technical memorandum 5, project delivery analysis

City of Bend Water Reclamation Facility Solids Handling Improvements Dewatering Project

Technical Memorandum 5 PROJECT DELIVERY ANALYSIS

FINAL | December 2018

City of Bend Water Reclamation Facility Solids Handling

Improvements Dewatering Project

Technical Memorandum PROJECT DELIVERY ANALYSIS

FINAL | December 2018

5

PROJECT DELIVERY ANALYSIS TM | SOLIDS HANDLING IMPROVEMENTS DEWATERING PROJECT | CITY OF BEND

FINAL | DECEMBER 2018 | i

Contents Technical Memorandum 5 - Project Delivery Analysis

5.1 Introduction 5-1

5.2 Background 5-1

5.2.1 Project Delivery Legal Authority 5-2

5.3 Delivery Method Alternatives Considered 5-2

5.3.1 Design-Bid-Build (and Best-Value DBB) 5-3

5.3.2 Construction Manager/General Contractor 5-3

5.3.3 Progressive Design-Build 5-5

5.4 Alternatives Evaluation and Recommended Delivery Method 5-6

Tables Table 5.1 Advantages and Disadvantages of DBB 5-3

Table 5.2 Advantages and Disadvantages of CM/GC 5-4

Table 5.3 Advantages and Disadvantages of PDB 5-5


FINAL | DECEMBER 2018 | 5-1

Technical Memorandum 5

PROJECT DELIVERY ANALYSIS

5.1 Introduction

The City of Bend (City) is implementing the Solids Handling Improvements Dewatering project (Project) at its wastewater treatment plant to improve the efficiency and operability of the solids handling process. Project delivery methods that are alternative to traditional competitive bidding (i.e. design-bid-build) are being considered given the Project’s unique attributes and challenges. The purpose of this technical memorandum is to describe the delivery method alternatives considered for the Project, the evaluation of those alternatives, and the recommended delivery method that provides the greatest benefit to the City.

5.2 Background

The purpose of the Project is to improve the reliability, performance, and safety of the existing Solids Handling Building and processes. Structural members in the existing dewatering building have corroded and must be repaired or replaced. The existing dewatering and polymer equipment must also be improved to address maintenance and performance issues. In addition to replacing process equipment within the existing building footprint, an extensive rehabilitation of the existing building will be required to accomplish the Project’s goals.

The Project consists of installing two new centrifuges within the Solids Building, two new polymer blending units, and a new free-standing cake hopper. Prior to the installation of the new centrifuges, significant improvements to the existing structural steel must be completed, including: removal and replacement of all existing steel members that cannot be repaired; replacement of anchor bolts at the metal roof decking-to-wall ledger angle connection near the existing belt filter press (BFP); and repair and coating of all structural steel including roof framing beams and ledger angles. The existing bridge crane must also be replaced.

The new centrifuges will be installed on the mezzanine level. Openings must be saw-cut into the mezzanine slab to accommodate chutes that will convey dewatered solids to new cake pumps located in the existing truck bay. The cake pumps will discharge into the top of the new cake hopper, which will be located in the yard adjacent to the west side of the building. New stairs and access platforms will be installed to provide access to the top of the new hopper. The existing polymer system will be replaced by neat polymer totes and polymer blending skids located in the existing polymer room. Once the existing BFP has been removed, the existing heating, ventilation, and air conditioning (HVAC) equipment will be removed and replaced.

Throughout construction, it is critical that the thickening and dewatering processes be maintained, either through the continued use of existing equipment or by providing temporary equipment. If the existing equipment is kept in use, extensive provisions will be required to maintain operator safety and the operability of the equipment.

CITY OF BEND | SOLIDS HANDLING IMPROVEMENTS DEWATERING PROJECT | PROJECT DELIVERY ANALYSIS TM

5-2 | DECEMBER 2018 | FINAL

Unique attributes of the project that influence the selection of a delivery approach include the following:

• Complex construction in a confined amount of space, requiring thoughtful consideration of construction sequencing to implement improvements while maintaining current operations.

