The State of New Mexico approached the need for widening a long corridor of NM 44 by issuing an RFP for a professional services contract. New Mexico law did not allow for design-build procurement at the time NM 44 was constructed. But Secretary Pete Rahn and the leadership of the NMSHTD were able to create many of the efficiencies of design-build through a professional services contract. This allowed the NMSHTD to outsource services it would have traditionally self-performed-design, construction management and long-term pavement management. Procurement of construction was done separately under the traditional low-bid system.
By using a professional services contract to outsource design and construction management to the same company (the Project Development Contractor or PDC), the State was able to gain many of the efficiencies found in design-build projects -- flexibility, quicker construction, cost savings, and streamlined decisionmaking. The PDC contract was awarded to Mesa, LLC, a division of Koch Materials Company, in the summer of 1998. Project design was outsourced to CH2M HILL by Mesa, while Flatiron Structures Company managed the project construction.
The NMSHTD required the road and pavement design to meet the NMSHTD and FHWA standards. However, the PDC's designer and construction manager were given the flexibility to adapt the design to address the varying conditions along the 118-mile project. The flexibility in design and construction management granted to the PDC was balanced by a requirement in the professional services contract that the PDC guarantee the quality of the pavement condition over time.
This guarantee took the form of a 20-year, long-term, fixed price performance-based rehabilitation and reconstruction agreement covered by $114-million bond. During the challenging design phase and rapid construction phase of NM44, this long-term responsibility ensured that the private sector would act like an owner and the State would receive the quality it demanded. This pavement warranty agreement provides preventive maintenance and rehabilitation to keep the road above the contractually agreed specifications. These specifications include objective measurable criteria such as IRI, cracking and rutting.
The agreement also states that the warranty requirements will be waived if the level of traffic for the warranty period exceeds a cumulative 10-year design level, in this case, 4 million Equivalent Single Axle Loads (ESALs). The NMSHTD has determined that the initial warranty cost of $62 million will save the taxpayers $89 million in maintenance cost over a 20-year period.
The innovative use of professional services contracting allowed the NMSHTD to enjoy many of the benefits of a design-build project approach without requiring the State to abandon the traditional low-bid method of procurement. This innovative approach has been called Design-Bid-Construction Management-Maintain (D-B-CM-M). It is estimated that innovative financing combined with the contracting approach has cut the total project time from 27 years to within 3 years. In this case, the total project time is considered the period from initial planning to completion.