MB: We went through a pretty difficult time in the bid room for awhile. We saw, at one point, escalation of about a percent per month. Unfortunately we put out some pretty significant projects during that time to keep up with our program. But we’ve been doing much better in the bid room recently. We’re seeing more bids and they’re coming in much more competitively. Our estimates have been beaten quite a bit lately.

JM: A lot more competition.

MB: Right. And we’re seeing larger companies compete for some smaller jobs they might not have been interested in a few years ago. We’re seeing some medium-sized companies stretching out and bidding on something that may have been a little more ambitious of them before.

NYC: So what does all of this work mean for the construction industry? Or, more importantly, what does it mean for your relationship with the construction industry in the years ahead?

JM: We are going into a new 10 year program that will be finalized in January 2011. It’s kind of a fluid, living document. We’re always working on it and updating it. Right now we have $11 billion total construction value of active contracts and we have about $3 billion of active planning and design contracts. That’s our mature program that’s generating new work out of planning and design or that’s continuing existing work through our ongoing projects. 85% of that has been construction. The 10-year going forward is $14.6 billion for the agency starting in 2011. That’s all new work. I think all those things we’ve been concentrating so much on in terms of relationship building and business process changes I think we’re starting to see improvement on existing projects but they’re really going to make a difference on these new projects going forward. We’re excited.

NYC: You mention your business process changes and I’ve heard you talk before about wanting to be a better client. You’re an agency that has taken some criticism over the years from the construction industry, are those business changes and your desire to be a better client an attempt to quiet some of that criticism?

CH: I look at it like this: What does it mean to be a good client? You pay your bills, you give clear direction and you don’t use the bureaucracy to your advantage to string people along. I’m certainly in favor of paying people to work and attracting contractors to be repeat players and do business with us again. That’s just economics. The more people you have competing for work the better price you’re going to get. It’s only to our benefit that we would foster a healthy competitive environment. When I read my mail and look at all the disputes that we’re handling, one of the questions I always ask is, “What does this mean for the contractor?” I want to know what the understanding was coming into the job. There have been a lot of improvements in this area, but what I’m always looking at is how can we do even better? I’m always going to be asking our contractors the same questions I ask our managers, which is: “Are we on budget, are we on time, if not, why not?”  I want to help them get paid for the work they’re doing and make sure they’re getting clear direction on the project because, ultimately, we have to deliver these projects together.

NYC: So what were the problems? What was the DEP like as an owner five, 10 years ago as opposed to today?

CH: I don’t think there was really anything unique about what the contractors were asking for from the DEP. Some audiences I’ve talked to from the construction industry said that change orders take a long time in our budgeting process. Change orders going into a project are challenging and getting them turned over is a challenge, as well. Now, the city has a very strong contract that is very protective of the city – which is great for the city and its residents – but it can mean that when there are delays, contractors can get held up. I think the administration has been good at looking at how to change that. I think there is general recognition that DEP had excellent designers and engineers and there’s good expertise at the agency. So I haven’t heard a lot of complaints about the department’s ability to design a project, build it and get it done. Most of what I heard was, “I don’t want to work with DEP because it takes forever to get paid, I can’t get a change order turned around.” We want to stop that. That prevents a lot of contractors from coming to us. Or at least it has in the past.

JM: I also think we were a lot more fragmented before. We’ve changed our model to more of a life-cycle approach where moving down into the organization we’ve created positions that are responsible for planning, design and construction instead of having silos where each team would work on one thing independently then throw it over the wall. On the design side we created a project delivery manual which outlines scope, cost, schedule, management, risk management, community outreach … just a way to put it all on paper and say, “This is how we do it.” It’s this dynamic of lengthy projects versus new projects. We’re transitioning from an old way of doing things into a new way of doing things and you see that manifest itself in some of the mature projects already out there and then on the new projects as they move out those things will become even more embodied. Next year we’ll be better than we are now, the year after that, even better. It’s a continuous improvement evolution.

MB: One of the things we’re trying to do is work more consistently to develop standard operating procedures and train up our staff and our consultants to develop more standardization and have more predictability in terms of what our contractors’ expectations should be when they work for us. We’ve had some problems in the past with processing change orders and we’ve working very hard to try to identify them as quickly as possible and to process them as quickly as possible. We’re trying to reach out to our contractors even more than we have in the past and be more proactive in letting every member of the team know that they can be a player, they can have an impact on the job. Some of these contracts can be very complicated – it doesn’t just have to be a megaproject.  When we do see issues that have potential to cause delays or costs, we’re trying to push as hard as we can to get passed those.

BD: We had a great example of that at Croton where we had a tunnel contractor on a job we’d bid out as drill and blast and they came back after the bid and offered to do it using a tunnel boring machine. So we ended up spending a couple of months reviewing their proposal and eventually agreeing to use the TBM. And it was finished quicker and we ended up getting a $4 million credit with that contractor. We’re going to finish that contract six months ahead of schedule because we were willing to listen to the contractor. So it was a win-win.

NYC: So, Commissioner, as the new leader of this department is it fair to say you were brought in here to be a kind of change agent?

CH: I think that the mayor is always looking for his commissioners to be change agents. If you’re brought in as the leader of an agency I think there’s an expectation that you’re going to bring a skill set, expertise and a vision that’s going to be aligned with what the mayor wants to get done. But that’s not to say that the agency in question is doing a bad job. The mayor isn’t paying us to just make sure that things are moving along at the status quo.