How to win more state and local government projects

With a huge building stock at their disposal, state and local governments can be attractive clients, especially in these difficult economic times.

September 20, 2012 |
The $65 million Westminster (Calif.) Police Department Headquarters. The 91,000-

The nation’s 90,740 state and local governments provide office space and support facilities for 16.6 million full-time equivalent employees. By comparison, the General Services Administration, the nation’s largest civilian landlord, provides workspace for roughly a million federal workers.

The obvious difference between working with a single agency like the GSA and working in the state and local government sector is that the latter encompasses tens of thousands of units with an immense variety of political, social, and economic frameworks. Moreover, state and local governments typically have their own legislative mandates, regulations, and policies when it comes to engaging the services of architects, engineers, and contractors.

To take the pulse of this diverse market, we contacted capital facilities officials at state and local government agencies, as well as AEC professionals whose firms do work with such public-sector clients. Here’s what they advised.

1. Bring your best game to the party

“I am intrigued by how much things vary from state to state,” said Tim Mason, Administrator of Idaho’s Division of Public Works. “We all do things a little differently.”

Mason’s office has responsibility for capital construction and upkeep of existing facilities for all state agencies in Idaho. But in his role as president of the National Association of State Facilities Managers, he also has a unique perspective on the ways in which states operate with regard to capital projects.

Despite their differences, states are looking for designers to bring more to the table, says Mason. “We look to the design community to be on top of what’s happening so they can come to us with innovative ideas, such as in areas like energy efficiency,” he says. “We don’t want to just keep building the same thing year after year.” He points to the new College of Business and Economics Building at Boise State University, where local firm Hummel Architects specified chilled-beam technology—“the first one of those we’ve done, and it was the design team that suggested it.”

What state and local government clients want from you:


1. Bring your best game to the party.

2. Reduce client risk, establish ironclad trust.

3. Be patient, but be prepared for delays.

4. Learn to work within regulatory constraints.

5. Help state and local government clients solve their funding problems.

6. Be open to using new alternative delivery methods.

7. Be wary about fees, but don’t assume you’ll be exploited.

8. Push the right local hot buttons.

9. Go for the dough—“essential services.”

To Mason’s point, Peter Conway, market leader for campus and institutional sectors for Albany, N.Y.-based CHA Companies, says his firm has become more of a partner with the state and local municipalities because of the financial constraints they’re under. “With budget cuts and staff reductions, they’re relying more and more on the design community to come up with innovative, cost-effective solutions to their problems,” he says. “We’re much more engaged now than we ever have been, right from the initial concept through completion.”

CHA Companies, which works in roughly 20 states, is also doing a lot more these days to help municipal clients save energy on their building portfolios. “In some cases, it’s a substantial amount of money,” says CHA president and COO Rodney J. Bascom. “In many cases, state and local programs are helping to fund those initiatives.”

2. Reduce risk, establish ironclad trust

Relationships between AEC firms and state and local government clients are evolving rapidly, says Bascom. “A lot of firms can do facility engineering, like when the client says, ‘We need to fix a boiler.’ Now it’s more a collaborative approach to problem-solving. Clients have a lot of questions: ‘How can we afford these improvements? How do we initiate them? Can we phase them?’ We pride ourselves on having become engineering consultants rather than just engineers, bringing in the right expertise and working together as a team to  solve the problems the municipalities face.”

That approach is playing well in other parts of the country, too. “More than anything, these clients want attentiveness and the peace of mind that they will be taken care of,” says Michael Brack, PE, president of Datum Engineers, with offices in Austin, Dallas, and San Antonio, Texas. “They tend to be risk-averse, and they want to be certain that all the angles have been considered. They don’t want to be embarrassed by surprises or blunders. We walk our public clients through the decisions we are making, or that need to be made, so they are a part of the process.”

Robert Utsey, a senior vice president in the Orlando, Fla., office of Skanska USA Building, says, “There’s got to be a level of trust established and maintained, and everybody at the table has to be cognizant of that. It’s how you behave, how you deal with people, how you communicate, and how transparent you are—all the basic things that are required to establish trust.”

3. Be patient, but be prepared for delays

Building Teams are also reporting that public-sector clients are still stretching out the decision-making process. “When clients are slow to make decisions and complete reviews, it creates gaps in our workflow, which are especially challenging when projects go on hold for a period of time,” says Datum’s Brack. Delays of this kind are more frequent these days, he says, forcing Building Team member firms to move on to other projects. “Of course, those owners are going to want us to be ready to jump when they’re ready,” he says.

The chief cause of these backups? Staff reductions at state and local agencies. But that’s not the only reason. “In most cases, we are the enemy when it comes to breaking promises,” says Bruce Bockstael, FAIA, chief architect for the State of Connecticut Department of Public Works. “We seldom can meet our own deadlines, due to low staff, and have difficulty performing up to the level we expect of our vendors.”

