Open-Book Pricing Practices for Construction Manager/General Contractor and Progressive Design-Build Projects (2025)
Chapter: Appendix A: National Survey
APPENDIX A
National Survey
Dear Agency Representative,
The Transportation Research Board (TRB), through the National Cooperative Highway Research Program (NCHRP), under the sponsorship of the American Association of State Highway and Transportation Officials (AASHTO), and in cooperation with the Federal Highway Administration (FHWA) is preparing a synthesis report on open-book pricing practices for Construction Manager/General Contractor (CMGC) and Progressive Design-Build (PDB) project delivery.
The purpose of this survey is to identify and summarize the use of open-book pricing practices for highway CMGC and PDB projects. The focus is primarily on the mechanics of the process used to negotiate the construction cost during the preconstruction phase of a CMGC and PDB project. The results of the survey will be incorporated into a synthesis of highway agency practice and will become a comprehensive document of effective open-book pricing practices metrics for use by agencies in their future alternative project delivery programs.
This survey is being sent to you because you were previously identified as someone involved in your agency’s alternative program. If you are not the appropriate person at your agency to complete this survey, please forward this request to the correct person.
Please complete and submit this survey by March 1, 2024. We estimate that it should take no more than 30 minutes to complete. If you have any questions or problems with the operation or access to the survey, please contact our principal investigator, Dr. Doug Gransberg. Thank you for your time and expertise in completing this important survey.
Definitions Used in This Survey
Construction manager/general contractor (CMGC) (also called CM-at-Risk, and CMAR): A project delivery method where the contractor is selected during design and furnishes preconstruction services. Design services are either completed by the owner’s engineering personnel or consultant under a separate contract. Project construction price is negotiated during preconstruction using open-book procedures. If an agreement is reached the construction contract is awarded to the contractor.
Progressive design-build (PDB): DB project delivery where the design-builder is selected on a basis of qualifications and past performance with little or no price competition. Design services are provided by the design-builder’s engineering personnel or consultant member of the design-builder’s team. Project price is negotiated using open-book procedures after award of the PDB contract.
Open-book estimating: A term that refers to the sharing of project information, such as actual project costs, between owner and contractor. It means that the project execution method is transparent to all parties. It indicates a level of collaboration that allows for defining risk and profit appropriately and creating a high level of trust among all the parties.
Negotiated construction price (NCP): An overarching term that is intended to cover the variations in terminology in use by different DOTs. This is the final agreed price for the construction contract in CMGC and the design-build contract in PDB. The typical terms included are guaranteed maximum price (GMP), lump sum price, target price, and other terms that are unique to the specific agency’s official definitions.
Preconstruction services fee: The amount paid the contractor for preconstruction services during the design phase.
Construction services fee: The amount paid to the contractor to compensate it for general conditions, home office overhead costs, and profit. This is a separate amount to facilitate open-book negotiations of the direct costs.
Contingency: The amount budgeted to cover costs that may result from incomplete design, unforeseen and unpredictable conditions, or uncertainties within the defined project scope. The actual amount is subject to negotiation and mutual agreement in CMGC and PDB.
Off-ramp: Contract language that gives the owner the right to terminate the preconstruction contract if an agreement on the construction cost is not reached and re-bid the contract through another contract strategy. This provides the owner a degree of protection against the CMGC or PDB contractor providing an unreasonable GMP price.
Contact Information
- Name
- What organization do you work for?
- What is your phone number?
- What is your email address?
- Is your agency authorized to use either Construction Manager/General Contractor (CMGC) or Progressive Design-build (PDB) to deliver transportation projects?
Yes No
In the questions below, please provide the details of your agency’s CMGC and/or PDB experience.
- Are you authorized to use or allowed to use the following by state statue? Please check all that apply.
CMGC PDB None of the above - Have you implemented the following on a project? Please check all that apply.
CMGC PDB None of the above
- What is the approximate number of CMGC projects your agency has awarded?
- What is the approximate number of PDB projects your agency has awarded?
- What is the approximate number of successfully negotiated CMGC work packages or mini-contracts your agency has awarded?
- What is the approximate number of successfully negotiated PDB work packages or mini-contracts your agency has awarded?
- What is the approximate number of CMGC projects your agency has completed?
- What is the approximate number of PDB projects your agency has completed?
- What is the approximate number of future CMGC projects your agency has planned?
- What is the approximate number of future PDB projects your agency has planned?
- For which of the following types of construction projects do you use an open-book approach for negotiating? Please check all that apply.
CMGC PDB None of the above
- For which of the following types of construction projects are you required to include some form of competitive pricing in order to award? Please check all that apply.
