Loading...
2002-11-06City of Southlake, Texas MEMORANDUM November 1, 2002 TO: Southlake Crime Control and Prevention District Board of Directors FROM: Rick Black, Director of Public Safety SUBJECT: Method of Best Value for awarding the construction contract for the North DPS Facility. Action Requested: Board consideration on which method contains best value for the construction - of the North DPS Facility.. Background Information: The Seventy Seventh Texas Legislature made a number of changes to purchasing laws applicable to municipalities, broadening options in a number of ways. One of the bills, S.B. 510, provided alternative processes for the construction of municipal facilities (buildings, not infrastructure). The attached memo from City Attorney Betsy Elam provides a detailed review of the options now available. The CIP is scheduled to contain the funding necessary to complete programming and architectural design of the North DPS Facility in FY 02-03 and FY 03-04 and then construction in FY 03-04 and FY 04-05. This item is placed on the agenda so that the Board can determine the method of best value for the City of Southlake. This determination will be forwarded to City Council who will make the final decision. This issue discussed with the board on May 8, 2002, July 17, 2002, August 7, 2002 and October 16, 2002. In addition, extensive research was conducted by staff, the President and Vice President of Crime Control. Interviews were conducted with different architectural and construction firms as to the merits of each method. Interviews were also conducted with area City Managers and employees responsible for construction of municipal buildings. Attached to this memo is a chart that contrasts the top four methods for awarding bids for construction of Municipal Facility. This chart outlines nine (9) different features of each method and illustrates the differences. Each cell contains information that was derived from the interviews, discussions and research conducted by staff and board members. Financial Considerations: Each method contains a substantial financial comparison to one another ranging from 1.5% to 6% cost reduction. 6A-1 Southlake Crime Control and Prevention District Board of Directors Method of Best Value for awarding the construction contract for the North DPS Facility November 1, 2002 Page 2 Financial Impact: The common cost of each method is 3% plus general conditions of the total project cost. The CIP currently contains the following monies allocated towards the design and construction of the North DPS facility: FY 02-03 $300,000 FY 03-04 $300,000 FY 04-05 $12,400.000 It is estimated at this point that the North Site will cost approximately $13,000,000. Citizen Input/ Board Review: The Crime Control and Prevention District Board of Directors determines the funding that will be approved for use in constructing the North DPS facility, and will provide input to the City Council regarding the method of best value. Legal Review: The attached memo was prepared by City Attorney Betsy Elam to apprise municipal officials of the alternatives now available as a result of recent action by the Texas Legislature. Obviously, the attorneys would be intimately involved in the preparation of request for proposal documents as well as contracts, regardless of the method selected. Alternatives: Continue researching the various methods available for the construction of the North DPS Facility. Supporting Documents: Comparison Spreadsheet contrasting four different methods of construction. New Methods for Awarding Bids for Construction of Municipal Facilities by Betsy Elam — February 13, 2002 Magazine article by Blake Peck, CCM, McDonough Bolyard Peck, Inc. Staff Recommendation: Staff recommends that the board discuss each method, share current research findings and decide which method contains the best value for the construction of the North DPS Facility. 6A-2 Features Key Points Who handles the contracts? Points of contact with Owner Conditions Public Sector Reviews CM Agent (a) The Construction Manager -Agent (CMA) manages the project for the owner in a fiduciary capacity. (b) The owner retains control of the project including procurement of trade contractors and professional services. (c) The architect is contracted for separately from the CMA. offiffiffilm The CMA manages all contracts with exception to the architect for cost, schedule and quality. The CMA also offers design assistance leading to cost and time savings without sacrificing quality. The CMA represents the owner with on- site supervision. Does not have self profit motivation due to fixed fee. Non -adversarial relationship - public bid opening at Owners location. Equal status with owner. Owner has final say on all issues. Methoob ur Construction Contrast Paper CM At Risk The Construction Manager at Risk IR) assumes risk and controls more ects of the project (b) The owner and CMR participate in competitive bidding tracts with subs. (c) The architect is tacted for separately from the CMR. manages all coi of the architect Single point of construction responsibility for cost, schedule and quality. Represents the owner but is responsibli for the companys profitability on the pro'ect mmoomm Potential adversarial relationship. Trenc toward competitive sealed proposals or bids, typically opened at CMR's office. and construction of the facility. e Design/Build Contractor manages all ntracts, including both the design and nstruction. A number of subcontracts ay be negotiated and not bid on a moetitive basis. ngle