveries. 3 SENATOR STAVISKY: I have a couple of 4 questions. 5 SENATOR LAVALLE: Okay, Senator Stavisky has 6 a couple of questions. 7 SENATOR STAVISKY: Yes, uhm, in your 8 testimony, you used the word "trust" a number of 9 times. 10 And "trust" is a very difficult word to 11 translate into legislation. 12 Have -- are there enough protections in here 13 to make it less subjective? 14 Do you understand what I'm saying? 15 "Trust me" -- 16 THOMAS P. QUARANTA, FCMAA: I don't trust you 17 unless I know you. I can't work with you, and trust 18 you, unless I've worked with you before, and know 19 you. 20 And in the construction industry, that's how 21 the game is played, and, is unlike in most other 22 industries. 23 So if we have, a designer, a constructor, and 24 an owner, that has, in previous projects, worked 25 together, the main individuals, the key individuals, 1 that know each other from past projects, that trust 2 each other; trust coming from successful results, 3 and honesty and integrity of the individuals and 4 firms in place, in delivering a project, thus 5 enhances the success rate for that particular 6 project. 7 If design-build, for example, is implemented 8 on a project, where the various project participants 9 have never worked with each other before, the 10 project can be successful, but the chances for that 11 success are not as high, because that element of 12 trust has not yet been established. 13 It could be established throughout the course 14 of the work. 15 But, in design-build, things work pretty 16 fast. You'd like to have that trust at the outset, 17 at an optimum. 18 SENATOR STAVISKY: Thank you. 19 A couple of other issues. 20 Are there, in your judgment, sufficient 21 protections for labor? 22 THOMAS P. QUARANTA, FCMAA: Well, 23 protections, to the extent, that -- and I've seen 24 this, in a project in Washington, the Nationals' 25 D.C. Ball Park, which implemented design-build. 1 The owner was a -- was a public and a private 2 owner: the team, and the City of Washington. 3 There was a percentage of 50 -- 50 percent of 4 local minority and small businesses, as a goal, for 5 participation of labor in accomplishing the work. 6 It was achieved with resounding success. 7 Why? Because the design-build entity 8 emphasized the importance of implementing that 9 program, and had people on staff that had no other 10 role but to make sure that that happened. 11 And to get that level of participation of 12 labor in that market was significant. 13 So, I have seen examples where that is able 14 to be accomplished successfully. 15 SENATOR STAVISKY: Very briefly, there are 16 two other issues; you touched on one, which is, my 17 next question was going to be about the "WMB"; the 18 women, minority, business-owned. 19 How would they be affected by this? 20 Would this give them more flexibility? 21 Or, would this make it easier? 22 Or, would it have no effect at all? 23 THOMAS P. QUARANTA, FCMAA: I see it as no 24 different than competing for a competitive bid. 25 If they've established relationships with 1 general contractors at the outset, it should be no 2 different. 3 SENATOR STAVISKY: And my last quick 4 question: Would this have any impact on the 5 Wicks Law? 6 THOMAS P. QUARANTA, FCMAA: Well, yes, 7 because Wicks Law employs multiple primes, and -- 8 SENATOR STAVISKY: That's why I'm asking the 9 question. 10 THOMAS P. QUARANTA, FCMAA: -- and this does 11 not have that as a -- CM-at-risk, and design-build, 12 does not deal with multiple primes. 13 You have one single point of responsibility, 14 on the construction side, for all of the trades. 15 SENATOR STAVISKY: And many of them are 16 already exempt from Wicks anyway -- many of the 17 construction projects that we're talking about, are 18 exempt from Wicks, particularly, within the 19 education field. 20 SENATOR LAVALLE: Well, in the city. 21 SENATOR STAVISKY: In the city. In the city 22 of New York, I'm talking about. 23 I thank you very much for coming. 24 THOMAS P. QUARANTA, FCMAA: Thank you. 25 SENATOR STAVISKY: Thank you for answering my 1 questions. 2 SENATOR LAVALLE: Thank you. 3 Next person to testify is, 4 William Gillbane III, vice president, 5 Gillbane Building Company. 6 Mr. Gillbane, before you begin your 7 comments, just tell me something about yourself; 8 your background. 9 Are you an, architect? engineer? 10 WILLIAM GILLBANE III: I'm a construction 11 manager. I'm a fifth generation in my family's 12 construction-management business. We're one of the 13 largest family-owned firms in the United States. 14 I head up the New York operation here. 15 And, I am actively participating in, both, 16 CM-agency roles and CM-at-risk roles, currently, on 17 both public and private projects in New York State. 