Using the bridging method, designers and builders meet on common ground. Cal Poly applied this collaborative model to complete a major student housing project, on time and within budget.
By Larry Kelley
When an institution considers adding a new facility or building on campus, the business officer's role includes limiting risk in delivering the project. The project must meet three primary goals: serve the program needs as defined, fit into the available budget, and be ready on time. Achieving even two out of three of those goals can prove challenging. Staying within budget might cause a compromise in specifications, or completing the project on time might cause project costs to soar.
At California Polytechnic State University (Cal Poly), San Luis Obispo, we set a goal to expand on-campus student housing consistent with the university's master plan goal to house one third of our students on campus. Cal Poly had built only one new student housing project since the 1970s. That project, which opened in 2003 and added 800 beds to student apartment space, was a challenge on all fronts: meeting specifications, staying within budget, and being ready when promised.
Our next student housing project would be to add nearly 3,000 new beds in what became a $300 million, 1.4 million square foot mixed-use student apartment complex known as Poly Canyon Village. Even with a talented crew of facility planners and project managers on campus, we recognized that a project this size would benefit from additional expertise. We decided to engage a program management company that employed a risk- and cost-reduction tool, which served us very well.
Poly Canyon Village, a mixed-use, 3,000-bed student apartment complex
Using the "bridging" method of construction project delivery, we finished this large student housing project in summer 2009. It included 38 acres of campus infrastructure expansion, two large multilevel parking structures, a student village, recreation facilities, and the relocation of three large agriculture facilities. Construction finished ahead of schedule and within budget, with no contractor-originated change orders. In addition, we obtained Leadership in Energy and Environmental Design (LEED) Gold certification for the entire Poly Canyon Village-unusual for a project of this size.
While the bridging method can be a difficult sell (particularly for state-funded projects), we found it well worth the effort to propose its application to our student housing project.
Considering Construction Methods
The program manager we used for this major project is the Brookwood Group out of Atlanta, and now with offices in San Francisco and Los Angeles. Company Chairman George Heery developed the bridging method, which he has used in the for-profit sector and on higher education projects throughout the United States as well as in Europe and Asia.
We considered other delivery methods such as the design-bid-build approach as well as the contract manager-at-risk methodology. We also considered a public-private partnership, but that did not develop well.
The arch, a grand entrance to the Poly Canyon Village
In the end, we decided that bridging presented a collaborative method of design and construction while providing tight control over the construction contract price as well as over change orders, claims against the university, and post-occupancy costs.
We financed the project with a standard revenue-bond issuance, moving forward because our research convinced us that bridging offered numerous benefits:
- Bridging is the only project delivery method that protects the university with a highly enforceable price. The construction manager-at-risk method, for example, features the less-dependable guaranteed maximum price (GMP). In addition, bridging greatly reduces contractor-initiated change orders. (The average under other methods is 3 percent to 5 percent.) We looked at this method as a way to mitigate financial and timing risks.
- Bridging reduces the university's risk by having a firm and final price for the construction at about halfway through the design phases. This is often as much as 8 to 12 months earlier than in other methods for larger projects, and with only about half of the design cost at risk. Getting to a GMP by other methods that are issued before design is 100 percent complete is not contractually enforceable, which can lead to unpleasant surprises. We believe that the basic contract price ($300 million) for the project was at least 4 percent to 5 percent less than it would have been with any other method.
- The bridging method incorporates valuable elements from both the "design-bid-build" and the "design-build" methods, while eliminating aspects that often cause problems for the university. (See sidebar, "How Does Bridging Stack Up?") With bridging, the university may or may not have an outside program manager (depending on the capabilities and availability of in-house technical staff), but it will retain a firm of architectural designers with in-house or subcontract engineering consultants. This entity is referred to as the university's design consultant and provides professional services to the university throughout the design and construction phases. As mentioned, we hired a project management company that included a design consultant who proceeded through the traditional schematic design phases with Cal Poly reviews and approvals, and then prepared a set of detailed drawings and specifications that constituted full design criteria.
- The university enters into a single responsibility contract for the construction that also includes the contractor's separate architects and engineers preparing the final construction documents. The "design criteria" documents require about as much of the design firm's effort and time to prepare as traditional "design development" documents, but they pinpoint project specifications in much more detail while leaving other aspects up to bidders so as to give the university the best price. For example, since the university is well protected by building codes with respect to foundation types and design details, bridging contract documents allow the contractor to select the type of foundations and take responsibility for their final design and acceptance by building code officials. The same is true for many of the project's detailed design of engineering components. This is a departure from the traditional design process, which typically incorporates the selection of the type of foundations into the design development documents. Bridging contract documents always include detailed final selections and specifications for all finish hardware, plumbing fixtures, architectural details, and materials selection. Traditional design development documents generally do not include these elements.
