Message From The President

February is the month we remember and celebrate the presidents of the United States on President’s Day. e holiday was initially designated by congress to remember President George Washington’s birthday. In 1972 it was broadened to include President Abraham Lincoln and all the others. In my previous messages, I used two quotes from my favorite president – eodore Roosevelt. He is my favorite because of his progressive policies and conservation e orts that have le a large impression on the soul of the United States. He had a huge impact on the growth of the National Park System, a favorite of mine. One of my goals is to visit all 63 national parks, 19 down and 44 to go.

I want to highlight a progressive step within the railway construction industry that has developed over the past few years. I am speaking mostly from my own experience, in having led various construction projects and programs over the years, but I believe it re ects the whole industry to some extent. e concept of bringing the construction contractor into the project team during the design phase rather than at the point of bidding the work is an approach that was not utilized for most of my time in the industry. e Construction Manager/General Contractor (CM/GC) project delivery method does this, and I will summarize some of the advantages that make this an excellent approach for many larger construction projects.

CM/GC is one of many alternative delivery methods for construction projects. It has been around for many years, primarily with some State DOT’s for publicly funded highway projects. It is exible and can be customized to accomplish speci c project goals. CM/GC o ers the greatest value with large and complex projects ($50M or more in my opinion). is is not a method for simple, small, or easily repeatable projects. ere is an added small up-front cost to cover preconstruction services, but when the project is large and complex, the savings generated will easily o set those costs. e basic CM/GC method is this – a er selecting a design/construction management (CM) rm with CM/GC experience, solicit interested contractors, request proposals from a selected short list, and through a quali cations-based selection process a contractor is brought into the team before the design reaches 30%. On a similar timeline you also select an Independent Cost Estimator (ICE) who validates the market rates the contractor provides in their cost proposals. e project team is then complete – a design/ CM rm, a contractor, and an ICE - all which would have a direct contract with the owner/railroad. Below are the key steps, value opportunities and pitfalls to avoid in the process.

There are several key steps in a successful CM/GC process:

• Initiate design

• Preconstruction phase - bring the contractor and ICE into the design process a er the 10% stage and before the 30% stage is completed

◊ Evaluate alternative design concepts to meet functionality

◊ Complete constructability reviews and evaluate alternative materials

◊ Schedule and price the work

◊ Develop a risk register and assign who will carry each risk item

◊ Complete the 30%, 60% and 90% design stages and repeat the steps above as the design, schedule, and pricing are re ned

• Owner and contractor negotiate the guaranteed maximum price (GMP) with ICE providing guidance to the owner

• Construction phase proceeds

◊ If negotiations fail to produce a competitive market-based price agreeable to the owner and contractor, then the owner can proceed with formally bidding the project to other contractors

◊ Execute early work packages prior to the GMP to accommodate longlead material/equipment and/or if starting certain work before all the design and pricing is complete benefits the schedule

Along the way, take note of the many value opportunities CM/GC can provide, such as:

• Schedule compression – with shared ownership

• Reduced risks – early identi cation and mitigation

• Upfront value engineering – drives out costs

• Improved constructability of designminimize railway operational impacts

• Improved cost certainty - a reduction of change orders

• Incorporate sustainability opportunities

– evaluate in both design and construction phases

• Environmental permits – incorporate contractor inputs

As with all projects, there are a few potential pitfalls to avoid:

• Failure to agree upon a GMP – resolve any large estimate di erences early and prepare to bid if not resolved

• Noncompetitive pricing through deceptive estimating techniques – a well-quali ed ICE will prevent this

• Contractor provides little value during preconstruction services – be sure to use a contractor with proven CM/GC experience

It is important to note that with the CM/ GC method, the owner remains in control of the entire process. is is one of the key reasons it can be a great method – the owner gets all the bene cial input from the contractor but retains control of the design process. I have provided a very simpli ed overview with the intent of raising awareness and highlighting the value CM/GC can bring to the rail industry. Much has been written about CM/GC and other alternative delivery methods, so if I have spurred your interest you may want to explore it further.

Enjoy your journey until next month.