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HomeMy WebLinkAboutItem 12 Consideration of Exemption from the City of Springfield Contract Review Board Rules to Allow Use of the Construction Manager/General Contractor (CM/GC) Project Delivery System for Construction of the Springfield Fire Station #16 Meeting Date: Meeting Type: Department: Staff Contact: Staff Phone No: Estimated Time: October 1, 2007 Regular Session City Manager' Carole Knap x 3672 15 minutes AGENDA ITEM SUMMARY SPRINGFIELD CITY COUNCIL ITEM TITLE: ACTION REQUESTED: CONSIDERATION OF EXEMPTION FROM THE CITY OF SPRINGFIELD CONTRACT REVIEW BOARD RULES TO ALLOW USE OF THE CONSTRUCTION MANAGER/GENERAL CONTRACTOR (CMlGC) PROJECT DELIVERY SYSTEM FOR CONSTRUCTION OF THE SPRINGFIELD FIRE STATION #16. Conduct a Public Hearing and ApprovelNot Approve the following Resolution: . A RESOLUTION AUTHORIZING AN EXEMPTION TO BIDDING REQUIREMENTS PURSUANT TO ORS 279C.335(1) AND SPRINGFIELD PUBLIC CONTRACTING ORDINANCE 2.71O(2)(V) FOR CONSTRUCTION OF THE SPRINGFIELD FIRE STATION #16. ISSUE STATEMENT: ATTACHMENTS Oregon Revised Statutes (ORS) allow for alternative methods of contracting when the project presents unique construction requirements and when there are budget limitations, schedule constraints and a complex project scope. The Thurston Fire Station project may benefit from use of the CMlGC strategy because it meets these four characteristics. In order to utilize the CMlGC strategy, Council must conduct a public hearing, consider testimony, and adopt a resolution exempting the project from competitive bidding. Attachment 1 - Council Briefing Memo . Attachment 2 - Adopting Resolution and Findings DISCUSSIONI FINANCIAL IMPACT: Staff proposes to utilize a Construction ManagerlGeneral Contractor (CMlGC) method of contracting for the Thurston Fire Station project. In order to use the CMlGC strategy, the project must meet certain requirements, including: 1) using the CMlGC method will likely result in substantial cost savings, and that 2) it is unlikely that the exemption will encourage favoritism or substantially diminish competition. The attached findings and conclusions of law detail how the project meets these requirements. Because of statutory requirements, the timing of Council meetings, and in order to give potential proposers an opportunity to understand the project, a Request for Proposals for the CM/GC services has been advertised. The RFP was written in conformance with the applicable state statutes which address requirements for CM/GC contracting. Proposals are due on October 17, pending Council approval of the CMlGC request. fthe Council approves the CMlGC request, a Selection Committee will be formed to review all proposals, interview the top-ranked fIrms and prepare a recommendation to the City Council for award of a contract.. If the Council does not approve the CM/GC request, staffwill cancel the solicitation. Subject: September 24, 2007 Gino Grimaldi, City Manager Carole Knapel, Project Manager Thurston Fire Station - Contracting Strategy COUNCIL BRIEFING MEMORANDUM Date: To: From: ISSUE: Oregon Revised Statutes allows for alternative methods of contracting when a project presents unique construction requirements and when there are budget limitations, schedule constraints and a complex project scope. The Thurston Fire Station project presents these issues and staff therefore recommends the use of a Construction Manager/General Contractor construction strategy. DISCUSSION: Oregon Revised Statues provide for alternative methods of contracting when the project presents unique requirements. One of the alternative methods is Construction Manager/General Contractor (CMlGC). Under this method, the project owner selects a CMlGC during the design phase of the project. The CMlGC is selected using specific criteria based on the project's requirements. Criteria for a public safety project includes factors such as experience in working on publicly-funded projects, prior CMlGC experience of proposed staff, prior record of on-time, on-budget project completion, experience in phasing of construction work, and the proposed fee for pre-construction and construction phased services. An ad,ditional criteria is the knowledge of the local contracting environment. It is anticipated that several local contractors will be able to meet all the applicable criteria for the selection of a CMlGC for this project. Once a CMlGC is selected, the fIrm actively participates in the design process by providing cost estimates, constructability review and phasing options. This work supports the project architect and the project owner in delivering a project which can most effectively address cost and schedule constraints. As the project design nears completion, the CMlGC provides a Guaranteed Maximum Price (GMP) for the construction of the project. The use of a CMlGC contracting strategy is most useful in certain specific situations. The Construction Engineering Management Program at Oregon State University has recommended that specific factors be considered when a jurisdiction is considering the use of a CMlGC contract. Those factors include such items as the complexity of the project, the project's schedule constraints, the need for construction phasing, project budget limitations and projects that may benefit from value engineering. For the Thurston Fire Station project several of the recommended factors are relevant; · The project has a constrained schedule. Currently, the crews assigned to the Thurston Fire Station occupy temporary trailer facilities. While this is an acceptable temporary situation, it is critical that the new facility be constructed and occupied as quickly as possible. · The project budget is also constrained. The design and construction of a new fIre station has resulted in the need to use City reserves and to develop