The effect of military construction transformation on project cost and schedule within the United States Army Corps of Engineers South Atlantic Division
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The United States Corps of Engineers (USACE) has been the primary Construction Agent of the United States Army and Air Force. Its members are considered the experts in project delivery for the Department of Defense (DoD). In 2006, the Base Realignment and Closure Program (BRAC) and the Global War on Terrorism (GWOT) led to increased workload which caused the USACE to adopt the Design-Build project delivery process as a primary means of project delivery in an effort to leverage the method’s ability to deliver projects at a lower cost and faster delivery time as compared to conventional methods. The focused use of the Design-Build process was to become the primary business practice of USACE after the BRAC/GWOT period, replacing the traditional Design-Bid-Build process that had dominated the USACE landscape for 50 years. The USACE Commander’s intent behind the Design-Build incorporation was to realize a 15% cost savings and a 30% reduction in delivery time over the traditional method. This measure of success would serve as a guide to the USACE for future business practices. Military Construction Transformation, or MILCON Transformation, was the name designated to the Design-Build process when it was approved as the primary form of project delivery in the USACE in 2006. Since then, the four-year spike in project workload brought about during the BRAC and initial GWOT period has been diminished, and the business practice has taken some time to incorporate refinements based on lessons learned during the BRAC/GWOT period. In 2009 the Engineer Inspector General (EIG) was commissioned to measure the performance standards given by the USACE Commander, but after conducting only interviews of district chiefs across the USACE, the EIG was unable to quantify any project data that was relatable to the Commander’s metric (EIG, 2009). Independent studies evaluating the performance of Design-Build in various domains of the public sector have been conducted in the past, however a measurement of this specificity has yet to be conducted. The scope of this thesis is to evaluate the MILCON Transformation performance of the of the South Atlantic Division during 2002-2014. Project data was gathered from the USACE-internal automated information system, Enterprise Data Warehouse (EDW). Only MILCON, vertical construction project data was collected from EDW, and four hypothesis based off cost and time were developed for testing. Five project milestones for 304 projects that qualified for evaluation were evaluated using 180 separate Welch’s T-tests to test for a statistically significant difference between Design-Bid-Build and Design-Build. Of the 180 T-tests conducted, 37 were in support of the alternate hypothesis, which stated that there was a statistically significant difference with 95% confidence between the two project delivery models. Projects were analyzed in three different ways. First, projects were distributed between the two project delivery populations and all performance metrics regarding cost and time were analyzed from the Division level. Next, projects were analyzed by building type, to find out if there were any specific types of buildings where Design-Build performed better than Design-Bid-Build. Finally, projects were analyzed by District, where projects from each of the 5 Districts within the South Atlantic Division were analyzed to determine if any one District executed Design-Build more successfully than another District. From this analysis, it was found that the 15% reduction of cost by use of Design-Build was realized from a Division level. However, in no circumstance was the target 30% reduction in time realized for the Division, any District, or any specific building type. Results were then presented to a focus group of leaders within the USACE South Atlantic Division to gather insight on why the USACE Commanders goals were not completely met. Since literature pointed to Design-Build as being a source of lower cost and time in the public sector, data results warranted further insight as to why the USACE struggled to gain full value from the Design-Build delivery model. The focus group validated the data and findings while attributing discovered performance metrics to operational tempo, manpower, and conservative management. From these results, the researcher submits recommendations on how the USACE can realize greater value from the use of Design-Build.