Bockstael notes, however, that legislative mandates regarding the timing of project advertising, oversight reviews, and multiple levels of review on certain contracts (three, in the case of Connecticut) are also impediments to timeliness. Moreover, at any moment, state legislators may pass a law that directly or indirectly affects building codes and practices, from which there may be no appeal.

“We recognize these problems, and admit them to our design and construction partners,” says Bockstael. “They generally play along, but for the most part, the enemy is us.”

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4. Learn to work within the regulatory restraints

On the Left Coast, California’s Office of Statewide Health Planning & Development is notorious for the depth of its oversight requirements. Created in 1978, OSHPD regulates design and construction for all healthcare facilities, public and private, in the Golden State.

“You really have to be a skilled practitioner to be able to work within their requirements,” says Gregg G. Sauter, vice president in the Los Angeles office of Skanska USA Building. He says OSHPD’s permitting process can take up to two years. “That’s a long time,” Sauter says. “We can sometimes get it down to a year, but in other states it’s usually just two to three months.”

Sauter also cites the California Environmental Quality Act as a frequent source of delays. Dating from 1970, CEQA casts its long shadow on almost all construction within in the state. “The fatal flaw with this act is that it’s all too easy for anyone who is opposed to any development to spend the few dollars required to document and register a protest,” he says. “Once a protest is registered, it has to be fully heard, and this really restricts the development process,” sometimes stretching it out for years.

“Nobody’s trying to get around anything,” says Sauter, “but you need to improve the effectiveness of the legislation,  to make sure it’s not as restrictive as it currently is.”

5. Help state and local government clients solve funding problems

The universal disease afflicting virtually all state and local governments is lack of funding for capital expenditures. In an era when revenues from sales, excise, and property taxes have fallen dramatically, public officials have adopted a heightened sensitivity to spending, with adverse consequences for AEC firms.

“We see city councils and county governments that have funds and they don’t obligate them,” says Benton Rudolph, AIA, senior vice president and national business sector manager for architecture with Atkins North America. “They may have gone for a bond referendum, but there’s a sensitivity to the taxpayers, and whether it’s appropriate to be obligating those funds for new projects.” Thus, says Rudolph, even when the money and the authority to initiate projects are in place, many cities and counties are not budging simply because of the political and economic climate.

Many government owners also are becoming more interested in alternative delivery methods to enhance their funding capabilities. John Raff, PE, deputy executive director of the Texas Facilities Commission’s Facilities Design and Construction Division, says the state is promoting public-private partnerships—so-called P3s—as a means to stimulate capital improvements without an initial outlay of public funds.

“We have a lot of state employees doing essential government functions in leased space,” says Raff. “It would be a huge boon for the state if we could get them back into state-owned space.” Raff says the TFC is considering a P3 option for long-term leases of state-owned land, perhaps with an option to purchase.

AEC firms that hope to partner with state and local governments in P3 projects also need to have the fourth P, for “patience,” notes Fred Evins, redevelopment project manager/architect for the Economic Growth and Redevelopment Services Office of Austin, Texas. Acting as the business development arm of Austin Energy, EGRSO works with private developers to redevelop underutilized downtown assets. For example, the city’s oldest water treatment facility is being redeveloped through a 10-year P3 project that will return the property to the tax rolls.

“Our P3 partners find it very beneficial that we act as a facilitator with the rest of the city organizations,” Evins says. “When they’re trying to get a permit and get conflicting directions from different departments, we help mediate the situation.”

Evins says one lesson from EGRSO’s experience in P3 is to base agreements on performance. “The city’s investment doesn’t come forward until after the project has reached performance milestones,” he says.

6. Be open to using new alternative delivery methods, like 'IPD Lite'

Ron Rochon, AIA, LEED AP, a partner at Seattle’s Miller Hull Partnership, says his firm’s expertise in multiple alternative delivery methods—design-build, CM at risk, and something known in the Northwest as “general contractor/construction manager,” or GCCM—has been to its advantage in public projects.

The latest alternative delivery mechanism is referred to as “IPD lite.” Rochon explains that, because the state of Washington prohibits government entities from entering into three-way contracts, the IPD lite mechanism empowers the state to select the GCCM right after the architect is named; this process allows for fast-tracking and real-time costing as the project develops.

“The idea is to get the benefits of integrated project delivery without going through that contracting methodology,” he says. “Firms that have the expertise and are nimble enough to do those different delivery methods are doing better than firms which aren’t yet there.”

Connecticut’s Bockstael says his state has learned that low bid is not usually the best method to obtain a complete design. “Seldom do we complete a building project without change orders, with the result that our final cost is often closer to the median bid,” he says. The state now uses a best-value approach on both design-build and construction manager at risk projects, considering both the cost and the capability of the team.

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7. Be wary about fees, but don't assume you'll be exploited

Twelve years ago, in an effort to foster collaboration, Bockstael’s office instituted a monthly Industry Advisory Council meeting, which it has been hosting ever since. Participants include virtually all of the regional construction industry’s key players—AE firms, construction managers, and the various contractor organizations. “We invite open discussion on how our department is doing, what changes need to be made, and other industry problems that maybe we, as an organization, can address or change,” says Bockstael.

