Alternative Delivery Methods: What do Public Owners Want?

CMAA-San Diego Panel: Alt Delivery Methods

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CMAA Workshop May 26, 2011

Alternative Delivery Methods What do Public Owners Want?

CMAA Alternative Delivery Workshop

Bill Prey Principal Engineer San Diego Association of Governments (SANDAG))

37 years civil engineering experience - public and private SANDAG LOSSAN Corridor Director – Managing 21

major capital projects valued at over $800 million SANDAG Construction Engineer - Managed the

construction of seven major Light Rail Transit (LRT) with total value over $1 billion


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Presentation Overview

Alternative Delivery Methods

DBB – Design, Bid, Build

DB – Design Build

CMAR – CM at Risk

CMMP – CM Multiple Prime

IPD – Integrated Project Delivery

PPP – Public Private Partnerships

Presenters


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21 years with Sundt 38 years in Alternate Project Delivery 17 years experience in Design/Build Design-Build Institute of America, Western Pacific

Region; Director and Legislative Committee Chair Associated General Contractors of America, San Diego

Chapter; Director

Jon Wald Senior Vice President Sundt Construction

Jim Gillie Director, Const. Services UCSD)


UCSD Facility Design and Construction Department since 2000

Manages $2 billion design and construction work at main campus, east campus Health Sciences facilities, Hillcrest Hospital and Scripps Institution of Oceanography

22 years with Blake Construction Co.


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Oversees $1.5 billion construction bond program, facilities services, and police functions

Executive Dir. of Facilities for SD Unified School District Implemented $1.51 billion Proposition MM capital

construction bond program and managed $131 million annual physical plant operations

David Umstot, PE Vice Chancellor, Facilities Mgmt. SD Community College Dist.

Manages Design Build and P3 pursuits for Flatiron in the West

19 years experience managing heavy civil projects in the Western U.S.

Pursuit Manager for Presidio Parkway Project, San Francisco – 1st Infrastructure P3 in Western US


Darren Blume Business Development Mgr. Flatiron West, Inc.


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Dan Fauchier Executive Vice President The ReAlignment Group)

35 years in design and construction project management and consulting

Lean Construction trainer and mentor to owners, designers and builders

Alignment Partnering / ReAlignment facilitator

Provocateurs


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Afshin Oskoui, PE City Engineer City of San Diego

25 years civil engineering and construction experience in public works

Responsible for the oversight of the City’s Land Development Permit Process and 10-year $7.2 Billion Capital Improvement Program

Lead development of City’s first and most comprehensive Design-Build, and CM@R project delivery methods


Mark G. Budwig Partner McKenna Long & Aldridge LLP

Practiced exclusively construction law for 25 years Public (Cal. & Federal) and Private Projects Drafted, arbitrated and litigated all forms of contract

delivery methods Former Licensed Civil Engineer (CA)


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Project Delivery Methods

Design-Bid-Build

Bill Prey SANDAG


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DDB Sequential Phases

OWNER

DESIGNER

OWNER

CM DESIGNER BUILDER

Construction Phase Design Phase

Summary of DBB

Construction

Time May take longer & cause late news on cost

Owner

GC

Designer

S U B S

Less Collaboration

CM

Design Bid


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DBB: What’s Working, What’s Not-Working

Working: Complete design – no surprises Less expensive on bid day Increased perception of fairness Avoids preferential awards

Not-Working: Comfort in mediocrity Risk for builders Provides less quality Detracts from relationship building

Jon Wald Sundt Construction

Design-Build


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Design-Build

Selection Process: Qualifications Only (QBS)

Requires no bridging documents Price Only

Requires extensive bridging documents Best Value (BV) Combination of Technical Score and Price

Requires limited bridging documents (primarily scope and program)

Design-Build

Qualifications Only (QBS) Requires no bridging documents Example: San Diego Airport Green Build Terminal

2 Expansion


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Design-Build

Price Only Requires extensive bridging documents Example: Most Federal Projects, Warriors in

Transition, Fort Bliss, TX

Design-Build

Best Value: Combination of Technical Score and Price Requires limited bridging documents (primarily

scope and program) Example: SD City College Math & Social

Sciences Building


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What it takes: Trust Collaboration Win-Win-Win Attitudes

Our experience: The greater trust, collaboration and win-win-win you have, the greater success you will experience.

