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HomeMy WebLinkAbout2005-26056 Reso RESOLUTION NO. 2005-26056 A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, APPROVI~G AND AUTHORIZING THE MAYOR AND CITY CLERK TO EXECUTE AMENDMENT NO 5 TO THE CURRENT AGREEMENT BETWEEN THE CITY AND THE CORRADINO GROUP (FORMERLY KNOWN AS CARR SMITH CORRADINO) FOR PARKS MASTER PLAN BOND PROGRAM SITES SCOTT RAKOW YOUTH CENTER; FLAMINGO PARK; AND NORMANDY PARK; SAID AMENDMENT TO PROVIDE FOR THE PROVISION OF ADDITIONAL CONSTRUCTION ADMINISTRATION AND TESTING SERVICES, IN THE AMOUNT OF $120,280, DURING COMPLETION OF THE CONSTRUCTION OF THE NORMANDY ISLE PARK & POOL FACILITY TO BE APPROPRIATED FROM THE PAY-AS-YOU-GO CAPITAL FUND. WHEREAS, On July 16, 1997, the Mayor and City Commission approved a Resolution authorizing the City to enter into an Agreement with The Corradino Group (formerly known as Carr Smith Corradino) for professional services related to the Parks Master Plan Bond Program Sites Scott Rakow Youth Center; Flamingo Park; and Normandy Park, in the amount of $536,068 (the Agreement); and WHEREAS, The Corradino Group (TCG) has continued to perform architect/engineering services on these projects in an effort to complete the construction of the projects, even though its Agreement has not been amended to include the additional time and fees required for completion; and WHEREAS, TCG has been involved in the re-permitting process of the Normandy Isle Park and Pool facility project, starting with providing an As-Built Survey of construction at the time of the former contractor, Regosa Engineering, Inc.'s, termination through the current review process with the Building Department to re-issue the construction permit; and WHEREAS, TCG's services have also included providing additional review of construction documents in conjunction with assessment of existing site conditions; evaluating defective work by the previous contractor, as well as providing recommendations to correct these conditions; attending additional site construction progress and other coordination meetings; presenting construction documents for review by the Building Department during the re-permitting process; responding to requested modifications; providing a new set of signed and sealed construction plans; and WHEREAS, construction of the Normandy Park portion is expected to achieve substantial completion status by February, 2006; and WHEREAS, construction of the Normandy Pool portion is currently estimated to be 60%) complete and, although site conditions and recent weather events have impacted the project schedule, it is expected that substantial completion will be achieved by July 2006; and WHEREAS, the extended construction period will require TCG to provide necessary additional construction management services and shall include Inspection and Assessment of Existing Conditions as well as Construction Administration Services as follows: 120 days for the Normandy Park - Park Portion; and 240 days for the Normandy Park - Pool Portion; and WHEREAS, this proposal has been evaluated by URS, the City's Program Manager, and the CIP Office, and determined that the negotiated amount was fair and reasonable; WHEREAS, the Administration recommends approving fees, in the amount of $120,280, for additional services and an extension of time to retain TCG as the architect/engineering consultant for the active projects through the end of construction; WHEREAS, the City wishes to amend the Agreement with TCG, and increase funds, in the amount of $120,280, available from the Pay-As-You-Go Capital Fund. NOW, THEREFORE BE IT DULY RESOLVED BY THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, that the Mayor and City Commission approve and authorize the Mayor and City Clerk to execute Amendment NO.5 to the Agreement between the City and The Corradino Group (formerly known as Carr Smith Corradino) for Parks Master Plan Bond Program Sites Scott Rakow Youth Center; Flamingo Park; and Normandy Park to provide for the provision of additional construction administration and testing services, in the amount of $120,280, during completion of the construction of the Normandy Isle Park & Pool facility to be appropriated from the Pay-As- You-Go Capital Fund. PASSED AND ADOPTED this 7th ATTEST: ~rp~ CITY CLERK Robert Parcher T:\AGENDA\2005\Dec0705\Consent\NIP&P Corradino Amend.5-RESO-2005.12.07.doc APPROVED AS TO FORM & LANGUAGE & FOR EXECUTION Mi1MItO. .IA.. 1)- ~J- ~~ ~Dm8 COMMISSION ITEM SUMMARY Condensed Title: A Resolution of the Mayor and City Commission approving and authorizing the Mayor and City Clerk to execute an amendment to the current professional services agreement with The Corradino Group in the amount of $120,280 for the provision of additional construction administration and testing services during completion of the construction of Normand Isle Park & Pool Facili ,to be a ro riated from the Pa -As-You-Go Ca ital Fund. Ke Intended Outcome Su orted: Ensure Well Designed Quality Capital Projects Issue: Should the Mayor and City Commission adopt the aforementioned Resolution to approve additional construction administration service and other fees for The Corradino Group as a result of the project's extended schedule and needs? Item Summary/Recommendation: The Normandy Isle Park & Pool project has experienced significant construction delays a result of several factors such as the removal of the Park portion of the project from Regosa which was later re-introduced and awarded separately to a Job Order Contractor (JOC); the subsequent termination of Regosa; settlement negotiations with