Federal Facilities Council's Report on the Role of Facility Design
Reviews in Facilities Construction (Correspondence, 07/11/2000,
GAO/GGD-00-172R).

Pursuant to a congressional request, GAO reviewed the Federal Facilities
Council's (FFC) study on the role of federal agencies' facility design
reviews in the facility acquisition process.

GAO noted that: (1) according to the FFC study, opportunities exist to
significantly reduce total project cost (TPC) by conducting an effective
design review process; (2) the study found that effective design review
practices result in less rework on the part of the construction
contractor, fewer change orders to correct design errors and omissions,
and lowering the cost of belatedly adding project upgrade features that
should have been addressed in the original design; (3) FFC reported
that, historically, 30 to 50 percent of all construction change orders
result from errors in the design documents directly related to improper
interfaces between design disciplines (civil, structural, architectural,
electrical, and mechanical); (4) the FFC study notes that attention
should be focused on review of designs during the conceptual planning
and design phases, where the ability to influence ultimate functionality
and cost of the project is the greatest; (5) the study states that the
potential savings resulting from conducting effective design reviews
range from a minimum of 3 percent to as much as 20 percent of TPC, and
even higher indirect savings are taken into account; (6) the FFC study
concludes that, in the end, effective review of designs maximizes the
probability that a mission or operational requirement will be
successfully supported by a facility that was conceived, designed,
constructed, and placed into operation efficiently and effectively; (7)
the study identifies 18 best practices that federal agencies and other
facility owners can use to manage or oversee design reviews throughout
the facility acquisition process; and (8) it organized the best
practices into 5 categories related to: (a) the role of the owner; (b)
teamwork and collaboration; (c) advance planning; (d) process; and (e)
benchmarking.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  GGD-00-172R
     TITLE:  Federal Facilities Council's Report on the Role of
	     Facility Design Reviews in Facilities Construction
      DATE:  07/11/2000
   SUBJECT:  Federal procurement
	     Federal office buildings
	     Solicitation specifications
	     Construction contracts
	     Architect-engineer services procurement
	     Private sector practices
	     Contract oversight

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GAO/GGD-00-172R

United States General Accounting Office
GAO

GAO/GGD-00-172R

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 (240392)

B-285663
Page 7        GAO/GGD-00-172R Study on Facility Design Reviews

B-285663

July 11, 2000

The Honorable Jeff Sessions
United States Senate
 
The Honorable Richard C. Shelby
United States Senate
 
The Honorable Sonny Callahan
House of Representatives
 
Subject:  Federal Facilities Council's Report on the Role of
Facility Design Reviews in Facilities Construction

This letter responds to your request for a review of federal
agencies' practices for reviewing the plans and specifications
used in the facility acquisition process. Your request
resulted from reports you had received from constituents that
plans provided to their construction firms for federal
contracts were often inadequate and that the design and review
process of the government has gotten progressively worse in
recent years. You were concerned that either agency
engineering departments or the architect-engineering (A/E)
firms hired by the agencies, or both, were neglecting their
duties to provide construction contractors with plans and
specifications that were sufficiently clear and comprehensive
to allow projects to be completed without extensive change
orders and rework.

Early in the planning of our work, we learned that the Federal
Facilities Council (FFC) had completed a study of public and
private sector design review practices.1 This study, which was
published in January 2000, identified best practices and
technologies that could be used by federal agencies and other
owners to provide adequate management and oversight of design
reviews throughout the facility acquisition process. We
discussed the contents of the FFC study with Senator Sessions'
office and jointly reached the conclusion that information in
the study would satisfy the intent of the requested review. We
then agreed to provide an abridgment of the findings and best
practices discussed in the FFC study in lieu of going forward
with the requested review, which is provided in enclosure I.
We did not independently verify the information contained in
the FFC study. However, on the basis of prior work and
experience in this area, we were already aware of many of the
problems in the facility design review area discussed in the
study, as well as the efforts that have been made by federal
agencies to address the conditions covered in the study.

Results in Brief

According to the FFC study, opportunities exist to
significantly reduce total project cost (TPC) by conducting an
effective design review process. The study found that
effective design review practices result in less rework on the
part of the construction contractor, fewer change orders to
correct design errors and omissions, and lowering the cost of
belatedly adding project upgrade features that should have
been addressed in the original design. FFC reported that,
historically, 30 to 50 percent of all construction change
orders result from errors in the design documents directly
related to improper interfaces between design disciplines
(civil, structural, architectural, electrical, and
mechanical).

The FFC study notes that attention should be focused on review
of designs during the conceptual planning and design phases,
where the ability to influence ultimate functionality and cost
of the project is the greatest. The study states that the
potential savings resulting from conducting effective design
reviews range from a minimum of 3 percent to as much as 20
percent of TPC, and even higher when indirect savings are
taken into account. The FFC study concludes that, in the end,
effective review of designs maximizes the probability that a
mission or operational requirement will be successfully
supported by a facility that was conceived, designed,
constructed, and placed into operation efficiently and
effectively.

The study identifies 18 best practices that federal agencies
and other facility owners can use to manage and/or oversee
design reviews throughout the facility acquisition process. It
organized the best practices into five categories related to
(1) the role of the owner, (2) teamwork and collaboration, (3)
advance planning, (4) process, and (5) benchmarking.

Background

FFC (formerly the Federal Construction Council) is a
continuing activity of the Board on Infrastructure and the
Constructed Environment of the National Research Council
(NRC). It is a cooperative association of 20 federal agencies
with interests and responsibilities related to all aspects of
facility design, acquisition, management, maintenance, and
evaluation. FFC is convened under the aegis of NRC, the
operating arm of the National Academies. Its mission is to
identify and advance technologies, processes, and management
practices that improve the performance of federal facilities
over their entire life cycle, from planning to disposal. The
federal agencies that sponsored the facility design review
study, which was produced as an element of the FFC's 1999
Technical Activities Program, included the

ï¿½Department of the Air Force, Office of the Civil Engineer;
ï¿½Department of the Air Force, Air National Guard (ANG);
ï¿½Department of the Army, Assistant Chief of Staff for
Installation Management;
ï¿½Department of Energy (DOE);
ï¿½Department of the Navy, Naval Facilities Engineering Command
(NAVFAC);
ï¿½Department of State (DOS), Office of Foreign Buildings
Operations;
ï¿½Department of Veterans Affairs (VA), Office of Facilities
Management;
ï¿½Food and Drug Administration;
ï¿½General Services Administration (GSA), Public Buildings
Service;
ï¿½Indian Health Service (IHS);
ï¿½International Broadcasting Bureau;
ï¿½National Aeronautics and Space Administration (NASA),
Facilities Engineering Division;
ï¿½National Institutes of Health (NIH);
ï¿½National Institute of Standards and Technology (NIST),
Building and Fire Research Laboratory;
ï¿½National Science Foundation;
ï¿½Smithsonian Institution, Office of Facilities Services; and
ï¿½U.S. Postal Service (USPS).

FFC's study discusses the results of a questionnaire survey of
nine federal agencies that acquire, maintain, and operate a
significant inventory of buildings and other constructed
facilities in supporting their mission.2 Questionnaires were
answered by agency headquarters senior facilities engineering
program directors and field-activity-level project managers.
In addition, FFC used the results from research done by The
Business Roundtable (TBR), NRC, U. S. Army Corps of Engineers
(USACE), Construction Industry Institute (CII),3 and other FFC
efforts, as well as others, to augment the study. A literature
search was used to identify facility acquisition practices and
industry trends, as well as best practices and technologies
being used to provide adequate management and oversight of
design reviews. Supplemental information was obtained through
interviews with various public agencies, private sector
facility owners, trade and professional organizations, and A/E
firms in order to characterize the current state of the art
from a broader perspective.

The federal government, the nation's largest building owner,
acquires buildings and other structures to support specific
functions and missions and the general conduct of its
business. It spends more than $20 billion a year for facility
design, construction, and related services. Owners, the
government included, traditionally have maintained some level
of internal facility planning and design oversight capability
to ensure that new facilities acceptably balance the factors
of cost, schedule, quality, and performance.

