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Alternative Public Works ContractingREVISED CODES OF WASHINGTON 39.10
AUGUST 16, 2018
AGENDA
• Panel Member Introductions• The Market, Escalation, and Conditions• Alternative Project Delivery: Design-Bid-Build, GC/CM,
Design–Build, Progressive Design – Build• Summary of APD Strengths and Weaknesses• APD Case Studies• Q&A
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PANEL MEMBER INTRODUCTIONS
HOWARD HILLINGER• Served as vice president for
Programs for the Construction Management Association of America
• Project Review Committee Member
JIM DUGAN• Parametrix Group Manager for
Tacoma Office of Parametrix• Project Review Committee
Member
JOHN PALEWICZ• Managed or directed 24 GC/CM and
Design-Build projects with a total project cost of over $1.2 B
• Past Chair, of the Project Review Committee
KATY ALLEN• City Administrator – Liberty Lake• Extensive Design-Build experience
from owner/city perspective.
THE MARKET
• Volatile• Labor and Material Demand Exceeds Supply• Unprecedented Market Saturation in $30 M to $50 M Range• Continued Escalation and Market Conditions• Western WA Projects Pulling Eastern WA Contractors• Fewer Bidders – More APD Applications• Not an Owners Market – No Short Term Relief Forecasted• Time is Expensive
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ESCALATION
• Escalation Continues• No Decrease in Sight• 3% to 4% Annual Base• Equates to $900 K on a $30 M Project per Year• Time is Cost - Accelerate Wherever Possible• Early Cost Certainty is Desired
MARKET CONDITIONS
• Total of $19.47 B in Funding over 6 Years – $3.3 B/Year• Unprecedented Cost Increases in Bid Market • Building Budgets at $380/sf – Bidding at 40% to 60% Higher• Increased Owner Risk Profile• Need Early Cost Certainty and Improved Cost Control
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THE RESULT
• Bid market construction costs up 40% to 60%
• In the $30 M to $35 M construction cost range
• Masonry doubled in cost this year
• Insulation and drywall up 8% in last 30 days
• Glass in short supply• Structural steel is now long lead
• Tower cranes are not available• Bids good for 30 days or Less• Decreased bidders• Increase in delay claims• Shortage of subcontractors• Poaching of key staff• Failure to design to budget• Everyone is slammed
FORMS ALTERNATIVE PROJECT DELIVERY (APD)
• Design-Bid-Build (DBB)• Cost Plus a Fixed Fee (CPFF)• Time & Material (T&M)• Team Build (TB)• Job Order Contracting (JOC)• Design-Build (DB)• Public Private Partnership (P3)• Integrated Project Delivery (IPD)• General Contractor/Construction Manager (GC/CM)
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RCW 39.10
• First Authorized in 1991 for the Department of Corrections• Expanded to Other Public Agencies• Re-Authorized in 2013 for 8 Years• RCW Sunsets if not Re-Authorized• Capital Projects Advisory Review Board (CPARB)• Project Review Committee (PRC)
PUBLIC AGENCY ALTERNATIVE PROJECT DELIVERY OPTIONS
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DESIGN-BID-BUILD
• Approved public procurement method • 100% competitive bid• Owner warrants design• Two owner contracts• Lowest bid does not equal lowest cost• Cost estimates not done by contractor• Not collaborative• Risks mostly borne by the owner
DESIGN-BID-BUILD: SCHEDULE
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DESIGN-BID-BUILD: PROS AND CONS
GC/CM
• A/E and GC selected on qualifications• Early contractor involvement in design• Increased three-way collaboration• Off ramp to DBB if needed between design
and construction• Opportunity to collaborate on trade
pre-qualifications• Owner warrants design• Two contracts with owner• Increased owner support needed• No single point of contact• Owner to GC/CM is performance based
– GC/CM to subs is low cost based
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• Implementation of the project involves complex scheduling, phasing, or coordination.