some financing options. The City needs to develop a functional facility, but the project must be completed in the most cost effective manner possible. In order to accomplish this goal, the project will benefit from on-going value engineering discussions as the design progresses. · The project will require phasing of some of the construction work. Currently the crews assigned to this station are using temporary trailer facilities. Staff is recommending that the living units be relocated to an adjacent parcel in order to provide space for the demolition and new construction. While the living unit may be moved, however, the apparatus will need to remain on the existing site due to the weight of the vehicle and the access requirements. In order to accommodate the apparatus, the construction of the building and the site improvements will need to be phased. Fire operations will have to continue during all phases. This phasing will result in a complex construction schedule. Under the CMlGC contracting strategy, the City will select a CMlGC through a competitive RFP process. When the Guaranteed Maximum Price has been set, the selected firm will be required to bid out all work using a competitive bid process. All subcontracts will be awarded to the lowest responsible bidders, thus ensuring that the City receives the maximum value. ACTION REQUESTED: Staff requests that the Council consider an exemption from the City of Springfield Contract Review Board rules in order to allow the use of a Construction ManagerlGeneral Contractor contracting strategy . Attachment 2 - RESOLUTION NO. A RESOLUTION AUTHORIZING AN EXEMPTION TO BIDDING REQUIREMENTS PURSUANT TO ORS 279C.335(1) AND SPRINGFIELD PUBLIC CONTRACTING ORDINANCE 2.71O(2)(V) FOR CONSTRUCTION OF THE SPRINGFIELD FIRE STAT,ION #16. WHEREAS, The site for the replacement fire facility includes the present Fire Station #16 fIre and emergency medical operations, and WHEREAS, Phasing of the construction work may need to occur since the existing fIre and emergency medical functions must remain in operation during the construction of the new facility, and WHEREAS the Springfield Common Council is the Contract Review Board for the City, and WHEREAS, the SpringfIeld Common Council has reviewed the applicable Findings of Fact, Conclusions of Law and Construction Exemption Resolution for the CM/GC Process for the City of SpringfIeld, prepared by City of Springfield staff, dated September 19, 2007, which is attached as part of this Resolution, and WHEREAS, the SpringfIeld City Council has conducted a public hearing and considered testimony and other evidence from the public on the subject of whether the use of the Contract ManageriGeneral Contractor ("CM/GC") project delivery method is in the public interest. THE CITY OF SPRINGFIELD MAKES THE FOLLOWING FINDINGS: 1. The City of SpringfIeld has determined that, in response to the community's desires for increased public safety, a replacement Springfield Fire Station #16 in Thurston is needed to adequately provide for the public's health, safety and welfare; and 2. The ability to fund the Fire Station Project with available revenue requires that value engineering be employed throughout the design and construction processes to ensure that the building is completed within the target budget; and 3. The complex design and construction requirements, the site being occupied by the current fire and emergency medical services functions, and the ability for fIre and emergency medical services to maintain ongoing operations, and the possibility of phased construction, require close communication between the City of Springfield, the facility architect, and the general contractor to ensure that all project requirements are met in a coordinated, cost effective manner; and 4. The Construction Manager/General Contractor ("CM/GC") bidding and project delivery method provides for the close communication between the City Attachment 2 of Springfield, the facility architect, and the general contractor necessary to produce the coordinated, cost saving completion of the project; and 5. This exemption request complies with the criteria outlined in ORS 279C.335(2), and City of Springfield City Public Contract Rules Sections 2.703(1) and (13), in that it is unlikely that the exemption will encourage favoritism or substantially diminish competition, as the selection process for the CM/GC will be open to all interested, qualified proposers, in accordance with the Attorney General's Model Public Contracting Rules, OAR Chapter 137, Division 49, and the City's Public Contracting rules. The subcontracting process will also be open to all interested offerors, and subcontracts will generally be awarded to the responsible firms submitting the lowest responsive offers; and 6. The CM/GC bidding method is widely used and recognized on projects of this type as an effective means of controlling project costs and generally produces greater value for the funds spent; and 7. The CM/GC project delivery system utilizes a competItIve selection process to select the project's desig1;ler and general contractor, thereby ensuring a fair, competitive process to determine the most qualified project team; and 8. Based on the attached fmdings it is unlikely that exempting the design and construction of the Springfield Fire Station #16 from the public contracting law competitive bidding process to the extent necessary to use the CM/GC method will encourage favoritism in the awarding of public contracts or substantially diminish competition in the award of this contract; and . 