Open-Book Pricing Practices for Construction Manager/General Contractor and Progressive Design-Build Projects (2025)
Chapter: Front Matter
 |
|
| NCHRP Synthesis 653 A SYNTHESIS OF HIGHWAY PRACTICE |
National Cooperative Highway Research Program |
Open-Book Pricing Practices for Construction Manager/General Contractor and Progressive Design-Build Projects
TRANSPORTATION RESEARCH BOARD 2025 EXECUTIVE COMMITTEE*
OFFICERS
CHAIR: Leslie S. Richards, Professor of Practice, University of Pennsylvania, Philadelphia
VICE CHAIR: Joel M. Jundt, Secretary of Transportation, South Dakota Department of Transportation, Pierre
EXECUTIVE DIRECTOR: Victoria Sheehan, Transportation Research Board, Washington, DC
MEMBERS
James F. Albaugh, President and CEO, The Boeing Company (retired), Scottsdale, AZ
Carlos M. Braceras, Executive Director, Utah Department of Transportation, Salt Lake City
Douglas C. Ceva, Vice President, Customer Lead Solutions, Prologis, Inc., Jupiter, FL
Nancy Daubenberger, Commissioner of Transportation, Minnesota Department of Transportation, St. Paul
Marie Therese Dominguez, Commissioner, New York State Department of Transportation, Albany
Garrett Eucalitto, Commissioner, Connecticut Department of Transportation, Newington
Andrew Fremier, Executive Director, Metropolitan Transportation Commission, San Francisco, CA
Martha Grabowski, Professor Emerita, Information Systems, Le Moyne College, Madden College of Business & Economics, Cazenovia, NY
Randell Iwasaki, President and CEO, Iwasaki Consulting Services, Walnut Creek, CA
Carol A. Lewis, Professor, Transportation Studies, Texas Southern University, Houston
Hani S. Mahmassani, W.A. Patterson Distinguished Chair in Transportation; Director, Transportation Center, Northwestern University, Evanston, IL
Scott C. Marler, Director, Iowa Department of Transportation, Ames
Ricardo Martinez, Adjunct Professor of Emergency Medicine, Emory University School of Medicine, Decatur, GA
Russell McMurry, Commissioner, Georgia Department of Transportation, Atlanta
Craig E. Philip, Research Professor and Director, VECTOR, Department of Civil and Environmental Engineering, Vanderbilt University, Nashville, TN
Steward T.A. Pickett, Distinguished Senior Scientist, Cary Institute of Ecosystem Studies, Millbrook, NY
Susan A. Shaheen, Professor and Co-Director, Transportation Sustainability Research Center, University of California, Berkeley
Marc Williams, Executive Director, Texas Department of Transportation, Austin
EX OFFICIO MEMBERS
Michael R. Berube, Deputy Assistant Secretary for Sustainable Transportation, U.S. Department of Energy, Washington, DC
Steven Cliff, Executive Officer, California Air Resources Board, Sacramento
LeRoy Gishi, Chief, Division of Transportation, Bureau of Indian Affairs, U.S. Department of the Interior, Germantown, MD
Firas Ibrahim, Director, Office of Research, Development, and Technology, Office of the Assistant Secretary for Research and Technology (OST-R), Washington, DC
Jason Kelly, Deputy Commanding General for Civil Works and Emergency Operations, U.S. Army Corps of Engineers, Washington, DC
Sandra Knight, President, WaterWonks, LLC, Washington, DC
Zahra “Niloo” Parvinashtiani, Engineer, Mobility Consultant Solutions, Iteris Inc., Fairfax, VA, and Chair, TRB Young Members Coordinating Council
Chris Rocheleau, Acting Administrator, Federal Aviation Administration, Washington, DC
Gloria Shepherd, Acting Deputy Administrator, Federal Highway Administration, Washington, DC
Karl Simon, Director, Transportation and Climate Division, U.S. Environmental Protection Agency, Washington, DC
Paul P. Skoutelas, President and CEO, American Public Transportation Association, Washington, DC
Jim Tymon, Executive Director, American Association of State Highway and Transportation Officials, Washington, DC
___________________
* Membership as of February 2025.
NATIONAL COOPERATIVE HIGHWAY RESEARCH PROGRAM
NCHRP SYNTHESIS 653
Open-Book Pricing Practices for Construction Manager/General Contractor and Progressive Design-Build Projects
A Synthesis of Highway Practice
Douglas D. Gransberg
GRANSBERG & ASSOCIATES, INC.