the surety company; securing as-built plans of the work completed by Regosa; discussions with the Building Dept. to address minimum permit requirements; securing JOC contractor proposals; coordination with the various sub-consultants for up-dating drawings and securing signed and sealed plans; and re-submittal of contract documents for review. The Corradino Group (TCG) has been involved in the re-permitting process with the City starting with providing an as-built Survey of construction at the time of Regosa's termination through the current review process with the Building Dept. to re-issue the construction permit. TCG's services have also included: providing additional review of construction documents in conjunction with assessment of existing site conditions; evaluating defective work by the previous contractor, as well as providing recommendations to correct these conditions; attending additional site construction progress and other coordination meetings on both the park and pool portions of the Project; presenting construction documents for review by the Building Department during the re-permitting process; responding to requested modifications; and providing a new set of signed and sealed construction plans for both portions of the Project. Construction of the Pool portion is estimated to be 60% complete and, although site conditions and recent weather events have impacted the project schedule, it is expected that substantial completion will be achieved by July 2006. Consequently, the extended construction schedule requires TCG to provide additional and reimbursable construction management services for the park portion of the Project. TCG has completed the re-permitting of the Park portion of the project, including providing additional drainage design drawings, and is currently providing additional construction administration services. As a result of both of the Project's portions extended schedules, an additional appropriation in the amount of $120,280 will be required for construction administration services for the park portion and for other services for the pool portion of the Project. The negotiated fee totals $160,000 plus $10,700 for the as-built Survey plus $2,300 for the redesign of an ADA, ramp less $52,720 previously appropriated for construction administrative services and other services for the pool portion of the Project. Based on the above, an appropriation, in the amount of $120,280, for the additional services is required to maintain the continuous involvement of the consultant in the Project until completion. Advisory Board Recommendation: I N/A Financial Information: sourceljOf Funds: OBPI Financial Impact Summary: lD ..., f.BEACH AGENDA ITEM C 7 F DATE 1f).....f7 -o~ e MIAMI B ......ACH City of Miami Beach, 1700 Convention Center Drive, Miami Beach, Florida 33139, www.miamibeachfl.gov COMMISSION MEMORANDUM TO: Mayor David Dermer and Members of the City Commission City Manager Jorge M. Gonzalez J >- ~ December 7, 2005 A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, APPROVING AND AUTHORIZING THE MAYOR AND CITY CLERK TO EXECUTE AMENDMENT NO. 5 TO THE CURRENT PROFESSIONAL SERVICES AGREEMENT BETWEEN THE CITY AND THE FIRM OF THE CORRADINO GROUP, DATED JULY 12, 2000, IN THE AMOUNT OF $120,280, FOR THE PROVISION OF ADDITIONAL CONSTRUCTION ADMINISTRATION & TESTING SERVICES, FOR THE COMPLETION OF NORMANDY ISLE PARK & POOL FACILITY; AND APPROPRIATING $120,280 FROM THE PAY-AS-YOU-GO CAPITAL FUND. ADMINISTRATION RECOMMENDATION Adopt the Resolution. FROM: DATE: SUBJECT: FUNDING Pay As you Go capital Fund. ANAL YSIS Following authorization from the Mayor and City Commission on July 16, 1997, the City entered into an Agreement with The Corradino Group (TCG) (formerly known as Carr Smith Corradino) for professional services related to the Parks Master Plan Bond Program sites which included the Scott Rakow Youth Center; the Flamingo Pool; and the Normandy Park & Pool; in the amount of $536,068 (the Agreement). All of the consulting services fees included in the Agreement have been exhausted in the completion of the Scott Rakow Youth Center and the Flamingo Pool as well as the Normandy Park & Pool prior to the Regosa Engineering, Inc. (Regosa) default. The Normandy Isle Park & Pool project has experienced significant construction delays as a result of several factors such as the removal of the Park portion of the project from Regosa which was later re-introduced and awarded separately to a Job Order Contractor (JOC); the subsequent termination of Regosa's contract; settlement negotiations with the surety company; the securing of as-built plans of the work completed by Regosa; discussions with the Building Dept. to address minimum re-permitting requirements; the securing of JOC contractor proposals; coordination with the various structural, architectural, mechanical and electrical sub-consultants for up-dating the drawings and securing signed and sealed plans; re-submittal of contract documents for review by the Building Dept. for the re-issuance of the construction permit; and resolving new issues raised by the Building Dept. after completing the review. City Commission Memorandu"m December 7, 2005 Normandy Isle Park & Pool- Corradino Contract Amendment 5 Page 2 of 3 During the construction period, TCG invested time in trying to enforce contract document requirements on Regosa, the contractor for the pool portion of the Project. TCG continued to be engaged on the Project, after the default of Regosa, which was approved by the City Commission on June 9, 2004 by Resolution No. 2004-25595, therefore exhausting a portion