Over the last decade, as a result of efforts to reduce the
size of government, agencies have downsized their design and
engineering staffs and relied more on outside consultants for
technical expertise. Although agencies have generally retained
their design oversight responsibilities, fewer staff resources
are now devoted to reviewing facility designs. The changes in
the facilities acquisition environment led FFC to conclude
that a review of issues, practices, and methods related to the
design phase of the acquisition process would be beneficial.

FFC Findings

The core issues of the FFC study concern the value added by
design review processes and the appropriate role of facilities
owners, particularly federal agencies, in such processes. In
developing a detailed scope of work for its study, FFC found
that no two of the sponsoring agencies defined the design
review process and its elements in exactly the same way. Nor
was a common start or end point identified for design review.
In view of the lack of commonly accepted definitions of the
elements, duration, and substance of the design review
process, FFC decided to focus on practices for reviewing
facility design over the entire facility acquisition process.
The study viewed design review as a multiphased process not
limited to the reviewing of designs during the design phase of
the acquisition. The objective of the study was to identify a
range of best practices and technologies that could be used by
federal agencies and other owners to provide adequate
management and oversight of design reviews throughout the
facility acquisition process.

Briefly, the FFC study presents five key findings on design
review processes.

ï¿½Effective design review processes add value by saving time
and money over the entire facilities acquisition process.

Effective design review processes result in the preparation of
more comprehensive and accurate design and construction
documents that, in turn, result in lower project construction
costs. Areas of savings include less rework on the part of the
construction contractor, fewer change orders to the owner for
correction of design errors or omissions, and a lowering of
the cost of belatedly adding project upgrade features that
should have been addressed in the original design. Indirect
cost savings can be realized by avoiding costs associated with
loss of productivity during construction-delayed facility
start-up, and with litigation. In short, effective review of
designs maximizes the probability that a business requirement
will be successfully supported by a facility that was
conceived, designed, constructed, and placed into operation
efficiently and effectively.

ï¿½The team responsible for design oversight should include
representatives of all project stakeholders: owner, user, A/E,
construction contractor, operation and maintenance staff, and
major equipment vendors.

The team should participate in and contribute to design-
related activities associated with each phase of the facility
acquisition process, from conceptual planning through start-
up.

ï¿½The use of metrics by federal agencies to measure the value
added by design review processes is not well established.

Although research has been done by the Construction Industry
Institute and other organizations to identify metrics that may
be used to measure both the efficiency and the effectiveness
of each phase of the facility acquisition process, the extent
to which individual federal agencies measure design review
processes and analyze results is highly variable.

ï¿½To provide effective oversight of design review processes,
the owner's interests are best served when the in-house staff
can fulfill the functions of a "smart buyer.

A smart buyer is one who retains an in-house staff who
understands the organization's mission, its requirements, and
its customer needs, and who can translate those needs and
requirements into corporate direction. A smart buyer also
retains the requisite capabilities and technical knowledge to
lead and conduct teaming activities, accurately define the
technical services needed, recognize value during the
acquisition of such technical services, and evaluate the
quality of services ultimately provided. As long as the owner
retains the in-house capabilities to operate as a smart buyer
of facilities, there does not appear to be any greater risk
from contracting out a broad range of design review-related
functions, so long as such functions are widely available from
a competitive commercial marketplace. If the owner does not
have the capacity to operate as a smart buyer, the owner risks
project schedule and cost overruns and facilities that do not
meet performance objectives.

ï¿½The ongoing revolution in information technology and
communications offers opportunities to improve design review
processes.

Examples include audio and video teleconferencing, immediate
and widespread data distribution via the Internet, computer-
aided design and drafting, and a wide range of project
management software. Emerging technologies, such as the use of
holographic projection techniques to create three- and four-
dimensional models of project designs, guarantee a continuing
stream of future enhancements.

The FFC study identifies 18 best practices for the review of
designs, which it summarized as follows:

Role of the Owner

ï¿½Be a smart buyer.
ï¿½Develop a scope of work that clearly and accurately defines
the owner's expectations regarding cost, schedule,
performance, and quality.
ï¿½Avoid the temptation to micromanage the design review
process.

Teamwork and Collaboration

ï¿½Use teambuilding and partnering techniques.
ï¿½Ensure that all interested parties participate in design
review processes.
ï¿½Use the same A/E throughout the process.
ï¿½Use senior, experienced staff to evaluate the evolving design
and guide the review process.
ï¿½Commit for the duration of the activity.
ï¿½Participate in a design awards program.

Advance Planning

ï¿½Focus attention at the front end during the conceptual
planning and design phases, where the ability to influence the
ultimate cost of the project is the greatest.
ï¿½Do not start the final stage of design until the preliminary
engineering is complete.

Process

ï¿½Tailor the review approach to project specifics.
ï¿½Keep up the pace of the process to maintain momentum.
ï¿½Pay special attention to civil, structural, architectural,
electrical, and mechanical interfaces.
ï¿½Exploit technology.
ï¿½Conduct a post-occupancy evaluation to develop a lessons-
learned document.

Benchmarking

ï¿½Measure results achieved by the design process.
ï¿½Document both unusually good and bad performance.

FFC's study identifies four areas where it was felt that
additional cooperation, research, and discussion could lead to
either fundamentally new approaches or significant
improvements to current practices. These areas are

ï¿½establishment of a senior-level advisory group on federal
facilities issues;
ï¿½identification of a set of metrics that could be used to
measure performance across all phases of the facility
acquisition process;
ï¿½evaluation of current practices of federal agencies with
regard to the standards, guidelines, and policies supplied to
A/Es in support of facility acquisition activities; and
ï¿½study of the potential benefits of establishing a peer review
process for agency design review practices.

The study also identifies a number of federal agency
initiatives related to the design review process. These
initiatives are included in the enclosure to this letter,
which provides a more detailed presentation of pertinent
information extracted from the FFC study relating to the
changing facilities acquisition environment confronting
federal agencies today, facility acquisition practices and
trends, and best practices.

Government/Industry Forum

On May 24, 2000, FFC sponsored a government/industry forum on
best practices for reviewing facility designs. Approximately
120 individuals from 30 federal agencies registered to attend
the forum. The major participants were GSA, all branches of
the Department of Defense, DOS, DOE, NASA, and the Smithsonian
Institution.

The forum highlighted identified best practices and tools that
can be used by federal agencies and other facility owners to
manage and/or oversee design reviews throughout the facility
acquisition process. The findings and 18 best practices
highlighted in the FFC-sponsored study were presented to the
forum participants by FFC. Government and industry
practitioners discussed best practices, tools, and processes
they have used or seen used to review facility designs, and
suggested how federal agencies could use such tools and
processes to foster quality design.

In addition, presentations were made on three systems that
have been developed to support different aspects of the design
review process. These design review tools were the Army's
DrChecks software program for documenting, collecting,
distributing, and archiving design review comments; the
Construction Industry Institute's (CII) Project Definition
Rating Index for preproject planning; and the REDICHECK
Interdisciplinary Coordination system for design reviews-the
first system designed specifically to correct the
interdisciplinary coordination discrepancies that account for
about half of the construction change orders involving errors
and omissions.

FFC Comments

On May 24, 2000, we asked both the FFC Staff Director and the
primary author of the FFC study to review and comment on a
draft of this letter and enclosure I. Both concurred with our
presentation of the information. In her letter dated June 7,
2000, the FFC Director said that the letter fairly and
objectively presented the findings of the FFC study, and the
primary author in his letter dated June 5, 2000, said that the
abridgement of the study both accurately reflected the report
and maintained its spirit and intent. Both provided minor
technical changes and updated information, which we
incorporated into the letter and enclosure I where
appropriate. The FFC Director's letter is reproduced in
enclosure II, and the letter of the primary author of the FFC
study is reproduced in enclosure III.

We are sending copies of this letter to Senator George V.
Voinovich, Chairman, and Senator Max S. Baucus, Ranking
Minority Member, Subcommittee on Transportation and
Infrastructure, Senate Committee on Environment and Public
Works; Representative Bob Franks, Chairman, and Representative
Robert Wise, Jr., Ranking Democratic Member, Subcommittee on
Economic Development, Public Buildings, Hazardous Materials
and Pipeline Transportation, Committee on Transportation and
Infrastructure; and to others upon request.

If you have any questions about this letter, please call me or
Ron King at (202) 512-8387.

