Memorandum In Opposition to New York City Design Build Authorization Bill

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Please note that this memorandum has been replaced by this updated one.

MEMORANDUM IN OPPOSITION

S5887 (Lanza) A7590 (Benedetto) New York City Design Build Authorization                                       

S 5887, in relevant part, would vest a number of New York City agencies with the authority to utilize design build without State legislative oversight.  Specifically the bill authorizes the use of design build for virtually all projects including roads, bridges, tunnels, buildings and other public improvements.

Pursuit to current law construction in both the public and private sectors must utilize a design-bid-build construction methodology.  In New York, design build has only been authorized by virtue of project specific enabling legislation, or by virtue of 2011 legislation establishing a pilot project employing a limited number of entities on a trial basis respecting highway and bridge projects.  The 2011 pilot was extended last year and a report on the use of design build is awaiting delivery to the Legislature. 

In the absence of additional safeguards as detailed below, NYSSPE opposes S 5887 which authorizes the unfettered use of design build in New York City.

Design-build is a project delivery system whereby a single entity is contractually responsible for both the design and construction of the project.  It differs from the design-bid-build, which entails the production of a set of plans and specifications, which are offered for bid.  Proponents of traditional design-bid-build argue that the interests of the owner are better protected using the design-bid-build model which emphasizes the role of the design professional as the owner’s expert.  Supporters of design-build cite savings attributable to a faster construction timetable and the ability to provide for one-stop shopping.

In New York, the State Education Law, by its express terms, prohibits the practice of professional engineering by persons who are not licensed or authorized under New York law to offer to provide or provide professional engineering services.  In short, a strict reading of the statute bars general business corporations, limited liability companies and other entities (contractors) from providing professional engineering services.  The principal public policy rationale of the law is to help insure that public health, safety and welfare are not compromised by the undue influence of a profit motivated corporate enterprise.  The danger to be guarded against is the potential that corporate financial goals will trump professional considerations.

Further, with design-build projects, the full contract price is typically established at the beginning stages of the project. This presents a greater potential for unanticipated design and construction costs arising after the fixed contract price has been established. This, in turn, can lead to eroded contractor profits or, worse, the temptation to cut corners in construction, which creates an increased chance for errors, omissions, claims and lawsuits.  Moreover, design build can be abused by project proponents in the initial phases of site development.  Since complete plans are not required, essential components of the design can be omitted or obscured, and the true cost of the project not accurately presented to the public and governmental bodies.

Another concern raised by the instant legislation is that it will permit the selection of design services based on a low bid selection process without sufficient regard to quality based selection procedures (QBS).  The use of QBS insures that the quality of the design team is given sufficient weight in the design build selection process.  QBS employs a Request for Proposals which leads to the identification of qualified firms which are scrutinized to determine the firm best suited for the project.  Price negotiations then ensue, and if the parties cannot agree, the next most qualified firm would be approached until a contract is consummated by the best qualified firm, subject to meaningful cost considerations.  The employment of QBS, which has been widely praised in New York and throughout the country, should not be impeded. The legislation should be amended to insure the broadest possible use of the QBS process.   Moreover the instant bill permits the proposer (general contractor) to dismiss a design firm in its discretion after a project has been awarded.  In the absence of wrongdoing on the part of a design firm, which owes a duty to protect both the interests of the project owner and public, the proposer should not be afforded the right to discharge the design firm without the owner’s consent.

(QBS is an essential tool to ensuring that projects move forward in manner which best advances the interests of the State and taxpayers.  The cost of design services represents a fraction of the overall cost of the project and its life cycle costs.  It is penny wise and pound foolish to not emphasize quality over cost when the cost of good versus poor design is fully examined.)

Finally, NYSSPE has endorsed the expanded use of design build provided the concerns expressed above are addressed and additional safeguards are employed.  Additional safeguards include those advanced by the New York State Boards for Engineering, Land Surveying, Architecture and Landscape Architecture in a 2013 Summary Statement addressing the use of design build.  The recommendations of these Boards should be incorporated into the instant legislation before the legislation is permitted to advance.

Accordingly, in the event that the proposed amendments are not adopted NYSSPE remains opposed to this bill.

Note: NYSSPE facilitates posting on this blog, but the views and accounts expressed herein are those of the author(s) and not the views or accounts of NYSSPE, its officers or directors whose views and accounts may or may not be similar or identical. NYSSPE, its officers and directors do not express any opinion regarding any product or service by virtue of reference to such product or service in this blog.

Comments

  1. The quality standards for construction and construction inspection should not be eroded by special interests whose goal is to reduce costs by cutting corners. Although this may not appear to be the intention of the bill, this is the real danger as to how this bill can be abused. This bill does not appear to be consistent with the efforts put forth to date to insure safety, proper design and long term reliance upon our building, roads, bridges etc.The bill needs to be amended to insure that licensed professionals are required to prepare and oversee the design, that there is oversight to insure that the design includes all necessary aspects and that the bidding contractors fully understand the necessary sequencing, that Quality Based Selection is necessary for the contractor selection and that the proper inspection is implemented during construction.