of the previously contracted services, in the amount of $52,720 (Exhibit 1). Subsequent to Regosa's termination, a settlement with the surety company, St. Paul Travelers (St. Paul), was reached and approved by the City Commission on July 6, 2005 and the City proceeded to secure a Job Order Contracting (JOC) agreement with PASS International Inc. (PASS) for the pool portion of the Project. PASS had already been contracted for the park portion of the Project. Pass was issued an initial Notice to Proceed for some areas of the park portion of the Project on March 30, 2005 (Exhibit 3) and was issued a Notice to Proceed on August 10, 2005 (Exhibit 4) for the pool portion of the Project. Throughout this period TCG continued to assist the City with both portions of the Project in order to bring them to conclusion. TCG also completed the re-permitting of the park portion of the Project, including providing additional drainage design drawings, and is currently providing construction administration services. The additional services agreement previously approved, (Exhibit 1), contained construction administration services for the pool portion of the project but did not contain any construction administration services for the park portion. Additional construction administration services included in the new proposal (Exhibit 2) are for the park portion of the Project. The park portion is currently estimated to be seventy percent (700icl) complete and is expected to achieve substantial completion status by February, 2006. These additional construction administration services are described in Task No. C of Exhibit 2 which were not previously requested by TCG or approved by the City. These services have been partially provided throughout the construction of the park portion of the Project and are further required for the continuous participation of the consultant in the completion of the park. Construction of the pool portion is currently estimated to be sixty percent (600icl) complete and, although site conditions and recent weather events have impacted the project schedule, it is expected that substantial completion status will be achieved by July, 2006. TCG has expended some of the services for the construction of the pool portion of the Project and will continue to participate in this process until completion. No further additional service fees will be approved from this involvement since they are included in the previously approved agreement presented herewith as Exhibit 1. TCG has been involved in the re-permitting process with the City's Building Dept. starting with the preparation of an as-built Survey of construction at the time of Regosa's termination through the current review process with the City's Building Dept. to re-issue the construction permit.. Plans for the re-permitting of the pool portion of the project were submitted to the Building Dept. on September 9, 2005. Some of the services for this effort are a part of Phase A as delineated in Exhibit 1 previously referenced and attached herewith and are not part of the new request. TCG's services also included providing additional review of construction documents in conjunction with the assessment of existing site conditions; evaluating defective work by the previous contractor; and the preparation City Commission Memorandum December 7, 2005 Normandy Isle Park & Pool - Corradino Contract Amendment 5 Page 3 of 3 of an inspection report detailing the findings, outlining required corrective actions and providing recommendations for methods of correction. A portion of these services, such as the as-built Survey, are additional and are delineated in Task No. D of Exhibit 2 previously referenced and attached herewith. The other portion of the services is part of the previous agreement and is delineated in both Exhibit 1 and Exhibit 2. The extended construction schedule for both projects requires that TCG provide additional construction managemenf and reimbursable services. As a result, an additional appropriation, in the amount of $120,280, will be required for construction administration services for the park portion already in progress, for additional services necessary for the re-procurement and the re-permitting of the pool portion, and for the as-built survey and the redesign of an ADA ramp. These services are described in Task No. D of Exhibit 2. The fee established after negotiations amounts to a total of $160,000 for various services plus $10,700 for the as-built Survey and $2,300 for the redesign of the ADA ramp requested by the City's Building Department. This total fee of $173,000 includes the previously approved appropriation, in the amount of $52,720, for the Inspection and Existing Conditions Assessment and the Construction Administration services of the pool portion of the Project. The difference between the total fee and the additional fees results in the required appropriation, in the amount of $120,280, to complete the construction of both portions of the Project. It is important to note that TCG has noted that they cannot continue to actively participate further in the Project without these proposed additional services. Given the importance of the subject Project, the complexity of the delays and the re-procurement efforts, and the need for the consultant's involvement in the Project, the Administration considers these additional services for a variety of activities necessary for the successful completion of the Normandy Park and Pool. CONCLUSION Based on the aforementioned, the Administration recommends appropriating $120,280 from the Pay-As-You-Go. Capital Fund for the