• Construction means and methods need to be considered during design to determine the most cost-effective and highest-quality design solution.

• Potential cost impacts and schedule delays due to discovering unknowns while working within an existing facility.

• The potential need to develop multiple bid packages or pre-procurement of equipment to meet schedule requirements.

• Potential safety issues due to extensive structural and recoating work within an operating facility.

The City is contracted with Carollo Engineers, Inc. (Carollo) to develop the design for the Project. Carollo is currently developing the preliminary design and will be proceeding with development of the 30 percent drawings and specifications.

5.2.1 Project Delivery Legal Authority

Under Oregon Revised Statute (ORS) 279C.335(2), a local contract review board may exempt certain public improvement contracts or classes of contracts from traditional competitive bidding by showing that an alternative contracting process is unlikely to encourage favoritism or diminish competition, and will result in substantial cost savings or risk mitigation to the public agency.

5.3 Delivery Method Alternatives Considered

Historically, construction projects in the water and wastewater industry have been delivered using design-bid-build (DBB). In this traditional competitive bidding method, an owner contracts with a design professional, the design professional prepares design and bidding contract documents, and construction contractors provide bids on the project based on information included in the contract documents. For a variety of reasons, delivery methods alternative to DBB, or alternative project delivery (APD) methods, are more frequently being considered and used in the delivery of water and wastewater projects across the United States, including the State of Oregon. These reasons include:

• Potential for schedule savings. • Cost certainty and cost control, including the potential for fewer change orders. • Ability to procure a contractor that is best qualified for specialized projects. • Involvement of the contractor in the design development process. • Assignment of project performance to a single entity. • Equitable sharing of risk, and minimization of potential risks.

These reasons, in combination with the unique attributes of the Project, prompted the City to consider the use of APD methods for completion of the Project. The APD methods, as well as DBB, that were identified as viable and applicable to the Project are described in the following paragraphs. The City has experience delivering projects with each of the delivery methods described below.



5.3.1 Design-Bid-Build (and Best-Value DBB)

The DBB delivery method involves three primary participants: design professional, general contractor, and the contracting agency (owner). Because the general contractor is not procured until the design is complete, there is little or no opportunity for collaboration between the design professional and the general contractor during design. The owner, through its design professional, is responsible for the accuracy of the design so any modifications to the design after the construction contract is executed result in a cost change order and/or schedule delay – thus, the owner retains the risk of design deficiencies (and the existing site conditions that are used as the basis for the design). The sequential nature of design-bid-build (i.e., design to 100 percent completion and then bid) typically results in the longest completion schedule.

Typically for DBB, the contractor is selected solely based upon lowest price. The City has previously utilized a variation of this low-bid approach by incorporation of qualifications criteria into the selection of the contractor, or “best-value” selection. The City evaluates and scores the qualifications criteria prior to a public opening of the bids. The cost score is combined with the qualifications score to determine an overall score for each contractor that proposed – the highest scored contractor is selected for the project.

The relative advantages and disadvantages of the DBB delivery approach are generally summarized in Table 5.1.

Table 5.1 Advantages and Disadvantages of DBB

Advantages Disadvantages

• Owner & contractor familiarity. • High-level of owner control over

development of design. • Project scope fully defined at

construction commencement. • Competitive bidding environment.

• Construction cost determined at bid time (engineer’s estimate during design).

• Selection based on low-bid contractor (unless qualifications are scored).

• Greater potential for disputes and change orders.

• Sequential schedule. • No contractor input during design. • Owner warrants design and existing

conditions to contractor.

5.3.2 Construction Manager/General Contractor

For Construction Manager/General Contractor (CM/GC), there are two primary participants contacted with the owner, similar to DBB. The CM/GC is contracted directly by the owner and is procured through a qualification-based selection process (although the selection process for the CM/GC also includes a price component). In this delivery method, the design professional is responsible for the design while the CM/GC is responsible for delivering the construction work. The CM/GC is placed “at risk” in the project for delivering the work by a specific date and within a Guaranteed Maximum Price (GMP). The design liability remains with the owner, through its design professional, however the involvement of the CM/GC during design allows for an understanding of the existing conditions and design details that are considered in the CM/GC’s development of its costs and schedule.