Norman, OK
Marko Pala
STANTON CONSTRUCTION SERVICES, INC.
Salt Lake City, UT
Subscriber Categories
Administration and Management • Construction • Finance
Research sponsored by the American Association of State Highway and Transportation Officials in cooperation with the Federal Highway Administration
NATIONAL COOPERATIVE HIGHWAY RESEARCH PROGRAM
Systematic, well-designed, and implementable research is the most effective way to solve many problems facing state department of transportation (DOT) administrators and engineers. Often, highway problems are of local or regional interest and can best be studied by state DOTs individually or in cooperation with their state universities and others. However, the accelerating growth of highway transportation results in increasingly complex problems of wide interest to highway authorities. These problems are best studied through a coordinated program of cooperative research.
Recognizing this need, the leadership of the American Association of State Highway and Transportation Officials (AASHTO) in 1962 initiated an objective national highway research program using modern scientific techniques—the National Cooperative Highway Research Program (NCHRP). NCHRP is supported on a continuing basis by funds from participating member states of AASHTO and receives the full cooperation and support of the Federal Highway Administration (FHWA), United States Department of Transportation.
The Transportation Research Board (TRB) of the National Academies of Sciences, Engineering, and Medicine was requested by AASHTO to administer the research program because of TRB’s recognized objectivity and understanding of modern research practices. TRB is uniquely suited for this purpose for many reasons: TRB maintains an extensive committee structure from which authorities on any highway transportation subject may be drawn; TRB possesses avenues of communications and cooperation with federal, state, and local governmental agencies, universities, and industry; TRB’s relationship to the National Academies is an insurance of objectivity; and TRB maintains a full-time staff of specialists in highway transportation matters to bring the findings of research directly to those in a position to use them.
The program is developed on the basis of research needs identified by chief administrators and other staff of the highway and transportation departments, by committees of AASHTO, and by the FHWA. Topics of the highest merit are selected by the AASHTO Special Committee on Research and Innovation (R&I), and each year R&I’s recommendations are proposed to the AASHTO Board of Directors, the FHWA, and the National Academies. Research projects to address these topics are defined by NCHRP, and qualified research agencies are selected from submitted proposals. Administration and oversight of research contracts are the responsibilities of NCHRP.
The needs for highway research are many, and NCHRP can make significant contributions to solving highway transportation problems of mutual concern to many responsible groups. The program, however, is intended to complement, rather than to substitute for or duplicate, other highway research programs.
NCHRP SYNTHESIS 653
Project 20-05, Topic 55-09
ISSN 0547-5570
ISBN 978-0-309-73576-6
Library of Congress Control Number 2025935060
Digital Object Identifier: 10.17226/29084
© 2025 by the National Academy of Sciences. National Academies of Sciences, Engineering, and Medicine and the graphical logo are trademarks of the National Academy of Sciences. All rights reserved.
COPYRIGHT INFORMATION
Authors herein are responsible for the authenticity of their materials and for obtaining written permissions from publishers or persons who own the copyright to any previously published or copyrighted material used herein.
Cooperative Research Programs (CRP) grants permission to reproduce material in this publication for classroom and not-for-profit purposes. Permission is given with the understanding that none of the material will be used to imply TRB, AASHTO, APTA, FAA, FHWA, FTA, GHSA, or NHTSA endorsement of a particular product, method, or practice. It is expected that those reproducing the material in this document for educational and not-for-profit uses will give appropriate acknowledgment of the source of any reprinted or reproduced material. For other uses of the material, request permission from CRP.
Cover photo credit: Kansas Department of Transportation
NOTICE
The report was reviewed by the technical panel and accepted for publication according to procedures established and overseen by the Transportation Research Board and approved by the National Academies of Sciences, Engineering, and Medicine.
This material is based upon work supported by the FHWA under Agreement No. 693JJ32350025. The opinions, findings, and conclusions or recommendations expressed or implied in this publication are those of the researchers who performed the research and are not necessarily those of the Transportation Research Board; the National Academies of Sciences, Engineering, and Medicine; the FHWA; or the program sponsors.
