Design-build experience in Puerto Rico Dec 1999

Five demonstration projects chosen by the USA Federal Transit Administration (FTA) are providing information on the possible use of turnkey and design-build procurement to control costs and time overruns on public transit infrastructure construction in the USA. "The demonstration programme emanates from the fact that turn-out costs are significantly higher than original project estimates," explained Edward Thomas, FTA Associate Administrator for Research, Demonstration and Innovation. "Some 50% of the variances can be attributed to changes in project scope such as adding stations or delays due to labour disputes or weather interruptions. But the other 50%, based on research, is invisible. "With the FTA funding 50% to 80% of these transit projects, the overruns are serious,” said Thomas. “The design-build or turnkey method of procurement we believe will control or eliminate these hidden increases and programme out some of the attributable increases."

Fig 1. First phase of the Tren Urbano LRT system

The turnkey approach has been used on Federal highways and by the Federal housing department, but it is new to transit projects. According to an FTA publication, the conventional design-bid-build method “safeguards against contract abuse” but also “limits the potential for expedited construction schedules, cost savings and innovative design.”

"Under the conventional model, the major aspects of a project, including planning, engineering, project management, and cash flow, are developed and managed relatively independently of each other and with little overlap," said Thomas. "It is the disintegration of these processes that we believe creates the potential for the invisible 50% increases. Design-build or turnkey contracting provides a single procurement package, which should realise immediate administration savings. The significant shift in liability responsibilities from the project owners to the design­build contracting groups should accrue further and more significant time and cost savings."

That is the theory. The reality is being judged by experience on the five demonstration projects. Of the projects, Tren Urbano in San Juan, Puerto Rico, is the largest and the only one that includes significant underground excavation elements (Fig 1). A visit by TunnelTalk to the Río Piedras underground contract on the project in August 1999 highlighted some early experiences with the method.

Río Piedras is one of seven design-build packages on the first 17km Phase 1 line of the system. It comprises a 1,500m underground section with two underground stations. Three competitive proposals for the job were submitted in October 1996. The contract was awarded to the Kiewit/Kenny/Zachry JV with CMA Architects & Engineers (KKZ/CMA) as the highest of the three bids at $225 million. It was considered the best value bid. The lowest bid submitted was $222 million.

Best value contract selection is another new aspect in the USA that is beginning to challenge the low-bid-wins concept that has ruled USA public works procurement historically. Under its best value criteria, the KKZ/CMA bid was said to address all the possible issues involved with underground excavation and comprised a construction and design team with experience, management expertise and an innovative proposal.

The Tren Urbano division of the Commonwealth of Puerto Rico Highway Transportation Authority as the owner, is advised by a general management, architectural and engineering consultant (GMAEC) comprising Fredrick R Harris; Daniel, Mann, Johnson & Mendenhall (DMJM); and local partners Eduardo Molinari & Associates and Barrett & Hale Engineering. The principal design engineers with the KKZ/CMA design-build team are Jacobs Associates of San Francisco, managing all excavation design; Sverdrup for the civil and architectural works in the stations; and Woodward-Clyde for managing the geotechnical, investigation, instrumentation and monitoring programme.

Hybrid project

The project is a hybrid with the civil and architectural work performed under design-build contracts and a systems-wide contractor will design the operating and M&E installations, procuring rolling stock and operating the system for an initial five years. This is not a concession. There are strict anti-trust laws in the USA and transit owners retain ownership of the facilities and hold the ridership and revenue generating risk.

Phase 1 of the project is funded 30% by the FTA and has a full-funding grant agreement on an estimated $1.25 billion project budget in 1996. Some $500 million covers the operating system-wide contract awarded to the Siemens/Parsons Brinckerhoff JV, and another $500 million covers civil construction. The Río Piedras underground section is about one tenth the length of the current line but accounts for about half the civil construction cost at about $250 million. The design-build bids were based on a 30% conceptual structural design completed for the underground works by DMJM as a member of the owner’s consultants GMEAC.

Bid evaluation was a complex nine-month procedure, with the three parts of each bid - technical, managerial and financial - being studied initially in isolation. Only at the end were all three examined together. Before that, there were interviews with each of the bidders. "During this phase, information within each bid was kept strictly confidential," said Javier Mirandes, a senior architect with Tren Urbano and a member of the evaluation team. "The unsuccessful bidders on the Tren Urbano bids did not receive an honorarium for participating, but an honorarium will be included on future design-build contracts such as those associated with the Seattle Light Rail Link system."

The scope of the contract, beginning at the north end, starts with the cut+cover transition from the neighbouring at-grade/elevated contract and continues through cut+cover tunnels into the cut+cover University of Puerto Rico Station. The line then runs through twin EPBM-driven running tunnels to the underground Río Piedras Station and on into two sets of twin NATM running tunnels. One continues the line to the cut-and-cover transition to the next at-grade/elevated contract, and the other is a set of turnout tunnels for a future line.