Bernard L. Ungar
Director, Government Business
 Operations Issues

_______________________________
1Ralph S. Spillinger, in conjunction with the Federal
Facilities Council Standing Committee on Organizational
Performance and Metrics, Adding Value to the Facility
Acquisition Process:  Best Practices for Reviewing Facility
Designs, Federal Facilities Council Technical Report #139
(Washington, D.C.: National Academy Press, n.d.).
2The report was authored by Ralph S. Spillinger in conjunction
with the FFC Standing Committee on Organizational Performance
and Metrics. Mr. Spillinger is a retired federal official with
30 years experience in planning, design, and construction of
federal facilities with the Navy and NASA.
3CII's membership includes several federal agencies--GSA,
USACE, NAVFAC, NASA, DOS, NIST, and the Tennessee Valley
Authority.

Enclosure I
Abridgment of the Federal Facilities Council Study
on Facility Design Reviews
Page 19GAO/GGD-00-172R Study on Facility Design Re
views
     We condensed the FFC study Adding Value to
the Facility Acquisition Process:  Best Practices
for Reviewing Facility Designs, Federal Facilities
Council Technical Report #139 (Washington, D.C.:
National Academy Press, n.d.), authored by Ralph
S. Spillinger in conjunction with the FFC Standing
Committee on Organizational Performance and
Metrics, to focus on issues that address the
concerns of the requesters. We made minor
revisions to the wording in some instances for
clarity and contextual purposes. We also omitted
parts of the study, including some footnotes and
bibliographic references, to shorten the
presentation. We have nevertheless retained the
essential elements and relative completeness of
the original FFC study.

Background
     The federal government, like private
corporations and other organizations, acquires
facilities to support specific functions and
missions and the general conduct of its business.
Confronted with a requirement to acquire a
building or other constructed facility, owner
organizations, both public and private,
traditionally participate in a multiphased process
involving conceptual planning, design,
procurement, construction, and start-up.
Throughout this process, owners usually maintain
some level of design oversight to ensure that the
acquired facility is an acceptable balance of
cost, schedule, quality, and performance.

     Until the 1990s, federal agencies often
maintained an in-house facilities engineering
organization, comprised in part of architects and
engineers, responsible for both the technical
aspects and the oversight of the planning and
design phases of the acquisition process. As a
result of executive and legislative initiatives to
reduce the size of the government, federal
agencies have downsized their design and
engineering staff. Agencies are increasingly using
outside consultants to provide technical expertise
for the planning and design phases of both new
projects and major renovations of existing
facilities. Although oversight responsibility for
the facility planning and design phases generally
remains within the agencies, fewer staff resources
are being devoted to the effort than in the past.

     Concurrent with downsizing, procurement
regulations have been modified to allow agencies
greater flexibility and choice in selecting
contracting methods for acquiring facilities. As
recently as 5 years ago, the design-bid-build
method of facility acquisition was used almost
exclusively. Today, agencies increasingly rely on
design-build, construction management, and program
management contracting methods. Further, advances
in computer-aided design and other technologies
are occurring simultaneously with process changes
in federal agencies, increasing the importance of
technology support in the design process.

Defining Design Review
     Prior to developing a detailed scope of work
for the study, the sponsor agencies shared
information on their own design review processes
and the design review processes of some private
sector organizations with which they were
familiar. Analysis of this information revealed
that no two of these organizations defined the
design review process and its various elements in
exactly the same manner. Nor was a common start or
end point identified for design review as an
element of the facility acquisition process.

     For some organizations, design review was
limited to reviewing a consultant-prepared
schematic design to ensure that it met the owner
organization's functional requirements for floor
area, functional adjacencies and connections, and
budget. For other organizations, design review
primarily involved reviewing a more detailed
facility design prepared by an in-house design
team or a private A/E firm under contract.

     The level of the review and the elements
reviewed-for example, architectural reviews,
mechanical and electrical interface reviews, or
constructability1  reviews-also varied. Some
processes were formal, incorporating design
reviews at specific design milestones (such as at
15, 30, and 60 percent of design completion).
Others were less formal, relying on periodic
meetings between the owner and the design team to
review the progress being made toward preparation
of final construction contract plans and
specifications.

Study Purpose and Objective
     The core issues of the FFC study concerned
the value-added of design review processes and the
appropriate level of oversight for owners of
facilities, particularly federal agencies, in such
processes. FFC's objective was to identify a range
of best practices and technologies that can be
used by federal agencies and other owners to
provide adequate management and oversight of
design reviews throughout the facility acquisition
process. Specifically, it sought to provide
answers to the following questions:

ï¿½    What is the value-added of design review
processes?
ï¿½    How do (and how can) federal agencies measure
the value-added?
ï¿½    What is the role of in-house staff, and what
value do they add to design review processes?
ï¿½    What functions are being (and should be)
contracted to outside consultants?
ï¿½    What skills and resources do federal agencies
need to provide effective oversight of design
review processes?
ï¿½    What risks and liabilities do federal
agencies face in outsourcing most or all of their
design review functions?
ï¿½    How can new and emerging technologies be
integrated into design review processes?

Facility Acquisition Practices and Industry Trends
The process of acquiring a facility usually
includes five phases that can be generalized as
conceptual planning, design, procurement,
construction, and start-up. The contracting method
used will determine whether the five phases occur
in sequence or if some phases occur concurrently.
The contracting method can also affect who is
involved at each phase (A/E, construction
contractor, etc.). For example, using the design-
bid-build contract method, the five phases
generally occur in sequence with the A/E involved
in the design phase and a construction contractor
in the construction phase. A design-build
acquisition, in contrast, will use the same
contractor for the design and construction phases,
thus allowing some phases and activities to occur
concurrently. Regardless of the contracting method
used, the acquisition of a facility will
necessarily involve activities and decisions
related to all five phases.

During the conceptual planning phase various
feasibility studies are done to define the scope
or statement of work based on the owner's
expectations for facility performance, quality,
cost, and schedule. Several alternative design
solutions can be considered during this phase,
leading up to the selection of a single preferred
approach. The preferred approach may be a
schematic that includes functional requirements,
such as square footage estimates for various
functions and adjacencies or connections to
functions that are desirable or required.

The design phase usually starts once the statement
of work and preferred design approach have been
developed. From the schematic, the design matures
into final construction documents comprising the
plans and specifications from which equipment
procurement and construction bids can be
solicited. Estimated facility cost and schedule
issues receive increasingly intense review during
the design phase so that the owner has a high
level of confidence prior to bid that the
performance, quality, cost, and schedule
objectives defined during the conceptual planning
phase can be met.

Complex facility projects usually include a
procurement phase in order to expedite the
purchase, manufacture, and delivery of long-lead-
time equipment, such as unique process machinery,
large electrical and mechanical equipment, and
sophisticated architectural components. Such
equipment procurement may proceed in parallel with
construction phase activities, so that the owner
ultimately is able to furnish long-lead-time
equipment to the construction contractor in a
timely manner, thus avoiding construction delays
attributable to late equipment delivery.

Early in the construction phase a formal
construction management plan is developed
describing the intended sequence and method of
construction activity as well as the
relationships, responsibilities, and authorities
of all involved parties (owner, user, A/E,
construction contractor, specialty contractors,
and relevant consultants). The biggest challenge
during the construction phase is managing changes
resulting from such sources as scope of work
changes by the owner, errors and omissions in the
construction documents, and unknown or changed
site conditions. The construction phase is
considered complete when the owner accepts
occupancy of the facility, although final
completion of construction may continue for months
(or even years) until all discrepancies have been
identified, resolved, and mutually agreed upon.

The start-up phase, sometimes called
commissioning, begins with occupancy of the
facility by its user. Building components are
tested individually and then together with other
components in order to measure and compare their
performance against the original design criteria.
Facility operation and maintenance plans are
implemented, tested, and refined as appropriate.

Downsizing of Facility Engineering Organizations
During the last 20 years, change has been
particularly pronounced with regard to how
corporate and government owners manage the
acquisition of facilities and other projects. As
noted by TBR in a 1997 white paper,

"Virtually all major firms have reduced the size
and scope of work performed by engineering
organizations. Many firms are drifting because
they are uncertain about the appropriate size and
role of their in-house capital projects
organization. Nearly every owner's engineering and
project management organization in the U.S. has
been reorganized, sometimes repeatedly, without
achieving a satisfactory result in many cases."2

     Since 1970, owner engineering downsizing has
resulted in increased use of contractors to
perform design and construction functions. Graphs
published by TBR, based on data compiled by
Independent Project Analysis (IPA) of Reston, VA,
for more than 2,000 projects from a variety of
industries, show a decline in the percentage of
major projects designed by owners' in-house staff
from about 30 percent during 1970-1975 to about 25
percent during 1981-1985, to less than 10 percent
after 1991.