• The project involves construction at an occupied facility which must continue to operate during construction.
• The involvement of the general contractor/construction manager during the design stage is critical to the success of the project.
• The project encompasses a complex or technical work environment.
• The project requires specialized work on a building that has historic significance.
RCW 39.10 GC/CM STATUTORY REQUIREMENTS
GC/CM: SELECTION PROCESS
• Request for Proposal (RFP)− Qualifications and experience to do this project− Scored by the selection committee
• Interviews− Optional− Scored by the selection committee
• Request for Final Proposal (RFFP)− Fee and General Conditions are competitively bid− Scored based on a sliding scale
• Highest scoring firm is selected• Enter into Pre-Construction Services Contract
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GC/CM: SCHEDULE
GC/CM: PROS AND CONS
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DESIGN-BUILD
• Owner does not warrant design• Single contract• Early to market – high potential for time savings• Single point of accountability• Excellent for highly specialized work• Close coupling between designer and contractor• Very high level of early owner effort• Three forms of design build available• Challenged by an involved owner• Design team does not work for the owner• Off ramps are more difficult• Early owner cost certainty
RCW 39.10 DESIGN-BUILD STATUTORY REQUIREMENTS
• If the construction activities are highly specialized and a design build approach is critical in developing the construction methodology
• If the project provides opportunity for greater innovation and efficiencies between the designer and builder
• If significant savings in project delivery time would be realized
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DESIGN-BUILD: SCHEDULE
DESIGN-BUILD: PROS AND CONS
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PROGRESSIVE DESIGN-BUILD
• Qualification based selection• Allowed based on 2013 revisions to RCW
39.10• RFQ to select qualified firms• RFP does not include detailed design
information• Selection is based on weighted evaluation
factors• 2 phases: (1) preliminary design, and (2) final
design and construction• Team works with owner to define and design
the project• Cost is negotiated between team and owner• Off ramp between phases
PROGRESSIVE DESIGN-BUILD: SCHEDULE
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PROGRESSIVE DESIGN-BUILD: PROS AND CONS
GC/CM CASE STUDIESGeneral Contractor/Construction ManagerRCW 39.10, Results and Lessons Learned
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PROJECT EVALUATION CRITERIA
• Provides substantial fiscal benefit or traditional delivery method is not practical - Pass/Fail
• Project meets qualifying criteria under RCW 39.10.340 - Pass if meets 1 of 6
• Public body has the necessary experience or team- Must pass all six
• Public Body has resolved any audit findings relative to previous projects - Pass/Fail
FISCAL/PUBLIC BENEFIT
Examples include improved performance regarding:
• Safety• Cost Forecasting• Market and Inflation Risk Management• Community Relationships• Risk Allocation• Fiscal Accountability
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QUALIFYING CRITERIA UNDER RCW 39.10.340 – NEED 1 OF 6
• Involves complex scheduling, phasing or coordination• Involves construction at an occupied facility which must
operate during construction• Involvement of the GC/CM during the design stage is
critical to the success of the project• Encompasses a complex or technical work environment• Project required specialized work on a building that has
historic significance• Public body elects to procure the project as a heavy civil
construction project
THE NECESSARY EXPERIENCE OR TEAM – NEED 6 OF 6
• Project delivery knowledge and experience• Sufficient contract administration personnel with
construction experience• Written management plan with clear and logical lines
of authority• Necessary and appropriate funding and time to carry
out the project• Continuity of project management team with project
type and scope experience• Necessary and appropriate construction budget
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STADIUM HIGH SCHOOLHISTORIC MODERNIZATION AND & ADDITIONS
• Planned Start: 2004• Actual Start: 2004
• Planned Finish: 2006• Actual Finish: 2006
• Planned Budget: $108,000,000• Actual Budget: $107,967,536• Budget Variance: -0.03%
LINCOLN HIGH SCHOOLHISTORIC MODERNIZATION AND & ADDITIONS
• Planned Start: 2006• Actual Start: 2006
• Planned Finish: 2008• Actual Finish: 2007
• Planned Budget: $75,000,000• Actual Budget: $75,170,798• Budget Variance: 0.23%
Completed one year ahead of schedule.
