NYC Mayor Unveils Plan to Reduce Project Costs
New York City Mayor Bill de Blasio and his administration announced a new initiative last week that he says will help control the costs and reduce the schedule times of capital projects under the city’s Department of Design and Construction.
The DDC (the city’s main contractor) has reportedly completed $20 billion of construction work in NYC since 1996, and is often plagued with cost overruns and ballooning timelines. The contractor covers both infrastructure and commercial work.
“We are overhauling operations in order to deliver City capital projects more efficiently and within budget,” de Blasio said in a press release. “This plan will ensure critical infrastructure projects are finished faster and with less disruption to our neighborhoods.”
The “Strategic Blueprint for Construction Excellence” mainly addresses issues that pop early in the project stages that can undermine timeliness later down the line. It also provides incentives for contractors to meet “ambitious construction schedules while also allowing for better evaluation of contractor performance.”
Strategies outlined in the plan include:
Modernize Procurement – The bidding process currently can take more than nine months, and some projects go through multiple cycles, according to the administration. DDC will work with the Mayor’s Office of Contract Services to delegate more independent authority to the DDC, propose rule changes to the Procurement Policy Board and expand the efficient use of contractor pre-qualified lists.
Use Innovative Project Delivery Methods – The agency will continue to advocate for the expanded use of effective tools like the Design-Build method of contracting, while exploring alternative project delivery methods such as CM-Build, CM-at-Risk and insurance reforms with the State Legislature.
Streamline Change Order Approval and Payment – Change orders, project modifications that occur during construction from changed conditions, can delay projects for months while payment for the changes is processed. The City will streamline processing by creating allowances in project budgets for common project delays to give DDC the ability to pay contractors as soon as change order work starts.
Get Projects Approved and Started Faster – The DDC will improve its internal business process to move projects through preliminary review more quickly, and coordinate with OMB to advance project review and shorten the time to get a Certificate to Proceed.
Plan Projects Better and Minimize Mid-Stream Scope Changes – More than half of DDC’s projects are delayed by late-stage modifications. The DDC will enhance its innovative Front-End Planning units and work with sponsor agencies to establish realistic project scopes and budgets before work begins.
Work With Utilities More Effectively – Interference with utilities under NYC streets is a leading cause of delays to infrastructure projects. The DDC is working to establish early, regular coordination with utility companies so that schedules are clear and delays avoided. The DDC will expand the use of joint bidding when utility work and City work can be performed simultaneously, eliminating months of potential disruptions and saving valuable time.
Empower DDC Project Managers – DDC project managers have extensive responsibilities to ensure projects are built on time and on budget. The DDC will provide managers with better training and more support.
Become More Active Community Partners – The DDC will take a more proactive approach to community outreach and communication with project stakeholders and expand the use of borough-specific liaisons to better manage public concerns.
Transform Information Technology – DDC will upgrade aging systems and create new tools to better manage projects including new mobile technology that gives staff access to project management information in the field.
The plan has garnered support from officials across the industry and local government, though some of it is laden with skepticism.
Crain’s New York Business spoke with Jonathan Bowles, executive director of the Center for an Urban Future and the author of a 2017 study highlighting the DDC’s cost overruns, who said that while he’s encouraged by the proposal, he’s not sure it can completely restore the system.
"I think it's great. I think it's refreshing. But I also think the Department of Design and Construction can't do it alone," he said. "For this to have the impact it deserves, it needs to be embraced by [the budget department] and so many of DDC's partners in government."
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