The contractual and working relationships associated with the CM/GC delivery method are essentially the same as those presented for the DBB method, with one important exception – the preconstruction role of the contractor (i.e., CM/GC). Because the CM/GC is typically retained shortly after the selection of the design professional, at an early stage of design, the CM/GC provides input throughout the design process and develops detailed estimates of construction costs. The CM/GC’s input during design provides significant benefits when the solution for the project requires consideration of construction methods and sequencing (such as projects completed within existing facilities).

The GMP agreement typically occurs when the design is between 60 and 90 percent complete. Early work release packages (i.e., mini-GMPs) are allowed prior to establishing the final GMP. Should the CM/GC and owner not be able to reach agreement on an acceptable GMP, the owner maintains the right to complete the design and proceed with DBB procurement. The risk of change orders and schedule delays is less likely to occur under the CM/GC process due primarily to collaboration during design, and the CM/GC’s knowledge of the existing conditions and details of the design. Schedule savings are realized if the CM/GC is able to utilize early work release packages (including early procurement of equipment), and due to the construction efficiencies inherent of having the CM/GC involved in the design. Furthermore, there are opportunities for the owner and CM/GC to identify specific project risks that can be shared or better addressed by the owner, thus reducing the cost that the CM/GC needs to include within the GMP to account for protection against such risks.

The relative advantages and disadvantages of the CM/GC delivery approach are generally summarized in Table 5.2.

Table 5.2 Advantages and Disadvantages of CM/GC


• Qualifications-based contractor selection.

• High-level of owner control over design development.

• Cost model (by CM/GC) established early in project – allows for ability adjust scope during design to meet fixed budget.

• Shortened schedule potential (potential for early release packages and early equipment procurement).

• Collaborative relationships and teamwork.

• Contractor input into design (value engineering input).

• Owner managing multiple contracts. • Negotiating GMP sometimes difficult. • Involvement of CM/GC during design

does not relieve owner of design risk (but helps mitigate the risk).

• Performance guarantees not available.



5.3.3 Progressive Design-Build

Progressive Design-Build (PDB) is very similar to CM/GC in the manner in which the project is delivered. However, instead of separate contracts with the design professional and contractor, there is a single contract between the owner and a design-builder (design professional and contractor team). Similar to the CM/GC procurement process, the design-builder is typically selected based on a combination of qualifications and price considerations. Because this method is relatively new, and because it entails a heightened need for oversight, owners often employ an Owner’s Agent to provide specialized expertise and additional staffing to support the owner.

During the design development phase of the project, the owner is able to provide input and review the design prepared by the design-builder. Cost estimates are prepared by the design-builder at each design milestone, which are also reviewed by the owner. The design and construction liability are held by a single responsible party, the design-builder – performance guarantees are available due to this single point of responsibility.

Like the CM/GC selection process, a GMP agreement typically occurs before completing the design documents. Should the design-builder and owner not be able to reach agreement on an acceptable GMP, the owner maintains the right to complete the design and proceed with DBB procurement. The risk of cost change orders and schedule delays is least likely to occur due to the design professional and contractor being on the same team. Early work release packages and mini-GMPs (including early equipment procurement) are an option and can be used to accelerate the project schedule. Similar to CM/GC, there are opportunities for the owner and design-builder to identify specific project risks that can be shared or better addressed by the owner, thus reducing the cost that the design-builder needs to include within the GMP to account for protection against such risks.

The relative advantages and disadvantages of the PDB delivery approach are generally summarized in Table 5.3.

Table 5.3 Advantages and Disadvantages of PDB


• Qualifications-focused selection. • Single contract to manage. • Owner involved in design phase. • Innovation from design-builder allows

potential cost savings. • Flexibility to design to budget. • Shortened schedule potential. • Transfer of design-related risk to

design-builder. • Single point of responsibility. • Performance guarantees available.