     Many owners originally identified the project
definition activity as a core competency.3
However, IPA's data indicate that project
definition, too, is increasingly being outsourced.
Data compiled through 1997 by CII, closely
correlates with TBR data.4

     Fortunately, an increasingly competitive,
productive, sophisticated, and capable facility
design and construction industry is capable and
willing to take on this increased workload.
Unfortunately, this trend has not reduced owners'
overall engineering costs as a percentage of TPC.5
The engineering share of TPC has increased over
the past 20 years from 13 to 20 percent. The
interpretation of this increase is controversial:
It is not clear if the increase reflects an
increased cost of outsourced engineering or simply
the cost of increased intensity of engineering
required by today's technology-driven projects and
more sophisticated design and construction
practices.

Contracting Methods
     Since 1993, federal regulations have been
modified to allow agencies greater flexibility and
choice in the contract methods used for acquiring
facilities. Downsizing and the increased
outsourcing of design and construction services
have provided the impetus for selecting methods
other than the traditional design-bid-build
contract method.

     Although there are many variations, current
practice recognizes four basic categories of
contract types that apply to several facility
acquisition systems:

ï¿½    general contract,
ï¿½    construction management,
ï¿½    design-build, and
ï¿½    program management.

General Contract Approach
     The general contract approach assumes that
the owner contracts individually for all
engineering and construction services required to
acquire a facility. This is the traditional
approach that most large-scale owners (both public
and private) used to design and construct their
facilities until the relatively recent growth of
interest in outsourcing of design and construction
services. It is illustrative of the design-bid-
build contract method used by federal agencies.

     Under this approach, the owner manages
individual contracts with all design, engineering,
and construction service providers, implying that
the owner must also manage all interfaces between
service providers. Interface management becomes
critical because assessment of accountability for
problems incurred during the project's evolution
is difficult due to the variety and separation of
individual contracts. To succeed, such a process
requires a relatively large and experienced
facility design, engineering, and management staff
within the owner's organization in order to
protect the owner's interests.

Construction Management Approach
     Under the construction management approach,
the owner contracts with an outside firm to manage
the construction of a project. The construction
manager (CM) may function either as an "agency"
CM, or as an "at-risk" CM.

ï¿½    Agency CM: The owner holds all individual
construction contracts, and the CM functions as
the construction contract administrator, acting on
behalf of the owner and rendering an account of
activities. The CM is typically not responsible
for construction means and methods, nor does the
CM guarantee construction cost, time, or quality.
ï¿½    At-risk CM: The actual construction work is
performed by trade contractors under contract to
the CM, who then becomes responsible to the owner
for construction means and methods and delivery of
the completed facility within the owner's scope of
work for cost, time, and quality.

 Under this approach, the owner typically retains
responsibility for managing all preconstruction
A/E services, and therefore must address all
interface issues between service providers.

Design-Build Contract Approach
     The design-build contract approach represents
a much larger step toward outsourcing of
traditional owner functions than occurs with the
above-described CM contract. Under this approach,
an owner prepares a project scope definition and
then engages a single entity that will provide all
services necessary to complete the design and
construct the facility. Generally, the scope
definition package represents a design that is
between 15 and 35 percent complete, although
variations may begin much earlier, often with a
performance specification, or much later with
perhaps a 65 percent design package.

     Project success under this approach is
primarily dependent on the owner's ability to
produce a comprehensive, well-defined, and
unambiguous scope of work upon which all
subsequent design-build activity will be based.
Once the design-build contract has been awarded,
changes to owner requirements will generally incur
heavy penalties to the project cost and schedule.
The owner is therefore well advised to ensure that
preparation of the project scope definition
package accurately and clearly expresses
expectations for project performance, quality,
cost, and schedule.

     Use of the design-build approach for project
delivery is growing dramatically in both public
and private organizations; NAVFAC, GSA, and USPS
have become particularly strong proponents of this
approach, but not without controversy.

Program Management Contract Approach
     The program management contract method
represents the ultimate step in outsourcing of the
owner's project management functions. The program
manager (PM) is engaged by the owner to exercise
oversight of the entire facility delivery process
for a multitude of projects. Similar to the
construction management approach, the PM can serve
in either an "agency PM" or "at-risk" capacity.

Owner as a "Smart Buyer"
     American business has regained its
competitive edge by reengineering its business
practices to improve their effectiveness and, in
the process, downsize their in-house staff.
However, competitive pressures caused many
organizations to approach staff downsizing without
adequate planning. Mistakes were made: reductions
were insufficient, or too extensive, or made in
the wrong area.

     The loss of technical competence through
downsizing was sufficiently pervasive that FFC, in
conjunction with TBR and the NAVFAC, conducted the
"Government/Industry Forum on Capital Facilities
and Core Competencies" in March 1998. A
fundamental finding of this forum was that owner
facilities engineering organizations need to
identify and retain core competencies-the
essential technical and managerial skills that
cannot be outsourced without serious risk to an
organization's ability to conceive and acquire
necessary facilities. The forum participants
recognized the advisability of the owner
performing as a "smart buyer" of outsourced
services. A smart buyer is one who retains an in-
house staff capable of

ï¿½    understanding the organization's business or
mission, its requirements, its customer needs, and
who can translate those needs and requirements
into corporate direction or mission;
ï¿½    accurately defining the technical services to
be contracted;
ï¿½    evaluating the quality, performance
effectiveness, and value of technical work
performed by contractors; and
ï¿½    managing the interface between technical
service contractors and the owner's line-of-
business managers who will ultimately benefit from
services provided.

     These functions are intrinsic to the entire
facility acquisition process and underscore the
need for the owner's in-house staff to be
intimately involved in these aspects of the
process, particularly the leadership role.

Cost Implications of Facility Acquisition
Practices
     It should be intuitive that poor planning and
design practices result in increased TPC. These
cost growth drivers include

ï¿½    construction change orders required to
correct errors and omissions in the design
documents;
ï¿½    owner-driven construction change orders
required to incorporate desirable features
overlooked during design;
ï¿½    inefficient construction resulting from a
failure to incorporate construction-enhancing
features during design;
ï¿½    rework resulting from unclear construction
documents;
ï¿½    standby costs incurred while construction is
either stopped or slowed to incorporate changes;
ï¿½    litigation;
ï¿½    delayed completion of the facility (i.e.,
lost business revenue, staff standby,
nonproductive capital investment costs); and
ï¿½    a poorly performing facility.

 Numerous research reports have been published
characterizing cost growth resulting from poor
planning and design practices. The following are a
few of the key statistics contained in documents
abstracted by FFC: 6, 7, 8, 9, 10

ï¿½    Project design costs average 13 percent of
TPC.
ï¿½    Total project engineering costs average 20
percent of TPC (in addition to design costs
discussed above, includes planning, development,
and project management costs).
ï¿½    Project rework costs average 12.4 percent of
TPC. Eighty percent of this rework results from
errors and omissions in the design documents. The
remaining 20 percent results from poor
construction practices.
ï¿½    Fifty percent of construction change orders
result from errors in the design documents
directly related to improper interfaces between
design disciplines (civil, structural,
architectural, electrical, and mechanical). These
change order costs contribute anywhere from 0.8 to
3.4 percent of TPC.
ï¿½    Comprehensive review of project document
development during the design phase of acquisition
should cost from 0.2 to 0.5 percent of TPC.
Properly done (i.e., using best practices
discussed later in this study), such activity
should drive down the cost of construction change
orders by an average of 3 percent of TPC.
ï¿½    To evaluate the value of thorough concept
definition a CII-led review of 62 projects
compared final TPC against the estimated TPC at
time of project approval for construction. The 21
projects with the highest degree of definition
averaged 4 percent cost underrun. The middle 21
projects averaged 2 percent cost underrun. The 21
projects with the lowest definition averaged 16
percent cost overrun.
ï¿½    Indirect costs, the business impact costs
discussed above, are highly variable and very
difficult to estimate, but are potentially huge.
An order-of-magnitude estimate would be 8-15
percent of TPC.
ï¿½    Research conducted by Redichek Associates, an
A/E firm specializing in outsourced design review,
indicates that the single biggest source of
construction change orders (approximately 50
percent) is errors in the design documents
directly related to improper interfaces between
design disciplines (civil, structural,
architectural, electrical, and mechanical).
Redichek's cost for conducting the discipline
interface design review is approximately 0.1
percent of TPC, with a resultant reduction of
rework cost ranging from 0.8 to 3.4 percent of
TPC. The estimated payback ratio here ranges from
$8 to $34 saved for every dollar invested in a
discipline interface design review activity.