The underground structures are located in soft ground comprised largely of highly weathered alluvium. Most structures lie below the groundwater table and pass beneath historic buildings with as little as 5m of cover. Settlement tolerances are tight and compensation grouting is being used to control and limit settlement.

Contractor alternative designs

In its design-build bid, KKZ/CMA departed from the 30% baseline design in various ways. Two significant aspects involved the Río Piedras Station and the two sets of twin tunnels to the south.

"Río Piedras Station is a large 240m² cavern 17m wide x 17m high x 150m long," explained Victor Romero, Project Manager for Jacobs Associates. "The crown of the cavern is less than 5m below the surface, directly beneath historic buildings. The 30% baseline design suggested a canopy of some 67 x 1m diameter interlocking steel pipes installed by microtunnelling techniques and back-filled with concrete to provide cavern excavation pre-support."

Reservations about the ability of the canopy to maintain sufficient rigidity through the interlocked pipes led the design-build team to develop two alternatives - one a multi-drift NATM approach with spiling ahead of each top heading and ground improvement above the cavern and the other being the stacked drift option. Unfortunately, "the bid was being reviewed after the NATM tunnel collapse at Heathrow Airport in London, and there was nervousness about the use of NATM under shallow cover for Río Piedras," said Romero. "This option was therefore withdrawn and the stacked drift option was selected."

Fig 2. Fifteen stacked drifts provided pre-support for the Río Piedras Station excavation

As opposed to the microtunnel presupport, the KKZ/CMA-Jacobs stacked drift alternative is a substantial structural cavern lining. The design comprises 15 interconnecting drifts of about 3m x 3m, excavated to the full 150m length of the station cavern and back-filled with concrete to create a massive pre-installed lining for the core excavation (Fig 2). The method was chosen after previous experience by Kiewit of its use on the Eisenhower Tunnel through squeezing rock conditions. At Río Piedras, compensation grouting by subcontractor Soletanche­Bachy was selected to limit settlement caused by excavation of the drifts.

Another major design change was the use of NATM to excavate the full length of the twin running tunnels at the south end of the station (Fig 3). The 30% baseline suggested horseshoe-shaped tunnels supported by steel sets in conjunction with cut-and-cover work. Instead, KKZ/CMA proposed using NATM all the way to the open-cut surface transition. Although separation of the over/under tunnel is just 500mm, NATM was approved for this section.

Work on site started in October 1997, and by early October 1999 construction was more than 60% complete. Construction of the two alternatives has been a mixed experience.

The NATM excavations went well. Each tube was completed before the next started, and settlement at the surface was limited to less than 25mm. Each tube is about 100m long and 37m² in cross section. Of the four headings, tubes three and two (the upper then the lower crossover headings) were excavated first, followed by tubes one and four (the two outer tunnels). When TunnelTalk visited the site in August 1999, the NATM tunnels were fully excavated, and the installation of the waterproof membrane by Wisko America and the final in-situ concrete lining was under way.

Excavation of the stacked drifts had been more problematic. In some drifts, KKZ/CMA is using open-faced shields at the front of each heading from within which low-profile excavators advance the face and convey muck to a small loco and skip for hauling to the open-cut access shaft. Two excavators supplied by Technicore of Canada advance two drift headings at once.

The geology is quite weak in places and contains lenses of water-charged silts and sands. When the excavators break into these lenses, the material runs at the face and is very difficult to control. A dewatering system was installed to lower the groundwater table in the Río Piedras Station area, but the water­charged lenses appear to remain isolated from the dewatering zone. To help control the situation, Soletanche-Bachy has undertaken systematic consolidation grouting along the drift alignments. This is being carried out from a grouting gallery added to the original 15 drifts, from within which compensation grouting is also being undertaken.

Fig 3. Four running tunnels at the south end of Río Piedras Station excavated using NATM

Another change made during construction involves reinforcement of the concrete-filled drifts (Fig 2). Originally, it was expected that the steel sets installed at 1.2m centres to provide immediate support with wood lagging would also form part of the steel reinforcement needed in the concrete filled drifts for the pre-installed lining of the station core. The requirement to torque the bolts and develop tension connections between the steel sets, however, proved difficult to execute. Instead, threaded rebar of 30mm diameter is being installed to reinforce the concrete between drifts.

Another time-consuming aspect of the drift programme is the excavation sequence. The design as submitted had a construction sequence starting from the lower drifts and working up either side to the top. During excavation of the access shafts, it was considered that top down excavation of the drifts would be more convenient. But the change was not accepted by Tren Urbano, and access ramps and temporary backfill in the shafts and decking was required to access the higher drift levels.

Owner's role

“The owner takes no liability or responsibility for design," said Vinton Garbesi, Tren Urbano Contract Manager for Río Piedras Station. "But it has the right to overrule design submittals in regard to overall project safety, particularly to third parties, project programme and conformance to long-term operational performance and design criteria. Tren Urbano, as the client, prepared the design criteria and the Category I drawings. Category II drawings are used by the design-build team to develop its bid designs once the contract is awarded.”

