Alternative Project Delivery Methods and Procurement

Board of Airport Commissioners Meeting 2 June 2014

Presented by:

Roger A. Johnson, Deputy Executive Director

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• Project Delivery Method

o The process by which a construction project is designed and constructed

• Project Procurement Process

o The process by which a construction contract is procured

Definitions

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Construction Success Defined

• No compromise on Safety or Quality

• Minimize impacts on airport operations

• Competitively priced (Best Value)

• M/WBE, SBE, and local business opportunities

• Meet schedule and budget commitments

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Step 1 Hire a designer for the least cost

Step 2 Bid the drawings (plans) and specifications

Step 3 Build the project with the least costly design and the contractor who had the lowest bid

Typical Project Procurement and Delivery Process

Design-Bid-Build (DBB)

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Design Bid Build

Project Time

Proj

ect C

ost

Lump Sum Bid

Conceptual Estimate

No Collaboration from Builder

Project Completion

Project Budget

Typical Project Delivery Timeline

Design-Bid-Build (DBB)

Delivery Timeline

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Advantages • Scope is rigidly defined

• Greater degree of owner control since the design team and contractor report to owner

• Most understood and accepted process

Disadvantages • Cost of construction is not determined until bids are received (can lead to

need to redesign, extended schedule, and increased costs) • Contractor is not able to give advice during the design, budget, or planning

phase (no collaboration) • Limited opportunities for schedule improvement • Owner owns design deficiencies • Owner-initiated changes are difficult and expensive to implement

Owner

Designer Builder

Delivery Method Selection

Bottom Line • Good choice for simple projects that are not schedule sensitive

Design-Bid-Build (DBB)

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2. Select the best firms for the projects

1. Work collaboratively to deliver projects

Through a collaborative alternative delivery process

Using a qualifications based selection of designers and contractors

Alternative Delivery and Procurement

Add Tools to the Delivery Toolbox

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Work Collaboratively

Construction Manager at Risk (CMAR)

Owner

Designer Contractor

• Same contractual relationship as typical DBB delivery method

• Contractor is brought on early in the design phase to provide constructability and Value Engineering (pre-construction)

• Owner retains control of design

• Owner retains responsibility for design schedule, completeness, and coordination

• Trade packages and contractor profit are competitively procured

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Construction Manager at Risk (CMAR)

Delivery Timeline

Design

Build

Project Time

Proj

ect C

ost

CMAR Hired

Buyout Complete

Begin Buyout

Conceptual Estimate

Competitive Open-Book

Collaboration (Design Assist)

Project Completion

Project Budget

Work Collaboratively

GMP

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Work Collaboratively

Construction Manager at Risk (CMAR)

<10% Lowest

Ultimate Cost

>90% Competitive Bids

Structure

Excavation / Foundation

Mechanical / Electrical / Plumbing

Finishes

Typical trade packages

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Advantages • Phase overlap is possible allowing for a faster construction schedule

• Changes in design or scope can be more easily accommodated than under DBB or DB

• Owner maintains control of design • CMAR collaborates with designer during design phase on constructability

and Value Engineering

Disadvantages • Owner maintains liability for design deficiencies

• Delivery can be longer than DB

Delivery Method Selection

Bottom Line • Best suited for large projects that are difficult to define, likely to change in

scope, or schedule sensitive • Useful for projects requiring extensive management due to technical

complexity, multi-trade coordination, or multiple phases

Construction Manager at Risk (CMAR)

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Work Collaboratively

Design-Build (DB)

• Single contract between owner and Design-Build entity

• Collaborative design responsibility

• Design-Build entity responsible for design: - Schedule - Completeness - Coordination

• Design fee and contractor profit packages are competitively procured

• Trade packages are competitively bid

Owner

Design/

Builder

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Design-Build (DB)

