IN THIS ISSUE

** GOP GAINS SEATS IN OKLAHOMA HOUSE AND SENATE
** ACEC BUSINESS INSURANCE DECLARES 21.9% DIVIDEND
** NOT SO "FAST"THERE!
** TRUE COST OF PUBLIC SECTOR DESIGN
** DESIGN/BUILD NO PANACEA

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BEST WISHES FOR A HAPPY AND SAFE
HOLIDAY SEASON, AND A PROSPEROUS
NEW YEAR!

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GOP GAINS SEATS IN OKLAHOMA HOUSE AND SENATE

The Democrats may still have control over the Oklahoma House and Senate, but that gap closed considerably as the Republicans gained eight seats in the House and three Senate seats following Tuesday's elections.

In the Senate, where most political analysts thought incumbents were safe, veteran lawmakers Sens. Ben Brown, D-Oklahoma City, and Lewis Long, D-Glenpool, were both ousted by Republican challengers.

Republican Jim Reynolds who has owned and operated a painting business in south Oklahoma City for over 20 years, defeated Brown by just over 500 votes.

In District 37, 10-year veteran Sen. Lewis Long, D-Glenpool, was defeated by just over 300 votes by Republican challenger Nancy Riley, a Tulsa schoolteacher. Riley garnered 12,641 votes (50.53 percent) to Long's 12,376 (49.47 percent).

Another seat was picked up in District 15 vacated by Sen. Trish Weedn where Norman Asst. District Attorney Jonathan Nichols captured just over 56 percent of the vote to defeat Democrat Pat Martin, a Purcell tag agent.

The state House proved to be an even greater success where Republicans not only won three open seats previously held by Democrats, they also ousted five Democrat incumbents to gain a total of eight seats. The separation of power in the 101-member House is now just five seats, 53-48.

The five districts in which an incumbent House Democrat was defeated by a Republican include:

* House District 96 where Harrah attorney Lance Cargill, 29, defeated incumbent Mark Seikel, D-Harrah;

* House District 74 where Owasso engineer John Smaligo, 24, defeated incumbent Rep. Phil Ostrander, D-Collinsville;

* House District 40 where 51-year-old Mike O'Neal, a teacher at the Chisolm Trail Vo-Tech, defeated incumbent Rep. John Sellers, D-Enid;

* House District 45 where attorney Thad Balkman defeated incumbent Rep. Wallace Collins, D-Norman.

* House District 23, in Tulsa, where Sue Tibbs, 66, defeated incumbent Rep. Betty Boyd, D-Tulsa.

Other seats gained by Republicans include three open seats where current Democratic lawmakers decided not to seek reelection. Those include:

* District 13 where 30-year-old Republican Stuart Ericson defeated Democrat Allan Harder;

* District 26 where Republican Kris Steele, 27, of Shawnee defeated 50-year-old Democrat Terry LaValley; and

* District 32 where Republican Kent Friskup, 59, the editor of a Meeker newspaper, defeated Democrat Danny Morgan, 41, of Prague.

House Speaker-designate Larry E. Adair announced the members of his leadership who will guide the Oklahoma House of Representatives during the 48th Session of the Legislature in 2001-2002.

Adair appointed Mike Mass, D-Hartshorne, who is also the Chairman of the State Democratic Party, as chair of the Appropriations and Budget Committee with Jack Bonny, D-Burns Flat serving as vice chair. Mass and Bonny will play a key role in setting spending priorities for Oklahoma's approximately $5.3 billion budget.

Danny Hilliard, D-Sulphur has been named Majority Floor Leader. His responsibilities will include making committee assignments for all bills before the House, setting the daily agenda and directing legislative operations on the House floor. Deputy Majority Floor Leader positions will be filled by Russ Roach, D-Tulsa and Jari Askins, D-Duncan. Terry Matlock, D-Garvin is Speaker Pro Tempore-designate for the upcoming session. In addition to presiding over sessions on the House floor in the Speaker's absence, the Speaker Pro Tempore is an ex officio voting member of all House committees. David Braddock, D-Altus was elected as chair of the Democrat caucus.

(The Legislative Information Network contributed to this article.)

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ACEC BUSINESS INSURANCE DECLARES 21.9% DIVIDEND

For those member firms that participated in the ACEC Business Insurance Program from November 1, 1998-99 the Hartford has declared a 21.9% all-lines dividend payable on eligible premiums in the program. More than $1,626,000 will be paid to policyholders.

If you're not one of the lucky ones that received a dividend, contact the ACEC Business Insurance Program at 1-800-338-1391 to find out how to get a quote on Business Insurance for your firm.

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NOT SO "FAST"THERE!
by
Paul F. Sprehe, PE, FACEC

At one time or another, most of us have been asked to participate in a "Fast-Track" project. The Owner pre-selects the Architect, Engineers, General Contractor, even Sub-Contractors, and asks the "team" to work together at maximum speed to get his project built in a short period of time. Oftentimes, such a project also includes a "guaranteed maximum budget" which the contractor is expected to honor. Frequently, the contractor is promised a bonus if he completes the project early, and/or under budget.

