Title: Using a Consultant as Both Designer and Construction Manager

Phase(s): Construction

Category: Management

Date: May 12, 1997

1. Background

The San Francisco Municipal Railway (Muni) engaged Bechtel Civil Corporation to design the Muni Metro Turnback project. The planning, environmental and design processes consumed nearly seven years and cost $15.9 million. Once Muni determined it needed a construction management consultant to manage this very large and complex project, Bechtel's qualifications in tunneling and construction management, as well as their intimate knowledge of the design and specified construction techniques, made their selection for this role desirable. To mitigate the potential conflict of interest, FTA approved the sole-source procurement of these services on the condition that independent review of all change orders of $50,000 or more be conducted.

Muni engaged two claims specialists who reviewed the 95 change orders valued at $50,000 or more issued during the construction of the project. Of the 95 change orders, 85 added a total of $21.5 million to the construction cost and the other 10 reduced the cost by a total of $3.9 million. In the judgment of the specialists, 15 of the change orders, which added a total of $2,232,000 to the project cost, where the result of design errors. Their analysis indicated the work was warranted in all cases, thus the incremental cost incurred as a result of these errors was the difference between the cost resulting from the negotiation of the change orders and the cost which would have resulted from including the work in the original bidding process. The claims specialists estimated the difference at 15% of the cost of the change orders or $335,000, which is less than 0.2% of the project cost.

Their opinion was that this was well within the level of error which could be expected on such a project and recommended that Muni take no action. The project was completed essentially on schedule and at an estimated cost at completion of $178 million, $24 million below the FFGA budget, despite unforeseen conditions including a Gold Rush era ship in the path of one tunnel and encountering over twice as many buried wooden piles as estimated. While it is not possible to attribute the success of the project specifically to the use of the design consultant as construction manager, the author feels that decision made a significant contribution.

2. The Lesson

Large, complex transit projects for which the grantee will employ a construction management consultant may benefit by using the design consultant as construction management consultant if the firm has the appropriate qualifications. The primary benefit of this approach is that the designer has in depth knowledge of the project which aids in making timely, consistent decisions during construction of the project. Two other benefits are that a procurement cycle can be avoided if the original procurement for a design consultant includes an option for construction management services and that the grantee avoids conflicts between the designer and construction manager during construction. In order to assure that there is no self-dealing regarding design errors and omissions, it is recommended that all significant change orders be reviewed by an independent claims specialist reporting directly to the grantee.

3. Applicability

This lesson learned is applicable to any transit capital project complex or large enough to warrant engaging a construction management consultant to act as the owner's representative.

4. References

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