An Interview with Greg Martz of GM Development
What is Build-Operate-Transfer (BOT)?
BOT is a procurement law the State of Indiana created for Public Projects. Most people think of it as a financing law, but it is actually a procurement statute. Its core purpose is to allow a community or government unit to select a design and construction/development team to design and build their facility on a qualification’s basis.
Simply put, it is a procurement model only used in Indiana, that allows qualifications-based selection of the entire design/construction team. It is authorized under IN Code 5-23.
How is it different from a traditional design/bid/build model?
First you are selecting the team based on qualifications and not on a public bid. Second, the result of the process is a real guaranteed price. This is a no-change order delivery model.
How long has it been around?
As far as we can tell, it was originally created in the late 1970s for use in Marion County, Indiana only. It was modified to its current version in 1997 but wasn’t really being used until 2009.
After we started developing projects under this statute at that time, there were only one or two BOT projects per year in the State for several years. By 2015 or 2016 it started to really grow. It gained momentum because more and more communities started to see it used effectively, and saw the result was a true guaranteed price.
Today there are probably 70 BOT projects around the state under construction right now.
Is there a type of project or size of project it is best suited for?
I’m biased. It is difficult for me to come up with something it is not suitable for because I have seen so many BOT successes in many types and sizes of projects. The reason I think it is so effective right now is because all quality contractors are currently so busy. In an economy like 2009, traditional public bidding is effective. But with the current construction market in Indiana, a negotiated construction management style is much more efficient. This procurement model not only allows you to negotiate with the CM, but also the subcontractors. It ensures a locked in price rather than gambling on an open bid model.
In terms of the size or scope of a project, I’m currently working on everything from $200,000 to over $90M+ construction cost.
When and why should someone consider the BOT delivery model?
The more complicated the process and the riskier the project, the more advantages with this process. The BOT model creates a collaborative team environment rather than putting the design and construction teams on opposite ends.