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MCCARVER ELEMENTARY SCHOOLHISTORIC MODERNIZATION
• Planned Start: 2015• Actual Start: 2015
• Planned Finish: 2016• Actual Finish: 2016
• Planned Budget: $39,000,000• Actual Budget: $38,765,433• Budget Variance: -0.60%
STEWART MIDDLE SCHOOLHISTORIC MODERNIZATION AND & ADDITIONS
• Planned Start: 2015• Actual Start: 2015
• Planned Finish: February 2017• Actual Finish: February 2017
• Planned Budget: $66,000,000• Actual Budget: $66,123,459• Budget Variance: .18%
7 months ahead of schedule!
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BROWNS POINT ELEMENTARY SCHOOLREPLACEMENT SCHOOL
• Planned Start: Summer 2017• Actual Start: Summer 2017
• Planned Finish: Sept 2018• Actual Finish: Sept 2018
• Planned Budget: $31,000,000• Actual Budget: $30,298,657• Budget Variance: -2.26%
GC/CM LESSONS LEARNED
• The critical importance of extensive due diligence with investigations when designing in older buildings – get the GC/CM on board sooner than the end of schematic design
• The clear definition of risk allocation early in the project, and the careful use of contractor and owner contingency throughout the project to mitigate the remaining risk
• The value of extended and varied interviews, including office visits, to break down barriers and nervousness in interview settings.
• The flexibility of RCW 39.10.340 – the many ways to use the statue to benefit the owner and the project team
• The critical importance of trust to the development of an integrated team comprised of the Owner, the Contractor and the Design team.
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GC/CM LESSONS LEARNED
• The critical importance of the Request for Proposal document – it informs the entire procurement process
• Bundling projects under one GC/CM approval and procurement process – improving the size of the prize and drawing the interest of GC/CM’s
• Reserving the right at the sole discretion of the Owner to move forward with one GC/CM Statement of Proposal if only one proposal was received
• Reserving the right at the sole discretion of the Owner to select either GC/CM candidate if the value of the Request for Final Price (RFFP) between the two candidates is more than 20% apart
• Identifying all of the possible Work that a selected GC/CM may do in the RFP and not just the Work that is intended – allows for adding Work to the selected GC/CM without being required to perform the GC/CM procurement process again
DESIGN-BUILD CASE STUDYI-5, Mounts Road to Thorne Lane – Corridor Improvements
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I-5, MOUNTS ROAD TO THORNE LANE – CORRIDOR IMPROVEMENTS – PROJECT NEED
I-5, MOUNTS ROAD TO THORNE LANE – CORRIDOR IMPROVEMENTS
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IMPROVEMENT TIMELINES
TYPICAL I-5 CORRIDOR CROSS-SECTION AND CONSTRAINTS
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WHY DESIGN-BUILD?
