June 23, 2010

CM-AT RISK VS. DESIGN BID BUILD A TEXAS CASE STUDY – PROCUREMENT

AND IMPLEMENTATION

Acknowledgement

Mike Adams, P.E

Executive Director of Engineering and Utilities City of Midlothian

Coy M Veach, P.E., CCM

Vice President Freese and Nichols, Inc.

David W. Sloan, P.E., BCEE Senior Process Engineer Freese and Nichols, Inc.

Bryant Caswell, P.E

Associate Schrickel Rollins and Associates

Outline

• City of Midlothian, Texas • Project Delivery Systems (PDS) • Legislation History in Texas • CM-At Risk – Structure, Schedule and Services

– Solicitation and Procurement Process

• CMAR vs.DBB • Take Away Points • Questions and Answers

City of Midlothian • Ellis County, Texas • Population - 16,000 residents • Strategically located equal distance from Dallas and Fort Worth –

25 miles southwest of Dallas and southeast of Fort Worth • 2006 Long Range Water Supply and Master Plan – projects

population to steadily increase over the next 20 years • Current water demand is 10.0 MGD • Projected water demand is 36.5 MGD • Existing Tayman WTP production capacity of 13.0 MGD

Midlothian WTP Project Profile • Tayman WTP is completely build-out • New Membrane Filtration WTP to meet future demands and

provide redundancy to existing Tayman plant • Funding

– TWDB Drinking Water SRF + City Funds = $30.0 M – Engineering = $4.2 M – Funding Available for Construction = $25.6 M

• Owner Preferences – Maximize local construction participation – Operators involved in design/pre-construction phase – Desire for qualified contractor with experience

• Projected water demand may exceed available capacity in summer of 2012

Selected Water Treatment Process

Raw Water Influent

Rapid Mix Flocculators Sedimentation

Basins

Membranes

Ground Storage Tanks High Service

Pump Station

GAC

Phase I – 9 MGD Phase II – 18 MGD Phase III – 36 MGD

Project Delivery Systems

• In-house design and construction • Traditional – Design / Bid / Build (DBB) • Construction Manager Agency (CMA) • Construction Manager At Risk (CMAR) • Design Build (DB) • Design / Build / Operate / Transfer (DBOT)

Legislation History In Texas

• 1995 SB-1 – Largely an education reform bill • 1997 SB-583 and 1999 SB-669 - Provided Guidance • 2001 SB-510 – Counties, Cities and River Authorities but

not for “horizontal” construction • 2003 HB-3028 - Revisions • 2007 HB-1886 – Authorization for all types of projects

Structure and Schedule

OWNER

ARCHITECT/ ENGINEER

CM/GC CONSTRUCTION

SUBCONSULTANTS

SUBCONTRACTORS

CMAR PRE-CONSTRUCTION

Design PDR Normal Construction

Project Schedule

GMP $

$ Contractor Selected

Fast Track Construction

CMAR

CMAR CONSTRUCTION

CMAR PRE-CONSTRUCTION

Typical CMAR Services

• CMAR assumes the risk of construction • Providing suggestions on constructability, risk

management, and materials during preconstruction. • Preparing bid packages for the procurement of

Subcontractors and Suppliers. • Preparing overall project schedule and updates. • Preparing Opinion of Probable Construction Costs (OPCC) • Guaranteeing the construction cost.

Profile of a CMAR Project

• Complex project, difficult to define or subject to change. • Tight/limited budget or sensitive financial controls • Tight schedule, fast tracking desired. • Better risk management desired. • Builder selection flexibility The Midlothian WTP #2 fits this profile

Prepare CMAR RFP. Evaluate and

Select CMAR

Award Contract to Low Bidder

Prepare CMAR RFP. Evaluate and

Select CMAR

Advertising and Bidding

CMAR Project Flow Chart

Contract with Architect/ Engineer

Prepare Preliminary

Design

CMAR Bids Project

Components

Complete Final Design

Contract with CMAR for Pre- Construction

Services

Negotiate GMP Enter into

Construction Phase Contract

Complete Construction

Contract with CMAR for Pre- Construction

Services

Solicitation of a CMAR

• Request for Proposal – Scope: Project should be reasonably well defined. – Selection criteria – Schedule – Budget – Other information to support selection of CMAR

• One or two step selection process required. Midlothian selected the one step process.

One Step/Two Step Process

• One Step Process – All qualification and fees are requested – Fees include preconstruction, general conditions, bonds, and

contingencies – Evaluation based on qualifications and pricing simultaneously

• Two Step Process – First step: Select maximum 5 proposers on the basis of

qualifications (non-monetary criteria) only. – Second step: Request full proposal only from shortlisted

proposers. – Evaluation based on qualifications first, then pricing

Scoring Process • One effective method for evaluation is using a scoring

matrix based on weighted criteria and point scale • Initial scoring done independently and without

knowledge of the preconstruction fees • Owner/Architect/Engineer Due Diligence

– Reviews: Financials stability, personnel and reference checks

• Step up a workshop: – Compile scores – Open fees and score the last criteria – Reevaluate scores based on financials

• Determine if interviews are necessary – Revisit scores based on interviews.

Midlothian CMAR Scores

Guidelines for Interviews

• Short list to top contenders, release the rest. • Establish a set of standard questions • For the benefit of the CMAR

– Provide adequate time for CMAR to prepare. – Be specific about expectations for the interview. – Make the sessions informal and relaxed.

• Set aside time to discuss the collective results after each interview.

• Document reasons for scoring changes - be able to defend scores.

Selection and Contract

• At the completion of interviews – Review and revise scores as necessary – Make final decision on CMAR for recommendation to Board or

City Council

• Publish results of selection process within 45 days • Notify TWDB (funding agency) of recommendation • Notify the selected CMAR firm and begin contract

execution process • Preconstruction services begins on contract execution

date and ends after GMP is established

Proposal Evaluation Flow Chart

CMAR = DBB

• Advertisement and solicitation process allows everyone to compete on “Best Value”.

• Selection includes competitive elements. • Includes safeguards of accountability and transparency. • Owner retains design professional as their advocate and

trusted advisor. • Price is known before construction begins. • Single point of responsibility for construction. • Contractor/Builder is at risk for cost overruns and errors.

CMAR ≠ DBB

• More control in the selection of Builder/Contractor. • Allows negotiations with top ranked firms. • Collaborative team with Owner, A/E and CMAR – vested

interest • Costing is “open book” and allows owner to participate in

setting price. • Risk can be managed jointly. • Ability to effectively “fast track” construction. • Contingency is owned and managed by Owner

CMAR Myths

• No Construction Inspection required

• Less qualified Construction Inspector is acceptable

• No change orders during construction

• Greatest cost savings to the Owner

• CMAR projects have shorter schedules

• No longer have the benefit of competitive bidding process

Take Away Points

• Assess the project and determine if alternate delivery is beneficial

• Solicit and procure CMAR in accordance to local rules and regulations

• Owner must provide inspections, materials testing and verification inspections independently of CM

• Bonds are required • Specify the point at which the Guaranteed Maximum Price

will be set in the RFP. • CM recommends, Owner selects subcontractors and

suppliers.

Questions and Answers

Theodore W. Chan, P.E. Project Manager

Freese and Nichols, Inc. 1701 N. Market Street

Suite 500 Dallas, TX 75202