18 SENATOR LAVALLE: But you didn't answer my 19 question. 20 WILLIAM GILLBANE III: Oh, my background? 21 I'm a political science major from 22 Brown University. 23 But, I, like yourself, grew up in the trades. 24 I was a laborer in Local 271, each summer. So, I 25 know the business since I was a little kid. 1 SENATOR LAVALLE: Yeah, no, no, okay. 2 Go ahead. 3 WILLIAM GILLBANE III: Thank you. 4 SENATOR LAVALLE: Thank you. 5 WILLIAM GILLBANE III: Good morning, 6 Senators, ladies and gentlemen. 7 And thank you for this opportunity to testify 8 before the Committee on alternative project-delivery 9 methods for State agencies. 10 I particularly want to thank you, 11 Senator Ken LaValle, Chairman of the State Senate 12 Higher Education Committee, for introducing this act 13 to amend the education law, to authorize the use of 14 alternative project-delivery methods; specifically, 15 the construction manager-at-risk method for the 16 construction, reconstruction, alteration, repair, of 17 State buildings. 18 As an overview: 19 Gillbane Building Company, whom I represent, 20 was established in 1873, and is rated one of the 21 nation's leading construction managers by 22 "Engineering News Record." 23 Celebrating 60 years in New York, with 24 offices in Albany, New York City, and Syracuse, 25 Gillbane has been working for higher-education 1 clients since the early twentieth century. 2 In the past five years, nationally, Gillbane 3 has delivered hundreds of higher-education projects 4 in excess of $5 billion. 5 In 2011, 35 percent of our workload, as a 6 company, was in the education market. 7 Nationally, Gillbane has been on the cutting 8 edge of "alternative delivery method" legislation 9 since the first construction manager-at-risk 10 contract, also known as "Construction Manager as 11 Constructor," for the General Services 12 Administration for the Robert F. Kennedy Department 13 of Justice Headquarters in Washington, D.C. 14 In addition, Gillbane has been a proponent of 15 the successful adoption of alternative delivery 16 methods for public construction projects in many 17 states, including, Arizona, Ohio, Massachusetts, and 18 Connecticut. 19 Gillbane has a direct working knowledge of 20 higher-education design and construction in 21 New York. 22 We have worked on both traditional 23 construction-manager and construction 24 manager-at-risk projects for both public and private 25 higher-education institutions, including, Cornell, 1 Colgate, Ithaca, Columbia University, University at 2 Albany, and dozens of other campuses across the 3 state. 4 Additionally, Gillbane maintains an active 5 relationship with the State University Construction 6 Fund, and the State University of New York, having 7 worked with them for over 14 year, delivering near a 8 billion dollars in various construction projects. 9 Gillbane is currently managing construction 10 manager-at-risk projects for public agencies in 11 New York, such as, the Dormitory Authority, 12 New York City Health and Hospitals Corporation, the 13 Empire State Development Corporation, and the 14 New York City Economic Development Corporation. 15 I am here today to support this act to amend 16 the education law, to authorize the use of 17 alternative project-delivery methods; specifically, 18 the construction manager-at-risk methodology, 19 because it will provide substantial advantages, with 20 respect to improving project schedule, reducing 21 project cost, managing project risk, increasing 22 collaboration, reducing claims, and optimizing 23 opportunities for small minority and women-owned 24 business enterprises. 25 With construction manager-at-risk 1 procurement, the owner contracts with the 2 construction expert who is at risk for the 3 completion of the project. The profitability of the 4 construction manager-at-risk is connected to the 5 success of the project. 6 The owner contracts the architect and 7 construction manager separately, and the 8 construction manager holds the trade contracts. 9 The construction manager is usually involved 10 early during preconstruction, through construction, 11 and project completion. 12 The continuity of expertise, and a full 13 understanding of the owner's programmatic goals, 14 objectives, and concerned [sic] expressed at the 15 design stage often help a construction manager 16 understand certain decisions that are made later in 17 the project. 18 The development of the 19 owner-architect-construction manager relationship, 20 early in the project is beneficial to cooperation 21 and collaborative decision-making; therefore, 22 technical and contractual efficiencies can be 23 realized with this methodology. 