Building a Better NYC Capital Budget

Streamline Procurement and Project Delivery

Streamline Procurement and Project Delivery

Improving the City's procurement and project management practices is an equally important element in making the City's capital budget more effective. Without meaningful changes to the methods the City uses to plan, procure, build, and maintain its infrastructure, the City will simply not have the capacity to deliver an expanded capital program. Improvements that should be implemented include:

Pass State legislation permitting project delivery methods like design-build, Construction Manager-at- Risk, and public-private partnerships. The City relies almost exclusively on design-bid-build procurement, in which each step of the design and construction process happens sequentially. Alternative approaches that allow teams to design and build projects more collaboratively, along parallel tracks, can shorten project duration. Public-private partnerships offer a variety of additional opportunities to control risk and costs through creative financial and management arrangements.

Expand use of integrated project delivery (IPD) and LEAN construction practices. IPD and LEAN emphasize collaboration and extensive design and process review throughout the construction process. On their face, these approaches appear common-sense: asking all participants on a project - owner, architect, engineer, general contractor, and key subcontractors - to review project documents together, early on, and throughout the project, to identify potential planning, design, or materials conflicts and reach consensus solutions. Yet this level of collaboration is inhibited by common practice and the competitive business relationships of the various parties involved in the project. IPD and LEAN offer proven methods for the entire project team to address constructability issues collaboratively, speeding delivery and reducing project costs.

The City used integrated project delivery to build a new hospital wing for NYC Health + Hospitals in under two years.

Increase project management capacity on large projects within City agencies. Agencies generally assign only one or two project managers to large capital projects, leaving most management and oversight to consultants and construction managers. Agencies should establish in-house Project Controls Divisions, adding cost-estimators, schedulers, and quality assessment staff to monitor projects and prevent cost overruns and delays.

Permit more advanced planning and design and produce more accurate cost estimates for projects prior to requiring full capital funding. The de Blasio Administration has initiated a Capital Project Scope Development fund to facilitate expanded early project scoping. This practice has proven successful and should be expanded.

Improve the change-order process. Any changes to the original scope of a project entail new costs and added administration. Change orders are an all-too-frequent occurrence, but their impact can be mitigated by the collaborative approaches already discussed and by streamlining administrative procedures, including adding a 10 percent contingency for most projects in the original budget allocation, a standard practice on private projects. A more comprehensive presentation of proposed improvements will be described in a separate policy paper.

Reform the dispute resolution process. Today, the City follows archaic practices for dispute resolution that almost guarantee higher initial bids and added costs at the end of a project. There are various Alternative Dispute Resolution models that are the current industry standard and have proven extremely cost effective for governments throughout the rest of the country.

Improve contract provisions in the City's standard contract to more equitably balance risk, reduce costs, and speed delivery. A variety of contract terms in the City's standard contract add tremendous inefficiency to City capital projects. The Building Congress has compiled contract terms that should be considered for alteration or elimination in a separate paper.