     The implication of these statistics is that
opportunity exists to significantly reduce TPC by
conducting an effective design review process. The
potential savings range from a minimum of 3
percent to as much as 20 percent, and even higher
when indirect savings are taken into account.

     Intuitively, good design review practices
result in the preparation of more comprehensive
and accurate construction documents, which in turn
result in lower project construction costs. Areas
of savings include less rework on the part of the
construction contractor, fewer change orders for
correction of design errors or omissions, and the
cost of belatedly adding project upgrade features
that should have been addressed in the original
design. By reducing changes that are required
during the construction phase, good design review
practices also generate significant indirect cost
savings by avoiding costs associated with loss of
productivity during construction-delayed facility
start-up, and litigation.

Effective Design Review Processes:  FFC
Conclusions
     During the 1980s and 1990s, a number of
business practice studies were conducted by
construction trade associations, professional
societies, and academic groups to better
understand which practices produced better results
in terms of facility performance, quality, cost,
and schedule. These studies concluded that quality
design yields buildings that perform well
throughout their service lives.11 Quality design
resulted when all interested parties (owner, user,
A/E, construction contractor, and specialty
consultants) in the facility acquisition process
worked together in an intense, collaborative,
complex, and multiphased process beginning with
conceptual planning and concluding after the start-
up phase.

     These business practice studies also found
that decisions made during the conceptual planning
phase will establish initial constraints limiting
future design flexibility. These early decisions
thus have a disproportionately greater influence
on a facility's ultimate performance, quality,
cost, and schedule than decisions made later in
the process. The conceptual planning phase should
therefore be the phase when the review of designs
is most intense, with the primary focus upon
ensuring the appropriateness, accuracy, and
thoroughness of the owner's expectations regarding
facility performance, quality, cost, and schedule.
This will be especially true when using the design-
build and program management contract methods when
the owner's involvement in design reviews declines
after the conceptual planning phase.

     If design review activity during the
conceptual planning phase has resulted in a clear
scope of work regarding the owner's expectations,
design reviews during the design phase are greatly
simplified. Those parties involved should focus
upon ensuring that the evolving facility design
incorporates high standards of professional
engineering practice, with regard to
architectural, civil, structural, electrical, and
mechanical systems and their interfaces. Formal
reviews may be scheduled periodically during the
design phase, at approximately the 35, 60, 90,
and/or 100 percent design completion milestones
(although these milestones may vary significantly
depending on the individual project's size and
complexity). Such structured formality helps
ensure the widest possible participation of
interested parties during the review, including
specialists and consultants who bring expertise in
such areas as value engineering, constructability,
biddability,12 operability, maintainability, and
environmental compliance.

     During the procurement phase, the review of
designs can continue to contribute to overall
project success by monitoring progress made in
ordering the various items of long-lead-time
equipment. It is not unusual for suppliers to
detect errors in the ordering specifications, or
to make substitution recommendations for either
greater economy or performance enhancement. The
review team should evaluate the impact of these
changes on facility performance, quality, cost,
and schedule.

     It is almost inevitable during the
construction phase that scope of work changes by
the owner, errors and omissions in the plans,
unknown or changed site conditions, and creative
initiatives on the part of construction staff will
result in recommended changes to the facility
design. Design reviews in this phase should focus
on assessing the impact and advisability of
changes on facility performance, quality, cost,
and schedule.

Design reviews should continue into the start-up
phase. At this juncture, it is important to
document the results achieved by conducting what
is commonly referred to as a postoccupancy
evaluation, whose purpose is to record lessons
learned for future reference. Facility
performance, quality, cost, and schedule actually
achieved should be objectively measured and
compared with the owner's original expectations.
Lessons learned during the five facility
acquisition phases concerning design strengths and
weaknesses should be recorded for use in improving
future similar project activities. And perhaps
most important, the facility users' subjective
satisfaction with both the acquisition process as
well as the completed facility should be noted.

Based on industry research by CII, NRC, FFC, and
similar organizations, interviews conducted for
this study, and the author's experience, it can be
concluded that an effective design review process
will be structured to address all of the topics
included in table I.1.

Table I.1: Topics Addressed in an Effective Design
Review Process
Topic              Key question to be addressed
Owner satisfaction Does the constructed facility meet the owner's
                  expectations as originally defined by the project scope
                  definition or statement of work (i.e., performance
                  characteristics, architectural statement, level of
                  quality, cost, schedule, and any relevant owner-published
                  standards and/or policies)?
Sound professional Is the approach taken in each of the specialty areas
practice           (architectural, civil, mechanical, and electrical)
                  commensurate with professional standards?
Code compliance    Does the design comply with all applicable codes, such as
                  fire protection, life safety, and access?
Architectural      Is the overall presentation representative of established
statement          architectural standards?
Value engineering  Are there any less expensive methods or materials that
                  could be used in the design without impacting project
                  quality or performance (or life-cycle costs)?
Biddability        Are the construction documents sufficiently clear and
                  comprehensive so construction contractors will have no
                  difficulty developing an accurate bid with minimal
                  allowance for contingency?
Constructability   Does the design impose any unnecessarily difficult or
                  impossible demands on the construction contractor?
Operability        Does design of the facility operating systems ensure ease
                  and efficiency of operation during the facility's useful
                  lifetime?
Maintainability    Does the facility design allow for easy and cost-
                  effective maintenance and repair over the useful life of
                  the facility?
Life-cycle         Does the design represent the most effective balance of
engineering        cost to construct, cost to start up, cost to operate and
                  maintain, and (perhaps most important) the user's cost to
                  perform the intended function for which the facility is
                  being acquired over the useful life of the facility?
Postoccupancy      Based on a review of the construction, start-up, and
evaluation         ongoing functioning of the facility, could any unexpected
                  difficulty have been avoided by a different design
                  approach?
Source:  Federal Facilities Council Technical
Report #139.

Design Review Practices in Federal Agencies
     Federal facilities comprise a portfolio of
significant, durable assets that have been
acquired to support specific functions and
missions and the general conduct of the
government's business. It is estimated that the
government spends about $20 billion per year for
new facilities and major renovations of existing
facilities. Even a relatively small agency such as
IHS is a major player, with over $265 million of
construction activity in planning, design, or
construction as of 1999. At the other end of the
spectrum are the truly capital-intensive agencies,
such as the Department of the Navy with a $2.5
billion annual construction budget.

     As missions, priorities, and situations
change, agencies may experience wide fluctuations
in the scope and budget for their facility
acquisition programs. For example, a recent
program to upgrade federal courthouses around the
country has added billions of dollars to GSA's
construction activity. DOS is facing a similar
situation. Following the 1998 bombings of
embassies in Africa, legislation requiring rapid
and extensive upgrade of embassy security features
worldwide was enacted which could require several
billion dollars to execute. Given the size of the
government's expenditures on facilities, it is
important that federal agencies have effective
design review processes that result in buildings
that perform well throughout their service lives.

Downsizing of Federal Facilities Engineering
Organizations
     Like private sector corporations, federal
agencies' facilities engineering staffs have been
considerably downsized in the past 10-15 years. A
1987 report of FFC noted that "due to budget cuts,
agencies have had to reduce the number of project
managers, design reviewers, inspectors, and field
supervisors they employ." Procurement specialists
trained primarily in contract negotiation and
review rather than design and construction have
been playing increasingly greater roles in
facilities development.13

     The federal downsizing trend accelerated
after 1991 as a result of a changed global
environment, a shift in focus toward smaller and
more cost-effective government, and a number of
legislative initiatives. In the nine federal
agencies that responded to the questionnaire
associated with this FFC report, facilities
engineering staffs have been reduced on the order
of 20 to 65 percent, with the average at about 50
percent. As a consequence of the loss of technical
staff, particularly architects and engineers,
federal agencies are increasingly outsourcing
design and construction-related functions.

