Alternative Delivery Methods: What do Public Owners Want? by San Diego Community College District

CMAA-San Diego Panel: Alt Delivery Methods

5/26/11

Alternative Delivery Methods What do Public Owners Want?

CMAA Workshop May 26, 2011

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

CMAA-San Diego Panel: Alt Delivery Methods

5/26/11

Presentation Overview 

Alternative Delivery Methods 

DBB – Design, Bid, Build

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DB – Design Build

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CMAR – CM at Risk

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CMMP – CM Multiple Prime

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IPD – Integrated Project Delivery

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PPP – Public Private Partnerships

Presenters

CMAA-San Diego Panel: Alt Delivery Methods

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CMAA Alternative Delivery Workshop Jon Wald Senior Vice President Sundt Construction    

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

CMAA Alternative Delivery Workshop Jim Gillie Director, Const. Services UCSD)

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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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CMAA Alternative Delivery Workshop David Umstot, PE Vice Chancellor, Facilities Mgmt. SD Community College Dist.   

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

CMAA Alternative Delivery Workshop Darren Blume Business Development Mgr. Flatiron West, Inc.   

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

CMAA-San Diego Panel: Alt Delivery Methods

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CMAA Alternative Delivery Workshop 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

CMAA-San Diego Panel: Alt Delivery Methods

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CMAA Alternative Delivery Workshop 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

CMAA Alternative Delivery Workshop 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)

CMAA-San Diego Panel: Alt Delivery Methods

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Project Delivery Methods

Design-Bid-Build Bill Prey SANDAG

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DDB Sequential Phases Design Phase

Construction Phase

OWNER

DESIGNER

BUILDER

Summary of DBB Owner Designer Less Collaboration

S Design

U Bid

S Construction

May take longer & cause late news on cost Time

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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

Design-Build Jon Wald Sundt Construction

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Design-Build Selection Process:  Qualifications Only (QBS) 

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Price Only 

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Requires no bridging documents 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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Design-Build 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 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

Construction Manager at Risk Jim Gillie University of California, San Diego

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CM/GC Method DESIGN & CONSTRUCTION PHASE OWNER

DESIGNER

BUILDER (CM/GC)

CM at Risk at UCSD 

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

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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! 

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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 

CM @ Risk

Computer Science Engineering Building

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Basis of Award of CM @ Risk Contract 

Prequalified firms bid the Fee & GC to manage the construction

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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 

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The bids do not include the following costs: 

The cost of the actual construction work.

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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.

Payment for Preconstruction Services 

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

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

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

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Preconstruction Cost Formula

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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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CM Multi-Prime Dave Umstot, PE San Diego Community College District

CMMP – What is it? 

Owner retains CM based on qualifications to act as builder

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Owner holds all trade contracts

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Typically 20-40 trade contracts

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

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CMMP – Why Do It?  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

Change Orders by Delivery Method Program Level Sum of Contract Sum of Approved Changes Percentage CM Mul&-‐Prime

$ 125,859,889

Hard Bid

$ 125,976,590

$ 2,683,649 $ 10,575,169

2.13% 8.39%

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Design/Build of Systems with CMMP

 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

$520 Million in CMMP Hard Cost Budgets City College

Mesa College

Miramar College

Con;nuing Ed.

Career Technology Center Rudolph & SleAen $55.7M (Completed)

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

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

Linda Vista Campus PCL Construc;on $16.9M

Student Services Center PCL Construc;on $38.5M

Library Learning Resource Center Sundt Construc;on $33.9M

Math and Science Building McCarthy Builders $105.2M

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

Science Building Rudolph & SleAen $47.6M Arts/Humani;es and Business Tech Bldgs. Turner Construc;on $78.3M

Cesar Chavez Campus Rudolph & SleAen $38M North City Campus Barnhart Balfour BeaAy $21.3M Educa;onal Cultural Complex Wing Expansion CW Driver $14.5M

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Completed CMMP Projects: Allied Health Building 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: Career Tech Center 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. Project Budget: $63.1 million Comple&on Date: April 2010 Change Order Rate: 0.6%

CMAA-San Diego Panel: Alt Delivery Methods

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Humanities & Arts and Math & Business Bldgs. 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. Project Budget: $32.8 million Comple&on: December 2010 Change Order Rate: 3.7%

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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Integrated Project Delivery Dave Umstot, PE San Diego Community College District

Owner’s Perspective: IPD

•hAp://www.aia.org/ipdg

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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

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

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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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Public - Private Partnership Darren Blume Flatiron West, Inc.

P3 Legal Structure P3 Delivery Model: Equity Provider

Owner DBFO Contract

Debt Provider

Concessionaire/ SPC

DesignerBuilder

Operations & Maintenance

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Payments Payment from Owner to Concessionaire: 

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

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Two Primary payment mechanisms…. 

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

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

Payments (cont.) 

Any combination of the above

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Incentives/Disincentives payments…. 

QA/QC

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Lane Rental

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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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Summary Project Delivery Methods

Advantages and Disadvantages CM at Risk

Design/Build

Advantages Disadvantages  CM provides preconstruction  State funding excludes services preconstruction  Design completed prior to services bidding  Costs more on bid day  Sub trades prequalified  Good Owner-Architect-Contractor relationship  D/B provides preconstruction  services  Sub trades prequalified   Cost Effective - Awarded on Cost/ Point basis  Good Owner-Architect-Contractor relationship

Design NOT completed prior to bid Exact project components loosely defined

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Advantages and Disadvantages Bid-Build

CM/ Multi-Prime

Advantages Disadvantages  Design completed prior to bidding  No preconstruction services  Lowest cost on bid day  Sub trades NOT prequalified  Owner-ArchitectContractor relationship may be stressed  CM provides preconstruction services  Sub trades prequalified  CM Selected

 Owner at greater risk

Advantages and Disadvantages Public Private Partnerships

Advantages  A vehicle to fund projects now  

 

Disadvantages  Added pursuit costs (. 5 to 1%) Schedule Savings  Owner control is decreased Sole Source of Finance, Design  Complicated Construct and Operate (1 stop procurement shop) documents, defining scope at bid time Claims reduced; Design  Lack of Legal Conflicts 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

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Educate the broader community about benefits, uses and track record

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

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

Discussion Dan Fauchier, Facilitator