Dr. Chait Bhat, Ph.D., LCACP is the Sustainability Engineer for the Asphalt Institute.
Contracting mechanisms, project delivery methods and green public procurement
Part 2 – Implementation scenarios
Part 1 covered fundamentals around different project delivery methods. In this edition, I will first discuss Green Public Procurement (GPP) and how sustainability and GPP may be employed at various scopes. I will then summarize conventional as well as alternative contracting mechanisms that have been used by public agencies. Lastly, I‘ll present a potential sustainability and GPP implementation scenario matrix when different project delivery methods and contracting mechanisms are employed.
Let us first understand what “green public procurement (GPP)” means: As per the European Union (one of the first entities to use this term), GPP refers to a process whereby public authorities seek to procure goods, services and works with a reduced environmental impact throughout their life cycle when compared to goods, services and works with the same primary function that would otherwise be procured1.
Key things to notice from the definition of GPP are as follows:
•GPP is relevant and can be applied for multiple things: goods, services and works (e.g., construction materials, preservation/maintenance services, and new construction/ rehabilitation).
• Recognition that the entire life cycle should be considered for environmental impact quantification (e.g., global warming potential). This means a cradle-to-grave scope rather than just cradle-to-gate.
• Importance of providing the same function (e.g., long-term performance, durability) when using GPP relative to typical procurement.
Sustainability and green public procurement
You might be wondering: Isn’t this column supposed to be on sustainability and how does this connect to “Green Public Procurement”?
We have previously discussed how pavement sustainability focuses on four pillars:
• Ensuring long-term performance (i.e., achieving engineering goals)
• Reducing life cycle costs
• Reducing environmental impacts
• Reducing social impacts
We have also discussed how a holistic cradle-to-grave scope (i.e., covering the life cycle of pavements) is desirable over a limited cradle-to-gate (i.e., covering only material manufacturing) scope. GPP implemented for a pavement cradle-to-grave scope offers the ability to make significant true advances in pavement sustainability by being accountable for reducing environmental impacts while ensuring long-term performance over the entire life cycle of the pavement.
Figure 1 provides a visual representation of this relationship:
Sustainability and GPP may be employed for different scopes:
• for materials only (cradle-to-gate),
• for material with some aspects of construction and maintenance of a pavement/building (cradle-to-gate with options)
• for the entire life cycle of a pavement/ building (cradle-to-grave).
A cradle-to-gate GPP policy would focus on the selection of “low-carbon materials only” (e.g., through Environmental Product Declarations (EPDs)) with an assumption that the low-carbon material performs equally compared to a non-low-carbon material. This policy assumes cradle-to-grave sustainability without any actual validation.
The criticality of scope consideration made me think of an implementation scenario matrix with project delivery methods represented in rows and contracting mechanisms represented in columns. This matrix details potential implementation scenarios for sustainability and GPP under different combinations of contracting mechanisms and project delivery methods. Before looking at this implementation matrix, let us look at various contracting methods employed by public agencies.
Contracting mechanisms: conventional and alternative2,3,4
This section explains a few of the many contracting mechanisms that can be used for a construction project:
• Unit price: This type of contracting is relevant for the procurement of individual items based on initial estimates by a public agency for use in a construction project. A public agency pays only for the actual quantities constructed on the project. The interaction between the public agency and contractor ends upon the completion of a project.
• Lump-sum: This is an alternate type of contracting to a conventional unit price based where the public agency enters into an agreement with a contractor to provide contractually specified work at one specific price. While this contracting method lowers the financial risks to the public agency as compared to the unit price method, there is still no interaction between the public agency and contractor once the project is completed.
• Material and workmanship warranty: This type of contracting is related to preventive maintenance treatments such as crack sealing, chip and seal coats, microsurfacing and thin HMA overlays. The interaction between the public agency and contractor does not stop after the completion of a project. Contractors typically need to provide warranty periods of 2-4 years, during which the contractor is responsible for correcting defects in work elements that are within the contractor’s control including defective material and workmanship. This type of contracting reduces the exposure of public agencies to risks.
• Performance warranty: In comparison to a materials and workmanship warranty, a performance warranty assigns more responsibility to the contractors and is usually longer. This type of contracting is related to new, reconstruction or rehabilitation-type projects and has warranty periods of 5-20 years in duration. Performance warranties shift responsibility to the contractor for design, construction oversight and quality management.
Now that we have discussed sustainability, GPP and contracting mechanisms, let us delve into the implementation differences between sustainability and GPP amidst the varying project delivery methods and contracting mechanisms.
