APPENDIX D

Case Example Interview Questions

The purpose of this questionnaire is to identify and summarize the use of open-book pricing practices for specific CMGC and PDB projects. The focus is primarily on the mechanics of the process used to negotiate the construction cost during the preconstruction phase of a CMGC and PDB project. The interviewer will use the below questions to guide the interview, but the interviewees are encouraged to digress and provide both perceptional and factual information about the open-book process used in a specific project.

DEFINITIONS

The following definitions are used in conjunction with the agency questionnaire:

• Construction manager/general contractor (CMGC) (also called CM-at-Risk, and CMAR): A project delivery method where the contractor is selected during design and furnishes preconstruction services. Design services are either completed by the owner’s engineering personnel or consultant under a separate contract. Project construction price is negotiated during preconstruction using open-book procedures. If an agreement is reached the construction contract is awarded to the contractor.
• Progressive design-build (PDB): DB project delivery where the design-builder is selected on a basis of qualifications and past performance with little or no price competition. Design services are provided by the design-builder’s engineering personnel or the consultant member of the design-builder’s team. Project price is negotiated using open-book procedures after award of the PDB contract.
• Open-book estimating: A term that refers to the sharing of project information, such as actual project costs, between owner and contractor. It means that the project execution method is transparent to all parties. It indicates a level of collaboration that allows for defining risk and profit appropriately and creating a high level of trust among all the parties.
• Guaranteed maximum price (GMP): A cost-type contract where the contractor and the owner negotiate actual costs incurred plus a construction services fee subject to a ceiling price. Once the GMP is mutually agreed it becomes the construction contract amount (also known as an open-book contract). Some agencies do not use the term GMP, as well as employ different pricing provisions. For purposes of this questionnaire, GMP will refer to the final negotiated construction price in CMGC and the final negotiated design and construction price in PDB.
• Preconstruction services fee: The amount paid to the contractor for preconstruction services during the design phase.
• Construction services fee: The amount paid to the contractor to compensate it for general conditions, home office overhead costs, and profit. This is a separate amount to facilitate open-book negotiations of the direct costs.

• Contingency: The amount budgeted to covers costs that may result from incomplete design, unforeseen and unpredictable conditions, or uncertainties within the defined project scope. The actual amount is subject to negotiation and mutual agreement in CMGC and PDB.
• Off-ramp: Contract language that gives the owner the right to terminate the preconstruction contract if an agreement on the construction cost is not reached and rebid the contract through another contract strategy. This provides the owner a degree of protection against the CMGC or PDB contractor providing an unreasonable GMP price.

Contact Information

Name Organization Position Phone E-mail

1. Is your agency authorized to use either Construction Manager/General Contractor (CMGC) or Progressive Design-build (PDB) to deliver transportation projects?

□ CMGC

□ PDB

□ Both

2. Name of Case Example Project:

   Delivery Method:

   Type of Project:

3. Initial Budget Value: $

   Final Negotiated Value $

4. Reason for selecting project delivery method:
5. Which of the following elements of the contract amount are negotiated? (Check all that apply).

□ Design fee

□ Preconstruction fee

□ Construction services fee

□ Home office overhead

□ Project indirect costs

□ General conditions

□ Profit

□ Allowances

□ Equipment rates

□ Quantities of work

□ Production rates

□ Risk

□ Contingencies

□ Contract terms

□ Schedule

□ Sequence of work

□ Subcontractor work

□ Other: Describe

6. How were the preconstruction, design, and or construction services fees established?
7. How was the cost model developed on this project?
8. How was risk included into this project’s cost model?
9. Was an ICE retained for the project?
10. If yes, what was the ICE’s primary responsibilities?
11. Did the open book negotiations result in a mutually agreed construction price?
12. If no, was an off-ramp triggered?
13. What are the trigger points for exercising an off-ramp?
14. Was this project considered a “success”?
15. Other information that might be cogent to the study.
16. Attach any project documents that are available such as RFQ, RFP, contract, DOT manual, etc.

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