Proposition 2, explained

Chances are pretty good that most Juneau residents, even those who plan on going to the polls on Tuesday, might not understand what Proposition 2 really means for them. While understanding the details of government procurement is surely not at the top of any voter’s “to do” list, you should know that your vote on this proposal has lasting implications for Juneau. Proposition 2 will allow Juneau the same authority so many other Alaska jurisdictions and other states already have to build public works projects smarter, stronger and more efficiently.

 

This authority would allow the city, under certain circumstances, to award a construction project to the contractor who is most qualified to undertake and complete the project. The proposed charter language calls it Alternate Procurement, it also goes by Best Value Contracting and for good reason. It includes a variety of contracting methods, including Design-Build and Construction Manager At-Risk. For the purposes of this discussion, I’ll call Alternative Procurement Best Value Contracting, because that is what it is.

Under the traditional low-bid award currently required by the charter, also called Design-Bid-Build, the owner and the design team develop the design, then put it out to the contractors, asking “Who will build this for the cheapest price?” The design can include errors, unnecessarily complicated and expensive elements and other problems that can drive up the costs.

In our business, we often say that the low bidder is the contractor who made the most mistakes.

The owner runs a significant risk of awarding a construction contract that may be an unrealistically low price. This often results in compromised quality, excessive disputes, delays, claims, litigation and increased costs. This traditional approach limits collaboration, which means the owner, architect, contractor and subs often end up at odds, leaving taxpayers to foot the bill for change orders and cost overruns.

In this procurement process, the Design-Bid-Build, the contract is usually the Guaranteed Minimum Price. By the time the construction is complete, the cost goes up.

Contrast this with the proposed Best Value Contracting. In this, the contractor is selected early in the project design process and becomes an integral part of the design team. Throughout the design process, the contractor provides expertise on constructability matters, efficiencies in design and materials and regular cost estimates that keep the project within a predetermined budget. Change orders are few and far between, because the contractor has been a part of the design team from the beginning.

The public benefit of Alternate Procurement is that the project contract is based on a Guaranteed Maximum Price.

Best Value Contracting is a proven method used successfully in virtually every state, including Alaska. Why? Because it works.

Despite all the benefits of Best Value Contracting, on Alaska projects of all types, distrust of government contracting in general and fear of change can lead skeptics who’ve never used Best Value Contracting to cling to the old ways. Approval of Proposition 2 does not mean that all city construction contracts will be up for grabs. Best Value allows the contractors’ talents and expertise to provide real benefits from early in the design process. For many city projects, which are smaller in size and complexity, traditional low bid will work best. Best value contracting is an effective project delivery tool that Juneau needs in its infrastructure toolkit.

Supporting Proposition 2 provides flexibility to the 1970s-era regulations which cost taxpayers time and money on necessary infrastructure projects. These are projects the city needs, yet are often too expensive and inefficiently delivered under the traditional model. The use of Alternative Procurement or Best Value delivery processes have been steadily growing since the 1990s and voters on Tuesday should give Juneau the same flexibility already seen throughout the rest of the state and country.


• John MacKinnon served on the Juneau Assembly for four terms from 1989 to 2001 and was deputy commissioner of Alaska Department of Transportation from 2003 to 2008. He now serves as the executive director of the Associated General Contractors of Alaska.


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