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Home My WebLink About10-09-14 About the Civic Center GMP Contract (goes with GMP #2 staff report)The GMP, City, and CW Driver September 14, 2010 Newport Beach City Council When the Public Sector Builds Our Approach /Principles: Cities don't build projects like this often —many private sector companies do. Hire a private company, through a competitive bidding process. Make them part of the design and do constructability analysis /value engineering from the start. Assign the risk (and some reward) to them. Three Models Design then Build —Two or More Contracts Independent architect designs project Project put to bid to construction company (handles all sub -trade bids) Advantage — common - place, relatively simple. Disadvantage — subcontract detail remains unknown to the public agency. Folks in NB have been concerned about this in the past, with Edison and UUDs. Three Models, continued Design -Build — One Contract Design and construction put out to bid. One company handles design contract and construction sub -trade bids. Advantage — also commonplace, even simpler than Design then Build. Disadvantage — subcontract detail remains unknown to the public agency. Folks in NB have been concerned about this in the past, with Edison and UUDs. Three Models, continued • Construction Manager at Risk (CM @R) 1. Construction Manager (CM) hired early to work with owner and architect 2. CM promises project delivery at a set price within a contract called a Guaranteed Maximum Price (GMP) contract: • Typically executed when 100% CD plan set complete and; • After opening and" normalizing" (malting sure the bidders didn't make any errors) sealed sub -trade bids More about CM at Risk • Construction Manager @ Risk (CM @R) — cont'd 3. Within GMP, CM usually gets a set profit / % -age (typically 3 to 7% of total project cost) plus an incentive to bring the project on time & under budget - Incentive = share of unspent construction contingency usually 25 to 50% - Penalty = CM responsible for all costs over agreed -upon guaranteed maximum price About this CM at Risk Contractor In 2008: City issued an RFQ for construction services. 24 firms responded Seven (7) firms were interviewed by staff and a Council Committee using a Qualification -Based Selection (QBS) process . The seven were: Barnhart, Inc, (Heery Intl.), C.W. Driver Gafcon, Inc. Griffin Structures, Inc. Pinnacle One (Arcadis Co.) Traker Development Voit Development CW Driver was ranked as the top firm and then hired at a City Council Meeting (January 13, 2009). Driver's contract was a part of the staff report. QBS v Low Bid Qualification Based Selection (QBS) Required for specialized services, like engineering, design, construction management. Firm selected based on qualifications. Prices can be negotiated. Price may not be the determinate factor. Lowest Responsible Bidder Required for public works projects construction, street repair, etc. Company selected based on lowest responsible bid. Price is as submitted / no negotiation. About this Contract Term = 2 '/2 Years GMP Contract includes 4 major components: Direct Costs — actual costs for insurance and bonding ($403,169 to date for amendments I & 2) About this Contract Contd. 2. General Conditions /Basic Services $7,169,255 (not- to- exceed) over 30 months. Includes all staffing (superintendent, inspection, support), trailers, fencing, traffic control, stormwater control, restrooms, computers, telephone, more. NO PROFIT built into these numbers. 3. Construction Management Fee (Profit) CW Driver receives 3.25% profit on all actual costs for completed construction and basic services performed. About this Contract Contd. 4. Actual Cost of Construction Work (sub -trade bids) StAmendment = mass excavation & shoring wall ($6.73M): 8% construction contingency (included in $6.73M) Any savings of construction contingency split 75% City, 25% Driver. 2nd Amendment = parking structure ($7,057,636) 5% construction contingency (included in $7.06M) Any savings of construction contingency split 75% City, 25% Driver. 3rd (and Subsequent) Amendments AmountTBD —based upon actual sub -trade bids, opened in public, for remainder of Civic Center Project Qan. 2011). Will also assume construction contingency with same split. About this Contract Contd. • Not included in GMP Contract: 1. Owners Contingency - if unused, 100% goes to City. - For Mass Ex — 10% (about $630,000) - For Parking Structure — 5% (about $350,000) Contractor and Subs EXAMPLE: A Long - Awaited Home Remodel — Construction Costs The Contract 0 Contractor profits 3.25% of: • Direct Costs (=$196) • Actual work completed with each VkUA* (= $2,080) * If any construction contingency saved, divided 25%- 75 %. (= $1,250) Your Home —Trade Bid Prices Foundation = 10,000+ 1,500 HVAC= 7,000 +350 Frami ng/Carp a ntry = 12,000+ 1,200 Plumbing= 6,090 +600 Tile /Masonry = 3,000+ 150 * windows /Door5 = 3,000 +150 Sheetroc k = 4,000 + 200 * Electrical = 4,000 + 200 0 Decking= 3,000+ 150 Painting/Stucco = 5,000+ 250 Cabinetry= 7,000 +250 Subtotal Trades = $64,000 Constr. Contingency= $5,000 Owner's Contingency =10 %or $6,900 Your Contractor's Direct Costs GCs- Construction Fence, ta: john, extra laborer= $5,015.00 DCs - Insurance,bondsforthis specific project ($1,000) .Subtotal Direct Costs = $6,015.00 The Contract 0 Contractor profits 3.25% of: • Direct Costs (=$196) • Actual work completed with each VkUA* (= $2,080) * If any construction contingency saved, divided 25%- 75 %. (= $1,250) Estimated Hard Costs (based on actual bids) $ 64,000 Estimated Construction Contingency (percentage varies bytrade) $ 5,000 Estimated Direct Costs $ 7,000 Estimated Profit for Contractor (3.25% of actual work done) $ 2,470 Estimated Retained Construction Contingency $ - Estimated Owner's Contingency (10% of Work Done Exposure) $ 6,900 Your Starting Estimate $ 85,370 hen the Proj _ Actual Work Done - Subtrades $ 64,000 - Construction Contingency (none spent - great contractor!) $ - SubtotalActual Work Done $ 64,000 Direct Costs - General Conditions (fencing, etc) $ 5,015 - Bonding, Insurance $ 1,000 Subtotal Direct Costs $ 6,015 Contractor's Profit - On Actual Work Done (3.25 %) $ 2,080 - On Direct Costs (also 3.25 %) $ 195 Contractor's Share of Unspent Construction Contingency (25 %) $ 1,250 Total - Contractor's Profit and Incentive $ 3,525 Amount in Contract (Subtrades + Profit + Incentive) $ 73,540 Retained Construction Contingency $ 3,750 Retained Owner's Contingency (none spent - great control!) $ 6,900 Project Cost at Project Completion $ 73,540 Contractor earns more ($1,250) by saving more contingency than contractor would if entire contingency used (only would earn $162.50) North Park, including Dog Park • Bid Price TBD (Dec2010j • Construction Contingency -5 %? EXAMPLE; The Civic Center Project — Construction Costs C Civic Center —Trade Bid Prices • Parking Structure- $6.7M +$350K. • City Hall -TBD • Parks -TBD • Library Expansion - TBD • Mass Ex /Shoring Wall - $6.2M + $490K Subtotal Trades = $12.7M+ more to be added Constr. Contingency= $240K+ moreto be added Owner's Contingency = Currently $1.023M ($350K +$5j +more to be added. 0 f E Central and South Park(s) _ • Bid Price TBD (12- 2010,; - 'a�r.��5= ructure • ConstCont =S %? • = '-'''e'- 57.057M inclu �! Cu'6- Conting =$350K 7 BifficeBu d:ng d Price TBD IDec2011 CW Driver's Direct Costs • GCs - Construction Fence, RR ft john, extra laborer = NTE $7.2M • DCs - Insurance, bonds for this specific project ($231K +$265K+ more to be added Subtotal Direct Costs = NTE $7.696M now, but more to be added The CM at Risk Contract • Contractor profits 3.25 %of: • Direct Costs • Actual work completed with each�e� • If any construction contingency saved, divided 25% - 75 %. So far, max to be saved is $840K. At 25% split, that's $210K. Our Co ntinge n cy — 10%% ? I W111111= G M P Contract Grows Over Ti me as Construction Elements Added ., .1 70 60 50 40 30 20 0 In April In May By By Early 2010 2010 September 2011 2010 F City Office Building North Park, Central Park Library Expansion Parking Structure Mass Ex & Shoring Wall General Conditions Similarities — Home, Civic Center Yes, the contract amount grows over time as subtrade bids are added to it. It's supposed to do that. Profit remains 3.25% of actual work done. Profit v. Saving Construction Contingency. Just like the home example, there is more reward to the construction manager to save construction contingency than to spend it all and make profit. Questions Raised "What is C. W. Driver making ?" They will make a 3.25% profit over actual opened public bids, actual work completed, and General Conditions. Their "General Conditions" payments are made monthly (not to exceed $7.169M) and reflect the actual cost of managing the Project (actual costs, no profit — about 30 months) — includes: Staffing (superintendent, inspection, support), trailers, fencing, traffic control, stormwater control, restrooms, computers, telephone, more. They get 25% of unused Construction Contingency. City gets 75% of unused Construction Contingency and 100% of unused Owner's Contingency. * CW Driver has risks, too: They must deliver on time and on budget. CW Driver is responsible for cost overruns (costs exceeding GMP) Issues Raised (cont'd) "Has this been an open & public process ?" Yes. Contractors prequalified using State - approved process. All contracts competitively bid with City oversight — opened by City Clerk. Monthly billings show actual costs and charges on a time and materials basis. All C.W. Driver and City project records are public (on the City's website) and available for review. Questions Raised (cont'd) Are there more affordable j`ordable project managers? Going profit rate is 3% to 7 %.This is 3.25% Incentive = 25% of construction contingency. Often 30 -35% goes to construction manager. Will always be firms offering to undercut competition. Qualifications and expertise prevail. Laguna Niguel's contract with CW Driver is a different style — called Multiple Prime — as such: City of LN retains risks of cost overruns Much less complex site - GCs are 4% of project costs Profit is 1.75% of project costs