Design-Build

Design-Build

Advantages (owner perspective): Cost control Schedule control Not responsible for design Disadvantages (owner perspective): Loss of direct design relationship Need for early, comprehensive project definition Re-training of staff


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DB: What’s Working, What’s Not-Working

Working: Trade contractors involved in construction drawings Design changes are within budget Schedule advantages Owners must be disciplined about change

Not-Working: Owner’s perceived loss of design control Cost overruns Unclear bid documents Potential public skepticism Some CA Public agencies do not allow qualifications-based

selection of Design-Build team

Jim Gillie University of California, San Diego

Construction Manager at Risk


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CM/GC Method

OWNER

DESIGNER BUILDER (CM/GC)

DESIGN & CONSTRUCTION PHASE

CM at Risk at UCSD

CA Department of Industrial Relations – Prequalification: a convenient coincidence?

Prequalification is a key to the success of all our projects AND is required for alternate delivery methods


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CM at Risk at UCSD

Eleanor Roosevelt College UCSD’S First CM at Risk Project

Prequalification: 3-Step Process

Level 1 Step 1: Advertisement

RFQ Mandatory Meeting Submit Qualifications

Step 2: Invitation to interview Interview Requirements

Level 2 Step 3: Prequalification Acceptance letter

RFP Bid

What exactly is being bid?


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Prequalification: Criteria

Certification (Pass/Fail) Attendance at mandatory meeting – (Pass/Fail) Surety Declaration*** - (Pass/Fail) Insurance Declaration*** - (Pass/Fail) Construction Experience – MAJOR

DETERMINING FACTOR! 3 – 5 comparable projects in last 10 years

Staff Experience – MAJOR DETERMINING FACTOR! Minimum Staff Requirements – (Basis of Bid)

Prequalification: Criteria (cont.)

Safety Program Quality Control Program Business Construction Revenue – (Formula) Mediation, Arbitration, Litigation, Disciplinary

Record Preconstruction Services Requirements

And non-scored estimate of Precon. Services


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Preconstruction Services

Estimates – DD, 50% CD, & 100% CD Preliminary Schedule – for sub-Bids also Constructability Review Bid package strategy Bidding sub-trades General Requirements

Approval for Construction

CM @ Risk Contract: A Two-Part Contract

Part 1 – CM (Consulting) Contract

Part 2 – Construction Contract

Cal IT²


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The CM @ Risk Contract

The CM @ Risk Contract: Part 1 Consulting agreement to perform the specified

preconstruction services

The CM @ Risk Contract: Part 2 General construction contract Plans and specs

Computer Science Engineering Building

CM @ Risk


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Basis of Award of CM @ Risk Contract

Prequalified firms bid the Fee & GC to manage the construction

This includes every cost the firm will incur to schedule, coordinate, manage, and administer the construction contract, i.e.: All field and office overhead & profit, staff, and

whatever supplies, materials, equipment, and utilities needed by general contractor to perform its work.

Basis of Award of CM @ Risk Contract

The bids do not include the following costs: The cost of the actual construction work. The General Requirements needed by the project

or the trade contractors

Examples: Do include in bid general contractor’s trailer Do not include project fence or dumpsters Do include all utility costs for GC’s trailer Do not include utility costs for project


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Transition from CM to Construction Contract

If the sum of the general contractor’s bid Fee & GC plus the sum of the trade bids plus the cost of General Requirements is within the budget and the project is scheduled to complete within the Contract Time, then…..

The construction “option” in the agreement is exercised, the costs of the trade bids and General Requirements are added to the agreement by Contract Amendment, (the Fee and GC bid amount are specified in the agreement) and the general contractor has a complete contract.

The amount paid for preconstruction services is established by UCSD and known by the General Contractors prior to bidding the Fee & GC

This amount is fixed and will not change unless the scope of the preconstruction services are changed by the University

If the established amount is insufficient then bidder should consider increasing Fee & GC bid to cover it

Preconstruction Cost Formula

Payment for Preconstruction Services


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CM @ Risk

Moores Cancer Center

CMAR: What’s Working, What’s Not-Working

Working: Qualifications-based selection allows contractor to

collaborate with subs Assembles team of experts Owner maintains control over design True cost known up front

Not-Working: Doesn’t guarantee project completed within budget Requires owner discipline


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Dave Umstot, PE San Diego Community College District

CM Multi-Prime

Owner retains CM based on qualifications to act as builder

Owner holds all trade contracts

Typically 20-40 trade contracts

The CM coordinates with project manager, superintendent and provides General Conditions

CMMP – What is it?