Implementation scenario matrix
“Buy Clean” policies became public policies in states like California, Colorado, Oregon, Washington and New York. Hence, it becomes critical to understand the system in which these policies are implemented.
Before we move on to the examples below, I would like to clarify the meaning of two terms used within the implementation scenario matrix:
1. Assumed: This term is used when there are no validation mechanisms throughout the project life cycle to check the decision-making made at the inception of a project.
2. Actual: This term is used when there are validation mechanisms throughout the project life cycle to check the decision-making made at the inception of a project.
Let us consider a state agency that wants to implement GPP and sustainability at the same time. Here are two examples of how to interpret the implementation scenario matrix in Table 1 with different combinations of contracting mechanisms and project delivery methods.
Example 1: Unit Price and Design-Bid-Build
Scenario: For a construction/ preservation/maintenance/rehabilitation project, consider a situation where a state DOT is using a combination of the “Unit Price” contracting method and the “Design-Bid-Build” project delivery method. Let us assume the DOT employs context-specific material specifications, requires cradle-to-gate EPDs from different material producers and conducts an in-house pavement-level cradle-to-grave LCA at the inception of the project.
Outcome: There are no validation mechanisms for both short-term (e.g., 3 – 5 years) and long-term (e.g., 15 or more) term durations. While the state agency might have conducted a pavement-level cradle-to-grave LCA at the inception of the project, there is no validation of the initial assumptions made while conducting that LCA, such as service life, sequence of construction activities, etc. Hence, sustainability and GPP of the resulting pavement systems are ASSUMED for both the short-term and long-term timespans.
Example 2: Performance Warranty and Design-Build-Operate-Maintain
Scenario: For a construction/ preservation/maintenance/rehabilitation project, consider a situation where a state DOT is using a combination of the “Performance Warranty” contracting method and the “Design-Build-Operate- Maintain” project delivery. Let us assume the DOT employs context-specific material specifications and monitors long-term pavement performance through their pavement management systems. In addition, the DOT requires cradle-to-gate EPDs from different material producers and conducts multiple cradle-to-grave LCAs: one at the inception of the project, one during the service life of the project and one at the project’s end-of-life.
Outcome: This combination could lead to an ACTUAL implementation of both sustainability and GPP for a cradle-to-grave scope. The state DOT can validate the initial assumptions around sustainability and GPP and have accountability measures in-place allocated between different stakeholders (e.g., contractors, subcontractors). This combination of project delivery method and contracting mechanism would ensure substantial monitoring of long-term performance, validating the initial LCA/LCCA/social impact results throughout the full life cycle of the project and highlight inaccurate assumptions. The abundant body of knowledge obtained through this process can be employed in future projects through a feedback loop within an agency’s information system.
Key takeaways
1. There is an intricate relationship between the combination of project delivery methods and contracting mechanisms with the true implementation of sustainability and GPP practices. 2. Different combinations of project delivery methods and contracting mechanisms lead to either ASSUMED or ACTUAL implementation of sustainability and GPP for various scopes.
3. The true implementation of sustainability and GPP occurs when the systems for project delivery and contracting mechanisms facilitate whole life-cycle accountability across the pavement supply chain.
The objective of this discussion is not to promote one contracting mechanism or project delivery method over another. Our state department of transportation stakeholders are well-versed around the context-specific usefulness of each method. Instead, the focus is on how these different systems may implement GPP and sustainability differently. To achieve the ultimate goal of VALIDATING cradle-to-grave sustainability and GPP, coordination and accountability from both public agencies and different stakeholder groups (e.g., material manufacturers, pavement designers, contractors, asset managers and so on) is needed.
As detailed in “PAS 2080 – Carbon Management in Infrastructure Standard”5, to achieve ambitious goals such as achieving net zero pavements, this systemic change that enhances accountability through whole life-cycle monitoring and validation is essential.
References:
1. En – EUR-lex (2008) Communication from the Commission to The European Parliament, The Council, The European Economic and Social Committee and The Committee of The Regions. Available at: eur-lex.europa.eu
2. Molenaar, K., Harper, C. and Yugar-Arias, I. (2014) Guidebook for Selecting Alternative Contracting Methods. rep. Available at: colorado.edu.tcm
3. Duval, R. (2018) Alternative Contracting Method Performance in U.S. Highway Construction. rep. Available at: fhwa.dot.gov/ publications
4. Pavements. U.S. Department of Transportation/Federal Highway Administration. Available at: fhwa.dot.gov/publications
5. PAS 2080 – carbon management in infrastructure: Reducing the carbon emissions associated with the infrastructure industry (2023) The Carbon Trust. Available at: carbontrust.com