Design-Build Dollars and Sense
Opinions differ on cost savings of project delivery method
The Cuomo administration and the state Thruway Authority have been battling constant criticism for a lack of transparency over the funding of the Tappan Zee Bridge replacement project—especially after the federal government denied a $511 million loan from the Clean Water State Revolving Fund—but that has not deterred the administration from repeatedly touting the bridge as a prime example of the benefits of the design-build law that expired last year.
The governor’s office has said design-build will cut $1.5 billion off the total bill for the project, which began in 2011 after Cuomo pushed through the design-build legislation and fast-tracked the new bridge. While there have been few details to support the cost savings claim, it still remains a key argument used to advocate for the legislation’s renewal.
Design-build allows a contractor to submit a single bid for both the design and construction of designated projects, potentially cutting costs, saving time and spurring innovation. Before the law was enacted, the design and construction of projects overseen by the state Department of Transportation had to be bid out separately.
However, state officials were unable to identify a specific amount of time that design-build has saved on the Tappan Zee Bridge project. Still, they argue that completing a project in a shorter time frame—which proponents for design-build claim it does—inherently results in cost savings.
“The results of using the design-build project delivery system across New York are overwhelmingly positive: projects are being delivered sooner and on-budget, jobs are being created, and the state’s infrastructure is improving,” Cuomo said in a statement. “And because contractors agree to deliver a project for a set cost and within a set time frame, the financial risk associated with most cost overruns or schedule delays lies with the design-build contractor, rather than taxpayers.”
But some observers are skeptical of that logic, and they are emboldened by a string of headlines about the lack of transparency in funding the new Tappan Zee.
“I think we need to take a hard look at the pros and cons of the design-build process now that we have some actual project data,” said state Senate Transportation Committee Chair Joe Robach. “I’d like to be shown actual data from projects where we have recently used the design-build process which can demonstrate that real economic benefits have ensued without any compromise on long-term project quality.”
State records show the early project estimates were more than $1 billion more than the final cost, which is now estimated to be $3.9 billion. A floating super crane has saved more than a billion dollars by performing functions that would otherwise require two floating cranes and reduces the amount of dredging needed by about 50 percent, according to state officials, who say that also lessens the environmental impact.
Mike Elmendorf, president and CEO of the Associated General Contractors of New York State and a proponent of design-build, argues that cost savings are not necessarily the ultimate goal of design-build. When a team submits a design-build proposal, cost is considered, but there is also a technical score based on the design proposal.
“I think it’s a little bit of a slippery slope just to say the reason you want to use design-build is because it’s less expensive. Like I said, it may or might not be, but that’s not really necessarily what it’s all about,” Elmendorf said. “I can’t tell you if it did or didn’t save you money on the Tappan Zee Bridge, because what are we comparing it to? They’re only building one of those. I’m sure that it certainly saved time. They would not be out there doing what they’re doing if we had to sit around and wait for the Thruway Authority to design the bridge.”
Susan Kent, president of the state Public Employees Federation, disagrees. PEF strongly opposed the concept of design-build last year, arguing that it shifts work away from public employees and is just a scheme to privatize what they argue should be public work.
Kent wants Albany to hold off on renewing design-build this year so that the state can assess completed design-build projects to see if they really are more efficient, cut costs and ensure high quality.
“There is zero evidence that design-build saves money, and especially on this Tappan Zee project, we have no idea what the end dollar figure will be,” Kent said. “Why would you just continue on doing something when you have absolutely no assessments of it? The governor throws out and the DOT commissioner throws out how much money this has saved, but when you ask, ‘Where’s the proof, where’s the evidence?,’ it’s nonexistent.”
The fate of design-build in the 2015 session is still uncertain.
In December of 2014, design-build was not renewed largely due the governor’s insistence that project labor agreements be used on all design-build projects worth more than $10 million—a proposal received poorly by many construction groups. The expiration of design-build does not affect projects that are already in the pipeline.
“At the end of the day it really is unfortunate because I think design-build is a good tool, it’s something the state agencies should have,” Elmendorf said. “It’s probably something some of the more sophisticated local govern-ments should have, but again it’s kind of in a ditch now because of the injection of this controversial unrelated is-sue into the mix. As a result, if I was placing a bet right now I think design-build is not going to continue, at least in the budget.”