Usually, the designers provide a preliminary design, the contractors start the construction work, and as construction proceeds, the plans are finalized..and with frequent contractor input into the design to control his cost.

But the term "fast-track" should send up warning flags to design professionals. Such projects have a single purpose..: to benefit the client's pocketbook by compressing the project schedule. It's true, that if everything goes just right, fast tracking can expedite projects and result in savings to the client; materials can be purchased in advance, locking in lower prices; labor costs can be minimized, and construction can be completed more quickly, thus allowing the client to move into or lease the property sooner, thus accelerating income.

But are there any advantages to the engineer? Sure, usually you can avoid the costs associated with competitive marketing. Also, turning out a project quickly can be cost-efficient, and there can be some savings in overhead. And of course you may be paid a bonus fee for your cooperative effort to finish the job in record time.

But what about the risks? Consider for example:

* Major design decisions must be made early or out of sequence without regard to downstream consequences.
* Time consumed in spinning off separate construction packages can usually mean a duplication of effort.
* Preliminary design decisions may prove to be wrong, causing the engineer to revise documentation ­ at additional cost.
* It is difficult to maintain consistency in design when work is performed piecemeal.
* Extra time is needed to administer the bidding and construction process.
* Fast-track usually means more change orders.
* There may not be time to work closely with Code officials. An adverse Code interpretation could mean costly modifications of the plans.and the work that is already in process.
* Fast-track projects are inherently more expensive for design professionals to execute, using your best talents and years of experience just so you can meet a client's time schedule.

Perhaps the biggest challenge however is the inexperienced or unrealistic client who only sees the expected time and cost savings of fast-track, and not the potential problems it can create. Many clients believe that fast-track plans will be just as accurate and complete as the traditional phased project. As changes occur, the client may think they are due to the designer's errors, omissions, or incompetence rather than being inherent in the fast-track delivery method. Unless the client clearly understands the fast-track process and it's pitfalls, his expectations may be much too high. And unrealistic expectations are the harbingers of disputes and claims.

REDUCING THE RISK OF FAST-TRACKING

The only sure way to avoid fast-track problems is to avoid such projects altogether. But in today's fast-paced business world, some clients will insist on this method. So if you can't avoid it, try to protect yourself.ahead of time.

* The first prevention tool is education; bringing the client's expectations in line with reality. Identify precisely what the client expects to achieve, then make sure he understands the risks and potential liabilities.

* The client should acknowledge that certain modifications to the early construction documents are to be expected and that such changes are not due to errors or omissions, but are part and parcel of the process and should be budgeted for. There should be a clear understanding that changes, delays and resulting extra costs are virtually guaranteed.

* Establish a realistic contingency fund to absorb changes.

* Your own contract should address the added liability risks and associated costs.

* Firmly establish the client's responsibility when authorizing changes to avoid the temptation of making changes without your knowledge and approval.

* It is essential that you document every step of your involvement. Keep detailed notes of why decisions were made, and why some tasks were done out of normal sequence.

The decision to participate in a fast-track project should start with prudent client selection. You should proceed only if you have a sophisticated client, a quality project, a strong contract, an adequate fee, experienced contractors, and good working relationships all around. To encourage teamwork and cooperation, a "Partnering Agreement" would be most helpful for all concerned.

Paul Sprehe has been a practicing Consulting Engineer for over 45 years and is Past-President of ACEC. He is currently the Oklahoma agent for McLaughlin-Brunson Insurance Agency, representing DPIC Insurance Companies in Oklahoma, who contributed to this article.

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TRUE COST OF PUBLIC SECTOR DESIGN

Using surprisingly harsh language, Robert S. Johnston, P.E., president of ASFE, declared that the association and the firms that comprise it "have had it with the falsified surveys that mislead the public into thinking the government can perform engineering services for just a fraction of the price the private sector can. Every such survey report we've seen uses incomplete data, leading to apples-to-oranges comparisons that defame the private sector in general, and the professional engineers who work there in particular. As it so happens, every one of the surveys has either been conducted by the government entity or sponsored by one, because only the government's able to get its hands on data that show how much the government spends to have its engineering performed by engineers on the government payroll."

ASFE has published a new White Paper titled "Establishing the Cost of Public-Sector Design." Although ASFE White Papers usually are published for member use only, "We are making an exception this time," Mr. Johnston said, "because we need to have all engineers and other independent design professionals nationwide armed with what they need to know in order to combat what's tantamount to negligent misrepresentation of actual cost differences."

Mr. Johnston said the most recent misleading report stems from a survey sponsored by the Texas Department of Transportation (TexDOT). "Hundreds of thousands of dollars, maybe more, were spent on a PriceWaterhouseCoopers study that demonstrated how TexDOT engineers could perform various types of projects for much less than their private-sector counterparts. But the data used are flawed and, from everything we can tell, the study's conclusions are worthless. In fact, the hourly rates assigned to the TexDOT engineers aren't real, because they fail to consider a significant number of costly overhead factors that have to be considered if an honest, apples-to-apples comparison is to be made."