  2. Andrew Szulczewski, PE says:

    Another argument against design-build contracts is a retro grading of the applicable building codes. Grandfathering of renovation projects to the old codes, (such as NYC BC1968, etc.), usually regards the existing physical structures and some utilities. That would keep the lid on can of worms until serious problems get revealed. The result: costly change orders and delay claims, questionable quality, issues with existing codes. Once you touch the untouchable zone, because there is no other way, otherwise design will not sign-off. Hmm…Bingo! -Change the Designer! The investor and GC are happy to go around but stil to come on budget and on time. Owners will get persuaded and public usually won’t know and won’t ask.
    That’s why NYSSPE Memorandum of June 9, 2016 may be the last wake-up call to public to stand up and kill the bill# S5887.

    Design-bid-build superiority comes clear to the owner and the public by virtue of more accurate project controls, especially in regard to quality and safety. Yet, it’s more costly and usually it takes longer to break the ground. Limited budget of agencies plus pre-committed deadlines usually entice the agencies to look for investors outside. Thus, off-the-bat they are under the pressure. Yet, is it worth to compromise? Absolutely not!

  3. In New York City, the only pure design build work permitted is for temporary structures, such as sidewalk sheds, scaffolds, temp. shoring, excavation bracing, fencing, etc. Shoddy work in sidewalk sheds has caused the City to create a special unit and issue hundreds of violations every year for defective shed and scaffold work performed under the design build scheme. At least 39 pedestrians and construction workers have been injured in the City between January 2011 to May 2014 in accidents involving sidewalk sheds. Here is the article;

    http://www.thenewyorkworld.com/2014/05/30/city-enforcement-efforts-fade-despite-growing-use-sidewalk-sheds/

  4. Here is another example of design-build project went wrong. In this article linked below, Princeton University contracted Turner Construction to renovate a portion of their campus and among others, to demolish a masonry canopy of a transit station on campus grounds. Instead of appointing a design engineer or retaining a PE to design and supervise the temp shoring of the canopy demolition, the contractor (Turner) decided not to call their engineers and directed its sub-contractor to demolish the canopy without any shoring or bracing. As result, the masonry canopy collapsed on the railroad tracks, thankfully with no casualties. The client (U. of Princeton) relied on the contractor’s (Turner’s) own discretion to hire its own PE to design-build the temp supports and did not have its own PEs on staff to design or supervise the demolition. Turner is a pretty sophisticated contractor and should know that demo shoring needs to be engineered and supervised by a PE.

    http://dailyprincetonian.com/news/2013/10/university-to-conduct-review-of-turner-constructions-plans-for-further-demolition-work-on-arts-and-transit-site/

  5. Here is another example of NYC design-build project went wrong; the construction of the NYC Mets’ baseball field known as Citi Field. The Mets baseball team contracted Hunt-Bovis GC to build the $850M publicly funded ball-park. The foundation and steel superstructure contracts were awarded 6-8 months before the architectural and structural documents were completed. Mets hired all the subcontractors “on the recommendation of Hunt-Bovis”. The project design professionals had no say about the selection of the contractors, no control or supervision thereof.

    Within the first 6 months of completion, Citi Field has been reportedly plagued by water leaks, flooding and related damage, electric shorts, failing HVAC, falling signage, flaking masonry and more. Elected official complained of the lack of supervision in this publicly funded project. Several subcontractors were either mob related, banned from doing business with the City or previously associated with fraudulent conduct. Alas, the project GC Bovis Lend Lease who was being investigated by federal prosecutors, agreed to pay $56 million in penalties and restitution after admitting a decade-long fraud that included routinely overcharging and ignoring minority hiring mandates.

    What went wrong?: The project design professionals had no say about the selection of the contractors, no control or supervision thereof, the GC in complete design-build control here.

    Sources:
    http://nypost.com/2009/09/06/mets-in-foul-territory/
    http://nypost.com/2010/01/03/met-mob-contracts/
    http://cnsnews.com/news/article/feds-56m-settlement-nyc-construction-firm

  6. Design-Build is another example of business interests improperly overruling engineering decision-making. Engineers have a legal and ethical responsibility to for the health and safety of the public, business owners hold profit higher than the public good.

    Second problem is that Engineers have liability that business owners do not have. In NYS it is said that there are only two things that have no statute of limitations, murder and signing engineering drawings. Design-Build is doubly unfair that the engineer is held liable for decisions he is not allowed to make plus he has liability forever.

    For Design-Build to work in NYS the Code of Ethics enforced by NYSED needs to change and the law needs to change to provide a reasonable statute of limitations on engineering work. Under the current law, it is highly imprudent for an Engineer to sign plans for a Design-Builder.

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