additional services and the continuing involvement by The Corradino Group in the construction of the Normandy Park and Pool Project until completion.. Attachments T:\AGENDA\2005\Dec.0705\Consent\NIP&P Corradino Amend.5-MEMO.2005.12.07 & ..... MIAMI BEACH OFFICE OF THE CITY MANAGER NO. LTC # 300-2005 LETTER TO COMMISSION FROM: Mayor David Dermer and Members of the City Commission City Manager Jorge M. Gonzalez \..rr"{)------ December 2, 2005 C)''-- ARCHITECT ENGINEER ADDITIONAL SERVICES FOR CONSTRUCTION ADMINISTRATION TO: DATE: SUBJECT: At a previous Finance & Citywide Projects Committee, the Administration was directed to prepare an item for discussion regarding the policies for awarding additional services to City Consultants and regarding the layering of fees for Architect/Engineers (AlE), Program Managers (PM) and the Capital Improvement Projects Office (CIP) staff. The purpose of this Letter to Commission (LTC) is to present brief explanations on the methods for procurement of AlE and construction contracts, general standards in the industry for awarding additional services to AlE's, and the reasoning behind the project management layers in the City. It is important to keep in mind during the discussion the complexity and magnitude of the construction program in which the City is currently involved as well as the factors that have influenced the commissioning of AlE firms by the City to respond to the varied and intricate consulting needs of the various types of projects in the Program. A follow-up discussion on this and other CIP related issues is being developed and will be scheduled as a Finance and City Wide Projects Committee meeting in the near future. In the meantime, I hope this information is helpful in understanding some of the challenges of the construction industry in Miami Beach. A brief history is necessary prior to discussing the rationale used by the Administration in negotiating and awarding consulting agreements. Prior to the creation of the CIP Office, the consulting agreements format by which the City retained the services of AlE firms were less than appropriate in establishing the value of contracts as well as in delineating the scope of the services. Some of these agreements are still in place and must be addressed on the basis of the conditions established in those agreements. Most of these contracts have now expired and the CIP office, with the assistance of the City Attorney's Office, has developed a new agreement format which more clearly delineates the services scope for consultants and that describes in more detail the tasks to be performed by the consultants. The new agleements also aHow forus 'bette-r distlncli6nbeNVeeil cOhtraclswnichare--primarllyofan infrastructure and right of way nature and those which are primarily concerned with vertical construction. This was done to facilitate the description of tasks and the negotiation of service fees. The CIP Office, however, must still manage projects and processes that are based on the previous contract generation as well as those that are based on the new generation of contracts. This distinction is important because some of the previous agreements address the awarding of additional services to the AlE's in a different manner than the more recent ones. The evaluation of additional services for time is sometimes different in the two generations of contracts and therefore must be addressed differently when requests for additional services are made. The older generation of contracts contained clauses for time Letter to Commission AlE Additional Services for Construction Administration December 2, 2005 Page 2 of 6 extensions which were specifically dependent on the project schedules included in the agreements. The new contract version more specifically defines the tasks to be performed and how additional services may be considered as they relate to the tasks and to time. Because of the above, the CIP Office is obligated to address additional services requests from AlE's and to present them to the City Commission in a manner that is consistent with the content of the particular contract in place. It is also important to note that within the consulting industry it is customary to provide additional services to consultants under any contract type when there are significant time extensions that occur through no fault of the consultant. If City decisions, construction events, or other reasons beyond the control of the consultant cause extensive additional services during the Construction Administration (CA) phase of a project, then the consultant is entitled to additional compensation for the time to be expended beyond the original established schedule of a project while serving the needs of the project and the City. One of the issues which have been raised is the award of additional services to a consultant when CA values were included in an original agreement and represented as a lump sum based on a percentage of the overall fee as the fee relates to the total construction cost. Under this scenario, which is not uncommon in the industry, a total fee is represented as a percentage of the construction value and the different aspects of the consulting services are represented as percentages of the total fee. As it relates to the current concern on additional services for CA, for example, if a Project is valued at $1 million and the consulting total fee is valued at $1 00 thousand, and the percentage for CA is expressed as twenty percent (200/0) of the total fee, the lump sum value of the CA would be $20 thousand. It has been argued that this lump sum fee is the