• Owner does not hold design contract. • Design-builder contract price established

after contract award. • Negotiating price can sometimes be

challenging.



5.4 Alternatives Evaluation and Recommended Delivery Method

Evaluation of project delivery methods for a particular project are typically oriented around the following criteria: cost; schedule; level of control; and risk allocation. Considering these primary evaluation criteria, and the unique attributes of the Project, an evaluation summary of the potential delivery methods consists of the following:

• DBB (and Best-Value DBB): Highest risk for cost change orders, schedule delays, and safety issues since

contractor not involved in design to be able to provide constructability and construction sequencing input into the design solution. The risk associated with the complexities of the Project (i.e., working within a confined footprint, maintaining operation of existing operations, significant repairs of facilities, safety considerations, etc.) are least mitigated during design without contractor involvement and input. .

Completion schedule shorter than PDB but longer than CM/GC. Best-value selection approach increases possibility of selecting a contractor with

experience with similar project challenges, but price may end up controlling selection.

No contractor input into design, which reduces the opportunity of benefiting from their value engineering (i.e., contractors input during design progression; not 3rd party value engineering) and constructability ideas, potentially resulting in a design solution that is not optimum and does not provide the greatest value to the City.

City is most familiar with delivery method so City’s normal policies, procedures, and contractual documentation can be utilized.

• CM/GC: CM/GC involvement in design allows for knowledge of existing conditions and

design details to be incorporated into the GMP, reducing the risks associated with cost changes, schedule delays, and safety issues. Also, potential for risks to be shared between CM/GC and owner, reducing the CM/GC’s cost for risk protection (i.e., contingency). Competitive bidding of subcontractors can promote competitively priced GMP.

Shortest completion schedule since design (by Carollo) can progress in parallel with procurement of CM/GC, and potential for early release packages. An important early release package for the Project may be to procure long-lead equipment early so the contractor can begin work on repair work while equipment is being manufactured - this is likely necessary to be able to meet schedule.

Ability to select contractor based upon experience delivering projects with similar challenges (important for project with sequencing challenges and requirements). A qualified contractor will bring experience with working within existing, operating facilities that is critical in addressing the complexities of the Project’s implementation requirements.

Ability to receive value engineering and constructability ideas from contractor during design will improve the cost-effectiveness and overall quality (i.e., longevity, robustness, and operations and maintenance effectiveness) of the improvements.



City is familiar with delivery method but contractual documentation needs to be developed.

• PDB: Design-builder development of design allows for existing conditions and design

details to be incorporated into the GMP, reducing the potential for risks associated with cost changes and schedule delays. Also, potential for risks to be shared between design-builder and owner, reducing the design-builder’s cost for risk protection (i.e., contingency).

Longer completion schedule than CM/GC (and potentially longer than DBB in this case) since design and procurement of design-builder cannot happen in parallel.

Ability to select design professional and contractor based upon experience delivering projects with similar challenges (important for project with sequencing challenges and requirements).

City is newly familiar with delivery method but does not have long track record of proven success.

Performance guarantees available (i.e., risk transfer of design and construction performance to design-builder).

Based upon the comparison of delivery methods described above, it is recommended that CM/GC be utilized for the Project. CM/GC allows for contractor involvement in the design which allows for CM/GC to best understand existing conditions and Project requirements, provide input into construction sequencing and constructability to address the unique complexities of the Project (working within a confined footprint; maintaining operation of existing operations during construction; significant repairs of existing facilities; safety considerations; and schedule constraints). Also, since Carollo has already developed the preliminary design and is in the process of developing the 30 percent design, the design can continue to be progressed while the CM/GC is being procured – this allows for minimal schedule impacts. The opportunity to release early construction packages, including procurement of long-lead equipment, is critical in being able to complete the project on schedule. Finally, the ability to procure a CM/GC that has the specific experience with similar projects increases the potential for quality construction and meaningful input into the design and construction planning.

technical memorandum 5, project delivery analysis

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