Below is the uncorrected machine-read text of this chapter, intended to provide our own search engines and external engines with highly rich, chapter-representative searchable text of each book. Because it is UNCORRECTED material, please consider the following text as a useful but insufficient proxy for the authoritative book pages.
11 3.1 Introduction This chapter introduces the pre-award phase and its underlying principles, which will help establish a foundation for the administration of the CM-GC contract. This guidebook focuses on post-award processes and tools for CM-GC contract administration. However, AASHTOâs A Guidebook for CM/GC Contracting for Highway Projects (Gransberg et al. 2013) describes CM-GC procurement activities in detail. This chapter highlights some of the key project delivery and procurement decisions that lay the foundation for effective contract administration. These include â¢ Project goals, â¢ Project delivery selection, â¢ Engineering consultant procurement, â¢ Independent cost estimator procurement, and â¢ CM-GC procurement. 3.2 Construction ManagerâGeneral Contractor Procurement Activities that Affect Contract Administration FHWA CM-GC regulations give state DOTs wide discretion in identifying CM-GC projects (FHWA 2016). However, at the time of this guidebookâs publication, state DOTs were primarily using CM-GC for more complex projects of more than $10 million in value (FHWA 2017a). Agencies choose CM-GC when the project goals align with the advantages of this delivery method. Given that state DOTs contract the engineer and the CM-GC early in project design, procurement activities affect construction administration processes. This section of the guidebook addresses a few key concepts from the CM-GC procurement stage that are important for a successful project. Project Goals CM-GC project delivery can provide advantages over D-B-B project delivery. These potential advantages can include shorter project dura- tions, earlier schedule certainty, lower initial costs, earlier cost certainty, and better life-cycle solutions. However, these advantages all assume the agency has selected an appropriate project and has clearly defined its project goals. Clearly written project goal statements, which are included in the RFQs for the CM-GC and engineering consultant (if the agency chooses to use one), C H A P T E R 3 Pre-Award Phase Administration Agencies will only realize CM-GC advantages if they clearly define project goals that align CM-GC advantages and choose appropriate projects.
12 Guidebooks for Post-Award Contract Administration for Highway Projects Delivered Using Alternative Contracting Methods are among the most important factors for CM-GC project success. They help guide the contract administration process. Table 3.1 provides example project goal statements that have been adapted from the AASHTO Guide for DesignâBuild Procurement (AASHTO 2008b). Agencies should consistently refer to the project goals throughout all phases of the project. To help integrate the project goals into the contract administration phase, the agencies can explicitly include them in the 1 Kickoff Meeting, 4 External Stakeholder Coordination Plan, and 8 CM-GCâSpecific Partnering tools. Project Delivery Selection With a clear understanding of project goals in mind, agencies can select the most appropriate project delivery method. Some agencies provide criteria for project selection in their alterna- tive contracting method guidebooks based on project goals, project constraints, and legisla- tive authority (Colorado Department of Transportation 2014, Washington State Department of Transportation 2016). Others make the decision on a case-by-case basis. To properly administer a project during the construction phase, agencies should be clear as to why they select CM-GC. FHWA Next Generation Transportation Construction Management Pooled Fund study (University of Colorado Boulder n.d.) developed a project delivery matrix to facilitate the project delivery selection process. The selection matrix was promoted by FHWA in the Every Day Counts initiative (FHWA 2017b). The process promotes a project delivery workshop that is up to 1 day long. The workshop gathers key project personnel to discuss the opportunities and obstacles of each delivery method around eight critical project issues. These issues are important for both project delivery selection and construction administration. â¢ Delivery scheduleâThe overall project schedule from scope through design, construction, and opening to the public. â¢ Project complexity and innovationâThe need for applicability of new designs or processes to resolve complex and technical issues. â¢ Level of designâThe percentage of design completed at the time of the project delivery procurement. â¢ Initial project risk assessmentâThe process of quantifying the preliminary risk events to ensure the selection of a delivery method that properly addresses them. â¢ CostâThe financial process related to meeting budget restrictions, ensuring accuracy of cost estimation and controlling project costs. Possible CM-GC Benefits Project Goals Schedule â¢ Shorter duration â¢ Earlier schedule certainty Cost â¢ Initial cost savings â¢ Earlier cost certainty â¢ Less cost growth Quality â¢ Equal or better quality â¢ Quality in procurement Innovation â¢ Better constructability â¢ Less impact on the traveling public Schedule â¢ Minimize project delivery time â¢ Complete the project on schedule Cost â¢ Minimize project cost â¢ Maximize project budget â¢ Complete the project on budget Quality â¢ Meet or exceed project requirements â¢ Select the best team Innovation â¢ Provide innovative solutions â¢ Minimize impact on the traveling public Table 3.1. Mapping of construction managerâgeneral contractor benefits to project goals.