maximum the consultant is entitled to and that additional services due to time extensions on the construction schedule do not justify additional fees for the consultant. This argument would be based on the premise that additional time does not necessarily increase the level of effort for the consultant since the scope of the services remains the same in terms of tasks to be performed. What the Administration would argue is that when a project's time schedule is extended significantly through no fault of the consultant, even if the individual tasks in the scope of services are not significantly increased, the need for the availability.of the consultant to address issues with the construction does increase. Under this premise it becomes necessary to address compensation for the continuing involvement of the consultant in the CA of the project until completion. It needs to be understood that the services provided during the CA period, such as the response to Requests for Information (RFI), evaluation of Change Proposals (COP), review -of submittatsuandshop drawing5,etc:are~often comptex-and time consuming and frequently. are the cause for time extensions on Projects. This is because RFl's and COP's are often the result of unforeseen issues on the project sites or of additional scope requested by the Owner. In such cases, the additional efforts of the consultant must be compensated since they could not have been envisioned at the time of entering into an agreement and could not have been represented as a simple percentage of construction value. Construction projects, especially many of those in the City's Program, are complex and require close attention from the consultant given the ongoing involvement of internal City clients, City residents and other factors that often result in a modification and/or addition to a project's scope. Consequently, it is not possible or realistic for a consultant to anticipate all these unknown factors when entering into an agreement and therefore the initial lump sum for CA often represents only a very standard and not complex process. Letter to Commission AlE Additional Services for Construction Administration December 2, 2005 Page 3 of 6 It also must be understood that frequently the requests for additional services presented by the consultants and submitted for approval by the Administration are not limited to time extensions only but also to other services which are either additional to a project's scope or generated by the time extension itself. In these cases, both the old and the new generation of contracts provide for the proper submittal by the consultant of substantiated additional services proposals. The City is then obligated to evaluate the proposals validity and content in relation to the contractual provisions and to analyze the proposed value. This service is currently provided by the CIP staff and where applicable by PM staff. All proposals for additional services presented by the City for approval go through this rigorous process and are carefully evaluated prior to submittal to the City Commission. One distinction that may be made is that the new generation of agreements delineates the consultant's tasks more specifically and defines the value and time of those tasks more extensively. As a result, when the new agreements are entered into by the City and a consultant, it is now easier to establish the value of the CA involvement and it is usually expressed in specific tasks and in specific time periods as well as time expenditures to accomplish the tasks. Therefore, for example, the review of RFl's is a single task item and the value of the task as well as the time necessary to accomplish it is represented in the agreement. This facilitates the evaluation of additional services requests and makes it easier for both parties to agree on the validity and appropriateness of the requests for additional effort. Requests due to time extensions are then more easily analyzed and their value and validity more easily established by City staff. What is also important to note is that when consultants are either denied or constrained in their requests for legitimate additional services during CA, the result is a lesser level of service that usually impacts the quality of a project's construction. Consultants that believe their total service fees are not commensurate with the expected level of effort will most commonly reduce that level of effort in order to compensate for the labor hours which were determined when the lump sum fee was negotiated. The City has experienced this practice in some projects, especially those under the old generation of contracts and those which have lingered in the City due to varied factors. When this practice occurs, the project suffers and the schedule, quality, and completeness, are affected. Because of this, it is usually more advisable to fairly negotiate legitimate additional services that can be justified in order to maintain the integrity of projects. One of the reasons the City has experienced some successes, especially since the creation of the CIP Office, is as a result of the quality and thoroughness in project management that comes from having an assigned City staff and a Program Manager. Although at times it may ap-pearthat there is an additiona11ayerof the same s-ervice;uthe reality-isthat -each group involved in the management of projects serves a unique function and with a different role. The AlE's responsibilities are fairly straight forward and include the planning, design, bidding and permitting assistance, and the construction administration of