“Changes,” said Garbesi, “are reviewed by the Tren Urbano design team and either conditionally accepted, modified according to client concerns, or rejected for reasons that contravene the client's overall project responsibility. The contractor and his design team are encouraged to be innovative, but concerns for the overall project must remain the focus. The contractor provides its own technical provisions, such as concrete strengths, and undertakes its own quality control and certification of the works. A team of field engineers working for Tren Urbano provides an overview of the works as constructed."

Through various changes and additions, including the addition of the open-cut University of Puerto Rico Station to the KKZ/CMA Río Piedras contract, the overall cost of Phase 1 has increased to $1.7 billion. This includes an increase of $84 million from, what FTA described in its progress report as an unrealistically low 9% project management fee to a more realistic 11.6% of the budget. Of this, $28 million is an extension of Parsons Brinckerhoff involvement in the Salmans operating JV to undertake the role of integrating the system-wide installations with the civil works packages.

Several additional points of the design-build method are highlighted by the Puerto Rico experience, particularly in terms of the higher risk element in underground excavation.

There is the problem of a suggested honorarium to the unsuccessful bidders. Design-build proposals are expensive to prepare, but being paid an honorarium is viewed as an inexpensive way of capitalising on the expertise of others if discussed and perhaps included in the successful bid proposal. This aspect increases the need for a balanced and impartial evaluation process. Both unsuccessful bidders on the Río Piedras contract contested the bid result through the courts, but Tren Urbano was exonerated in its evaluation conduct and procedures.

Another area of concern is the role of the owner's design teams. If the design-build contractor is fully responsible for design liability, it must be free to take action on that basis. The problem for the owner's representatives is the influence of the contractor on its own design engineer. The time-saving advantage of the design-build method is the fast track approach, but this increases significantly the onus on the contractor's design engineer to demand time to complete the design of various works adequately and not to be pressurised by construction programme concerns.

Work begins on one of the NATM running tunnels into Río Piedras Station

In rail transit projects there is the difficulty of superimposing the system-wide M&E contractor's responsibilities on the different civil construction packages. This integration must be carried out by either the M&E contract's designer, as in the case of Puerto Rico, or by the client, or by an overall construction/project/programme manager. It is difficult, if not impossible, to include this responsibility in the design-build construction packages.

Additional concerns were raised by the FTA during the TunnelTalk interview with Thomas.

"The US military has received criticism lately for its single point of procurement policy, but research indicates that the policy saves some 23% on time, which implies a 6% to 13% savings in cost. In the traditional design-bid-build procurement, the client retains liability for the design and any changes, both before, during or after the bid stage, resulting in delays, claims and cost increases. Incentives to finish early will contribute to potential design-build time and cost savings."

The larger the design-build package, the larger the potential for time and money savings, but also the more expensive the bid and the greater the project risk. "The honorarium could alleviate the bid cost debate," said Thomas, "but the amount needs consideration." In response to questions about contract risk, Thomas replied that the 100% bonding or contract insurance required by contractors was prohibitive for large projects. "The number of potential bidders for these larger contracts will be smaller and the joint ventures will have to be larger, but to maintain competition, the contracts must be viable. One method of ensuring this would be to reduce the bonding to about 25%," he said.

Regarding construction risk, Thomas suggested that contracting bids are too low and any problems could easily push the contract into negative territory. "Best value engineering will help address this problem," he continued, "but evaluation of bids should include an analysis of the financial status of companies, not just engineering and experience, in addition to the bid’s bottom line price." Budgets by owners and their design teams are also too low, in his opinion.

"Budget contingencies should be increased from the current 6% to 10% maximum to more like 30%. Controls on managing that contingency would then be required, and liquidated damages for time overruns would have to be $50,000 to $75,000/day rather than the current $15,000/day."

As to the higher risks involved with underground works, Thomas suggested that the level of pre-bid design of such structures should be increased from 30% to more like 60% to 80%. "Planning is some 10% to 15% of the 30% baseline design," he said, "and perhaps more emphasis should be placed on the difficult aspects of the project and the contingencies rather than on the percentage of baseline design."

The success or failure of a project relies significantly on efficient cash flow. Thomas stated that owners must recognise their responsibility to the contractor to make payments on time and without unreasonable withholdings. "The FTA and other funding sources must also accept their responsibilities for project cost overruns if these are caused by delayed appropriation of funds or even cancellation of promised funding part way through a project realisation programme. A reserve fund has been established in the Department of Transport to make loans available to owners at well below market interest rates to bridge cash-flow restrictions, and San Juan is one of the bank's first successful applicants.

"We have just started on our road to discovery and development of better public works procurement practices. There is still much to know and experience before we arrive," he concluded.