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

August 07, 2012

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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