projects. This role is well defined and is traditional in the construction industry. The CIP staff has the responsibility of representing the City's interests and is therefore more involved with the oversight of the AlE's, the PM and the contractor's performance as well as with the management of the project's funds and finances. This staff is not directly involved in the project's design and is not involved in addressing issues during construction; this is the role of the AlE. City staff, though, serves as liaison between the different City departments and regulatory agencies involved in projects; between the AlE and the Letter to Commission AlE Additional Services for Construction Administration December 2, 2005 Page 4 of 6 contractor and the internal City clients; and with the residents, the Administration and the City Commission. Therefore the CIP Office is involved in much more than project management and the value added to the project's process is much more than the traditional owner's representative role. If City staff were not present the role of representing the owner's interests would be deferred to the consultant and would generate additional costs for the additional effort. Ultimately, though, the City's interests are better represented by City staff rather than an outside agent. The PM was retained for the purpose of providing assistance and support to the City's staff because it is usually not possible for an owner to embark on such an ambitious program as that in which the City is involved with the limited staff levels that any organization of this kind can reasonably carry. It must be noted here that the value of the overall capital improvements program has doubled since its inception and it is now in the range of $500 million. This kind of growth in scope and value necessarily generates the lengthening of project schedules and therefore can generate additional services requests from the AlE. It is usually more cost effective and more efficient to retain the services of a large organization that can offer the varied services that a PM can provide, such as coordination management between all the entities involved, time and schedule management, record keeping, inspection and resident representatives services, etc. than for an owner to recruit the necessary staff for such an endeavor. The role of the City's PM is as described above and cannot be viewed as an additional layer but rather as additional support to the City's program. Additionally, it must be recognized that there is a relationship between the procurement and definition of scope for the services of AlE's and the procurement of construction contracts. Depending on how a construction contract is awarded, the involvement, responsibility, and extent of service by the AlE can vary. For example, the traditional design-bid-build (DBB) procurement approach requires that the AlE be heavily involved in all aspects of the process from planning through bid through construction and therefore, because their services are more extensive consequently the value of those services must be higher. Under this method of procurement, the AlE must be heavily involved in the CA phase of a project because of their strong commitment to insure the contractor complies with all aspects of the contract documents and to insure that the end product is compatible with the project scope. This approach also often results in the contractor under valuing the project in order to win the bid and then reducing quality or requesting change orders in order to complete the project. This situation requires more involvement from the AlE and often results in the need for additional CA services. Under this scenario, the CIP staff is more closely involved in the oversight of the AlE and the contractor and in safeguarding the City's interests and the City's financialcommitments~- When a design-build (DB) approach is used, the contractor and AlE team up to provide complete services from planning to completion of construction but in this case the AlE usually reports to the contractor and not the owner. The team is selected both for quality as well as cost but the designer traditionally responds to the needs of the contractor once the cost is established and the team enters into an agreement with the City. The DB approach provides the benefit of having one entity responsible for the complete project, generally eliminates the conflicts between AlE's and contractors that often arise, and provides for better accountability and efficiency. It also often leads to economies on the projects and minimizes change orders since the team is responsible for the quality, completeness, and correctness of the design and because value engineering efforts are performed during the Letter to Commission AlE Additional Services for Construction Administration December 2, 2005 Page 5 of 6 process by the team. In this scenario the CIP staff is responsible for monitoring the performance of the team but the services of the AlE are the responsibility of the DB team and therefore the contact between CIP and the AlE is somewhat remote. The result is that compensation to the AlE during the CA phase is minimized or eliminated since they are part of a team and only limited construction change orders arise. Under the Construction Manager at Risk (CMR) approach the owner enters into agreements with both an AlE and a contractor early in the process. They are both independently responsible for the design as well as for the value of the project as it relates to established budgets. During the design process the contractor provides constructability, value