Dropdown items
My Academies

Personal Library

Account settings

Defining Contractual Risk Profiles to Increase Competition on Alternative Project Delivery Methods (2025)

Chapter: Appendix F: Glossary of Processes/Tools

Visit NAP.edu/10766 to get more information about this book, to buy it in print, or to download it as a free PDF.

Previous chapter Next chapter
Page of 197
Search this publication

Previous Chapter: Appendix E: Interview Summaries

Page 171 Bookmark

Suggested Citation: "Appendix F: Glossary of Processes/Tools." National Academies of Sciences, Engineering, and Medicine. 2025. Defining Contractual Risk Profiles to Increase Competition on Alternative Project Delivery Methods. Washington, DC: The National Academies Press. doi: 10.17226/29285.

Appendix F: Glossary of Processes/Tools

F.1: Fixed Price APDs

Item	Description
Alternative Dispute Resolution (ADR) Methods	Methods for resolving disputes such as mediation and dispute review boards (DRBs) that are specified in the contract that aim to resolve issues more efficiently and effectively.
Alternative Project Delivery	Alternative Project Delivery (APD) refers to project delivery methods developed to streamline design and construction, enhance collaboration, reduce risks, and provide opportunities for early contractor involvement and innovation. APD methods in the context of this study include Fixed Price APD methods (Design-Build and P3), and Progressive APD methods (Design-Build, GC/CM, and P3).
Alternative Technical Concepts	An Alternative Technical Concept (ATC) is a proposed change to agency-supplied base design configurations, project scope, design criteria or construction criteria proposed during one-on-one meetings. This change provides a solution that is equal or better to the requirement in the contract. ATCs should be targeted to address solutions to specific risk issues.
Alternative Forms of Security	Alternative forms of security include performance bonds that cover a portion or reduced percentage of the budgeted cost. They also take the form of letters of credit or parent/bank guarantees to promote competition for very large or mega-projects.
Communication / Escalation Protocols	Procedures specified in the contract (or other project-related documents) that delineate how specific issues are addressed and resolved, particularly those needing escalation from field to possibly executive levels for resolution.
Dispute Resolution Process	Provisions within the contract that specify how project disputes are resolved which may include requirements for notice, escalation, and time limits for decisions regarding entitlement, compensation, and time at various levels of decision-making authority.
Feasibility Studies	Necessary studies of market, technical, environmental, etc. conditions to gauge the factors and issues that may influence a project’s overall feasibility.
Industry Forums/Roundtables	Early Agency/industry forums or a roundtable to describe and generate interest in specific upcoming APD projects.
Industry Outreach	Early outreach with industry to gauge interest in the specific upcoming projects including posting of planned projects on website.
One-on-One Meetings	Confidential meetings with proposing industry teams to target and dialogue about project risk issues and opportunities to mitigate risk or add value. One-on-one meetings should be tailored to a purpose such as general issues, risk pricing and allocation, third-party issues, ATCs, etc. Owner and industry risk registers should possibly be exchanged to make each aware of how the other views key risks. Meetings could include negotiations to address risk allocation and potential risk sharing strategies. Based on the input and dialog received during these meetings, the risk register should be updated to reflect the final contract price and schedule, risk mitigation and risk allocation or sharing strategies.

Page 172 Bookmark

Partnering Agreement

An agreement/charter signed by project parties designed to promote a project first mentality with an issue escalation process to address and resolve issues in real time as close to the project team as possible.

Item	Description
Partnering Practices	Charters, social events, workshops, meetings, etc. that are used in the partnering process.
PDM Screening	An initial Project Delivery Method (PDM) evaluation and screening to select a probable PDM.
PDM selection	An evaluation of PDM alternatives based on project criteria, objectives and risks and choice of a final preferred PDM.
Pre-proposal One-on-One Meetings	Early confidential meetings with interested industry partners to obtain ideas regarding project scoping and packaging, PDM selection and delivery, risk allocation, etc.
Primers & Information	Published information or media designed to educate and train key stakeholders about APDs.
Project Delivery Guidelines	Guidelines published by public agency that delineate how it plans, procures and executes FP APD projects. Such guidelines may include information about various topics such as risk management practices and typical roles and responsibilities.
Project Pipeline/Website Posting	Circulated, published, or posted information about prospective projects to provide advance notice to market participants regarding scope, location and scale of potential APD projects. This allows industry to consider resource needs
Proposer/Bidder Review of Solicitation Documents	Process for proposers/bidders to review and provide feedback on RFP documents and draft Contract. Owner and industry representatives emphasized sharing draft terms or contracts in the RFP. Industry emphasizes that a consultative process should be followed where input is received, and terms/conditions are modified possibly through multiple rounds.
Reference Information	Baseline project data and information (e.g., survey, site, subsurface and utility data, etc.) used for project planning and design development. Practitioners emphasize that the greater the clarity of baseline data and information the more accurate the pricing. If feasible, more time should be allotted during planning and development stages to improve the quality of due diligence assessments or carry out supplementary investigations as needed.
Requests for Clarification (RFC)	Requests by proposing teams for clarifications of solicitation documents, modifications, etc.
Request for Qualifications	A request for qualifications (RFQ) is a screening step to establish a pool of bidders that submit Statements of Qualifications (SOQs). If shortlisted, bidders are then eligible to submit responses to a request for proposals (RFP). To promote dialog and enhance understanding an RFQ package should include a Draft Contract or Term Sheet for industry to review and provide feedback. The RFQ will also include a procurement schedule and an initial price range, target price or budget to indicate where the Agency baseline cost stands based on the current level of design and reference information.