The Transportation Research Board does not develop, issue, or publish standards or specifications. The Transportation Research Board manages applied research projects which provide the scientific foundation that may be used by Transportation Research Board sponsors, industry associations, or other organizations as the basis for revised practices, procedures, or specifications.
The Transportation Research Board; the National Academies of Sciences, Engineering, and Medicine; and the sponsors of the National Cooperative Highway Research Program do not endorse products or manufacturers. Trade or manufacturers’ names or logos appear herein solely because they are considered essential to the object of the report.
Published reports of the
NATIONAL COOPERATIVE HIGHWAY RESEARCH PROGRAM
are available from
National Academies Press
500 Fifth Street, NW, Keck 360
Washington, DC 20001
(800) 624-6242
and can be ordered through the Internet by going to
https://nap.nationalacademies.org
Printed in the United States of America
The National Academy of Sciences was established in 1863 by an Act of Congress, signed by President Lincoln, as a private, nongovernmental institution to advise the nation on issues related to science and technology. Members are elected by their peers for outstanding contributions to research. Dr. Marcia McNutt is president.
The National Academy of Engineering was established in 1964 under the charter of the National Academy of Sciences to bring the practices of engineering to advising the nation. Members are elected by their peers for extraordinary contributions to engineering. Dr. John L. Anderson is president.
The National Academy of Medicine (formerly the Institute of Medicine) was established in 1970 under the charter of the National Academy of Sciences to advise the nation on medical and health issues. Members are elected by their peers for distinguished contributions to medicine and health. Dr. Victor J. Dzau is president.
The three Academies work together as the National Academies of Sciences, Engineering, and Medicine to provide independent, objective analysis and advice to the nation and conduct other activities to solve complex problems and inform public policy decisions. The National Academies also encourage education and research, recognize outstanding contributions to knowledge, and increase public understanding in matters of science, engineering, and medicine.
Learn more about the National Academies of Sciences, Engineering, and Medicine at www.nationalacademies.org.
The Transportation Research Board is one of seven major program divisions of the National Academies of Sciences, Engineering, and Medicine. The mission of the Transportation Research Board is to mobilize expertise, experience, and knowledge to anticipate and solve complex transportation-related challenges. The Board’s varied activities annually engage about 8,500 engineers, scientists, and other transportation researchers and practitioners from the public and private sectors and academia, all of whom contribute their expertise in the public interest. The program is supported by state departments of transportation, federal agencies including the component administrations of the U.S. Department of Transportation, and other organizations and individuals interested in the development of transportation.
Learn more about the Transportation Research Board at www.TRB.org.
COOPERATIVE RESEARCH PROGRAMS
CRP STAFF FOR NCHRP SYNTHESIS 653
Monique R. Evans, Director, Cooperative Research Programs
Waseem Dekelbab, Deputy Director, Cooperative Research Programs, and Manager, National Cooperative Highway Research Program
Arefeh Nasri, Senior Program Officer
Stephanie L. Campbell-Chamberlain, Senior Program Assistant
Natalie Barnes, Director of Publications
Heather DiAngelis, Associate Director of Publications
Dominique Williams, Editor
NCHRP PROJECT 20-05 PANEL
Joyce N. Taylor, Maine Department of Transportation, Augusta, ME (Chair)
Jessie X. Jones, Arkansas Department of Transportation, Little Rock, AR
Raymond J. Khoury, Virginia Department of Transportation, Richmond, VA
Jesus Alberto Sandoval-Gil, Arizona Department of Transportation, Phoenix, AZ
Cynthia J. Smith, Mississippi Department of Transportation, Jackson, MS
Jean M. Wallace, Minnesota Department of Transportation, St. Paul, MN
Mary Huie, FHWA Liaison
TOPIC 55-09 PANEL
Paramvir S. Bhalia, Washington State Department of Transportation, Lacey, WA
Lisa Choplin, Whitman, Requardt and Associates, LLP, Baltimore, MD
Joseph Dongo, California Department of Transportation, Sacramento, CA
Eric K. Kahlig, Ohio Department of Transportation, Columbus, OH
Alison Pedigo, Delaware Department of Transportation, Dover, DE
Suril Shah, Virginia Department of Transportation, Richmond, VA
Kenneth Sullivan, Arizona State University, Tempe, AZ
Matthew Corrigan, FHWA Liaison
Robert J. Shea, TRB Liaison
ABOUT THE NCHRP SYNTHESIS PROGRAM
Highway administrators, engineers, and researchers often face problems for which information already exists, either in documented form or as undocumented experience and practice. This information may be fragmented, scattered, and unevaluated. As a consequence, full knowledge of what has been learned about a problem may not be brought to bear on its solution. Costly research findings may go unused, valuable experience may be overlooked, and due consideration may not be given to recommended practices for solving or alleviating the problem.