Design-Review-Related Trends in Nine Federal
Agencies
     The FFC's Standing Committee on
Organizational Performance and Metrics developed a
two-part questionnaire focused on design review
processes and distributed it to FFC sponsor
agencies. Part one was sent to senior facilities
engineering program directors at the headquarters
level and focused on agencywide policy issues.
Part two was sent to randomly selected project
managers at the field activity level and focused
on individual project review issues. The nine
federal agencies that answered the questionnaires
were ANG, DOE, DOS, GSA, IHS, NASA, NIH, NAVFAC,
and VA.

     The FFC report included a summary and
analysis of questionnaires returned by each of
these agencies that described the agency's design
review practices at the time of the study. The
following discussion compares and contrasts the
responses contained in the 44 questionnaires that
were returned by the 9 federal agencies listed
above.

How Are Agency Facility Engineering Functions
Organized to Carry Out Their Missions?
     There is no single organizational model for
federal agency facilities engineering
organizations. DOE's facilities are government-
owned but contractor-operated. Some agencies, like
the VA, have moved to field-based design review
and a mix of field-based and headquarters-based
project management. Others, like NASA, have a
centralized program policy and oversight office,
with all program and project management functions
conducted at the field activity level. The
majority of the responding agencies maintain
multiple regional project execution offices.

What Has Been the Extent of Downsizing on Agency
Facility Engineering Organizations?
     Seven of the nine responding agencies'
facility engineering organizations experienced
significant downsizing between 1994 and 1999, on
the order of 20 to 50 percent reduction of in-
house staff positions (the VA's reduction has been
estimated at 65 percent). As of August 1999, only
DOS and ANG have been able to maintain a
relatively stable situation with regard to staff
size.

How Are Agency Facilities Engineering
Organizations Responding to Mitigate the Impacts
of Downsizing?
     During the early stages of downsizing, the
responding agencies simply tried to do more with
less. However, this adaptation became untenable at
a certain point. Agencies then began to reengineer
their facility engineering processes and
practices. Intensity of this reengineering varies
among the responding agencies, reflecting the fact
that the speed and extent of downsizing has varied
greatly from one agency to another. Impact-
reducing strategies reported by various agencies
include the following:

ï¿½    Augmenting in-house staffing voids through
personal service contracts. Personal service
contracts allow agencies to add contractor staff
to in-house staff on a temporary basis to fill
voids in specific disciplines, or to address
unusual peaks in workload. Procurement policies
vary among agencies with regard to allowing use of
personal services contracts.
ï¿½    Outsourcing functions previously accomplished
in-house. Nearly all facility acquisition
functions except agency policy development and
oversight have been considered for outsourcing by
one agency or another.
ï¿½    Reducing the intensity of oversight
activities such as design review and construction
inspection by either contracting such functions to
third parties, or by including the functions
within the scope of the design and/or construction
primary contracts.
ï¿½    Eliminating some activities entirely. One
NAVFAC field office reported that it has
eliminated formal design reviews on many smaller
projects, holding A/Es responsible for instituting
a self-review process. Similarly, a GSA region
reported that it generally only requires a single
formal progress review during design.
ï¿½    Using project delivery contracting schemes
that shift more responsibility for design and
construction oversight to the contractor, such as
design-build, construction management, and program
management. Indeed, NAVFAC reports that design-
build is now the favored contracting strategy and
the traditional design-bid-build strategy has
become the least favored.

Why and How Do Federal Agencies Approach the
Practice of Design Review?
     Risk management, compliance with user
expectations, and reductions of change orders were
cited as the primary reasons for conducting design
reviews. The least cited reason was to maintain in-
house core competencies. All nine responding
agencies report participation in a design review
process. Significant differences were noted,
however, as follows:

ï¿½    All responding agencies reported that they
participated in design reviews, although not at
every field office (a few field offices of
decentralized agency engineering organizations
reported no or minimal design reviews-they rely on
A/Es to self-review their work). Also, the degree
to which agencies and their field activities
varied the intensity of the design review process
between simple and complex projects varied greatly
from one agency to another.
ï¿½    Design review functions identified as having
the greatest value-added were scope and budget
compliance, constructability, and compliance with
client design guides. Functions identified as
adding the least value were the discipline
reviews-architectural, electrical, mechanical, and
structural (although the responses did not support
the idea that these functions could be dropped
from the review process without risk.)
ï¿½    Nearly all responding agencies reported
conducting formal design reviews at the 30 and 90
percent project design milestones. Only two (NASA
and GSA) reported conducting formal reviews
routinely earlier than the 30 percent milestone.
ï¿½    The primary criteria used to determine the
intensity of design review are project value,
complexity, and the project delivery method.
Conversely, these criteria had little impact on
the decision to review with in-house or outsourced
resources. That decision rested primarily on in-
house staff availability.
ï¿½    When elements of design review are
outsourced, all responding agencies still use in-
house staff to review project scope and budget
compliance. The most consistently outsourced
elements included constructability, value
engineering, and compliance with building codes.
ï¿½    Nearly all responding agencies exploit
technology tools to support their design review
activities, including computer-aided or assisted
design software, Internet and Intranet
communication links, and computer software word
processing and project management programs.
ï¿½    Fewer than half of the agencies measure
performance of their design review processes.

How Have Federal Agencies Changed Their Approach
to Design Review?
     Eight of the nine responding agencies
reported that they have changed their approach to
design reviews since 1994. The primary reasons
cited for change are staff downsizing, changes in
contract methods, and business process
reengineering. The most frequently reported
changes included

ï¿½    consolidation of agency design guides and
standards for simplification,
ï¿½    increased outsourcing of either parts or all
of the design review activity,
ï¿½    exploitation of technology to assist the
process, and
ï¿½    reduced frequency of formal design reviews.

     Several questions related to outsourcing of
design review functions. Opinions and experience
on this issue were varied, and no conclusions
could be reached from the data provided. The
following were typical comments:

ï¿½    "Outsourcing results in a loss of core design
capability. This in turn results in a lack of
ability to be a Smart Buyer. At some point, we
wouldn't even have enough expertise to hire a
contractor to conduct design reviews."
ï¿½    "Outsourcing poses no risk, as long as the
contractors are liable for performance."
ï¿½    "Outsourcing poses a very significant risk,
particularly on renovation type work. And it is
very difficult to have technically competent
contractors in specialty areas."
ï¿½    "Outsourcing is our present way of doing
business, and we have experienced little risk."

     Looking to the future, about one-third of the
responding agencies reported that they are
considering further outsourcing of design review
functions.

Interesting Initiatives
     During the course of interviews and an
extensive literature search, a number of
innovative practices were noted that may have
broader implications. These practices are
discussed below.

Partnering and Team-building Training
Although this practice is achieving widespread
recognition, some programs have proven more
effective than others. USACE and CII have both
been recognized for their particular programs, and
both offer formal training.

In-house Training Programs
Agencies have developed in-house training programs
specializing in program and project management
practices for federal agencies. Among the oldest
are schools run by USACE and NAVFAC. More
recently, NASA has developed two 1-week short
courses of facility engineering management
practices.

Review Comment Documentation
USACE's latest software program used for
documenting, collecting, distributing, and
achieving design review comments is called DR
CHEKS. It runs on a desktop computer and uses the
Internet for communication among design review
participants. Perhaps most important, it has
features to aid follow-up of actions taken in
response to review comments, which is a
particularly troublesome area.

Project Management Center of Expertise
GSA recently established the GSA Project
Management Center of Expertise. The center has
been staffed by GSA's most senior and competent
project managers to serve two functions:

ï¿½    Actively manage all of GSA's uniquely large,
complex, or high-visibility projects, regardless
of location.
ï¿½    Provide mentoring, counseling, and training
services in the area of project management in
support of all of GSA's regional offices.