24 Under the current approach, all contracts are 25 bid on a lump-sum basis, and there is no 1 transparency with respect to what is included within 2 the lump sum. 3 Under the proposed act, the construction 4 manager-at-risk is compensated solely with the 5 predetermined fee and overhead, plus the actual and 6 legitimate cost of construction, also known as 7 "cost of the work," expended up to a guaranteed 8 maximum price. 9 Pricing of all of these components is secured 10 through a competitive process. 11 While the guaranteed maximum price includes a 12 contingency, contingency dollars can only be used 13 for actual and defined cost of the work, as approved 14 by the owner, with any savings either returned to 15 the owner or shared on a predetermined basis. 16 I would highly recommend that the Senate pass 17 this act to amend the law, to authorize the use of 18 construction manager-at-risk, which, if applied 19 against the right projects, will save time and 20 money, and allow us to build more and better 21 facilities to improve education in New York State. 22 Additionally, I would also urge the Committee 23 to consider adding to the amendment the following 24 two provisions: 25 The first recommendation is for contractor 1 selection based on best value. 2 While low price is properly the deciding 3 factor in many award decisions, best value and 4 return-on-investment ought to be considered an 5 option. 6 "Best value" is the process of selecting the 7 offer which provides the greatest value to the owner 8 or agency, based on evaluating and comparing all 9 pertinent factors, including price, so that the 10 overall combination that best meets the owner's or 11 agency's needs is selected. 12 The second recommendation, is that the 13 legislation includes a process for prequalifying 14 contractors seeking to work under the construction 15 manager-at-risk delivery method. 16 Prequalification not only assures the 17 involvement of a more qualified contractor, but also 18 streamlines the system for bidder review and award 19 in a manner that promotes fair and open competition, 20 without limiting minority and women-owned 21 business-enterprise opportunities. 22 I thank you for your attention and 23 consideration, and I'm prepared to take any 24 questions. 25 1 SENATOR LAVALLE: Just one question. 2 What level of detail should the initial 3 design-criteria package, released by project owner 4 or State agency, include? 5 WILLIAM GILLBANE III: For -- 6 SENATOR LAVALLE: What kinds -- 7 WILLIAM GILLBANE III: For CM-at-risk? 8 SENATOR LAVALLE: Yes. 9 WILLIAM GILLBANE III: Well, oftentimes, 10 we're brought in by private owners at the same time 11 that the architect is engaged. 12 So, at the very conceptual stage, is 13 generally when we are chosen. 14 We find that that adds the most value to the 15 process. 16 SENATOR LAVALLE: Just one last thing, and 17 Senator Stavisky was kind of touching on that last: 18 Because we're using a new process, are we 19 compromising public health and safety? 20 Or, is there some way we can ensure that the 21 design profession is responsible to the contractor, 22 not the integrity of the design? 23 WILLIAM GILLBANE III: Well, I think, in 24 CM-at-risk, what is great about being able to choose 25 on a qualification-based criteria, and the same in 1 design-build, is that the owner and the agency gets 2 to select what is the best value. 3 So, you can take into, a firm's safety 4 record; their expertise in a certain type of 5 building type, both for design and construction. 6 You can also take into account their 7 commitment to minority and women-owned businesses, 8 and local businesses. 9 It also allows you to design the bid packages 10 in a more creative way, to really fit the community 11 involvement. 12 So, we really look at CM-at-risk as a tool in 13 the tool box, that protects public competitiveness, 14 and health and safety, but allows more flexibility 15 in how the players are chosen, and really allows the 16 right fit for the right project. 17 SENATOR LAVALLE: All right, because, when 18 everything is all said and done: Cost is great. 19 You know, having an efficient project, that it gets 20 built on time. 21 But when you're done, have you created a 22 building that is safe, and so forth? 23 We had an incident in a project, out in 24 Suffolk County, that was designed. And, obviously, 25 everyone knew that it was designed, where there 1 would be chemistry labs, and other kinds of things 2 that were done -- being done. And the venting was 3 not proper, and it just seeped through the whole 4 building. 5 You were poisoning the atmosphere. 6 So, that's specific example of what I'm 7 talking about. 8 You know, the project was built quickly, it 9 was done cost-effective and efficient, and so forth. 