point of design and construction sponsibility. Functionality but not quality design is known before prices given. owner representation. More cess to select and manage. Schedule can be reduced Manager responsible for schedule but will Schedule can be reduced. not sacrifice profitability for shorter time frame. The CMR may also use the schedule to enhance pricing. Any savings goes directly to the owner. Any project cost savings is shared No "Checks and Balances" Potential The CMA is motivated to increase project between the CMR and the Owner. The savings via the speed fo delivery (i.e. savings that will enhance opportunities for CMR is not as motivated to reduce original interest expense). future projects and other references. pricing. Change orders may be Change orders are approved/not approved approved/not approved based on end based upon end quality, not agent profit profit not quality of project Schedule and The CMA normally will perform quality could both suffer if numerous constructability reviews and have changes changes. made prior to bidding and this precludes a lot of changes after award. General Conditions are predicated on project duration and are included in the I Agents fixed fee, therefore motivating ty completion. reviews. Southlake Crime Control and Prevention District Board of Directors the most positive I he General Conditions for a CM at Risk Similar to CM at are usually inflated since it is difficult for a layman to affect changes. These costs will only increase if the job cost increases since the General Conditions are usually a percentage of any added cost changes. CM at Risk has receive some positive and No history with tl some negative reviews. municipalities. Traditional (a) The owner works with two contracts, the architect and the general contractor. (b) The owner may not be involved between general contractor and owner manages the contracts itect and General Contractor. points of responsibility iral Contractor) owner representation by General itractor unless through history or Inevitable longer schedule duration un stiff liquidated damages are enforced. Emphasis is on completing projects with the company profit intact or increased. No supervision over architects plans. Potential cost increases. General Conditions costs are very conservative on competitive bids but additional cost changes will increase the General Conditions as a percentage of change. Normally competitive bidding will not include a complete or full time staff on site. Difficult to assess because this is the only method cities could use. Southlake prefers a different method. 11/1/2002 FORT WORTH OFFICE: 6000 WESTERN PLACE, suITE 200 1-30 AT BRYANT-11tvw ROAD FoRT WoRrll, TEw 76107.4654 �-voice: (817) 332-2580 .LL FREE: (800) 318-3400 (817) 332.4740 ...A= MASE@TOAs&COM WEBSITE: WWW.TOASE-COM EuzAnTM ELAm EXT. 211 betsvelem9hoese.com Billy Campbell City of Southlake 1400 Main Street Suite 460 Southlake, Texas 76092 Tailor" Iso �,nsralla ' m Attorneys Counselors February 13, 2002 DENTON OFFICE: 620 WEST HicxoRr DEMON, TExAs 76201 VOICE: (940) 383-2674 ryhrmo: (972) 434-3834 FAx: (940) 898-0118 U Re: New Methods for Awarding bids for Construction of Municipal Facilities Dear Billy: t Senate Deptember dified in Chapters 252 and 271 of the Local Government Code' s �� became effect1 1', 2001 and provides for significant ' changes in procedures and methods permitted for awarding construction contracts for municipal facilities. A copy of Subchapter H of Chapter 271 is enclosed. Instead of being limited to awarding the bid to the "lowest responsible bidder", a city can choose between one of several methods when awarding a construction contract for a municipal facility. The methods for awarding construction bids include: (1) competitive bidding; (2) competitive sealed proposals for construction services; (3) design build contract; (4) a contract that involves using a construction manager -agent; (5) a contract that utilizes a construction manager -at -risk; or (6) a job order contract for the minor repair, rehabilitation, or alteration of a facility. These methods apply to the construction, rehabilitation, alteration or repair of municipal facilities as defined by Section 271.111(7). A facility means buildings, the design and construction of which are governed by accepted building codes_. The term does not include highways, roads, streets, bridges, utilities, water supply projects, water plants, wastewater plants, water and wastewater distribution or conveyance facilities, wharfs, docks, airport runways and taxiways, drainage projects, or related types of projects associated with civil engineering construction; or buildings or structures that are incidental to projects that are primarily civil engineering construction projects. PROCEDURES REQUIRED FOR ALL METHODS OF AWARDING CONSTRUCTION CONTRACTS Each method requires specific procedures, but the following rules and procedures ' Unless otherwise noted, all codes references in this letter are references to the Local Government Code. W:1SouthiakelLEfTERS%C2mpbell.EBE.002.wpd 6A-4 February 13, 2002, Page 2 apply to all methods in Chapter 271 unless otherwise specifically noted: Determination of best value. For all methods except competitive bidding,.the City Council (or its designated representative) must before advertising, determine which method provides the best value for the governmental entity. For example, before advertising begins, a city council could by resolution make a finding that the design- build method will provide the best value. If