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HomeMy WebLinkAbout02 - Civic Center AuditCTY OF F NEWPORT BEACH City Council Staff Report June 16, 2015 Agenda Item No. 2. TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: Dave Kiff, City Manager — (949) 644 -3002, dkiff @newportbeachca.gov PREPARED BY: Dave Kiff, City Manager PHONE: 949 - 644 -3001 TITLE: Civic Center Audit ABSTRACT: Council members have asked that a close -out audit /post - implementation review analysis be completed of the Newport Beach Civic Center project. This item would implement that direction. RECOMMENDATION: a) Set forth the scope of work as proposed for a Civic Center Project close -out audit /post implementation review; b) Set minimum qualifications as proposed; c) Seek qualifications via a Request for Qualifications (RFQ) of firms capable of completing a post - construction review of the Newport Beach Civic Center; d) Designate Council members Dixon, Petros and Muldoon as the audit review Working Group; e) Authorize the Working Group to interview and select the audit management review firm and identify a principal construction - management auditor manager to report to the Working Group. The auditors will report to the Working Group with periodic updates of findings; f) Provide that the City Attorney's office will administer the contract that results from the RFQ; g) Establish a "not to exceed" budget of $100,000 for the audit /review; and h) Determine that the audit/review should be completed by FUNDING REQUIREMENTS: Budget includes sufficient funding. DISCUSSION: Council members have expressed a desire to analyze the more than five -year process for the Newport Beach Civic Center Project ( "Project "). The intended outcome of this close -out post - implementation review or audit would be to formally analyze "lessons learned" and, hopefully, bring forth a consensus on how the City might embark upon similar (but likely smaller) capital projects in the future. This is a vital phase of the project for staff and council to learn from experiences and apply to future projects. Mayor pro Tem Diane Dixon and Council Member Kevin Muldoon stated that an outside close -out review would be desirable, done by an industry expert, of: • The overall Civic Center project's process — from planning to execution. Specifically, how the project grew in cost, time and scope. • How the Project may have followed or deviated from standard private industry practices for construction method and construction management. Specifically, did the fact that the same company acted as lead contractor and project manager affect the final cost? • The overall price per square foot of the completed project, including comparisons with facilities of similar construction. Did the close -out of the project adhere to the existing contracts and if not, how were the variances managed and monitored? • The merits of Construction Manager at Risk versus Design -Build versus Design- Bid -Build or other construction management methods. • The effects of any schedule delays in terms of cost, and the cost impact of each delay and any plan alteration. • Effectiveness of the monitoring of the project's variables against its plan. • Documentation of the final "as built" project versus original concept. • The quality of the City's management and execution of the Project and its effectiveness. • Were there regularly scheduled project review sessions, including cost variance detail, with members of the City Council and public? • The final post - implementation review analysis. Staff further believes that it may be appropriate to review and submit: • Whether change orders were appropriate and /or within industry norms. • How delay claims were addressed and were delays within industry norms (as well as the cost impact of these delays). • Were the project's progress and scope, cost and time schedule details presented on a regular reporting schedule basis in a transparent manner? If not, why? The auditor may submit recommendations for improvement. • Following the Project's design parameters' public approval in April 2008, did the final design and product end up following these parameters? If not, how did the final design deviate from the parameters? What were the cost implications of any deviations? For more information about the 2008 -2013 Civic Center project (which included a new City Hall, a community room, a Council Chambers, a park, an expansion to the Newport Beach Central Library, a parking structure, and a pedestrian bridge), readers should review this web page: http://newportbeachca.gov/index.aspx?page=2481 The following is proposed as guidance for the Council in embarking upon this effort: Proposed Minimum Qualifications of for Proposers The firm shall have at least 15 years' experience providing contract compliance close -out reviews for public and /or health care and /or university buildings; For the key principal(s) assigned to this close -out audit: • At least 20 years' experience in construction auditing; • Principal(s) must be a Certified Construction Auditor(s); and The firm and its assigned principals must have completed at least three California -based projects completed and available as references. Proposed Scope of Services Based on the comments of Ms. Dixon and Mr. Muldoon, staff proposes the following Scope of Services for qualified firms: • Review the Project's construction contracts, including subcontractor bids, for compliance with State law and common industry standards; • Review the Project's contract amendments for compliance with State law, common industry standards, and local contract approval processes; • Review and compare on a per square foot basis, project costs and compare with similar projects of this size and scope. • Review Change Order Log (available on the City's website at: htto: / /ecros. newi)ortbeachca .ciov/Web /Browse.asr)x? startid= 687617& cnb= Car)itallml)rovementProiects), the process for approval of the change orders and project delay claim data; Report on the cost impact of the change orders and a comparison of cost impacts of similar projects of this size and scope. • Review the Value Engineering process and outcomes. • Critique the process by which the Project's scope was changed since February 2008: • Was this a public process? • Was the reasoning sound by which the scope increased? • Were valid cost estimates presented and made public on a regular basis as decisions were made to change the Scope? • In the end, were the General Design Parameters that were adopted in 2008 followed? • What were the cost implications of scope changes? • To the extent necessary, interview the Project's process and oversight with CW Driver and any other relevant contractor or City official(s) or staff members; • Provide a Final Report. In that Final Report, offer the firm's opinion as to: • The City's oversight of the Project. • Recommendations /observations about this Project's Construction Manager at Risk management method versus Design -Build or Design- Bid -Build or other construction management methods. • The effectiveness of Project cost controls, including the administration of change orders and claims. • The reasonableness of the Project's price per square foot (for various elements of the Project, if appropriate) compared to industry standards. • Variances of final total cost versus project cost estimates (noting which estimates reflected solely construction costs or soft costs/"All-in" numbers) within Design Development and Construction Document phases provided by City staff, CW Driver, or BCJ's cost estimating firm. • Did the close -out of the Project comply with the Project's contracts? If not, the Report should provide a detailed description of the variances. • Did the fact that the same company acted as lead contractor and project manager affect the final cost? If so, provide a line -by -line detailed analysis. • Lessons Learned from this project that should translate into other public construction efforts. Include a review and comment on the City staffs lessons learned from January 2015. • Were there any other aspects of the Project's implementation that raised a question in the firm's opinion as to financial, ethical or legal issues? Proposed Budget Staff proposes a not -to- exceed budget of $100,000 for this review. This can be revised by the City Council if the auditing firm states reasons for doing so in the course of the review. Administration and Oversight Staff proposes that the City Attorney enter into the selected proposer's contract, and that the Working Group is designated to review the work of the selected proposer as the proposer goes through their review. Staff assistance may come from the Public Works Department, which is the department most familiar with the latter stages of project construction and project documents. ENVIRONMENTAL REVIEW: Not a Project CEQA Language - -Staff recommends the City Council find this action is not subject to the California Environmental Quality Act ( "CEQA ") pursuant to Sections 15060(c)(2) (the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment) and 15060(c)(3) (the activity is not a project as defined in Section 15378) of the CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, because it has no potential for resulting in physical change to the environment, directly or indirectly. NOTICING: The agenda item has been noticed according to the Brown Act (24 hours in advance of the special meeting at which the City Council considers the item).