10 Everyone was happy. 11 But when everyone got inside, you were 12 poisoning people. 13 WILLIAM GILLBANE III: Well, I think that's a 14 really great example. 15 Labs are very complicated buildings. 16 And, generally speaking, when you're going to 17 a low-bid contractor, with certain design criteria, 18 and people are pointing fingers at one another, it's 19 very tough for a public owner to grapple with those 20 issues. 21 All they can look to is, price and schedule. 22 And, there's a lot more that goes into a job 23 than that. 24 And I think these types of delivery methods 25 allow the State to hold people accountable beyond 1 price and schedule. They are held accountable to 2 quality standards, and, constructability, usability. 3 SENATOR LAVALLE: Good, thank you. 4 SENATOR STAVISKY: The previous witness 5 testified that, perhaps, in State contracts, it 6 might be necessary to not award the bid to the 7 lowest bidder. 8 It was toward the end of his testimony. 9 How do you feel about that? 10 WILLIAM GILLBANE III: Well, I think that, 11 uhm -- if we're first talking about the selection of 12 the design and construction team, not the trade 13 contractors, I think you have to look at two ways. 14 One: I think you need to, one is responsible 15 when they pick the most-qualified contractor and 16 design team that adds the most value to the end 17 owner. 18 At Gillbane, we're an institutional builder 19 first, so up-front cost is only about 20 percent of 20 the life-cycle cost of a building. 21 So, when you're picking your design team and 22 your construction manager, you want someone with 23 that long-term vision, because the State owns their 24 buildings till they die. 25 When you're talking about, at the 1 trade-package level, there is an ability to 2 prequalify subcontractors, like DASNY has in place 3 for their special legislation, CM-at-risk. 4 This is very important, because, for CMs, and 5 for the industry, prequalifying those subcontractors 6 does a couple of things. 7 One is, it ensures that minority, 8 women-owned, and local businesses are -- commitment 9 is there; 10 And, it also ensures, that, the contractor 11 that wins the job, can actually execute the work. 12 And the current system does not allow for 13 that. 14 SENATOR STAVISKY: Thank you. 15 SENATOR LAVALLE: Okay, thank you very much, 16 Mr. Gillbane. 17 WILLIAM GILLBANE III: Thank you. 18 SENATOR LAVALLE: Now we're going to hear 19 from the architects; right? 20 BURTON L. ROSLYN, AIA: Yes. 21 SENATOR LAVALLE: Burton L. Roslyn was the 22 past president of FAIA. 23 And you also have with you, someone who we 24 know: Ed Farrell. 25 BURTON L. ROSLYN, AIA: Good morning, 1 Senator LaValle, Chairman; Senator Stavisky; other 2 members of the Committee. 3 Let me start by thanking you for the 4 opportunity to deliver these remarks on behalf of 5 the over 8,000 member architects of AIA New York 6 State. 7 My name is Burton Roslyn. I am a practicing 8 architect in New York State. 9 I am the 2009 president of AIA 10 New York State; 11 A fellow of the American Institute of 12 Architects; 13 A member of the National Advisory Panel on 14 project delivery; 15 And, author of numerous articles on the 16 subject of project delivery; 17 And, editor of significant webinars. 18 SENATOR LAVALLE: See, we know who you are. 19 That's what I was asking the other: Who are 20 you? 21 But we know who you are. 22 BURTON L. ROSLYN, AIA: We here in New York 23 face significant constraints on the execution of 24 public projects; limitations that were imposed as 25 public reaction to excesses of the last centuries; 1 most significantly, the conduct of Boss Tweed. 2 The resulting protective legislation has 3 significantly hindered the development of innovative 4 and advantageous methods of project delivery. 5 While recent legislative sessions have 6 significantly -- have attempted moderate changes to 7 the Wicks Law, and authorized design-builds for 8 infrastructure projects, resulting from emergencies 9 or natural disasters, this is only a small step, and 10 addresses only one of the restrictions. 11 Our general municipal and public finance laws 12 require strict adherence to traditional process of 13 design-bid-builds, with award going to the lowest 14 responsible bidder. 15 Strict adherence to this method eliminates 16 the time and cost advantages of alternative project 17 methods, which have been proven successful in 18 California, Texas, Massachusetts, and numerous other 19 states, large and small. 20 Recent studies of the issue have indicated 21 savings of, from 10 to 20 percent, depending on the 22 delivery methods selected. 23 In New York State, where total public 24 construction can run to $86 billion annually, the 25 potential savings are so significant, they could 1 reverse the entire budget shortfall. 