International Standards Organization (ISO) 9000
Certification
Some large A/E firms have secured ISO 9000
certification as a quality control activity. Among
federal agencies, several USACE's district offices
have received ISO 9000 certification for their
design and construction programs. Other agencies,
including NASA and NIH are working toward ISO 9000
certification for their facility engineering
activities.14 It should be noted that ISO 9000 does
not guarantee a quality product. Rather, it
guarantees that the process that produces the
product (good or bad) has been carefully
structured, documented, and measured.
Organizations have found that the process of
securing ISO 9000 registration has been a valuable
experience in understanding just what they do and
how they go about it.

Conceptual or Advance Planning
Most projects that fail to meet their planned
objectives do so because of faulty or inadequate
predesign development. CII has recently developed
a comprehensive preproject planning approach that
allows organizations to measure whether they have
adequately addressed all predesign requirements.
CII also has developed a training module intended
to assist organizations in adopting this
recommended approach to preproject planning.

Design Review Lessons Learned
     Problems identified in the design review
process can become a powerful tool to improve
performance. VA uses a method of documenting and
publicizing such lessons learned in an innovative
program called ProCATS. Its purpose is to identify
recurring problems that result in change orders,
claims, and delays and then to take positive steps
to avoid such problems in the future. The system
is the first of its kind in the federal government
and was a 1996 winner of the Vice President's
Hammer Award.

A/E Historical Performance Database
     USACE has, for many years, maintained a
database containing historical evaluations of A/E
performance on past projects. This database, the
ACASS, can be queried by any federal agency
interested in a particular A/E's past performance.

NIH Contractor Performance System
     NIH has developed a multiple agency, shared
file system that allows all authorized users to
have access to the completed contractor
performance evaluations of all subscribing
agencies via the Internet. A separate module for
each subscribing agency is developed with a unique
URL, allowing each agency control of agency data
and access authority. Planned future enhancements
include automated construction and A/E forms,
electronic storage of contractors' rebuttal and
comments, electronic and encrypted transmittal of
evaluations to contractor, and ad hoc reporting.

Findings About the Value-added of Design Review
Processes
     During the course of the study, a literature
search was conducted, industry experts and
practitioners were consulted, and federal agencies
were surveyed. The findings of this report as they
relate to the original questions posed about the
value-added of design review processes and the
role of facilities owners are addressed in this
segment.

What is the Value-added of Design Review
Processes?
     Design reviews are an essential component of
the facility acquisition process. An effective
design review process helps to unify and align all
interested parties to a common objective and
integrate their knowledge, experience, and skills
throughout all phases of the facility acquisition
process (conceptual planning, design, procurement,
construction, and start-up). In the end, effective
review of designs maximizes the probability that a
business requirement will be successfully
supported by a facility that was conceived,
designed, constructed, and placed into operation
efficiently and effectively.

     Effective design review practices result in
the preparation of more comprehensive and accurate
design and construction documents, which in turn
result in lower project construction costs. Areas
of savings include less rework on the part of the
construction contractor, fewer change orders to
the owner for correction of design errors or
omissions, and the cost of belatedly adding
project upgrade features that should have been
addressed in the original design. By reducing
changes required during the construction phase,
effective design review practices also generate
significant indirect cost savings by avoiding
costs associated with loss of productivity during
construction-delayed facility start-up, and
litigation.

How Do (and How Can) Federal Agencies Measure the
Value-added?
     The nine federal agencies that responded to
FFC's questionnaire indicated that they currently
measure the value-added of design review processes
primarily from a broad context: Their insight is
both subjective (is the user reasonably happy with
the completed facility?) as well as objective (how
close did the completed facility come to the
original cost and schedule objectives?).
Sufficient industry research has been conducted in
recent years to identify metrics that can be used
to measure both the efficiency and the
effectiveness of each phase of the facility
acquisition process and compare the results to
established benchmarks. The extent to which
individual federal agencies currently take such
measurements and analyze results varies widely.

What Is the Role of In-house Staff, and What Value
Do They Add to Design Review Processes?
     Within most federal agencies, acquiring
facilities is a means to support the agency's
mission rather than the mission itself. The
agency's in-house facility engineering staff exist
to support the agency's mission. First and
foremost, the in-house staff should be able to
identify facility requirements in the context of
their impact on the agency's mission success and,
in so doing, to act as a smart buyer. The staff
should be capable of leading a strategic planning
process involving representatives of the agency's
facility user community where give and take
decisions are made balancing the facility's
ultimate performance, cost, and schedule.

     During the tactical facility acquisition
phase, in-house facility engineering staff should
be capable of providing the overall process
leadership, ensuring that all activities proceed
in the best interest of the owner. Toward this
end, the owner's interests are best served if the
in-house staff can also perform in the role of a
"smart buyer" of the necessary technical services.
A smart buyer is one who retains the requisite
technical knowledge to accurately define the
technical services needed, recognizes value during
the acquisition of such technical services, and
can evaluate the quality of services ultimately
provided.

What Functions Are Being (and Should Be)
Contracted to Outside Consultants?
     Individual and often uncontrollable
circumstances have resulted in nearly all facility
engineering functions, from conceptual planning to
project start-up, being contracted to outside
consultants at one time or another. Today's
general practice among federal agencies is to
outsource design development and, to a lesser
extent, certain specialized technical review
functions, such as shop drawing reviews, value
engineering, and constructability.

     As long as sufficient skills are retained in-
house to meet the smart buyer approach discussed
above, there does not appear to be any greater
risk from contracting out a broader range of
design review functions, including such services
as construction document discipline reviews and
code compliance checks, so long as such functions
are widely available from a competitive commercial
marketplace. The exception occurs when complex
projects include unique and specialized features
of high mission relevance and limited skill
availability in the commercial marketplace
(examples would include NASA wind tunnels, VA
medical research facilities, and high-security
military facilities). Agencies are well advised to
retain such unique specialized skills in-house as
core competencies, with design review a primary in-
house responsibility.

What Skills and Resources Do Federal Agencies Need
to Provide Effective Oversight of Design Review
Processes?
     Industry-related research and the author's
interviews with public and private sector
practitioners suggest that agencies should retain
the capabilities in-house to

ï¿½    define facility requirements in relation to
the agency's mission, assess facility-related
mission impacts, and conduct facility-related
strategic planning activities;
ï¿½    lead and conduct teaming activities involving
participants from various interested parties
(owner, user, A/E, construction contractor,
specialty consultants, etc.);
ï¿½    develop, implement, and maintain overall
policy and direction of the agency's facility
engineering function; and
ï¿½    perform as a smart buyer of outsourced
technical services.

What Risks and Liabilities Do Federal Agencies
Face in Outsourcing Most or All of Their Design
Review Functions?
     The risks and liabilities will vary depending
on whether an agency maintains the in-house
capabilities to perform the design review-related
functions listed above. If an agency does not
retain such in-house resources and capabilities,
agencies risk the following consequences:

ï¿½    Consultant access to agency decision makers
may be limited, resulting in difficulty
understanding the owner's project performance
expectations.
ï¿½    Project schedule may be compromised at key
decision points due to lack of owner insight.
ï¿½    A design review process with little or no
owner participation may become ineffective without
the owner being aware of the developing process
deterioration. An owner with little or no
participation in design reviews is less likely to
become aware of any breakdowns in the process; the
owner may find out too late to remedy the problem
or to save the project schedule, and this may
result in cost overruns.
ï¿½    Consultants may find it difficult to
communicate with owner staff regarding technical
issues and problem solving.

 In the case of unique or unusual facilities,
consultants may have limited access to unique
skills, potentially resulting in naï¿½ve and
inappropriate technical solutions.

How Can New and Emerging Technologies Be
Integrated Into Design Review Processes?
     The ongoing revolution in information
technology and communications offers unlimited
opportunities to improve design review processes.
Examples range from relatively simple practices,
such as effective use of audio and video
teleconferencing to improve meeting flexibility,
to emerging technologies using holographic
projection techniques to create three- and four-
dimensional models of project designs in order to
visualize the impact of proposed changes. The
Internet and computer-aided design and drafting
can be used for fast, comprehensive, paperless
communication between reviewers, managers, and
A/Es.

     Benchmarking offers one tool to identify
which technologies offer the most return for the
investment made. Agencies can identify similar
organizations that have successfully incorporated
desirable technologies and adopt those practices
that offer significant improvements in process,
cost savings, time, or resources.