9. Based on the attached fmdings, utilization of the CM/GC method will result in substantial cost savings over the conventional design-bid-bui1d method, as the CM/GC process provides a guarantee of cost and schedule, which is not provided by the use of a conventional construction manager coordinating phased construction for multiple design-bid-build contracts, and because the project will be constructed on the existing site, and fire and emergency medical services operations must be maintained throughout construction. Attachment 2 NOW THEREFORE THE CITY OF SPRINGFIELD DOES RESOLVE AS FOLLOWS: 1. The Springfield Common Council, acting as the Public Contract Review Board for the City, exempts the project(s) described herein from competitive bidding, and authorizes the construction of the project(s) through the use of the construction manager/general contractor (CMJGC) process, to be implemented according to the rules described in the contract documents. The City Manager, or designee, is authorized to procure the services of a qualified CMJGC firm. Construction services are authorized to begin as appropriate. 2. This Resolution shall take effect upon adoption by the Council and approval by the Mayor. ADOPTED by the Common Council of the City of Springfield this _ day of October 2007, by a vote of _ for and _ against. APPROVED by the Mayor of the City of Springfield this _ day of October 2007. Mayor ATTEST: Draft Findings of Fact, Conclusions of Law and Construction Exemption Resolution for the CM/GC Process for The City of Springfield September 19, 2007 Hearing on this proposed exemption: At the meeting of the City Council of Springfield on Monday, October 1,2007. Findin2s of Fact 1. Proiect Description. On October 1,2007, the City Council of Springfield will be receiving a recommendation from the project staff for construction of a replacement Springfield Fire Station #16 (Thurston) using the CM/GC alternative construction method rather than the conventional competitive design-bid-build process. A public hearing, as required by ORS 279C.335, will be conducted by the City Council on October 1, 2007, for the purpose of receiving public comment concerning the draft [mdings. It is anticipated that the Council will take action on the proposed public contracting exemption following the public hearing. The project will be constructed at the site ofthe existing Fire Station #16. Phasing of the construction work may need to occur to maintain current fire and medical response operations on the existing site and/or adjacent parcel during the construction of the new facility. The project is to be funded by a combination of loans and City reserves. In April 2007 the City issued an RFP for the procurement of architecture/engineering services for this project. The AlE firm of Paul Bentley Architect has been selected and is under contract with the City. 2. Construction methodology. It is in the best interest of the City to use the construction manager/general contractor (CM/GC) form of contracting for the above described work. Under this form of contracting, the CM/GC fIrm is hired at the beginning of the project to assist with design considerations, administrative coordination, scheduling, budget estimating, constructability review, and value engineering. The CM/GC provides these management services, as well as management of the construction, for a negotiated fixed fee. In addition, the CM/GCwill provide, during the design process, a guaranteed maximum price (GMP) for the full value of the construction, supported by a full performance and payment bond. Subject to parameters described within the contract, "subcontractable" work will be competitively bid to the CM/GC firm, with the oversight of the City. The CM/GC process is being proposed for five major reasons: (1) To assist in evaluating the potential building configurations. The CM/GC will be expected to provide constructability and cost assessment for each option; (2) To provide for a coordinated and safe utilization of the phasing of construction, if necessary, to maintain current operations at the site while the new facilities are being constructed in close proximity; (3) To provide construction expertise during design to ensure the most cost effective construction to match the City's scope. The 1 expertise ofthecontractor will help to ensure the optimal allocation of resources. The total project cost will be kept within budget through the GMP, for which there is a contractual agreement before the project goes to construction. The CM/GC's participation in the design process serves to minimize the actual cost, which is generally below the GMP; (4) Should time be a factor, the project construction can be phased, so that initial work can begin while the final elements of the project are still in design. 3. Favoritism will not be encouraged and competition will not be diminished. The CM/GC will be selected through a competitive and formally advertised RFP process in accordance with a primarily qualifications-based selection format, with identified selection criteria. The "subcontractable" work (approximately 85%-90% of the project) will be placed out to competitive procurement by the CM/GC, who, in turn, will contract with the lowest responsible offerors. The provisions of the Attorney General's Model Public Contracting rules in OAR Chapter 137 Division 49 as well as the City's Public Contracting rules will be used to hire the CM/GC firm. 4. The use of the CM/GC process will result in substantial cost savings to the City. Costly change orders should be reduced. The CM/GC, working early on design and coordination, can helpto minimize change orders. The GMP is established during the design process. The CM/GC will obtain a complete understanding of the City's needs, the architect's design intent, the specific peculiarities of this project, and the scope of the project (including operational needs) by participating in the design process. With the benefit of this knowledge, as well as an experiential data base for similar fire station or other emergency services facility construction costs, the CM/GC will be able to provide an early