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Match builder to project

Factor past performance into selection

Select best management team available

Reduce redundant management costs

CM fee is typically equal to GC OH&P at bid

Change order rates typically trend 50% lower than traditional delivery

CMMP – Why Do It?

Program Level Sum of Contract Sum of Approved Changes Percentage

CM Mul&-‐Prime $ 125,859,889 $ 2,683,649

2.13%

Hard Bid $ 125,976,590 $ 10,575,169 8.39%

Change Orders by Delivery Method


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Consider delivery of complicated MEP or skin systems via design/build as part of larger projects

Integrate shop and fabrication drawings into the final design

Resolve any spatial conflicts in model prior to construction

Design/Build of Systems with CMMP

City College Mesa College Miramar College Con;nuing Ed. Career Technology Center Rudolph & SleAen $55.7M (Completed)

Science Building Rudolph & SleAen $47.6M

Arts/Humani;es and Business Tech Bldgs. Turner Construc;on $78.3M

Allied Health Educa;on & Training Facility McCarthy Builders $24.9M (Completed)

Student Services Center PCL Construc;on $38.5M

Math and Science Building McCarthy Builders $105.2M

Humani;es & Arts and Math & Business Buildings Sundt Construc;on $29.4M (Completed)

Library Learning Resource Center Sundt Construc;on $33.9M

Cafeteria/Bookstore & Student Services Center CW Driver $30.5M

Linda Vista Campus PCL Construc;on $16.9M

Cesar Chavez Campus Rudolph & SleAen $38M

North City Campus Barnhart Balfour BeaAy $21.3M

Educa;onal Cultural Complex Wing Expansion CW Driver $14.5M

$520 Million in CMMP Hard Cost Budgets


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50,000 SF, three-‐story building,

cer&fied LEED Gold. Awarded

CMAA 2010 Project of the Year

Project Budget: $27.4 million

Comple&on Date: Sept. 2009

Change Order Rate: 8.8% (included owner-‐requested coffee kiosk)

Completed CMMP Projects: Allied Health Building

88,000 SF, five-‐story building, cer&fied

LEED Gold. Includes parking structure with

approximately 700 spaces. Winner of CA

Higher Educa&on Sustainability Conference

award for Best Overall Sustainable Design.


Comple&on Date: April 2010

Change Order Rate: 0.6%

Completed CMMP Projects: Career Tech Center


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Humani&es & Arts provides 45,000 sq. b. of new classroom and laboratory space.

Math & Business provides 45,000 sq. b. of new classrooms, computer labs, and a mathema&cs research center.

The dual classroom building project was named CMAA 2011 Project of the Year.


Comple&on: December 2010

Change Order Rate: 3.7%

Humanities & Arts and Math & Business Bldgs.

CM Multi-Prime: What’s Working, What’s Not-Working

Working: Allows owner to bid out smaller components Provides flexibility to owners Several school districts seem to like it

Not-Working: Larger owner administrative burden Potential lack of single overall project manager Multiple primes must be scheduled and coordinated Loss of efficiency due to lack of coordination


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Dave Umstot, PE San Diego Community College District

Integrated Project Delivery

•hAp://www.aia.org/ipdg

Owner’s Perspective: IPD


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IPD: What is it?

Project delivery approach that integrates people, systems, business structures, and prac&ces to op&mize project results, increase value to the owner, reduce waste and maximize efficiency of project delivery.

Dis&nguished by highly effec&ve collabora&on among the owner, prime designer and prime constructor commencing at early design through project comple&on.

Waste in Construction


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IPD: Why do it?

Target Costing


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BIM! BIM! BIM!

