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INFRASTRUCTURE OUTSOURCING

Research shows the benefits of DB procurements and why they have become so popular. For example, a study by the University of Florida on DB transportation projects found that design time was 58 percent faster and construction was 18 percent faster than in traditionally structured projects.166

Following corruption problems in the mid-1970s, Massachusetts imposed restrictions on alternative procurement. A 1999 paper examined the effects of state restrictions on methods of project delivery in the state.167 After normalizing unit costs for the delivery of public buildings, the report concluded that limiting project delivery methods had created a sharp increase in the cost of construction procurement. Public buildings in Massachusetts cost $202 per square foot, while comparable projects in Indiana, Florida, and

Texas cost $142, $128, and $127 per square foot, respectively.168

The study found that Massachusetts had the

poorest performance in every category. Average cost growth was 30 percent higher than in similar projects in Florida, three and a half times the rate in Texas, and nine times the rate in Indiana.169 Likewise, Massachusetts projects experienced average time growth (percentage change in length of the contract) of over 55 percent, compared to 17 percent in Florida, 12 percent in Texas, and 6 percent in Indiana.170

Limiting project delivery methods had created a sharp increase in the cost of construction procurement.

D. Design-Build-Operate-Maintain (DBOM)

DBOM “means a source selection method in which the Purchasing Agency enters into a single contract for design, construction, maintenance, and operation of an infrastructure facility over a contractually defined period.” Funds required to pay for the services of the DBOM contractor during the contract period are appropriated prior to award of the contract or garnered vis-à-vis fares, tolls, or user charges.171

E. Design-Build-Finance-Operate-Maintain (DBFOM)

DBFOM “means a source selection method in which the purchasing agency enters into a single contract for design, construction, finance, maintenance, and operation of an infrastructure facility over a contractually defined period.” It should be noted that no funds are appropriated to pay for any part of the services provided by the DBFOM contractor during the contract period. Many A/E firms are ill-equipped to handle the legal and financial aspects of DBFOM. Involvement with this delivery system requires lawyers, accountants, banks, and principals savvy to the management of risks associated with these issues.172

166

Henk, “Privatization and the Public/Private Partnership,” p. 28.

167

Douglas Gransberg, The Cost of Inaction: Does Massachusetts Need Public Construction Reform? White Paper No. 7 (Boston MA: Pioneer Institute for Public Policy Research, September 1999).

168

Ibid., p. x.

169

Ibid., p. 14.

170

Ibid.

171

Directly from McGowan, “Value Based Delivery,” p. 2. Quotes are his, from the American Bar Association’s Model Procurement Code.

172

Ibid.

37

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