STAGE 2 BASIC CONFIGUATION (RFP) DESIGN VS. D-B DESIGN
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DESIGN-BUILD BID OPENING RESULTS
PROGRESSIVE DESIGN-BUILD CASE STUDY West Campus Utility Plant (WCUP)
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WEST CAMPUS UTILITY PLANT
• UW Seattle Campus• Mortenson, ARUP and Miller Hull Architects• Emergency power and chilled water for campus buildings• Schedule driven to service the new ARCF building• Architecturally prominent with gateway location• Final project budget $44.2 M
SCHEDULE
• Selection: January 2014 – June 2014• Design through DD (+/-): September 2014 – May 2015• Construction: November 2015 – January 2017• Occupancy: February 2017
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PROCESS
• Team thoroughly program the project with UW
• Verify constructability of piping in existing utility tunnel
• UW involvement with design process• Full team members available for
design• Able to selectively bid mechanical
and electrical work• Develop design until the UW is
comfortable with all costs
EVENING VIEW LOOKING NORTH FROM NE PACIFIC STREET
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SWITCH GEAR ON THE MAIN FLOOR
CHILLERS ON THE MAIN FLOOR
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By project phase
LESSONS LEARNED
1. Much less time and work than traditional DB procurement2. The DB team can be brought on board very early
- Help to define scope and budget- Verify project assumptions
3. If scope and budget has been established, the first step is to validate4. Owner needs to embrace the DB team as a partner in developing project
PLANNING AND PREPARATION
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1. Owner can set the depth of the DB team- Designer and Builder only (my recommendation)- Plus sub-consultants and sub-contractors
2. With DB only, the owner can participate in selecting the team3. Ideally Teaming Agreements are in place for owner review4. Design manager role is critical, and least understood
CREATING THE RIGHT TEAM
1. Collaborative design phase2. Need to validate or establish budget/scope assumptions3. What is covered in design documents versus design narratives4. Need to determine what scope items need more detail 5. When is the project defined enough to lock in scope and budget6. A key consideration – Lump Sum or Guaranteed Maximum Price (GMP)
PHASE 1 – PRELIMINARY AGREEMENT
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1. Scope and Price defined and guaranteed- Usually after Design Development
2. A high quality design narrative is essential- Establish much of scope and quality- Fills gap between DD and CD- Prescriptive/Performance
3. Third party cost review is recommended- More critical for lump sum
4. Role of contingencies: DB, Owner, project
PHASE 2 – FINAL AGREEMENT
1. Design and permitting work continues-Consultant team and trade partners roles start to overlap-Who is the engineer of record?-Follow up during construction
2. Team members continuity from design to construction is critical-Continued involvement of key team members-Decisions made during design inform agreements in construction
PHASE 2 – FINAL AGREEMENT
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1. Quicker and more cost effective procurement2. Timely and cost effective project delivery 3. Greater control of the design, scope, quality, cost and schedule 4. Achieve competitive market pricing for all or a portion of the construction 5. Ability to select equipment, subcontractors and vendors 6. Guaranteed price, performance and schedule
BENEFITS FOR THE OWNER
Institute for Sustainable InfrastructureENVISION GOLDFirst Certified Higher Education ProjectDBIA National Award of Merit Industrial/Process/Research Facilities APWA Project of the Year Structures $25 - $75 Million
AWARDS
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Q&A
PROJECT DELIVERY METHOD SELECTION
• Example “Tier 1” Screening• Identify if one method stands
out, or if any have fatal flaws
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PROJECT DELIVERY METHOD SELECTION
Potential Influences on Selection of Delivery Method
SCHEDULEBUDGETINNOVATIONREAL ESTATEUNDEFINED SCOPEFLEXIBILITYAGENCY PARTNERING
FAST è DESIGN-BUILD
PRICE (HOT MARKET) è DESIGN-BUILD
PRICE (COOL MARKET) è DESIGN-BID-BUILD (GC/CM)
INNOVATION è DESIGN-BUILD (GC/CM)
ROW ACQUISITION CHALLENGES è GC/CM
POORLY DEFINED SCOPE è GC/CM (pDB)
LOTS OF CHANGE è GC/CM (pDB)
EXAMPLE: SCORING
Score Definition10 Delivery method is most likely to achieve desired
outcome.8 Delivery method is likely to achieve desired
outcome; there is small risk that the desired outcome will not be realized.
6 Delivery method may result in desired outcome; there is moderate risk that the desired outcome will not be realized.
4 Delivery method might result in desired outcome; there is strong risk that the desired outcome will not be realized.
2 Delivery method unlikely to result in desired outcome; it is very likely the desired outcome will not be realized.
TIER 2 CORRIDOR 1033SCORINGSCALE OF 1 – 10 POINTS
Intermediate values (i.e., 1, 3, 5, 7, 9) may be used to indicate values between those in the table.