contractual guarantee of the total cost. This is before the detailed design considerations are fully worked out. Conversely, under the traditional design-bid-build method, bids are developed by contractors without the benefit of the bidders participating in the design. At the close of the bid period, as well as at the end of the design period, there will be no assurance that the project cost will be within the project budget. . Involving the contractor throughout the design phase generally results in the need for fewer change orders. For example, for projects with a GMP, owners typically need to carry only lf2 of the construction contingency (10%) that would normally be carried on a comparable design-bid-build project. Consequently, it is anticipated that 5% ( or more) of the initial construction cost will be included within the bids rather than being added through change orders. As a general rule, change orders are more expensive to the owner than work that is included within the original bids. Using the CM/GC process, change orders to the scope of work also cost the owner less, in that the CM/GC only charges its negotiated fee percentage (typically in the 5% range) as opposed to the industry standard of 10%. 2 Due to the CM/GC's active construction management role, and early involvement.in the project, many CM/GC jobs finish with an actual cost less than the GMP. Should there be such savings, which often occurs, savings would be made available to the City for the procurement of alternates, or, alternatively, savings could be split with the CM/GC and the . City. The latter provides an incentive for the CM/GC to finish the project under the GMP. It is not unrealistic to have savings between 1-2% of the GMP to as high as 10%. 5. Before undertaking the use of the CM/GC process. the public agency should assure itself that it has the appropriate expertise to adequately manage the process. The City Project Manager has previous experience in the management ofCM/GC projects in both public sector and private sector projects. Currently, the City's Justice Center Project is being constructed using a CM/GC contract. The procurement solicitation for the CM/GC firm will identify selection criteria from each firm's prior cMiGC experience. The City Attorney is experienced in the development ofCM/GC contracts. Additionally, the architect under contract with the City is experienced in CM/GC work. There are many construction firms in Oregon, and several locally, which have had experience with CM/GC public agency work. For example, the most recent additions to the Lane County Jail, the new Federal Justice Center, and the County Juvenile Justice Complex were all performed using the CM/GC process. The regional Metropolitan Wastewater Management Commission is currently reviewing proposals from CM/GC firms for one of the construction projects. 6. ORS 279C.335. requires that, in addition to the general findings that it is unlikely that the exemption will result in encouraging favoritism or substantially diminishing competition. and that the exemption will result in substantial cost savings. it is also necessary to have specific findings addressing the following criteria under ORS 279C.330. a. Operation. budget and financial data. Cost estimating considerations, as noted above, will be best addressed through use of the CM/GC process. b. Public benefits. It is generally agreed that public safety is one of the most important public goals. Maximizing the value received and ensuring the highest quality construction best serves the community. In addition, current fire and medical response operations must be maintained from the site and/or adjacent parcel during construction of the new facility. Using the CM/GC process will allow the contractor full understanding of the needs of the Fire Life Safety Department. The City can benefit from the contractor's expertise and experience to maintain uniriterrupted emergency services. c. Value engineering. It is anticipated that the CM/GC firm will bring expertise to the table that will facilitate better and more cost-efficient building methodologies. d. Specialized expertise required. Expertise in the construction of essential facilities and in 3 the phasing of construction in order to minimize impact on on-going operations will contribute to overall cost savings and effectiveness. . e. Public safety. As described above under public benefits. . f. Market conditions. The current volatile economic climate in building materials and the current construction activity in the region makes cost an unknown until bid. More economic certainty can be brought into the process using the GMP established under the CM/GC process. , g. Technical complexity. As described above under public benefits. h. Funding sources. Not applicable. Conclusions of Law This exemption request complies with the criteria outlined in ORS 279C.335(2): 1. It is unlikely that the exemption will encourage favoritism or substantially diminish- competition. The selection process for the CM/GC will be open to all interested, qualified proposers, in accordance with the Attorney General's Model Public Contracting Rules, OAR Chapter 137, Division 49, and the City's Public Contracting rules. The subcontracting process will also be open to all interested offerors, and subcontracts will generally be awarded to the responsible . fIrms submitting the lowest responsive offers. 2. The exemption will result in substantial cost savings to the City. As noted above, use of the CM/GC method should result in substantial savings over the conventional design-bid-build method. The types of cost savings are identifIed in the [mdings.' The CM/GC process provides a guarantee of cost and schedule, which is not provided by the use of a conventional construction manager coordinating phased construction for multiple design-bid-build contracts. 4