Pre-Award Phase Administration 13 â¢ Staff experience and availabilityâThe experience and availability of the ownerâs staff to execute the project delivery methods under consideration. â¢ Level of oversight and controlâThe level of and manner in which the owner exercises control over design and construction processes. â¢ Competition and contractor experienceâThe level of competition, experience, and avail- ability in the marketplace and its capacity for the project. Evaluating these issues will allow the selection of appropriate strategies and tools for agency contract administration. Engineering Consultant Procurement In CM-GC, engineering design can be done by the state DOT or through an engineering consultant. Engineering consultants are more common because schedule reduction is frequently an overriding project goal on CM-GC projects. The CM-GC contracting method requires a different skill set and level of effort from engineering consultants because they will be working very closely with the CM-GC. In fact, the engineering consultant is frequently co-located with the CM-GC. Engineering consultants are most commonly procured before the CM-GC. Ideally, a state DOT will include a description of the CM-GC services in the engineering consultant request for proposal (RFP). At a minimum, state DOTs should state that the project will employ CM-GC project delivery. If a project changes from D-B-B to CM-GC delivery, it is important for the state DOT to adjust the engineering consultantâs scope of services to accommodate work with the CM-GC during the preconstruction and construction administration stages. To assist engineering consultants with understanding the full scope of their services, agen- cies can share the CM-GC scope of services. A few contract administration tools can aid in this discussion. 2 Roles and Responsibilities will show how engineering services and CM-GC services align. 6 Co-Location of Key Personnel will reveal agency expectations for the level of team integration efforts. If the team is working in an open-book pricing environment, 7 CM-GC Management Fee Table will explicitly show where the CM-GC is interfacing with design efforts. Independent Cost Estimator Procurement Involvement of the CM-GC in design development necessitates the negotiation of GMP as opposed to a bidding of unit prices. Agencies can employ 25 Independent Cost Estimator to facilitate this negotiation. The independent cost estimator develops an estimate to compare against the contractor price to ensure that the agency receives a fair market value for their project. While the cost of an independent cost estimator is far less than an engineering consultant or construction manager, independent cost estimator selection and procurement of services is critical to team integration, roles, and responsibilities during contract administration. The agency uses an independent estimate to aid in negotiating GMP with the CM-GC. During the GMP negotiation, most agencies have some version of a variance review to com- pare the independent cost estimator, CM-GC, and engineering estimate. The discussion of variance revolves around all bid items that differ by more than a predefined value, typically 5 percent to 10 percent. Some of the agencies use the independent cost estimatorâs estimate but do not request involvement of the independent cost estimator during any of the negotiations. Others request the assistance of the independent cost estimator in estimate reconciliation. This bid reconciliation is iterative. In the event that a GMP cannot be reached, the agency has the The CM-GC contracting method requires a different skill set and level of effort from engineering consultants because they will be working very closely with the CM-GC.
14 Guidebooks for Post-Award Contract Administration for Highway Projects Delivered Using Alternative Contracting Methods ability to either put the job out to bid or negotiate with the second-most-qualified CM-GC, as determined. A clear knowledge of the CM-GCâs 2 Roles and Responsibilities during construction is key to proper contract negotiation. At a minimum, agencies employ the independent cost estimator with involvement in the bid reconciliation process, which can use 21 Cost-Comparison Spreadsheet. This process must be clearly defined in the procurement documents of all parties (i.e., the independent cost estimator, engineering consultant, and CM-GC). Agencies can also include additional tasks in the independent cost estimator agreement. These most commonly include design, constructability, and schedule input. They can also include negotiating change orders and documenting lessons learned. Clarity of the independent cost estimatorâs scope in the CM-GC process is key to negotiating a CM-GC construction contract. Construction ManagerâGeneral Contractor Procurement Agencies procure CM-GCs early in the project to aid with design development. There are two phases to the CM-GC contract: preconstruction engineering services and construction. The CM-GC is selected for preconstruction services through a qualifications-based selection or best- value process, due to the undeveloped nature of the design at the time of selection. When the design has come to a point where quantities are known at a sufficient level for accurate estimates, the contractor and agency agree on a price for construction. Qualifications-based selection and best-value selection highlight different CM/GC team and project characteristics. Qualifications-based selection procurement involves a review of the CM- GCâs statement of qualifications proposal, which may include specialized qualifications, firm experience, past performance, key personnel, and project innovations. It includes no evaluation of monetary elements for construction. Best value includes cost as a scoring criterion, in addition to the qualifications proposal in the qualifications-based selection process. Best-value procure- ment can be a one-step RFP response or a two-step RFQ and RFP response and review. Best value procurement has an obvious impact on CM-GC project admin- istration. Agencies must include and monitor any best value selection criteria in the contract administration process. Examples could include commit- ments made by the CM-GC in the procurement stage to include specific personnel or processes. The 2 Roles and Responsibilities, 7 CM-GC Manage- ment Fee Table, and 9 Continuity of Team Members tools can assist with this process. These commitments are particularly important when they include a monetary value, such as fee or unit price proposals. 3.3 Summary Actions and decisions made by the agency during pre-award can influence the contract administration post award. Defining project goals, criteria used in selecting a delivery method, and criteria used in the selection of a CM-GC entity impact the CM-GC contract and the expectations for the project. One of the key pre-award activities is procuring an independent cost estimator and defining the approach for establishing a construction agreed-upon price or guaranteed maximum price. Thus, the pre-award phase serves to establish the foundation for administration of a CM-GC contract. Agencies must include and monitor any best value selection criteria in the contract administration process.