CMGC PDB None of the above
The remainder of the survey is focused on the open-book estimating and negotiating process, not the differences between CMGC and PDB as project delivery methods. The next series of questions explore your reasons for choosing to negotiate the construction cost after the award. For example, early contractor involvement in constructability is related to the project delivery method decision, not whether the construction cost is negotiated. On the other hand, the availability of transparent, real-time material costs is specifically related to the ability to negotiate costs without regard to project delivery method characteristics.
- Please check all of the reasons your agency would use for choosing to negotiate the construction cost.
The project scope is not well-defined
Need to evaluate technical alternatives in cost and schedule context before making final design decisions
Need to share risk Volatile market prices
Implementing new or unfamiliar technology
A desire for assistance in environmental permitting process
Tight budget – not sure it will be sufficient
Need to obligate funding as soon as possible
A desire for transparency in pricing
A desire for enhanced cost certainty
A desire for enhanced schedule certainty
Aggressive schedule
Politically motivated or mandated
Multiple third-party stakeholders that could influence project progress
Need to phase/stage construction
Lack of relevant historical cost data
Means & methods will drive the final design Complex utility coordination issues
Right of way is not currently available
Complex maintenance of traffic requirements
Need to jointly assign risks
A desire to enhance collaboration during project delivery
Limited personnel
Controversial project
Other (Please describe below.)
- Please provide any additional comments on your agency’s motivations for selecting to negotiate rather than fix the construction cost prior to awarding the construction or DB contract.
- On CMGC and PDB projects, which of the following elements of the contract amount are negotiated? (Check all that apply).
Design Fee Preconstruction fee Construction services fee Home office overhead Project indirect costs General conditions Profit Allowances Equipment rates Quantities of work Production rates Risk Contingencies Contract terms Schedule Sequence of work Subcontractor work Other (Please describe below.)-
- Please provide any additional comments on your agency’s approach to determining what items will be negotiated after awarding the CMGC or PDB contract.
- How does your agency set the preconstruction services fee?
Agency specified lump sum Agency specified percentage
Negotiated hourly rates/level of effort Negotiated percentage
Proposer specified lump sum Proposer specified percentage Negotiated lump sum
Negotiated profit Other (Please describe below.)
- Please provide any additional comments on your agency’s approach to determining the preconstruction services fee.
- How does your agency set the construction services fee?
Agency specified lump sum Agency specified percentage
Negotiated general conditions, overhead, and profit Negotiated percentage
Proposer specified lump sum Proposer specified percentage Negotiated lump sum
Other (Please describe below.)
- Please provide any additional comments on your agency’s approach to determining the construction services fee.
- Does your agency use a project cost model for the open-book GMP negotiations and who develops that model? Please check all that apply.
No
Yes, agency develops a model for each project Yes, the ICE develops the model
Yes, developed by the owner and contractor together Yes, agency uses a standard template
Yes, CMGC/PDB contractor develops the model Yes, designer develops the model
Other (Please describe below.)
- Please provide any additional comments on your agency’s approach to developing the cost model used in open-book negotiations.
- How does your agency establish the amount of profit in a CMGC or PDB project?
Agency specified lump sum Agency specified percentage
Negotiated lump sum Negotiated percentage
Proposer specified lump sum Proposer specified percentage
Other (Please describe below.)
- Please provide any additional comments on your agency’s approach to determining profit in open-book negotiations.
- How does your agency handle the establishment of design costs in a PDB project?
Agency specified lump sum Agency specified percentage
Negotiated rates, same as in DBB design contract Proposer specified lump sum
Proposer specified percentage Other (Please describe below.)
- Please provide any additional comments on your agency’s approach to determining the PDB design fee.
- How does your agency handle the establishment of contingencies in a CMGC or PDB project?
The agency holds the project contingency outside the GMP
Agency-specified percentage in the GMP
Negotiated single lump sum contingency controlled by the agency in the GMP
Negotiated single percentage contingency controlled by the agency in the GMP
Separately negotiated agency and contractor continencies in the GMP
Separately negotiated agency and contractor contingencies: contractor contingency in the GMP and agency contingency outside the GMP
Other (Please describe below.)
- If you chose other in the previous question, please explain how your agency handles the establishment of contingencies in a CMGC or PDB project below.
- Does your agency use a risk-based approach to establish contingencies?
No. Yes, it is based on a qualitative assessment of the value of risk.
Yes, it is based on an expected value assessment of the risk; Input values of likelihood and impact are based on professional judgement.
Yes, it is based on a data-driven expected value assessment of the risk; Input values of likelihood and impact are based on past projects.
Yes, it is based on a Monte Carlo simulation assessment of the risk; Input values of likelihood and impact are based on past projects.
