Participants in the virtual Design-Build Risk Panel Included (Clockwise from upper left) Jerry Yakowenko, Federal Highway Administration and session moderator; Bob Lanham, Williams Brothers Construction Co.; Michael Vecellio, The Vecellio Group; Chris Christopher, Washington State DOT; and Kevin Cornish, AECOM.
By Rich Juliano, general counsel, ARTBA
The risk profile of many design-build projects remains a concern for the transportation construction industry, according to two ARTBA leaders appearing on a panel addressing the topic. Michael Vecellio, vice president of The Vecellio Group and president of ARTBA’s Contractors Division, and Kevin Cornish, senior vice president of AECOM and a member of ARTBA’s Board of Directors, participated in the session held during the annual conference of the American Association of State Highway and Transportation Officials (AASHTO) Committee on Construction.
Committee membership includes state department of transportation (DOT) construction engineers or directors from across the country. This year’s conference took place in a virtual format on Aug. 10-13. Other panelists for this session included Chris Christopher of the Washington State Department of Transportation and Bob Lanham of Williams Brothers Construction Co.
In response to a question from moderator Jerry Yakowenko, contract administration team leader at the Federal Highway Administration, Vecellio and Cornish described their respective companies’ decision processes for pursuing design-build projects. From the contracting side, Vecellio noted that his firm carefully evaluates the owner-agency’s program-wide and project-specific track record of collaborating with industry, as well as potential risk factors like utility and railroad relocations. From the design side, Cornish said AECOM reviews the owner’s experience with design-build projects and the company’s relationship with the owner and area contractors.
The panelists also addressed identification and mitigation of risk. Vecellio emphasized that contractors simply cannot control, mitigate or even identify certain types of risk, yet some contractors will still pursue projects that include them, which is a disincentive for many state DOTs to change their approach. Cornish agreed that some in the industry will purposefully low-ball their pricing of risk because of a belief that they “need the work,” regardless of the repercussions.
Christopher, who reported his agency has let $7.8 billion in design-build projects during recent years, said his agency tries to identify risk factors early in the process, but balances risk allocation so as not to stifle innovation by the design-builder. Lanham cited the collaborative efforts of his state organization, the AGC of Texas (which is also an ARTBA affiliate), and the Texas Department of Transportation, focusing on five potentially troublesome areas for design-build projects: right of way, railroads, utilities, environmental and differing site conditions.
ARTBA’s newly-launched Construction Forum will be facilitating a risk policy development process open to members of all membership divisions. Please contact me for more information.