San Francisco Int’l Uses Progressive Design-Build Method for Recent Garage Project

San Francisco International Airport (SFO) is in the middle of a $7.3 billion modernization program. Main components of the initiative include reconstruction and expansion of Terminal 1 and the new 27-gate Boarding Area B; additional gates in Terminal 3; a new hotel; expansion of the AirTrain system; and a second long-term parking garage.

No matter what is being built, projects with multibillion-dollar price tags often get messy and complicated. You know the story: Something goes awry and finger pointing among the mind-boggling number of participants slows construction. 

Looking for a better way, SFO has employed a different contracting approach to deliver projects. The new method helps project teams deliver design excellence and strive for exceptional outcomes that exceed expectations, explains Geoffrey Neumayr, the airport’s chief development officer.

When planning began three years ago, Neumayr was already using a methodology called design-build with progressive guaranteed maximum price packaging (quite a mouthful, right?). Unlike the traditional design-bid-build method, it does not require airports to accept the lowest bid. Instead, it requires a project’s prime contractors, designers, engineers, builders and subcontractors to work together to agree to a maximum price before construction begins.

“With the traditional design-bid-build process, there were compromises to avoid litigation, which means projects would be behind schedule and budget,” he says. “It was rampant—not just in aviation, but throughout other industries, too.”

The newer project delivery process, now commonly referred to as progressive design-build, is structured to be an antidote for such problems. It operates on the premise that cheapest isn’t always the best, and acknowledges that prices quoted at the beginning of projects often increase due to scope creep, contractor clashes and unforeseen obstacles.

“The progressive design-build method builds trust and collaboration between the owner, designer and construction teams,” says Praful Kulkarni, CannonDesign’s executive director of Integrated Services, former president of the Design-Build Institute of America, and a leading advocate for progressive design-build. “When you’re doing everything in collaboration, you’re no longer pointing fingers.” Kulkarni and CannonDesign did not participate in the recent garage project, but are assisting the airport with its current Capital Program and other progressive design-build projects.

“Progressive design-build offers some interesting dynamics that develop better efficiency and are changing the industry,” observes Neumayr. “Productivity has been lagging because of old processes.”

Greater Flexibility

Using the new method, SFO and a design-build team comprised of Nibbi Brothers General Contractors, DLR Group, JV Builders and FMG Architects added a new $154.8 million long-term garage on time and on budget, without any claims.

The new garage added 3,600 much-needed stalls to the airport’s parking capacity. Features of the six-level structure include:

• pedestrian and vehicle connections with AirTrain, the airport’s 24/7 automated people mover;
• automated parking guidance technology with variable message signage and wayfinding;
• electric vehicle chargers in 3% of stalls, plus preliminary infrastructure for more chargers if needed;
• space for customer amenities on the ground floor (options under consideration include valet parking, car detailing, dry cleaning drop off, pet boarding and customer pick-up for Amazon Prime, Google Express, Instacart and Safeway);
• Park Smart Certification, for green design and operation; and
• net zero energy consumption, largely due to rooftop panels.

Neumayr notes the airport’s ambitious sustainability goals were no small undertakings; but planning for them early in the progressive design-build process helped make it possible to achieve them.

Tasso Mavroudis, SFO project manager, says that the traditional design-bid-build method locks in a low bid proposal at the beginning of a project, leaving no room for uncertainty and/or adjustment as the project progresses. This substantially increases the risk of change orders and claims, he explains.

With design-bid-build, compromises may be necessary to avoid litigation, which can cause projects to fall behind schedule and budget, Neumayr adds.

In response, the industry came up with progressive design-build, which allows an airport to choose a design-build team based on qualifications rather than price. Then, the airport buys the project out trade by trade to determine an agreed-upon guaranteed maximum price. 

Rather than providing risk transfer at the time of the bid with partially completed drawings, progressive design-build is structured to minimize change orders, arguments about who is at fault and associated delays. 

“Under design-bid-build contract delivery, the guaranteed maximum price is measured against the engineer’s estimate or cost model and is based solely on the design bid documents and known conditions at the start of the project,” says Mavroudis. “In my experiences, much time and energy is devoted to addressing changes and potential changes on contracts. It makes for contentious and adversarial relationships between the owner, designer and contractor.”

In contrast, he notes that the progressive design-build method does not establish a guaranteed maximum price until the project is nearly bought out, which is usually at about 85% to 95% completion. Cost models and corresponding schedules developed by the design-builder are used in the early planning/design phases to provide reasonable estimates and budgets for trade package buyout. As trade packages are bought out over the course of the project, real costs are assembled. Toward the end of the project, a guaranteed maximum price is established with minimal risk to the final budget because actual costs are in place for the majority of the work.

Progressive design-build puts the design in the hands of the design-builder, explains Mavroudis. As a result, the design is advanced and implemented in constant collaboration with the construction team and owner—in this case, SFO. This allows elements of the project to be implemented in steps, while the design process continues for the remainder of the work. The owner and design-builder progress together toward a final design and guaranteed maximum price with actual values rather than an estimate established at the beginning of the contract.

The Big Room

One central concept of progressive design-build is the “big room”: a shared workspace where owners, designers and contractors can exchange ideas, make decisions and resolve problems quickly.

At SFO, the team uses a trailer complex for progressive design-build projects, which Kulkarni says is the most common way to set up a big room. At the project’s peak production, an open office space held over 100 people at once. The walls were covered with game boards, acronym lists and a clock counting down to the project activation deadline of Jan.10, 2019.