Delivery Timeline

Design

Build

Project Time

Proj

ect C

ost

Design to

Budget

Begin Buyout

Conceptual Estimate

Buyout

Collaboration

Project Completion

Project Budget

GMP

Work Collaboratively

Buyout Complete

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Advantages • Owner, designer, and contractor work collaboratively during all phases of

the project • Owner has a single point of contact throughout the work • Guaranteed Maximum Price can be established early in the process • DB entity assumes all risk for design deficiencies • Significantly faster schedule than DBB and slightly faster than CMAR

Disadvantages • Owner can lose design control without clearly identified project

requirements • Not as responsive to scope change as CMAR

Bottom Line • Most useful in time-sensitive projects and those that have specialized or

technically complex scope

Delivery Method Selection

Design-Build (DB)

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Optimization of Time and Cost

Design

Build

Project Time

Proj

ect C

ost

Lump Sum Bid

Begin Buyout

Conceptual Estimate

Buyout

Collaboration

Time Optimization

Cost Optimization Project

Completion

Project Budget

Opportunity for quality, schedule , and cost savings

Design-Bid-Build (DBB)

Design-Build (DB) / Construction Manager at Risk (CMAR)

Buyout Complete

Design Bid Build

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• Design-Bid-Build (DBB):

o Use the Competitive Sealed Proposal (CSP) selection process • Design-Build (DB) and Construction Manager at Risk (CMAR):

o Use the Lowest Ultimate Cost process

2. Select the best firms for the projects

Procurement

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• Contractor submits Qualifications and Technical Proposal

• Firms with the highest scores are invited to interview

• Following interview, the most qualified firms are invited to submit sealed cost proposals

• Project is awarded to firm with the lowest cost proposal

Procurement

Design-Bid-Build*

* Using Competitive Sealed Proposal (CPS) Selection Process

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Procurement

Construction Manager at Risk / Design-Build

Lowest Ultimate Cost Process

Efficiency Points*

• Firms submit statement of qualifications and technical proposals

• Firms with the highest scores are invited to interview

• Following the interviews, the most qualified firms are invited to submit cost proposals

• Firm with “Lowest Ultimate Cost”

- CMAR Cost Proposal Preconstruction services and proposed fee (%) on total estimated construction cost

- DB Cost Proposal Design fees + preconstruction services and proposed fee (%) on total estimated construction cost

Cost Proposal = = Lowest Ultimate Cost

* Total points from written proposal and interview

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• Under DB and CMAR delivery, the contractors are limited to

10-30% self-performance

o Self-performance work is performed at cost

• All trade work is competitively bid in an open book process

Construction Manager at Risk / Design-Build

Lowest Ultimate Cost Process (Cont)

Procurement

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Design-Build (DB) Central Utility Plant Replacement (2010) Terminal 4 Connector (2013)

Construction Manager at Risk (CMAR) Bradley West Core and Gates (2009) Construction of Central Terminal Area Improvements (2012) TBIT Renovation, Aprons, and Concourse Demo (2013) Second Level Roadway Repair / New Face of the CTA (2014)

LAWA Alternative Delivery Experience

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Design-Build (DB) Barren Ridge Renewable Transmission Project (Ordinance 182950 – DWP)

Haiwee Power Plant Penstock Replacement Project (Ordinance 182940 – DWP) Sylmar AC/DC Filters Replacement Project (Ordinance 182593 – DWP) Scattergood Generating Station Unit 3 Repowering Project (Ordinance 182292 – DWP) Haynes Generating Station Units 5 and 6 Repowering Project (Ordinance 181220 – DWP) Pine Tree Wind Project (Ordinance 178229 – DWP) Security and Surveillance System Projects (Ordinance 176744 – Harbor) Underground Storage Tanks Upgrades (Ordinance 175590 – DWP) San Francisquito Power Plant 2 Redevelopment Project (Ordinance 175027 – DWP) Castaic Power Plant Condition Assessment & Modernization Project (Ordinance 174206 – DWP)

Construction Manager at Risk (CMAR) Sixth Street Viaduct Replacement Project (Ordinance 182353 – DWP)

Silver Lake Reservoir Complex Storage Replacement Project (Ordinance 181639 – DWP)

Other City Departments’ Alternative Delivery Ordinances