- Please provide any additional comments on your agency’s approach to the establishment of contingencies in a CMGC or PDB project.
- Is your agency required to prepare a “state’s estimate” in addition to estimates that are prepared by design consultants and other external sources?
Yes No
- If the answer to the above question is yes, are you authorized to use the ICE’s estimate as the “state’s estimate”?
Yes No
- Does your agency employ an independent cost estimator (ICE)?
Yes No
- Please check all of the activities covered by the ICE’s contract below.
Produce independent opinions of probable construction cost (OPCC) as required in the ICE contract.
Validate the contractor-developed project cost model.
Producing ICE deliverables per the agreed preconstruction schedule.
Coordinate with the contractor to ensure that ICE estimates are based on the same construction means methods and production rates used by the contractor.
Conform quantities of work and definitions for payment and measurement.
Participate in project design and preconstruction meetings as required by the agency.
Assist in value engineering analysis as required by the agency.
Assist during price negotiations as needed. Validate the final GMP.
Provide production-based contractor-style (bottom-up) estimates at various stages of project development and/or construction using industry-accepted estimating software.
Share, review, and discuss assumptions, quantities, contingencies, constructability, and other items that affect the price of the project.
Solicit quotes for elements of the work to independently validate the cost.
Assist the project team in identifying and managing risks and suggesting solutions that eliminate, minimize, or mitigate those risks.
Provide input and feedback in the development of approaches to building the project, sequence of work, means and methods, and overall construction schedules.
Prepare an independent project schedule to provide (an) accurate estimate(s) of construction cost(s).
Prepare a competing bid to the contractor’s opinion of probable construction costs.
Provide negotiation and conflict management support to the agency.
Provide risk management support to the agency.
Conduct independent constructability review of design documents.
Provide financial management and accounting experience to prepare project costs and bids.
Develop and track scope, schedule, and budget.
Other (Please describe below.)
- Please provide any additional comments on your agency’s approach to employing an ICE in CMGC and PDB projects.
- How are ICE services retained contractually? Please check all that apply.
Separate ICE contract for each project
On-call ICE contract for multiple projects
Included in General Engineering Consultant or Program Management Consultant contract
Internal DOT staff perform the ICE
Other (Please describe below.)
- If you chose other in the previous question, please describe.
- Does your agency have a mandated percentage variation of the proposed GMP from the ICE or state’s estimate that must be met to award the construction?
Yes No
- If yes, what is the percentage?
- If an impasse is reached regarding the GMP, do your agency’s CMGC and/or PDB contracts provide for an “off-ramp” as defined in the introduction to this survey and if so, has your agency ever exercised it? Please check all that apply.
No.
Yes, for CMGC. Never used.
Yes, for PDB. Never used.
Yes, for CMGC. Exercised at least once.
Yes, for PDB. Exercised at least once.
- If your agency has exercised an off-ramp, can we contact you directly and get the details associated with the project?
Yes No
- Name
- Which of the following were “trigger points” for exercising the off-ramp in your CMGC and PDB contracts? Please check all that apply.
Inability to agree on pricing, production rates, means and methods, and other elements of the GMP direct costs
Contractor’s price exceeds an allowable range from the Engineer’s Estimate
Contractor’s price exceeds an allowable range from the ICE’s Estimate
Contractor’s price exceeds available funding
Contractor’s proposed schedule exceeds the project’s required delivery date due to material and/or labor availability
Failure to achieve required percentage of difference after a specified number of attempts
Inability to acquire required right of way in a timely manner to support the contractor’s proposed schedule
Inability to comply with federal mandates imposed by the Buy America Act, Americans with Disabilities Act, etc. within the contract period
Scope of work is increased due to unforeseen events such as changed legislation, tighter environmental constraints, failure to consummate third-party agreements with railroads, utilities, etc.
Evidence of bad faith during GMP negotiations
Other
- Please provide information where the researchers can obtain documentation that reflects your agency policy and procedures for open-book negotiations in CMGC and PDB. This may include contract documents, agency reports, agency manuals of practice, guidelines, policies, research reports, etc. Please provide as much information such as website links, email addresses to obtain digital copies of material, and additional knowledgeable points of contact regarding your agency’s practice.
The synthesis will also include case examples illustrating agency open-book negotiation practices.
- During the development of the case example, additional follow-up interview questions may be required. Agencies will be provided the opportunity to review the case example write- up for accuracy. Would your agency be interested in participating in a case example interview?
Yes No
- Name
- Agency
Thank you for sharing your knowledge and your precious time. If there is anything else you would like to share with the research team, please include it in the textbox below.
