"Design-build and P3s, as alternative delivery methods, are changing the landscape of transportation engineering," says Mark Acuff, president of ICA Engineering. He says the effort to deliver projects more efficiently is a trend "that is rightfully challenging the traditional design-bid-build industry." Acuff says design firms will be successful if they can maintain separate relationships with the client and the contractor but also work as a team with both.
However, alternate project delivery is having an impact on smaller infrastructure design firms. "It is good for larger players as they are better positioned to assume that level of risk," says Pierson. He notes that preparing bids on design-build transportation projects is not cheap. "There is a greater risk, but there is also the prospect for greater reward," he says. But Pierson admits that smaller firms may not be positioned to assume that level of risk.
Slimp says smaller firms have to be able to assess the amount of risk they are willing to assume when bidding on design-build projects. "But there still is plenty of room for smaller firms through joint ventures, teams and other vehicles. For example, we have 150 engineers on the Crenshaw line project," he says.
Not everyone agrees that design-build is always the answer. "Alternate delivery is being introduced to the infrastructure market as the panacea for all ailments," says Tony Mardam, vice president of Stanley Consultants. He says design-build, P3s or design-build-operate project delivery may offer benefits in some cases, but "the medicine is not universal to solve all the challenges."
For many designers, design-build and other delivery methods can put pressure on designers that are not used to working in teams. "With lower levels of funding, contractual relationships are constantly tested," says Boyer. "That being said, our client relationships are generally solid in spite of contractual pressures."
With the scramble by clients for funding alternatives, some larger firms are getting more actively involved in assisting them in securing project financing. "We're noticing an uptick, especially in the United States, of clients who are looking to engineering and construction firms for guidance on financing for projects," says Vahid Ownjazayeri, group CEO, global civil infrastructure, for AECOM. "In addition to our work advising clients on public-private partnerships and other forms of alternative delivery, we launched our AECOM Capital operation in early 2013 to help provide direct investment in certain projects to help get them started—projects that can also benefit from AECOM's other offerings."
Ownjazayeri says AECOM Capital investments have helped enable the start-up of more than $900 million in projects that are currently under way, including high-rise residential mixed-use projects in New York City and Los Angeles. "This model also could enable more activity at the construction joint-venture level on infrastructure design-build projects."
Slimp and other firms in the infrastructure market are excited about states assuming a greater role in funding transportation programs. "Some states are seeing rewards for local funding of transportation programs, and there hasn't been much fallout from the new taxes and fees to support them," says Slimp. He cites Pennsylvania and Virginia as two states that have been at the forefront of such programs.
Federal Funding Needed
However, most designers in the transportation market say a federal funding bill is necessary to ensure adequate funding levels for long-term projects. "I really can't predict it, but I would suggest that we are better positioned for a federal transportation bill now than the last time it came up," says Pierson. He says there is more bipartisan support in Congress as members realize investment in infrastructure is necessary for the nation's economic health.
Failure to do long-term planning and construction of infrastructure projects could have a devastating impact. "The transportation business keeps rumbling along, but it is truly time for a comprehensive strategy to address the chronic underfunding of our nation's infrastructure," says Ruth Bonsignore, senior vice president at Vanasse Hangen Brustlin.
Bonsignore says engineers are problem solvers who figure out ways to keep the system going even with inadequate resources. "I sometimes wonder, in working so hard to patch things together, if the planning and engineering community is being an accessory to the demise by neglect of our infrastructure system," says Bonsignore. The industry must come together to articulate the full needs of a 21st-century transportation system and educate the public on this topic, she says.
On the water-and-wastewater side, firms have seen their clients struggle. "It has been a very difficult few years for the U.S. public sector, and many agencies are still working on improving their balance sheets, prioritizing deferred investments and returning cash to reserve funds," says Alan J. Krause, CEO of MWH Global. He says funding pressures will result in a shift from asset creation to asset optimization, "integrating sophisticated data modeling to creatively improve service levels and operational efficiencies of the existing system."
Many firms believe the growing concern over climate change is spurring activity. "On the water- resources side, we expect that, with climate change and extreme weather patterns like droughts or floods, cities and regional water agencies will revise their planning," says Mardam of Stanley Consultants. "Whether we are looking at flood mitigation in the Midwest or drought-response measures, including needs for more water in the West, America needs to recalibrate its water-resources strategy."
Failure to fund the water sector may have wide-ranging impacts. "The drought in the western U.S. could have some negative effects on the overall economy if hydropower cannot keep up and there are electrical shortages," says Eric Keen, HDR vice chairman.