Expand design-build to help solve New York’s infrastructure crisis

As New York faces a growing backlog of critical infrastructure needs, it is essential for everyone to focus on one collective goal: to accomplish more with existing resources. Design-Build procurement is a proven way to do just that.

Gov. Andrew Cuomo has ushered in an ambitious agenda with a much-needed focus on modernizing New York’s infrastructure. Billions of dollars in projects have been proposed ranging from rebuilding LaGuardia Airport and Penn Station to renovating upstate roads and bridges. These projects complement others already underway, like the new Tappan Zee Bridge.

It is not an understatement to say the infrastructure crisis we face is real. As the American Society of Civil Engineers' inaugural 2015 Report Card for New York's Infrastructure highlights:

·     New York needs $40 billion to maintain roads through 2030.

·     Over 50 percent of the state's bridges are more than 75 years old.

·     New York requires more than $74 billion to repair, replace, and upgrade water infrastructure over the next 20 years.

From roads and bridges to water mains and transportation hubs, we must find a way to finance these improvements efficiently and effectively.

Traditional government procurement for construction projects is "design-bid-build," meaning the design contractor is selected first, followed by a second bid process for construction contractors. In a number of cases, the actual bid results far exceed the cost estimates put forward by design firms.

Design-build simplifies the process by making a single entity responsible for both design and construction, and has proved to save money. Currently, 41 states, including California and Texas, have authorized broad use of design-build as a cost-saving technique. New York is one of only nine states using design-build on a limited basis.

Last year, the Association for a Better New York and RBC Capital Markets sponsored a study on the use of design-build. The report, written by the NYU Rudin Center for Transportation Policy and Management, documents savings and other advantages of design-build for New York taxpayers.

In 2011, Cuomo advanced a bill through the Legislature that authorized five state agencies to use design-build. The Legislature again passed limited authorization allowing design-build in 2015 but without any expansion, once again narrowing its use to only five agencies.

One of those agencies, the Department of Transportation, has already completed 14 projects costing over $800 million using this method. These projects have been on time and on budget.

Furthermore, this limited design-build authority has yielded substantial savings on other key projects. The Tappan Zee Bridge project has saved taxpayers $1.1 billion compared to the projected cost under the traditional design-bid-build model. The bridge will be completed 18 months earlier than projected, relieving taxpayers of the annual $100 million maintenance cost of the old bridge sooner.

This year the governor and state Legislature created the Design and Construction Corporation as a subsidiary of the Dormitory Authority of the State of New York. This vehicle will provide a high-level review of large-scale state infrastructure projects with an eye toward advancing the efficiencies of the design-build procurement model. This is an important next step at the state level to achieve significant cost savings on major infrastructure projects. In many cases, these savings can be used to reduce New York’s infrastructure backlog.

The state’s continued embrace of design-build demonstrates its commitment to doing more with existing resources and may help pending legislation providing New York City with selective design-build authority to become a reality in the near future. New Yorkers will benefit if it is approved.

The expansion of design-build is a major win for taxpayers. It has been proven that for certain projects, this method saves money, time, and holds a single entity accountable if there is a problem – results that taxpayers need and deserve. To take advantage of design-build techniques, this proven cost saving model should be made available for all governmental entities.

Recently, the Citizens Budget Commission completed its own study on the potential savings of design-build procurement. Its conclusion is powerful, projecting this approach could save as much as $2 billion over a 10-year period on $7.7 billion of bridge work planned for fiscal years 2016 to 2025 by the New York City Department of Transportation. State law does not currently permit New York City to employ this procurement method.

The size and scope of proposed infrastructure projects in New York is impressive, and it is a list that would benefit greatly from additional legislative action that would continue to expand the use of design-build.

New York taxpayers deserve it and our economic future depends on it.

Mitchell L. Moss is the director of the Rudin Center for Transportation and the Henry Hart Rice Professor of Urban Policy and Planning at New York University. Chris Hamel is Head of U.S. Municipal Finance at RBC Capital Markets.