2 Numerous state and local agencies, 3 authorities and public-benefit corporations, are 4 receiving individual exemptions. 5 It is time to unify the process, and provide 6 all of the tools available. 7 With adoption of Senate 3035, and 8 Assembly 4735A, we have the opportunity to provide 9 all governmental entities, agencies, and authorities 10 with the ability to maximize the flexibility for 11 benefit tailored to the specific project 12 requirements. 13 The current system of multiple prime 14 contracts has the potential to lead for delays and 15 cost overruns. 16 Any benefits from direct payment to major 17 subcontractors, and maintenance of prevailing-wage 18 requirements, could be contractual requirements 19 rather than legislative mandates. 20 The alternative delivery methods include 21 design-build, wherein, one entity contracts the 22 design and delivery of the finished product. 23 The system is used effectively by the 24 University of California at Irvine, and Caltrans. 25 Here at home, it has been allowed by special 1 legislative exemption to the Buffalo School System, 2 the New York State for School Construction -- the 3 New York City, rather, School Construction 4 Authority, are just two examples. 5 Construction manager-at-risk, under this 6 system, the procuring agency has the ability to 7 attain the services of a sole-source constructor, 8 who will hold the entire risk for the project 9 delivery in conformance with the agreed-upon price 10 and schedule. 11 Integrated project delivery is a third tool. 12 It's a system developed, where the owner, 13 developer, designer, and constructor all become 14 stakeholders in the project's success. 15 We further enhance the ability of users to 16 maximize the budget dollars spent, and benefit from 17 this same thought processes utilized in 18 design-build. 19 Integrated project delivery uses business 20 structures, practices, and processes that foster 21 collaboration, and utilize the strengths and 22 insights of each member of the team. 23 Owners, both private and public today, 24 increasingly demand that the projects be 25 accelerated, to provide a quicker return on their 1 capital investments. 2 Decisions, whether or not to proceed, are 3 based on exhaustive cost-benefit analysis. 4 The owner's decision to proceed with a 5 project is based on the trust that the building team 6 can deliver the project within these assumptions. 7 The challenge to the team, is to quickly and 8 creatively address the program needs of the owner. 9 Recent economic turbulence has rendered 10 typical allowances for escalation unreliable. 11 As project progresses, the owner advises the 12 team as to the current market condition -- 13 Oh, I'm sorry. 14 -- the builder advises the team, as to the 15 current market condition of particular materials and 16 systems. 17 The team must then quickly analyze the 18 economic and constructability impact of the 19 different solutions. 20 The market also presents challenges in terms 21 of material availability. 22 The builder must keep the team apprised of 23 long lead items or potential changes. 24 Together, we can encourage greater use of 25 partnering between public and private entities. 1 Comprehensive reform of delivery project -- 2 public projects has the potential to save taxpayers 3 millions of dollars annually, as well as foster 4 design excellence. 5 We can achieve this without reinventing the 6 system, but by adopting practices in -- ready and 7 used for public and private work in other states and 8 by the federal government. 9 These alternatives will preserve the 10 leadership role of New York State in creating 11 excellence at public works, as well as ensuring a 12 maximization of the final -- financial benefits to 13 be gained by the public. 14 With passage of S-3035A and A-4735A, we have 15 the opportunity to benefit from legislation. 16 The people of the state deserve no less. 17 I'm prepared to take questions. 18 SENATOR LAVALLE: Yeah, you were very, very 19 detailed. And you even -- you told us about 20 yourself. That was great. 21 Gave us detailed testimony. That was great. 22 And you even told us how we can save money in 23 the budget. 24 I think we should quit while we're ahead. 25 Thank you. 1 [Laughter.] 2 BURTON L. ROSLYN, AIA: Thank you. 3 SENATOR LAVALLE: Thank you. 4 ED FARRELL: Senator, if I could just add one 5 comment -- 6 SENATOR LAVALLE: Yeah. 7 ED FARRELL: -- which hasn't been raised by 8 any of the speakers thus far, is to point out the 9 obvious: 10 That, not only does this apply to State 11 projects, but it invents the General Municipal Fund 12 as well. And, that there's savings for local 13 governments. 