How An Innovative Approach to Procurement and Risk Management Saved the Project

Year: 2022
Presenter/s: Ian Machan
Symposium Session: 2022 - 10 Complex, High-Risk, Climate-Resilient Floodplain Restoration
Topics covered: fish-salmon, floodplain, lessons learned, and risk


ABSTRACT

The Lower Columbia Estuary Partnership (Estuary Partnership) embarked on the planning and design of the high profile, high risk Steigerwald Reconnection Project nearly a decade ago. This $30M restoration effort in the Columbia River floodplain involved ten landowners, eleven real estate acquisitions, five funders, eleven regulatory agencies, two setback levees, and 1.5 million cubic yards of earthwork. Over the course of seven years, the project design was refined with the goal of contracting with a construction contractor in early 2020. During this time, the project team identified key challenges that presented significant risk to the project with considerable ramifications. With the immense effort that went into project development, the team realized that similar emphasis needed to be placed on the procurement and management of the contractor and construction phase. The Estuary Partnership employed several means of risk mitigation to reduce exposure to the potential of negative cost or schedule impacts, namely by:
Providing prospective contractors with vital pre-bid information including geotechnical reports, test pit locations for observation during bidding, and guided site tours, resulting in more thoughtfully prepared contractor approaches.
Requiring prequalification of specialty Aquatic Habitat Restoration Specialist (AHRS) subcontractors eligible to contract with prime contractors and required the prime to use the AHRS for ecologically sensitive aspects of the project.
Including a significant incentive/disincentive clause to motivate contractors to aggressively pursue work to hit hard deadlines imposed by USACE.
Implementing a two-step Best Value Procurement methodology that required qualifications and a detailed approach to short-list prime contractors (Step 1), and a more detailed approach to construction, interview, and competitive bids to complete the selection process (Step 2). The short-listing process and opportunity to place 50% of the scoring criteria on project approach incentivized contractors to invest time in determining ways to manage the complex project staging.
We will present an overview of Best Value Procurement and a case history that provides examples of risk management to both minimize exposure to the Owner and incentivize the prime contractor to perform at the highest level. The importance of an integrated team and the collaboration between Owner and Contractor will be explored and highlighted, as this partnership allowed the project team to work through several large design changes efficiently, effectively, and without significant changes to contract terms or timelines. The partnership approach and buy-in from all parties to make the project’s success a priority saved the project from a potentially difficult and confrontational finish. This presentation will explain the benefits of this delivery method and risk management, and provide agencies an example of how properly implementing these risk mitigation strategies can set a project up for success before construction even begins.