Bringing various disciplines together allowed personnel to cross-pollinate and devise innovative ways to keep the airport open while safely executing concurrent projects, explains Neumayr.

“The building information modeling process becomes magical with progressive design-build, because it stays consistent all the way through,” he adds. “We end up with a 3-D model with all the data that we can take into the long-term project. In the past, the consultants might have kept it to themselves. Now, we have one master model, and it’s fully coordinated. It was meant to be a collaborative tool from the beginning to end.”

Kulkarni notes that communication in the big room helped build trust among team members. “The only way your team can get better at what they do is to protect them when they take a risk,” he says. “Can you imagine how people would behave if they are threatened to lose their jobs if their fail? They become risk-averse. Instead, we build a comfort zone for risk.”

Big Project, Big Challenges

Kulkarni notes that progressive design-build can be particularly effective for airport projects. “Fifty million people go through these facilities, which is like a large city moving through a postage stamp,” he comments. “You can imagine the potential disconnect.”

SFO’s recent long-term parking garage project required significant redesign during the design phase—largely due to a major utility conflict and the value engineering needed to address unexpected cost model overruns. Because it was implemented under the progressive design-build method, the team was able to maintain the schedule by initiating foundation construction while the superstructure redesign was still underway.

Another challenge started with a forced sewer line positioned right in the middle of the site.

“If not for progressive design-build, we would have had a long and drawn-out process to figure it out,” says Neumayr. “Together, they realized they could use the guidance system; and they used that same system to connect to the old parking garage, too. They also had the challenge of integrating that with the other long-term garage and overcoming the challenges of connectivity on multiple floors. Without progressive design-build, it could have been a gigantic disaster for the airport.”

With a litany of major adjustments needed to address utility conflicts, the airport could have been locked into arbitration to settle claims if the project had been executed under a traditional design-bid-build method, observes Mavroudis. Redesign to address these conflicts would have been sequential, requiring foundation construction to halt until a solution was presented, vetted and approved. That would have most certainly resulted in schedule delay and extended overhead claims in addition to direct costs for the changes, he adds.

Mavroudis says that it’s critical to keep projects moving while making adjustments to the design and/or design criteria to meet unforeseen conditions and/or necessary owner additions and changes. Progressive design-build facilitates that and allows the design-builder and owner to “partner their way to the best solution” within reasonable costs and schedule constraints that are flexible enough to meet the project budget and timeline.

“By committing to the scope too early, traditional design-build ends the collaborative approach much too soon,” agrees SFO Program Director James Hawley. “Progressive design-build really brings out the best decisions throughout the life of a project.”

Ideal Partnering 101

Neumayr has experienced how the new project delivery method can help team members get to the root of problems and resolve them with unity rather than disparate factions.

“We’re asking people to be good to each other and solve the real issues, not the fake issues of relationships,” says Neumayr. “It’s so much better than wasting our time blaming each other while avoiding the real issue at hand. All the issues come to the surface and you have to deal with them.” 

Kulkarni nods his head in agreement: “You have a team, and you can’t let issues hang there without resolving them in a healthy way. We reduce negative stress by treating each other well. We try to remember to be soft on people and hard on issues.”

SFO’s “big room” was designed to help team members understand that it’s acceptable to disagree and provided a platform to do so. A facilitator was also trained to help with mediation.

Neumayr says the secret is allowing decisions to be made and problems fixed at the lowest possible level. There’s also a ticking clock on resolving issues. Parties are allotted a set amount of time to solve a problem before it is kicked up a level. “If they can’t do it, it works its way up to the next level and the time frames get shorter,” he explains. “This inspires people to just get along and figure it out.”

Failure Begets Success

The design-build team for the parking garage project worked to complete the structure ahead of schedule to mitigate potential delays down the road. Ultimately, the team did not deliver the project early, but finished it on time due to lessons learned while trying to beat the original schedule.

Neumayr adheres to the philosophy that failure is sometimes necessary to achieve success, and he counsels his teams accordingly. 

“It’s interesting how humans are,” muses Neumayr. His strategy is to empower personnel—and to reward effort and help pick up the pieces if they fail. That way, workers can focus on the job at hand instead of being overly concerned about getting in trouble for taking action, he explains.

Neumayr offers the scenario of a potential plumbing issue as an example: A piece of pipe must be added, and the team has to decide whether to cut the stud. Because the owner and builder are both represented on site, they collectively make the decision to cut out the stud and install the pipe. Later, they realize they need the stud for structural reasons and have to put it back.

“In some cases, maybe the right decision would be to choose a different action,” Neumayr says. “But you don’t pound people for making a decision when they’re trying to keep the project moving. The only way we might have discovered the next step is to make a decision.”

Hawley agrees about the importance of cooperation. “When individuals from separate entities come together to put the project outcome ahead of their own distinct interests, the resulting team mentality encourages individuals to do their best,” he says. “No matter the delivery method, it comes down to the people; progressive design-build simply brings out the best in people who are willing to collaborate.”

In retrospect, Mavroudis notes that SFO’s recent garage project and other progressive design-build efforts were not successful just because of the delivery method. The top-down commitment from the airport director to rank-and-file workers really makes it work, he explains.

“We are embarking on something that will change the industry and delivery methodology,” says Kulkarni. “We’ll see much more progress with greater value and less conflict, and we are committed to moving the industry in this direction. Progressive design-build creates a highly collaborative process with the best value for clients and even taxpayers. This is big.”