the City Council delegates its authority, the designated representative should make a determination in writing stating which method provides the best value. (Section 271.114). Criteria for selection of contractor. Unless otherwise specked below, for all methods, the City Council must base -its, selection among offerers on the following 'criteria (referred to below as the "selection criteria")2: 1. the purchase price;, 2. the reputation of the vendor and of the vendors goods or services; 3. the quality of the vendor's goods or services; 4. the extent to which the goods or services meet the City's needs; 5. the vendor's past relationship with the City; 6. the impact on the ability of the City to comply with rules relating to historically underutilized businesses; 7. the long-term cost to the City to acquire vendor's goods and services; and 8. any other relevant factors specifically listed in the request for bids or proposals. (Sections 271.113 and 271.114) Required publication of notice. A City must publish notice of the time and place the bids or proposals, or the responses to a request for qualifications will be received and opened. The notice must be published in a newspaper of general circulation in a county in which the municipality's central administrative offices are located, once a week for at least two weeks before the deadline for receiving the responses. (Section 271.112(d)) Criteria must be published. The City is required to publish in its request for bids, proposals or qualifications all of the selection criteria that will be used to evaluate the offerers and the relative weights given to the criteria. (Section 271.114(b)) Basis of selection must be documented. The City is required to document the basis of its selection and make all of the evaluations public not later than the seventh day after the date that the contract is awarded. (Section 271.114(c)) Recycled Materials. The City must comply with the requirements found in Section 2 Some methods require other specific criteria in addition to the listed selection criteria. W;1Southlake\LE7TERS\Campbell.EBE.002.wpd 6A-5 February 13, 2002 Page 3 361.426 of the Health and Safety Code to give preference to regoled materials. (Section 271.112(b)) A copy of Section 361.426 is enclosed. Engineer and Architect. Whenever an engineer or architect is required to be selected or utilized, the engineer or architect must be in-house or selected by demonstrated competence and qualifications in accordance with the Professional Services Procurement Act, found in 2254.004 of the Government Code. A copy of the Act is enclosed. Independent Testing. Whenever the City is required to provide independent testing, inspection or verification services necessary for acceptance of the facility, those services must be selected in accordance with the Professional Services Procurement Act. Charter Controls. A charter provision that requires the use of competitive bidding or competitivesealed proposals or that prescribes - procurement procedures, controls over these methods, unless -the City Council elects to have these procedures supercede the charter. (Section 271.112(a)) DESCRIPTION OF EACH METHOD Following is a description of each of the methods available to municipalities for awarding contracts for the construction, rehabilitation, alteration, or repair of a facility: 1. Competitive Bidding. (Section 271.115) • Key points: a. Similar to traditional competitive bidding b. The City may use the procedures in Chapter 252 or 271 of the Local Government Code. C. The City may not negotiate with the bidders. • The City need not make a determination on which method provides the best Value. • If the procedures in Chapter 252 are followed, the contract must be awarded to the lowest responsible bidder. The procedures in Chapter 271 allow more flexibility, and the contract may be awarded on the basis of best value. The procedures outlined here are those required by Chapter 271. • The City must publish notice seeking bids with selection criteria listed. • The City must award a competitively bid contract at the bid amount to the bidder offering the best value to the governmental entity according to the selection criteria that were established by the, City and published in the notice. (Section 271.115(c)) • The bids may be opened only by the City Council at a public meeting or by an officer or employee of the municipality at or in an office of the City. (271.026) W.\Southlake\LETTERS1Campbell.EBE.002.wpd 6A-6 February 13, 2002 Page 4 • A bid that has been opened may not be changed for the purpose of correcting an error in the bid price. (271.026) • A bidder has the right to withdraw a bid due to material mistake in the bid. (271.026(b)) • The City may not negotiate with bidders. • The City council may reject any or all bids. (271.027(a)) 2. Competitive Sealed Proposals. (Section 271.116) • Key points: a. The contractor is selected based on best value. b. Negotiations are permitted with the offerers in ranked order. C. Engineer and architects contracted separately. • The City Council or its designee must make a determination that this method provides the best value. • The City must publish notice seeking proposals. • The City must select or designate an engineer or architect to prepare construction documents for the project. (Section 271.116(b)) • The City is required to contract for the inspection services, the testing of ~ construction materials engineering, and the verification testing services necessary for acceptance of the facility by the City. The