Build it in model space before you build it in real space

Reduce conflicts using Revit and NavisWorks clash detec&on

Energy efficiency evalua&on

Walk the end user through the space

With schedule integra&on, a 4-‐D model can be developed

With cost es&mates, a 5-‐D model can be developed

Builder’s Perspective: Internal Clash Survey

Building Construction Mechanical piping hits cable tray and fire protection piping in ceiling space

Survey Average Results Man-hour Savings = 61 Delay Savings = 3 Days Cost Savings = $30,349

Number of Clashes Shown in Example = 9 Savings per Clash Resolved = $3,372


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Early Attitudes Towards Lean Construction

We’ve tried that.

We already do that.

We don’t need it. It won’t work here. We don’t build cars.

We’re different.

The other guy needs it, not me.

We’re doing well, so why change?

RFI Value Stream Mapping


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Cont. Education: Major Projects 2010-11

Key Points

Reducing workflow variability Improves total system performance Makes project outcomes more predictable Simplifies coordination Reveals new opportunities for improvement

Point speed and productivity of a single operation doesn’t matter – throughput does

Strategy: Reduce variation then go for speed to increase throughput.


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Local Optimization

Playing the Capacity Utilization Game Workflow losses are real, lead to adversarial rela&ons and can not be demonstrated by delay claims, so…

Trade contractors protect themselves by adding con&ngency and holding back labor to keep u&liza&on high

This further reduces workflow predictability and increases project risk

By their/our ac&ons, we shib that risk along.

Why Pull Planning

Without Pull Planning: Only half the tasks on weekly work plans are

completed as planned So called “project control” is after-the-fact

identification of variances, not proactive steering toward objectives

Projects are a commitment-free zone; promises are neither requested nor made


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Darren Blume Flatiron West, Inc.

Public - Private Partnership

P3 Legal Structure

P3 Delivery Model:

Owner

Designer- Builder

Operations & Maintenance

Concessionaire/ SPC

Debt Provider

Equity Provider

DBFO Contract


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Payments

Payment from Owner to Concessionaire:

25,30,50,90 year payment periods (monthly, yearly, milestones, etc.)

Two Primary payment mechanisms….

Availability type payments (i.e. mortgage)….only if it is “available”

Usage/Traffic Risk (who takes the risk of ridership?)….Toll or Shadow toll

Payments (cont.)

Any combination of the above

Incentives/Disincentives payments…. QA/QC

Lane Rental

Safety performance


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Cost Structure

PPP: What’s Working, What’s Not-Working

Working: Owner doesn’t need large initial investment Maximizes innovation and creativity Schedule Savings Allows the US to play catch up All the same advantages of Design-Build

Not-Working: Understanding of Revenue risk and that risk transfer Must be careful about the residual value of asset after transition to

owner’s possession Procurement documents are complicated, understanding of how to

get what you want Requires more sophisticated owner’s representation on the legal and

commercial side


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Project Delivery Methods

Summary

Advantages and Disadvantages

Advantages Disadvantages CM at Risk CM provides preconstruction

services Design completed prior to

State funding excludes preconstruction services

bidding Costs more on bid day Sub trades prequalified Good Owner-Architect-Contractor

relationship

Design/Build D/B provides preconstruction services

Design NOT completed prior to bid

Sub trades prequalified Cost Effective - Awarded on

Cost/ Point basis

Exact project components loosely defined

Good Owner-Architect-Contractor relationship


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Advantages Disadvantages Bid-Build Design completed prior to bidding No preconstruction

services Lowest cost on bid day Sub trades NOT

prequalified Owner-Architect-

Contractor relationship may be stressed

CM/ Multi-Prime

CM provides preconstruction services

Owner at greater risk

Sub trades prequalified CM Selected


Advantages Disadvantages Public Private Partnerships

A vehicle to fund projects now Added pursuit costs (.5 to 1%)

Schedule Savings Owner control is decreased

Sole Source of Finance, Design Construct and Operate (1 stop shop)

Complicated procurement documents, defining scope at bid time

Claims reduced; Design Conflicts

Lack of Legal precedence

Major Project Efficiencies Potential for High Risk – High Reward


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Where Do We Go From Here?

Educate ourselves on relative benefits, uses and proven “track record” of alternate delivery methods

Educate the broader community about benefits, uses and track record

Explore legislation to provide all public agency owners flexibility to select which method works best for each project

Continue to educate public agencies, designers, builders in how best to collaborate on projects for the best benefit of the public

Dan Fauchier, Facilitator

Discussion

Documents

Alternative Delivery Methods: What do Public Owners Want?