     Agencies can also consider joining any of the
many trade and professional organizations that
assist their membership in identifying and
implementing appropriate technology-based
practices. It is important to recognize that some
of the technology practices will cause major
changes to established routines, require new
equipment and software, and require mastering new
sets of skills.

Best Practices
     Effective design review processes require
work, some of it obvious and some of it quite
subtle. The following list of 18 best practices
relies heavily on research conducted by CII, TBR,
NRC, FFC, and similar organizations. The best
practices are organized into five categories
related to the role of the owner, teamwork and
collaboration, advance planning, process, and
benchmarking.

Role of the Owner
1.   Be a smart buyer. Facility acquisition
  processes (including review of designs) work best
  when the owner has sufficient in-house expertise
  to qualify as a smart buyer. A smart buyer is one
  who retains an in-house staff that understands the
  organization's mission, its requirements, and its
  customer needs and who can translate those needs
  and requirements into a corporate or strategic
  direction. A smart buyer also retains an in-house
  staff that includes technical experts who can
  articulate the nature of technical services being
  bought, recognize good value during the
  negotiation of such services, and evaluate the
  quality of the services as they are provided.
  
2.   Develop a scope of work that clearly and
accurately defines the owner's expectations
regarding facility cost, schedule, performance,
and quality. The owner's standards, more than
those of any other entity involved in the
acquisition process, will set the tone for all
aspects of design review activity. The owner's
scope of work should be used as the yardstick
against which to measure performance.
3.   Avoid the temptation to micromanage design
reviews. A/Es are selected based on their
experience and expertise; they should be given
wide latitude to bring that expertise to fruition.
Teamwork and Collaboration
4.   Use team-building and partnering techniques
  to build good working and communicative
  relationships among the participants, as well as
  to align all participants toward common objectives
  and expectations.
  
5.   Ensure that all interested parties
participate in design reviews from the planning
and design phases, so that all perspectives are
represented as the design evolves. Broad
participation creates early project endorsement or
"buy-in," reducing the potential of later
disagreement or need for changes. At a minimum,
involve representatives of the owner, the user,
the A/E, construction management staff,
maintenance and operations staff, and special
staff such as procurement, safety, and fire
protection. Where possible and appropriate,
include the construction contractor, permitting
agency staff, and independent specialists for
value engineering and independent review. Err on
the side of excess participation-it is cost-
effective protection against subsequent unexpected
and expensive fixes and oversights.
6.   Use the same A/E throughout the facility
acquisition process to maximize continuity and
allow participants to build and apply their
experience baseline. Using the same A/E for
conceptual planning, detailed design, construction
support engineering services, and start-up takes
advantage of the A/E's intimate understanding of
both the owner and his project needs, and supports
continuity of personnel involved.
7.   Use senior, experienced personnel who
understand the relationship of a facility to
meeting the agency's overall mission and who can
effectively evaluate the evolving design and guide
the review process.
8.   Participants should commit for the duration
of the activity to ensure continuity. Changing
participants from any of the organizations
involved in reviewing the design can disrupt the
work flow and threaten the stability of good
teaming relationships.
9.   Participate in a design awards program in
order to recognize and motivate excellence.
Nothing succeeds like success! Recognition of a
job well done gives visibility to a successful
process and motivates all of the participants to
continually improve.
Advance Planning
10.  Focus attention on the review of designs
  during the conceptual planning and design phases,
  where the ability to influence the ultimate
  functionality and cost of the project is the
  greatest. Effective design review processes start
  out being very intensive and proactive, with an
  intensity that declines through the procurement,
  construction, and start-up phases of the
  acquisition process.
  
11.  Do not start the final stage of
design-preparation of the construction plans and
specifications-until the preliminary engineering
has been completed. To do otherwise could
significantly slow the overall design activity due
to frequent interruption and rework caused by
incomplete project scope definition.
Process
12.  Tailor the design review approach to project
  specifics. Project complexity, cost, mission
  criticality, visibility, method of contracting,
  and schedule are just a few of the variables that
  can drive aspects of the design review approach
  such as frequency, intensity, and reliance on
  outsourced experts and consultants.
  
13.  Keep up the pace to maintain momentum and
keep the facility acquisition process on schedule.
The review of designs at each phase of the process
should not impede progress toward a completed
facility. A stop-start or prolonged process
impacts the acquisition in many ways, perhaps the
most critical being the increased potential that
organizations will reassign participants.
14.  Pay special attention to the civil,
structural, electrical, and mechanical interfaces.
Historically, 30-50 percent of all construction
change orders result from interference fit
problems between trades. Is the power supply
appropriate to the specified mechanical equipment?
Does the HVAC (Heating, Ventilating, and Air
Conditioning) ducting interfere with structural
members?
15.  Exploit technology. The technological
revolution has provided many tools to enhance
design review processes, including computer-aided
design, three-dimensional modeling, data
collection and distribution software programs, and
rapid communications systems, including the
Internet.
16.  Conduct a postoccupancy evaluation to develop
a lessons-learned document for future reference.
After facility start-up, the design review team
should document objective results (how did final
cost and schedule compare to planned?) as well as
subjective results (is the user pleased with
facility performance?). The postoccupancy
evaluation should also relate approaches taken
during the various phases of the facility
acquisition process with the final results.
Benchmarking
17.  Measure results achieved by design review
  processes in order to assess their level of
  performance. A process cannot be managed if it is
  not measured. Successful benchmarking requires an
  organization to identify relevant performance
  characteristics, measure them, and compare results
  against either established industrial norms or
  against similar measured characteristics of other
  organizations recognized for their excellence.
  
18.  Document both unusually good and bad
performance for future reference. Even better,
find a way to share such information with other
organizations and federal agencies.
_______________________________
1In constructability reviews, experienced
construction managers look for such items as
inappropriate materials, physical barriers, and
complex interfaces that will unnecessarily
complicate the construction phase.
2The Business Stake in Effective Project Systems
(Washington, D.C.: TBR, 1997).
3Core competency is defined as an essential skill
that should be retained within the organization in
order to perform effectively.
4Benchmarking and Metrics Summary for 1997,
Benchmarking and Metrics Committee (Austin, Texas:
The University of Texas at Austin, 1998).
5TPC is defined as the sum total of all costs
associated with a project's planning, development,
design, construction, outfitting, and start-up,
not including land costs.
6Benchmarking and Metrics Summary for 1997, CII,
Benchmarking and Metrics Committee (Austin, Texas:
The University of Texas at Austin, 1998).
7The Business Stake in Effective Project Systems,
(Washington, D.C.: TBR, 1997).
8Costs of Quality Deviations in Design &
Construction, CII, Publication  10-1 (Austin,
Texas: The University of Texas at Austin, 1989).
9 William T. Nigro, and Martha W. Nigro, Redicheck
Interdisciplinary Coordination, 3rd edition
(Peachtree City, GA: The REDICHECK firm, 1992).
10Measuring the Cost of Quality in Design &
Construction, CII, Publication 10-2 (Austin,
Texas: The University of Texas at Austin, 1989).
11Improving the Design Quality of Federal
Buildings, NRC, Committee on Improving the Design
Quality of Federal Buildings, Building Research
Board (Washington, D.C.: National Academy Press,
1989).
12In biddability reviews, procurement specialists
look for conflicts, errors, omissions, and lack of
clarity in the construction documents that could
create confusion on the part of prospective
equipment suppliers or construction contractors.
13 On the Responsibilities of Architects and
Engineers and Their Clients in Federal Facilities
Development, NRC, Committee on Architect-Engineer
Responsibilities, Building Research Board
(Washington, D.C.: National Academy Press, 1994).
14Subsequent to the issuance of the FFC report,
NASA received ISO 9000 certification for its
headquarters office and each of its centers. Also,
NIH received certification for the design and
construction branch of its Division of Engineering
Services.

Enclosure II
Comments from the Director, Federal Facilities
Council
Page 33GAO/GGD-00-172R Study on Facility Design Re
views
See footnote 14 on p. 24.

Enclosure III
Comments from Mr. Ralph Spillinger, Primary Author
of the FFC Study
Page 34GAO/GGD-00-172R Study on Facility Design Re
views
Now on p. 4.
Now on p. 16.

Now on p. 25.
Now on p. 25.
Now on p. 26.

Now on p. 28

Now on p. 29

Now on p. 30.

Now on p. 31.

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