engineering, and construction methods advice so that the final construction documents lead to a more accurate price. The end result is a Guaranteed Maximum Price (GMP) from the contractor which is subject to restrictions in change orders requests and minimizes or eliminates additional costs to the owner. In this approach the CIP staff is involved in monitoring both the AlE and the contractor throughout the complete project process. This scenario tends to minimize additional services requests from the AlE since most of the issues which may arise during construction are addressed during the team design approach. Additional costs from the contractor, including time extensions, are also minimized since the GMP method prohibits most project cost adjustments. Risk to the owner in these procurement approaches is different. The DBB method distributes risk to all parties involved with the owner usually the most responsible for costs, the AlE most liable for the design, and the contractor more liable for time issues and quality of construction. This approach, though, usually leads to a more adversarial relationship throughout and to additional costs. The DB method assigns most of the risk for the design and the construction to the DB team and minimizes the owner's risk. The approach usually leads to a slightly higher cost for the project since the owner pays a premium for the AlE involvement in the team and a premium for the construction because of the minimization of change orders and additional services since the contractor adds a safety factor to the project cost to account for possible unforeseen events. The cost upfront, though, leads to better control by the owner of the overall project and it also minimizes additional costs during the process. The CMR method assigns almost all the risk to the contractor but the owner pays a premium upfront in the project cost since the CMR will include a fee and additional general conditions to protect against unforeseen events for which the CMR will be responsible. The advantage is that the cost is negotiated upfront, is generally not increased during construction, and the responsibility for the project in terms of time and cost is mostly on the contractor with less flexibility tnan on-g-OBS-or DB approach . This1eads to the co-ntractorbeingmore- effident, to increased productivity, and to few or no change orders. Under this approach time is of the essence to the contractor because there will be no compensation considered for delays. In view of the above, the Administration's position is that additional services to consultants during the CA phase of construction of a project is dependent on many factors. The method of procurement of the AlE as well as of the contractor has an impact on how additional services requests are evaluated and approved. The nature of the contract in place, whether the old or the new generation, also has an impact. The type of procurement method, whether DBB, DB or CMR, may lead to a lesser responsibility by the owner for additional costs from either the AlE or the contractor and to increased transfer of risk away from the owner and to the AlE or the contractor. But it is important to note that not all projects lend Letter to Commission AlE Additional Services for Construction Administration December 2, 2005 Page 6 of6 themselves to the same procurement approaches and that therefore, the CIP staff currently evaluates each project carefully and recommends to the Administration which procurement method best fits a project with the assistance of the City's Procurement Division and the Program Manager. Attached is a schedule that briefly presents the three primary methods of project procurement and describes criteria that impacts the costs as well as the management of projects. The schedule briefly describes consultant selection, additional services, risks, advantages and disadvantages, and others. The schedule provides a general overview of the three different methods and offers sample projects where the City has used the methods. I trust that this Letter to Commission provides the information requested and provides the starting point for the discussion on additional services for Construction Administration by Architect/Engineers and on the effectiveness of the different layers of project management in the City and their distinct roles. Please feel free to contact me if you have further questions on this matter. JMG:TH:JCH:jch L:\CAPI\$all\chartrand\AE Add Services R.doc EXAMPLE PROJECT: GENERAL CONSULTANT I caNTRACTOR SELECTION CONSTRUCTION PROCUREMENT CONSTRUCTION MANAGEMENT PROFESSIONAL I ADDITIONAL SERViCE COSTS CONSTRUCTION COSTS & CHANGE ORDERS PROJECT DEVELOPMENT AND CONSTRUCTION PERIOD RISK ASSESSMENT ADVANTAGES DISADVANTAGES .. .::~':'_'~'/',:-",,".'A..>;i -~'''-''JlN); \i~-,I(,..:~_',(iit!,~~M --~""--~~~~~~~~~~,~~~_.._,,._._.-J Alternative methods have been developed to address weaknesses in the traditional design-bid-build scenario and, as a result, a number of options are available for selecting the best delivery method for construction projects. The selection of the most appropriate procurement options for design and project management services, as well as the construction delivery method needs to be made with careful consideration of budget, project complexity, risk assessment, strategic objectives and other key planning criteria I_~~~:~~~~=:~ .