ASFE's new White Paper points out that some of the studies available omit from government cost calculations the expenses associated with rent, equipment, and other essentials when they are provided by another agency. "As a consequence," the White Paper states, "the budget of the agency that employs design engineers could show a zero expense for human resources, even though the 'owner' of the agency-the public-provides and pays for all of the agency's human resources needs, just as the owners of private sector organizations do. In other words, while payment may come from different pockets, all payments...come from John Q. Public's pants."

The White Paper uses a chart of accounts as the template for discussion of expenses the government should either include in its costs calculations, or exclude from the calculations used to determine what a private firm would charge for the same services. "A number of government expenses are hidden," Mr. Johnston said. He cited an item such as professional liability insurance, something which almost all government entities require their engineering, environmental, architectural, and other consultants to carry, to provide protection in the event of errors or omissions. "The government can say it can do the work for less because, among other things, its engineers are uninsured. But that kind of position is disingenuous, because it ignores the fact that the government is self-insured, and that any claims it pays come from general funds or from some type of self insurance set-aside. How much does the government pay each year to settle claims brought against it by parties who have somehow been damaged by government engineering? And how many losses has the government just absorbed because of the errors or omissions made by its engineers; errors or omissions that, if made by a private firm, would almost certainly be covered by their insurance? Until the real (Cost) numbers are known, comparisons without them don't inform; they misinform."

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DESIGN/BUILD NO PANACEA

A new survey from leading management consulting and publishing firm, Zweig White & Associates, Inc., reveals that there is no evidence that design/build will ever become the project delivery method of choice in the design and construction industries. Previous expectations of growth have been tempered as firms are discovering that design/build isn't the cure-all for all challenges involved with project delivery. While optimism still persists about the future of design/build, growth projections in this, the fourth edition and Year 2000 model of the DESIGN/BUILD SURVEY, aren't nearly what they used to be.

"Firms need to realize that design/build hasn't turned into the panacea it was believed it would become for the design and construction industries. It has its place in the industry, but we can all stop waiting for the time when every job will be completed using design/build, because it's not coming," says Mark C. Zweig, president & CEO of the firm.

A look at the facts in the DESIGN/BUILD SURVEY shows that Zweig's comments reflect what more firms are learning about the future of design/build. In the 1997 edition of the survey, firms projected a median 80% increase in the percentage of gross revenue they would derive from design/build projects in the following three years. The 2000 edition of the survey, however, reports firms see a more moderate 25% increase in the percentage of gross revenue they expect to derive from design/build work in the next three years.

Why hasn't design/build become more popular? Sluggish expansion into public-sector work has been one obstacle. Many firms consider public-sector work the key to the future growth of design/build. While design/build has enjoyed relative success in the private sector for years, the public sector has been slow to accept this method of project delivery on a large scale. Laws banning public projects from being performed using design/build still abound on the federal, state, and municipal levels. The percentage of firms
that say procurement laws in their state effectively shut them out of acquiring public-sector design/build work has increased from 35% in 1998 to 41% in this year's survey. And after holding steady at 50% since 1997, the
percentage of design/build work firms do in the public sector dropped this year to 40%.

Regardless, firms continue to be optimistic about design/build's future in the public sector. Whether this optimism is founded or not, 85% of firms still report they expect an increase in the use of design/build in the public sector within the next five years. Confidence remains that the benefits of design/build to the public are tangible and will lead to change.

Another factor that may explain why more firms aren't getting their feet wet with design/build is the higher level of risk involved with this project delivery method. Risk-averse design firms simply don't find design/build
work worth pursuing because of the unfamiliar risks involved. Among other factors, significant front-end marketing costs during the procurement process add a high level of risk to design/build work. The percentage of firms that say their marketing fee was at risk in a design/build competition has steadily declined from 92% in 1998 to 83% in this year's survey, but this figure is still high. Firms know going in that the investment they make trying to win design/build work may be lost if their team doesn't get the job. Only 10% of firms have ever been reimbursed for a percentage of their marketing costs when they didn't get the job they were pursuing. Of those firms, three-quarters were reimbursed just 50% or less.

The 2000 DESIGN/BUILD SURVEY is available from the publisher for $345, plus $4 shipping and handling. Contact Zweig White & Associates, P.O. Box 8325, One Apple Hill Drive, Natick, MA 01760, tel: 508-651-1559, fax: 508-653-6522, e-mail mailto:info@zweigwhite.com or visit our web site at http://www.zweigwhite.com/store/svdes.

Zweig White & Associates, Inc. provides unique management information and expertise exclusively to the design and construction business through research, publications, education, consulting, and other specialized products and services. The firm is based in Natick, MA, and has in Oakland, CA, Washington, DC, Overland Park, KS, Atlanta, GA, and Austin, TX.

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