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EXAMPLE: FINAL SELECTION
Assumptions:
• Budget is critical to project success and cannot be delivered without grant funding.
• Stakeholder partnerships, public involvement, and ESJ are major influencers to project success.
• Schedule is important to project success, but not as much as budget, grant funding, or third-party relationships.
• Right-of-way is a challenge for this project and there are concerns of impacts to schedule.
CRITERIA WEIGHTINGTOTAL OF 100 POINTS
Selection Criteria WeightDeliver project within budgeted contingency allowances.
25
Deliver project within scheduled contingency allowances.
10
Manage Risk through proactive application of Risk Management Plan (PMP) and updates to risk register.
10
Apply for and receive $85M in grant funding. 25Deliver without right-of-way impacts to schedule critical path and without use of condemnation.
10
Develop and implement successful stakeholder partnerships, public outreach plans, and ESJ programs to meet agency goals.
20
TOTAL 100
EXAMPLE: RESULTS
TIER 2 CORRIDOR 1033RESULTS
Selection Factor
Project Delivery MethodDBB GC/CM tDB pDB
Factor Weight Score Weighted
Score Score Weighted Score Score Weighted
Score Score Weighted Score
2. Cost 25 7 175 8 200 9 225 8 2003. Schedule 10 7 70 8 80 9 90 9 904. Risk Management 10 8 80 8 80 9 90 9 9028. Grant Funding 25 8 200 8 200 6 150 7 17518. Stakeholder, Community, ESJ Processes 20 8 160 9 180 6 120 6 12025. Right-of-Way 10 7 70 9 90 5 50 7 70
Total Score 100 755 830 725 745
• Higher total is better • Review and assess • Adjust if needed
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EXAMPLE: CONFLICT OF INTEREST
If the project were to be delivered as a Design-Build project, the following contracting “firewalls” would apply in order to prevent conflicts of interest and retain a level playing field for future prospective Design-Build bidders:
• The Consultant would not be allowed to participate in the Design-Build (D-B) contract;
• Consultant subs could participate in D-B contracts if they could demonstrate they did not have a conflict of interest or unfair project knowledge.
• Parent and subsidiary companies participating in Consultant Joint Ventures (JV) would be precluded from D-B contracts.
Note: “Consultant” includes Design and PM Consultants.
APPROVED APD APPLICATIONS
Agency Project Delivery MethodCity of Airway Heights Recreation Complex Project DBCity of Everett Grand Avenue Park Bridge DBCity of Everett Service Center Redevelopment GC/CMCity of Everett Public Works East Clearwell Roof Replacement DBCity of Federal Way Performing Arts & Conference Center GC/CMCity of Liberty Lake Town Square Project DBCity of Oak Harbor Clean Water Facility GC/CMCity of Richland Certification DBCity of Richland City Hall Project GC/CMCity of Richland Fire Station DBCity of Seattle Boundary Dam 3-Generator Rehab DBCity of Seattle Certification DB & GC/CMCity of Seattle Overlook Walk Project GC/CM
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APPROVED APD APPLICATIONS (CONT)
Agency Project Delivery MethodCity of Spokane CSO 24 Control GC/CMCity of Spokane Spokane Falls CSO 26 Control Facility GC/City of Spokane NLT Plant GC/CMCity of Spokane Post St Pedestrian & Utility Bridge DBCity of Spokane River Front Park Project GC/CMCity of Tacoma Certification DBCity of Tacoma Recertification DBCity of Tukwila 3 Fire Station Replacement GC/CMCity of Tukwila Justice Center Project GC/CMCity of Walla Walla Water Treatment Plant Improv. GC/CMKing County DOT Pier 50 Float Replacement DBSnohomish County North Sound Behavioral Health Treatment Facility GC/CMSpokane Public Facilities District INB Performing Arts Center DB
