New York state's recently passed legislation to allow design-build delivery for certain infrastructure projects may be more a sign of the economically troubled times than a whole-hearted vote for this alternative project delivery system, say some industry players.
"We've seen quite a number of states in the last few years that have passed legislation allowing for public-private partnerships, and, if there are public-private partnership laws, design-build really has to be a part of them," says Mike Schneider, managing partner at Los Angeles-based InfraConsult LLC, which specializes in transportation consulting.
Helping to drive this trend is the scarcity of federal infrastructure funding coupled with states' needs to repair or replace aging infrastructure, Schneider says. About half the states so far have passed legislation permitting P3s, he says. "They have varying requirements within their statutes as to what the approval process is, but it seems to be proliferating across the country in recent years," he adds.
Under the new New York law, several state agencies—the Dept. of Environmental Conservation, Dept. of Transportation, the Thruway Authority, the Office of Parks, Recreation and Historic Preservation, and the Bridge Authority—are authorized to use design-build. The program provides $700 million in state capital investments to accelerate certain planned capital projects, with the Port Authority of New York & New Jersey providing an additional $300 million for New York City infrastructure project funding. A new public-private infrastructure fund of up to $1 billion also will be established from pension funds and private investments.
Potentially funded projects include replacing deficient state and local bridges; rehabilitating dams and flood-control infrastructure; renovating parks; rebuilding water systems; conducting energy retrofits on homes, farms, businesses and schools; and accelerating major SUNY and CUNY projects, the state says.
The law, set to expire in three years, creates the New York Works Infrastructure Fund, part of a broader state economic package aimed at job creation and tax reduction for the middle class. Gov. Andrew Cuomo (D) unveiled the program on Dec. 6.
The three-year limit is a way for the state to give design-build a test run before making a further commitment, says Mike Elmendorf, president and CEO of the Associated General Contractors of New York State, which supports the law. The law will give a handful of state agencies flexibility to deliver projects "more quickly, more efficiently and, in many cases, less expensively," which is a significant step forward, Elmendorf says.
Other groups that praise the measure include the Design-Build Institute of America. Richard Thomas, DBIA vice president of advocacy, says the law is a major victory as New York currently allows design-build only for dormitory construction and, more recently, for emergency infrastructure repairs after Hurricane Irene. He notes that, earlier this year, Ohio also expanded its use of design-build for certain transportation sector work. "[New York] and Ohio are probably the two biggest victories for design-build in the last decade," Thomas says.
Not everyone is a fan of alternative delivery mechanisms, however. The Professional Engineers in California Government (PECG), Sacramento, which represents 13,000 state-employed engineers and related professionals, contends that design-build "typically eliminates competitive bidding, allows contractors to inspect their own work, and in every instance in California has greatly increased project delivery costs." The union lost its bid earlier this year to stop the California Dept. of Transportation's plan to use a design-build P3 for phase two of its $1-billion Presidio Parkway project in San Francisco. PECG sued to have the project go through a traditional design-bid-build process but lost in court.