__J I. REGIONAL LIBRARY The most traditional approach, involving a contract between the owner and the architect I engineer to design the project, and a separate contract between the owner and contractor to construct project. Requires owner to have project management expertise and time to devote to the project. Designer - AlE selected by City from a pre. approved list for construction under $500,000, or by issuing Request for Qualifications (RFQ) for construction greater than $500,000. AlE provides design and prepares construction and bid documents used for construction procurement. City issues an Invitation to Bid and awards construction contract to the lowest responsive and responsible bidder. Construction Manager. (eM) - eM services may be provided by internal resources (City) or outside AlE firms. AlE consultant compensated for additional services triggered oy legitimate tllne extension I project delays. Funded as required. Contractors sometimes bid low in order to win the project and then hope to make up the loss in profits through change orders. . Change orders may also result as a result of the inability to review design with a contractor during the design phase. The separation of design and construction processes is time-consuming, since all design work must be completed prior to solicitation of the construction contract, thus resulting in the longest schedule. The' owner faces exposure to contractor claims over design and constructability issues, since owner accepts liability for design in its contract with the contractor. City has control' of the AlE through the selection process as well as through the determination of the project scope of services and design parameters J. r r' The contractor pursues a least-cost approach to completing the project, requiring increased oversight. and. quality review by the owner. The absence of contractor input into the project design may limit effectiveness of the design. DESIGN-BUILD WASHINGTON AVE. STREETSCAPE The owner enters into a single contract with a designlbuilder to both design and build the. project. The contractor is the lead service provider, primarily because they carry the bonding and insurance capabilities that are needed to meet construction contract requirements. Design-Build Team - City hires a single Design-Build Team, typically a joint venture between a contractor and a designer. City issues. a single Request for Proposal (RFP) for. design and construction services and awards contract on the basis of qualifications and cost. Project Manager - City may hire Design Criteria Package Professional (AlE) to develop project scope and technical requirements, provide constructability review, and monitor project progress. AlE compensation is limited during construction penod by AlE's involvement in the Design-Build Team. City is able to better control additional costs as a result of the Design-Build Team approach. Reduction of delivery time due to the capability of simultaneous design and construction work. Procurement of services is done just one time by retaining the Contractor I Designer team. Design-Build team assumes the majority of the risk and owner is not held legally responsible for problems caused by the designlbuilder. The primary benefit is the simplicity of having one party responsible for the development of the project lines of accountability are clear with this approach and good communication, coordination and design efficiencies can be expected. If owner agrees to an overall price at the start, prior to design completion, the price is likely to be high given the designlbuilder's need to protect itself against unknowns. If a separate construction price is negotiated, the designlbuilder is in a strong position with the negotiation given the lack of competitive bidding. This approach tends to promote more adversarial relationships rather than cooperation or coordination among the contractor, the designer and the owner. CIDocumenls and SellingslCAPICANJIMy DocumentslConstructionprocurementoplions.xls _,j: CONSTRUCTION MANAGER AT RISK FIRE STA TION # 2 The owner enters into a contract with an architect I engineer and a second contract with a construction manager to both coordinate and build the project. Contractor - City hires the contractor early in the design phase to assist the designer. The contractor is responsible for providing value engineering and. constructability reviews during project design phase. City issues a Request for Qualifications (RFQ) for design services and a Request for Proposal (RFP) for contractor pre-construction services. City then issues a request for a Guaranteed Maximum Price (GMP) from Contractor that is negotiated. Project Manager - City may provide oversight services with intemal resources Additional costs are limited by obtaining a GMP and transferring most of the risk to the Contractor By assuming all risk and costs associated with time extensions, delays, and . unforseen conditions, costs associated with time extensions are factored into the eM @Risk Contractor's price . This scenario offer the opportunity to begin construction prior to completion of the design, where the eM can bid and sub-contract portions of the work at any time while design of unrelated portions is not complete All risk is assigned to the CM @ Risk Contractor. eM @ Risk assumes costs associated with time extensions. This approach reinforces advantage of construction manager as agent, in that owner would need to have less project manager expertise and time involvement. Relatively complicated approach and lines of accountability can be blurred. The "check and balances" system operates less well during construction, when the construction manager acts as the contractor rather than as the owner's agent.. Construction costs high given that competitive bidding not used under this approach.