14 Especially, local governments who are working 15 under the newly imposed tax cap, this could provide 16 relief. 17 And, this does not take off the table, 18 design-bid-build. It's still an option. 19 SENATOR LAVALLE: No, I understand. 20 ED FARRELL: This remains an option. 21 And, discussions that we've had with State 22 agencies; OGS, in particular, they think that this 23 will remain an option, but, most projects will still 24 be design-bid-build. And that this will be a tool, 25 where appropriate. 1 SENATOR LAVALLE: Yeah. 2 Ed, your comments go to why I'm sponsoring 3 this measure. 4 You know, for years, as a legislator, I've 5 watched the process, where, we have stretched out 6 a -- we've appropriated money in the budget for a 7 project. 8 It's taken so long, that we had to come back 9 in the next session and appropriate more money. 10 I had one project where we had to do it in 11 three different budgets, because it was during a 12 time, where, every construction was hot, the costs 13 of steel going up. Even able -- we weren't even 14 able to get the kind of -- kinds of materials we 15 needed in a timely way. 16 So, that has been my focus: that we can do 17 something. 18 The old process is still there, but we are 19 offering other processes that may work in certain 20 conditions; save localities money, save the State 21 money. 22 And, if we can do it, the last person that 23 testified, I talked about: Can we do it without 24 compromising health and safety? 25 And, that, if we can do that, then I -- I 1 think, in this bill, it's a win-win. 2 BURTON L. ROSLYN, AIA: Senator, I think to 3 address that point, I don't think, based on my own 4 experience with design-build outside of 5 New York State, that there is any diminution of the 6 level of responsibility that's held by the design 7 professionals. 8 If anything, it's enhanced. And there's 9 additional responsibility held, under the 10 design-build, for the health, welfare, and safety. 11 So, I don't think, at any point, we have to 12 worry about -- 13 SENATOR LAVALLE: Yeah, I'm going to hold you 14 to that. 15 BURTON L. ROSLYN, AIA: Okay. 16 SENATOR LAVALLE: Thank you. 17 Next person to testify is, Richard Thomas, 18 vice president, Design-Build Institute of America. 19 Do you need help from the gallery? 20 RICHARD THOMAS: I have a PowerPoint. 21 SENATOR LAVALLE: Oh, that's right. You're 22 the PowerPoint person. 23 Okay. 24 You've practiced, so you know it's going to 25 work? 1 RICHARD THOMAS: Yes. 2 SENATOR LAVALLE: Okay. 3 RICHARD THOMAS: I just can't turn it on. 4 SENATOR LAVALLE: Who's going to turn it on? 5 RICHARD THOMAS: I don't think that's the 6 right one. 7 Well, I can start with introductions, if you 8 want? 9 SENATOR LAVALLE: Well... 10 Just wait. I mean, you've come prepared, and 11 we should provide you with, uhm... 12 [Pause in the proceeding due to in-room 13 technical difficulties.] 14 [The proceeding resumed, as follows:) 15 SENATOR LAVALLE: I think we have a major 16 glitch. 17 [Inaudible comments.] 18 SENATOR LAVALLE: I know, but it's -- it's 19 not being fed from the computer, into -- 20 It's working? 21 Okay. Let's go. 22 RICHARD THOMAS: Chairman LaValle, members of 23 the Committee, thank you for the opportunity to come 24 and talk today about an important topic: 25 Alternative Project Delivery. 1 My name is Richard Thomas, and I'm 2 vice president of the Design-Build Institute of 3 America. 4 DBIA is the only organization that defines 5 teachers and promotes best practices in 6 design-build. 7 Our membership includes over 8 four thousand organizations and individuals who are 9 leaders in the design-and-construction community; 10 and an additional three to four thousand industry 11 leaders who participate in our educational 12 initiatives each year. 13 [Slide being shown.] 14 For a lot of folks, design-build is new, but 15 design-build is actually the oldest project-delivery 16 method available. 17 Many of the iconic buildings that we see 18 around the world, that have stood for centuries, 19 were done using the Master Builder Design-Build 20 System. 21 Design-build is an integrated approach that 22 delivers design and construction services under one 23 contract, with a single point of responsibility. 24 Public and private owners select design-build 25 to achieve best value, while meeting schedule, cost, 1 and quality goals. 2 Nearly half of all the construction projects 3 today are done using alternative project-delivery 4 methods; primarily, design-build. 5 [New slide being shown.] 6 Studies show that design-build projects are 7 completed 6 to 10 percent cheaper, and are completed 8 33 percent faster than traditional project-delivery 9 methods, and are for more -- are far more -- are 10 more likely to achieve sustainable goals. 