“We believe we have a fair system of compensation,” he says, “and have benchmarked our fees with other states, organizations such as various colleges within our region, and private companies that often hire these types of consultants.”

Robert F. Pulito, AIA, president of the S/L/A/M Collaborative, Glastonbury, Conn., says the Nutmeg State has been an enlightened patron. “When the recession hit and everybody was struggling for work, a lot of the state work continued at a reasonable pace. Private institutions and corporations really dropped off, but our state work did not.” He says that many private-sector corporations, schools, and institutions “took full advantage” of the economic situation to squeeze fees but the states did not. “The states know what it takes to do the work,” says Pulito. “The fees they pay are reasonable for the effort they expect. Plus, they are interested in maintaining high quality.”

Atkins’s Rudolph echoes that point of view. “There are overly cost-competitive clients out there who don’t care if you lose money on a project,” he says. “On the other hand, government clients push you, and they’re competitive about their expectations, but for the most part they do care about their communities, and they are not there to put you out of business.”

Unfortunately, not all public entities were so benevolently inclined during the economic downturn. “The big concern is the lack of opportunity at this level,” says Miller Hull’s Rochon. “There are opportunities, but they’re limited. And for firms that do a lot of public work, like we do, we see risk aversion at the municipal level.”

Moreover, says Rochon, many large firms have been going after smaller projects that they might ordinarily have passed over, which pushed fees downward. “In 2007 and 2008, when it was really crashing, local governments were getting incredible deals on their public projects,” he says. “They were bidding at 25% or 30% below what we had estimated.” The point: Don’t blame low fees entirely on the states and cities.

8. Push the right local hot buttons

Rudolph says a game-changing trend he calls “hyper-local presence” has recently made its way onto project checklists, particularly with local governments in Florida and Texas. “It used to be that it wasn’t a big deal if you were based in Houston and went for a project in Austin, but there seems to be new scrutiny that is looking for very local staff,” he says. “Clients want to know that you’re an architect in the city, not just in the county.”

Of course, many local governments also have sustainability as a hot button. According to the U.S. Green Building Council, 384 cities, 58 counties, and 34 states reference LEED in some way for public buildings.

Since 2000, for example, Austin, Texas, has mandated LEED Silver certification for new or reconstructed municipal buildings. Kalpana Sutaria, AIA, LEED AP BD+C, PMP, supervisor of the project management division of Austin’s Public Works Department, says, “It’s a constant learning process for the contractors and their subcontractors, but our consultants seem to be much more on board in the last few years. When we did the first project, in 2001-2002, they were not as familiar and the fees were higher, too.” Now, she says, training and experience, plus the ability to visit the city’s 15 LEED-certified projects (including the LEED-EB:O+M Gold Austin Convention Center), are all proving to be helpful.

9. Go for the dough—'Essential services'

Among today’s active state and local government-owned projects, many have been specifically funded for so-called “essential services.”

“There is an abundance of specifically funded projects,” says Atkins’s Rudolph. “In most of the states we deal with, public safety projects are funded, as are emergency operations centers. Beyond a lot of smaller projects and deferred maintenance projects, it seems to be the essential buildings that are being funded.”

Texas Facility Commission’s Raff says his organization has been working on crime labs and regional offices throughout the state for the Department of Public Safety. They also recently completed the $35 million Texas Center for Infectious Disease, a tuberculosis treatment facility in San Antonio. Although the revenue bond for this project was approved in 2001, the legislature only released the money in 2007.

Another prime example of an “essential” project is the new 525,000-sf Travis County (Texas) Civil and Family Courthouse, now in the conceptual design stage. The county is building the new courthouse in Austin to provide badly needed space for court-related support facilities and technically up-to-date courtrooms.

“Today’s family courts have very specialized needs,” says Belinda Powell, strategic planning manager in the county’s Planning and Budget Office. “It’s not necessarily the traditional courtroom setup. You have to deal with all the participants in family life, which could be several parents and grandparents involved in the proceedings around one child.”

The existing courthouse, built in the 1930s, simply does not offer the necessary non-courtroom space to accommodate offices for the many county support agencies, nor does it have an adequate circulation system to keep the public and persons in custody separated. “Modern courtrooms need much more than what was available in the historic facility,” says Powell.

Meanwhile, the historic courthouse will be used for more suitable purposes, such as probate court. “The idea is to create new facilities to meet new needs, while repurposing older facilities for more suitable functions,” says Powell.

What, then, are state and local government clients looking for in their Building Teams? “Long-term, established relationships, above anything else,” says Atkins’s Rudolph. While this has always been a factor, he notes that, in today’s climate, “You have to be a known commodity, you have to provide best value, and you have to offer low risk to your owner. They need to know that they will look good in the end.” +

 

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