- The university receives fixed and final price hard bids not only for the construction but also for the production of the final construction documents so that the building contractor has full responsibility for the completeness, accuracy, coordination, and code compliance of the construction documents prepared by the contractor's subcontract architects and engineers. This is a major shift in risk from the university to the contractor. The university's design consultant follows through, on behalf of the university, to ensure that the construction documents comply with the bridging contract documents. The consultant assists the university in awarding the construction contract (which has the form of a design-build contract), observes the work underway, approves progress and final payments to the contractor on behalf of the university, and handles any change orders that the university initiates.
- The cost to the university for design services is little or no more than the cost of traditional architectural and engineering (A&E) services. The university's design consultant will earn about 65 percent of a normal full A&E fee, and best estimates indicate that the contractor usually pays its A&E around 35 percent of a normal full A&E fee. In our Poly Canyon Village project, we had a final and firm price for the construction ($249 million) much earlier, with design fees at a much lower cost. Design services were paid both as part of the construction cost (contractor's A&E) and outside of the construction (the university's A&E). Total design services cost approximately $12.3 million. In addition, we had no contractor-initiated change orders, and new-building glitches were resolved promptly and at no cost to the university.
In summary, bridging worked well for us on this bond-funded project. However, it is important to point out that bridging would be much more difficult to use in traditional state-funded projects since funding for planning, for example, often is awarded years in advance of the funding for project construction.
A schematic representation of the Poly Canyon Village
Forging Ahead—On Schedule
The student housing project began with a commitment to fulfill the master plan goal of housing one third of enrolled students on campus. We recognized that the goal could be accomplished with a number of small projects or, possibly, one large one. We developed several business plans and decided that the most responsive and cost-justifiable choice would be a single large project. (See the rendering for a schematic of the Poly Canyon project).
We took the idea to the California State University System office in January 2003 for consideration. When the chancellor wondered how we would manage such a large project, we explained that we would use the program manager and bridging methodology. We received various approvals over the next couple of years, completed our environmental impact studies, and gathered bids. We selected Clark Construction as the contractor, and this company partnered with Niles Bolton Associates for design services. We had had some initial design work completed earlier, when we were exploring a public-private partnership, so we purchased it and provided it to the contractor.
We decided to deliver the housing in two phases, allowing us to absorb the additional students and ease the burden on the community as well as provide the contractor with reasonable completion dates.
- Phase one. Construction began in February 2006 on the roads and infrastructure for a 38-acre expansion of the campus. The complete student village, recreation facilities, 1,541 beds and related space, and one of the two 950-car parking garages were completed in summer 2008.
- Phase two. The balance of the 3,000 beds and the second parking structure were completed the following year.
With the university housing staff leading the way, this project became a team effort to improve housing facilities and enhance student experiences. Cal Poly planners and project managers worked with housing and with the new program manager. Everyone worked closely with the contractor and design firm to meet program needs and keep the project on schedule and on budget.
We fulfilled our housing promise to students on campus thanks to an extraordinary team and the bridging process that supported the team. This $300 million project went from idea to phase-one completion in five years—lightning speed for a state project.
As with any large-scale construction project, disagreements and misunderstandings occasionally arose. Nonetheless, the agreements established in the bridging documentation outlined a clear set of responsibilities that addressed any concerns that developed, defining ownership of the many functions in advance. For example, in the first year of occupancy, we noticed that the quality of painting did not meet our standards, with much of the paint beginning to peel. The bridging agreement clearly defined this as a contractor's issue, and it was the contractor that was obligated to pay several million dollars to correct the problem. Another issue came up regarding the functionality of the cogeneration unit. Again, the contractor stepped up, as defined in the bridging agreement.
By clarifying these kinds of issues and responsibilities in an agreement at the front end, our risks were greatly reduced. And, after the project's completion, we've had no claims against the university as a result of this design and construction process. As mentioned, the understanding between the contractor and the university helped correct the post-construction bugs that inevitably surface. At the same time, the process preserved design creativity, control over the design and details, and engineering and construction quality.
A More-Connected Campus
The project's most rewarding outcome is its popularity with the students. Demand for rooms each year is strong and, in fact, we have a waiting list each fall. The village plaza is used by university housing, students, and campus departments for many special events. The two parking structures allow resident students to park their cars and reduce the number of day trips by vehicles on campus; this helps in sustainability efforts as well as campus safety. The retail spaces are popular with students and the campus in general.
We delivered our promises—on the program, on the budget, and on the schedule. Although bridging does not guarantee a collaborative relationship among all entities, it creates a clearly defined path that can improve the project delivery process.
LARRY KELLEY is vice president for administration and finance and chief financial officer, California Polytechnic State University, San Luis Obispo.