11 Design-build also reduces litigation, change 12 orders, cost growth, all without compromising 13 quality, safety, environmental protection, or 14 minority or women-owned business goals. 15 Another important factor to consider is 16 design-build's positive impact on the New York 17 economy. 18 Design-build puts people to work much faster 19 than traditional methods. In many cases, it could 20 be several months, which could be a construction 21 season. 22 And since projects are completed faster, it 23 reduces the impact on local businesses and 24 neighborhoods. 25 Design-build also provides economic 1 opportunities to New York firms that are now limited 2 to doing design-build projects out of state. 3 The use of design-build has doubled over the 4 last five years, both in terms of the number of 5 projects and the value of those projects. 6 Currently, design-build is the primary 7 delivery method used by the federal government. 8 The Navy, the Army, the State Department, and 9 the Bureau of Prisons use design-build on over 10 75 percent of their projects. 11 The GSA, VA, USDA. and Interior Department 12 are also increasingly using design-build to deliver 13 high-performance projects. 14 Single point of accountability -- 15 [Multiple slides being shown.] 16 And, uhm -- excuse me. 17 Single point of accountability, faster 18 delivery, enhanced cost-effectiveness, and reduced 19 change orders, and claims, are often cited as 20 reasons for the federal government's transition from 21 project delivery. 22 [New slide being shown.] 23 This slide, here, just gives you a look at 24 how much the market is changing. 25 As you'll see, if you put CM-at-risk and 1 design-build together, it's almost equal to 2 traditional methods. 3 [New slide being shown.] 4 The transformation we've seen at the federal 5 level is also occurring at the state and local 6 levels as well. 7 Over the last 19 years, we've seen 8 design-build go from being a very limited 9 procurement option, at the state level, to being 10 authorized in all 50 states, in some fashion. 11 And this gives you an idea of, just, "red," 12 being the states that didn't allow design-build in 13 any form. And the "lighter green," being the states 14 that have very limited design-build authority. 15 And if you look at the map today, you'll see 16 it's changed dramatically. 17 In 2011, almost 60 bills were passed at the 18 state level, expanding design-build authority. 19 And over the last three years, half of all 20 the design-build legislation that was passed granted 21 design-build authority to local governments. 22 [New slide being shown.] 23 And this kind of lays out those -- as you all 24 know, with the new legislation passed last week, 25 which agencies were granted design-build authority. 1 [New slide being shown.] 2 These are the federal agencies. 3 And I think what's interesting here, and 4 these are -- 5 You all have a copy of the slides. 6 -- is, these are actual owners telling why 7 they chose to use design-build. 8 Now, design-build is suitable for any type of 9 project. 10 In the wake of disasters, such as the recent 11 storms that damaged New York Route 42, the 12 hurricanes that battered the Gulf Coast, to the 13 collapse of the I-35W bridge in Minneapolis, 14 design-build has been an effective tool to 15 fast-track recovery projects. 16 It has been used for schools, universities, 17 wastewater treatment plants, transportation, 18 housing, restoration projects, hospitals, and major 19 federal facilities. 20 And, also, projects where sustainability is 21 seen as a top priority. 22 Design-build has, literally -- literally, 23 transformed the construction industry over the last 24 two decades, allowing state and federal governments 25 to deliver projects on time, on budget, and without 1 a lot of claims and change orders. 2 [New slide being shown.] 3 However, I do want to caution everyone, that 4 design-build is a valuable tool, but not a panacea. 5 Design-build is a way of doing business that 6 requires a mental shift, as it relates to team 7 interaction and collaboration. 8 A full understanding of both the relational 9 and contracting aspects is paramount for owners and 10 practitioners to fully develop -- to fully be 11 effective in their project roles. 12 [New slide being shown.] 13 And, what I have here, is, I want to give an 14 example of some of the types of projects that we've 15 seen. 16 And I think a critical thing to understand 17 here, is that, every single one of these projects 18 were done, on time, on budget, without litigation. 19 [New slide being shown.] 20 I also would like to address some issues 21 brought up in some of the early testimony. 