Page 173 Bookmark

Item	Description
Request for Proposal	A request for proposals (RFP) is a request from qualified short-listed bidders to provide a technical and price proposals to complete the scope of work. To enhance interest and competition, the criteria used for proposal evaluation should be streamlined to ask how proposers will meet key project objectives and manage critical risks and less important criteria are evaluated on a pass/fail basis. The procurement schedule should allow sufficient time for additional industry site investigations, if warranted to improve the quality of reference information, obtain industry input regarding ATCs, and conduct negotiations regarding risk allocation and contractual terms and conditions.
Risk Management Meetings / Workshops	Meetings typically outlined in a partnering charter/agreement (but possibly the contract) that are focused on managing project issues and risks.
Risk Register	A risk register is a project management tool used to identify, evaluate, and prioritize risks, and serve as a central repository for tracking and mitigating risks, and assigning responsibility for managing risks. The risk register will be updated during the project to expand, clarify, revise, or retire risks and to include likely risk allocation. Updates to the risk register are based on industry dialogue and input so each risk has a risk allocation and management strategy.
Roles and Responsibilities Matrix	A roles and responsibilities matrix defines responsibilities during project execution to ensure consistent understanding of roles and responsibilities for the final selected PDM.
Scope Validation Period	A period after NTP (90-120 days) where the Design-Builder will review the Contract Documents and verify and validate its proposed design and identify any scope issues (defects, errors, or inconsistencies in the RFP Documents) that affect Design-Builder’s ability to complete its proposed design within the Contract Price and/or Contract Time(s). If the Design-Builder is not able to conduct additional investigations due to lack of access to certain areas of the site, the owner will provide access for limited periods to determine if there are any scope issues arising from geotechnical or other conditions. The Design-Builder must acknowledge that the Scope Validation Period is a reasonable time to enable Design-Builder to identify Scope Issues that will materially impact DesignBuilder’s price or time to perform the Work. After the expiration of the Scope Validation Period, subject to certain exceptions. The Design-Builder waives its rights to seek any relief (additional increase in price or time) for scope issues associated with the RFP and Contract documents. If the design-builder requests relief, it must provide notice within the scope validation period and provide adequate description of the scope issue and support for any price and time impacts related to a differing site condition or relief event that cannot be mitigated.
Staff Risk Workshop	A risk workshop with staff (and possibly consultants augmenting staff) to discuss project related risks and to enhance understanding of their likelihood and impact.
Stakeholder/Third-Party Engagement Plan	An initial plan for third-party coordination that outlines coordination requirements, responsible parties (e.g., Agency, utilities, railroads, local governments, Contractor, etc.). This is updated and finalized as additional information and feedback are received. Use a stakeholder engagement plan to more effectively oversee engagement actions.

Page 174 Bookmark

Item	Description
Stipend	Payments to shortlisted proposers compensate them for their ideas in return for the owner’s right to use those ideas for the benefit of the project. Stipends should be sufficient to stimulate industry interest and provide a reasonable compensation for design or technical solutions offered in industry proposals. Stipends are set based in part on project size but should consider the relative weighting given to the non-price evaluation criteria published in the RFP.
Term Sheet	Typical standard contractual and commercial terms for projects that exhibit how an agency will structure related provisions in a project’s contract.

Item

Description

Stipend

Payments to shortlisted proposers compensate them for their ideas in return for the owner’s right to use those ideas for the benefit of the project. Stipends should be sufficient to stimulate industry interest and provide a reasonable compensation for design or technical solutions offered in industry proposals. Stipends are set based in part on project size but should consider the relative weighting given to the non-price evaluation criteria published in the RFP.