There is information on nearly every subject of concern to highway administrators and engineers. Much of it derives from research or from the work of practitioners faced with problems in their day-to-day work. To provide a systematic means for assembling and evaluating such useful information and to make it available to the entire highway community, the American Association of State Highway and Transportation Officials—through the mechanism of the National Cooperative Highway Research Program—authorized the Transportation Research Board to undertake a continuing study. This study, NCHRP Project 20-05, “Synthesis of Information Related to Highway Practices,” searches out and synthesizes useful knowledge from all available sources and prepares concise, documented reports on specific topics. Reports from this endeavor constitute an NCHRP report series, Synthesis of Highway Practice.
This synthesis series reports on current knowledge and practice, in a compact format, without the detailed directions usually found in handbooks or design manuals. Each report in the series provides a compendium of the best knowledge available on those measures found to be the most successful in resolving specific problems.
FOREWORD
By Arefeh Nasri
Staff Officer
Transportation Research Board
The use of open-book pricing practices in construction manager/general contractor (CM/GC) and progressive design-build (PDB) projects is becoming increasingly popular because of its benefits, such as increased price transparency. It also provides an opportunity for price-informed decisions, which can potentially retire major risks before establishing the negotiated contract price and reduce the size of the contingency pool carried into the final agreement. Many state departments of transportation (DOTs) have experience conducting open-book negotiations in alternative contracting and have developed diverse approaches for CM/GC and PDB projects. However, guidance on how to configure the procedures for open-book price negotiations, how to articulate those procedures in procurement documents, and how to assess the effectiveness of the procedures in use is currently limited. Additionally, a gap exists in identifying effective practices for executing the off-ramp if negotiations fail or if the estimated project price exceeds available funding.
The objective of this synthesis is to document state DOTs’ policies and procedures for developing open-book pricing practices for CM/GC and PDB projects. The synthesis looked at DOT practices, specifications, and challenges associated with open-book estimating and negotiations, DOT procedures for open-book pricing practices related to risk, open-book implementation policies and procedures at DOTs (including utilization of an independent cost estimator), and DOT procedures for utilizing the off-ramp in CM/GC and PDB if an impasse on price is reached or if the agreed-upon price exceeds available funding.
Information for this study was gathered through a literature review, a survey of state DOTs, and follow-up interviews with selected DOTs. Nine case examples located in eight geographically diverse
states provide additional information on the practices related to the open-book negotiations in CM/GC and PDB projects.
Douglas D. Gransberg of Gransberg & Associates, Inc., and Marko Pala of Stanton Construction Services, Inc., collected and synthesized the information and wrote the report. The members of the topic panel are acknowledged on page iv. This synthesis is an immediately useful document that records practices that were acceptable within the limitations of the knowledge available at the time of its preparation. As progress in research and practice continues, new knowledge will be added to that now at hand.
CONTENTS
Chapter 3 State of the Practice
3.1 Overview of DOT CM/GC and PDB Experience
3.2 Findings from the Survey Analysis
3.3 Findings from the Content Analysis
4.1 LBB CM/GC Project Bay City, MI
4.2 CMCR Widening and Improvements CMAR Project, Fort Worth, TX
4.3 TPI CM/GC Project, Duluth, MN
4.4 Sellwood Bridge Replacement CM/GC Project, Multnomah County, OR
4.5 I-95 and SR 896 Interchange CM/GC Project, Newark, DE
4.6 Scofield Avenue Undercrossing SSR CM/GC Project, Richmond, CA
4.7 Bangerter 4700 S Interchange PDB Project, Salt Lake City, UT
4.8 I-270 ICM PDB Project, Montgomery and Frederick Counties, MD
4.9 BDBR PDB Project, Wilsonville, OR
Chapter 5 Conclusions and Recommendations
5.2 Future Research Recommendations
5.3 Open-Book Negotiation Guide
5.5 Setting the Preconstruction Fee
5.6 An ICE’s Role in Open-Book Negotiations