22 There's been questions on: How does 23 design-build affect local contracting? 24 One of things that I think is great about 25 design-build is, it gives added flexibility. 1 We've seen states, where the local contractor 2 participation has been in the 80 and 90 percent. 3 If this is something that's important for an 4 owner, this is something that you can put in those 5 proposals, to ensure that you actually get what 6 you -- what you want delivered. 7 There's also been issues: How does this 8 address minority and disadvantaged business issues? 9 What we've seen, is that acts, uhm -- that 10 flexibility also enhances that. 11 [New slide being shown.] 12 I -- one project I have to show is, the I-35W 13 project. 14 There it is. 15 This was a project, where you had a major 16 interstate collapse in a city. And many thought, 17 that, in order to get this project up -- 18 And not only that, it's right by downtown 19 Minneapolis, affecting neighborhoods, and, millions 20 of dollars in commerce was being lost every day. 21 -- and their conventional wisdom was, that, 22 they would have to cut corners on environmental 23 rules. That, minority and women-owned business 24 goals would have to be put aside. 25 And none of that proved to be true. 1 In fact, on the disadvantaged businesses, 2 they not only met the goal, they exceed it by 3 50 percent. 4 No environmental rules had to be bent. 5 And this project, a project of this scale, 6 normally, would have taken 9 to 10 months to design. 7 This project was completed, and opened, in 8 14 months; on time, on budget. 9 SENATOR LAVALLE: 14 months, you said? 10 RICHARD THOMAS: 14 months. 11 SENATOR LAVALLE: Yep. 12 RICHARD THOMAS: And the other issue that has 13 been addressed, that I think is very legitimate: 14 New York is in a position, where, for many folks in 15 the industry, it's going to be new. 16 And, there are going to be contractors and 17 engineer-design firms that are going to lack 18 experience. 19 And there's no way of getting around that, 20 when you try something new. 21 But I think one of the things, though, that 22 is a great equalizer, is education and training. 23 And, education and training is involved. And 24 I think the -- not only for those contractors, but 25 for owners as well. 1 Because, I think one of the things that was 2 brought up earlier, was: How do you -- how do we 3 ensure that the owner actually gets the kind of 4 project that they envisioned when they began the 5 process? 6 And, sometimes, without training, or without 7 a consultant to advise them, they may not even know 8 some of the questions to ask, you know, or some of 9 the provisions they may want to put in that 10 contract. 11 So, that is something that I would seriously 12 consider, is: Look at what kind of training may be 13 available, both for -- for all the practitioners. 14 And, with that, Mr. Chairman, I would be 15 happy to address any questions that you may have. 16 SENATOR LAVALLE: You actually answered, in 17 your last remarks, a question that I was going ask 18 you. 19 I was actually going to ask Mr. Gillbane, a 20 question, where you have generational differences. 21 "I'm used to a certain method. You know, can 22 I adapt to something new?" 23 And -- 24 RICHARD THOMAS: Well, in -- Senator LaValle, 25 you actually touched on this earlier, too, is, uhm, 1 I think one of the challenges that we do have with 2 design-build, is, all the processes can be in place, 3 but there, also, is a mental mind-shift that has to 4 happen. 5 If we're doing projects, design-build, but 6 we're still thinking with a design-bid-build 7 mindset, that -- that is going to cause some 8 problems on the project. 9 And I think that -- one of the things that 10 is -- it's important to have folks that -- that have 11 worked together; integration is essential for us -- 12 to have success on all of these projects; and, 13 certainly, taking advantage of training out there, I 14 think, make sure that, uhm -- and ensures that you 15 don't have some of those issues. 16 SENATOR LAVALLE: Uh-huh. 17 Since I have been in public office, I found 18 out that not everyone has a good kindergarten 19 experience, so, people can't work together many 20 times. 21 So -- even under the best of circumstances. 22 I want to thank you. 23 Thank you for the PowerPoint presentation, 24 and your remarks. 25 And, thank you, once again, to all of those 1 who testified, and are here at the hearing. 2 Thanks. 3 RICHARD THOMAS: Thank you. 4 5 (Whereupon, at approximately 1:13 p.m., 6 the public hearing, held before the New York State 7 Senate Standing Committee on Higher Education, 8 concluded.) 9 ---oOo--- 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25