Term Sheet

Typical standard contractual and commercial terms for projects that exhibit how an agency will structure related provisions in a project’s contract.

F.2: Glossary of Additional Processes/Tools for Progressive APDs

In addition to those tools addressed in Appendix F.1, progressive APDs are often associated with the tools identified below.

Item	Description
Cost Model	The cost model is an open and transparent document that defines the Contractor/DB team’s pricing assumptions. The cost model defines the Contractor costs related to labor, materials, equipment, subcontractor, and supplier quotes, means and methods, production rates, risk, direct costs, mobilization, overhead and profit. The model is continually updated during preconstruction. Regular updates to the cost model are used to demonstrate whether the design is proceeding within the expected cost, or whether adjustments are necessary to bring the project cost back in line with the owner’s budget expectations.
Guaranteed Maximum Price (GMP)	The construction phase of progressive APD projects are often implemented as a Guaranteed Maximum Price (GMP) contract. Under a GMP contract, the contractor/DB Team commits to constructing a project for a price (including fee, general conditions, direct costs, and contractor contingency) that will not exceed a certain guaranteed maximum (i.e., the contractor will assume responsibility for cost overruns). Under a GMP, the contractor is entitled to receive the maximum price amount only if its actual project costs, including direct costs, indirect costs, and fees, equal or exceed the negotiated GMP amount (as amended by any subsequent change orders to cover scope adjustments or quantity changes that were not reasonably inferable at the time the GMP was established).
Independent Cost Estimator (ICE)	The independent cost estimator (ICE) is a tool to assist in determining the reasonableness of the estimate for construction being evaluated. ICE is especially critical whenever there is no price competition (e.g., for CM/GC or PDB procurements or where only one price proposal is received). The ICE will be a consultant not affiliated with the CM/GC Contractor and should have experience performing contractor-style or production-based estimating to assist the owner in reconciling cost estimates with the Contractor/DB Team. The ICE will be involved in most of the preconstruction services (i.e., partnering, design reviews, innovation, and risk workshops, etc.) so that they may have a good understanding of the project to be able to develop informed cost and schedule estimates.

Page 175 Bookmark

Lean Design and Construction Practices	Various tactical tools and practices that can be employed individually or in combination during preconstruction to achieve a “Lean” project and a more collaborative and integrated project team. Example tools include use of: Target Value Design (TVD) principles to apply a disciplined management approach to the design process, in which cost, schedule, and constructability are viewed as design constraints, and cost targets are used to drive innovation in designing a project that provides the best value to the owner. Pull planning exercises to help teams better understand the order and dependencies of different work tasks and identify roadblocks or constraints that could cause delays. Decision-making tools such as A3s and Choosing-by-Advantages to help ensure more informed and timely decisions. Continuous Process Improvement tools such as Plus/Delta and Retrospectives to foster a culture of continuous improvement.
Pre-construction Risk Management Meetings / Workshops	Meetings during preconstruction phase with owner, Contractor, and consultants to further develop and update the risk register to identify the potential preconstruction and construction risk issues (“Risk Register Event”), define mitigation strategies to be used for Risk Register Events, and identify probable cost and time impacts to the Project. The Risk Register will be revisited on a regular basis during the Preconstruction Phase as the design of each work package is developed and investigations and other due diligence activities are conducted. All Risk Register Events will be categorized as an owner risk, a DesignBuilder risk, or a provisional risk to be shared by the parties.
Shared Savings	If the actual cost is less than the maximum amount under a reimbursable GMP Contract, the Contractor only receives its actual costs. An incentive for the Contractor to keep costs below the GMP is sometimes provided by incorporating a shared savings clause allocating the savings between the Contractor and the owner.
Subcontracting / Self performance Plan	The Subcontracting Plan identifies the Progressive APD Contractor’s subcontracting process for the Construction Phase Services. As part of the Supplier and Subcontractor outreach for public work, the Contractor is typically expected to solicit and obtain three or more quotes for subcontracted work and materials (including competing self-performed work) to ensure competitive pricing including meeting DBE goals. However, if approved by the owner, the team may use a Subcontractor that provides the best value if in the best interest of the project. The plan would further describe the scope of work and percentage the APD Contractor intends to self-perform. The plan would address the role subcontractors will play on the team, including during the preconstruction phase, and what benefits they will provide.
Work Packages	A Progressive APD project may be executed by dividing the work into separate and severable work packages. Each work package becomes a “mini-GMP” package or negotiated construction price package which must be a severable and independent phase of the construction, such that the owner is not obligated to have the contractor construct any other portions of the work.