entity or person providing these services must be identified in the request for proposals. (Section 271.116(c)) • The request for competitive sealed proposals must include the construction documents, selection criteria, estimated budget, project scope, schedule and other information that contractors may require to respond to the request. The proposals must contain the selection criteria that will be used in selecting the successful offerer as outlined above. (Section 271.116(d)) • The City is required to receive, publically open and read aloud the names of the offerers and if any are required to be stated, all prices stated in each proposal. (Section 271.116(e)) • Not later than the 46h day after the date of opening the proposals, the City must evaluate and rank each proposal submitted in relation to the published selection criteria. (Section 271.116(e)) • The City then selects the offerer that offers the best value to the City based on the published selection criteria. In determining best value, the City may consider any of the factors stated in the selection criteria, and is not limited to price alone. • After selecting the offerer that provides best value, the City must then negotiate a contract with the selected offerer. In negotiating the contract, the Cityy and its engineer or architect may discuss options for a scope or time modification and any price change associated with the modification. If the City is unable to negotiate a contract with the first selected offerer, then the City must formally and in writing end negotiations and proceed to the next W:1Southiake\LETTERS\Campbell.EBE.002.wpd 6A- 7 February 13, 2002 Page 5 offerer in order of the selection ranking until a contract is reached or all proposals are rejected. 3. Construction Manager -Agent Method. (Section 271.117) • Key points: a. Manager -agent manages the project for the City in a fiduciary capacity. b. The City retains control over procuring general, sub, and trade contractors. C. Engineer or architect are contracted separately. • The City must make a determination that this method provides the best value. • A construction manager -agent is a sole proprietorship, partnership, corporation, or other legal entity that provides consultation to the City regarding the construction, rehabilitation, alteration or repair of a facility. (Section 271.117(a)) • The City, by contract, may require the construction manager-agentto provide administrative personnel, equipment necessary to perform the duties under this method, and on-site management and other services specified underthe contract. (Section 271.117(a)) • A construction manager -agent represents the City in a fiduciary capacity. (Section 217.117(b)) This imposes a special legal duty on the construction manager -agent to act primarily for the City's benefit in matters connected with the construction of the facility. • Before, or concurrently with, selecting a construction manager -agent, the City must select or designate an engineer or architect to prepare the construction documents. The City's engineeror architect may not act as the construction manager -agent, unless the engineer or architect is selected in accordance with the procedures for selecting a construction manager -agent outlined herein. -(Section 271.117(c)) • The City selects a construction manager-agenton the basis on demonstrated competence and qualifications in the same manner as provided for the selection of engineers or architects under the Professional Services Procurement Act, except that the notice must be published in the same manner as other methods, as outlined above. (Section 271.117(d)) • If the City uses this method, it must procure, "in accordance with applicable law" (which means competitively bid or competitive sealed proposals if . required by law) a general contractor, trade contractor or subcontractors who will serve as the prime contractor for their specific portion of the work and, be supervised by the construction manager -agent. (Section 271.117(e)) • In accordance with the Professional Services Procurement Act, the City is required to procure all of the testing and inspection services necessary for acceptance of the facility by the City. (Section 271.117(f)) W.\Southlake\LETTERS\Campbell.EBE.002.wpd 6A-8 February 13, 2002 Page 6 4. Construction Manager -at -Risk Method. (Section 271.118) • Key points: a. Manager assumes risk and controls more aspects of the project. b. The City and the. manager -at -risk participate in competitive bidding contracts with subs. C. Engineer or architect contracted separately. d. The City may negotiate with ranked offerers. • The City must make a determination that this method provides the best value. • A construction manager -at -risk is a sole proprietorship, partnership, or other legal entity that assumes the risk for construction, rehabilitation, alteration or repair of a facility at the contracted price as a general contractor and provides consultation to the governmental entity regarding construction during and after the design of the facility. (Section 271.118(b)) • The City must designate an engineer or architect to prepare the construction documents. (Section 271.118(c)) • The City's engineer, architect or construction manager -agent for a project may not serve alone or in combination with another as the construction manager -at -risk unless that person or entity is hired to serve as the construction manager -at -risk under procedures in accordance with this section. • In accordance with the Professional Services ProcurementAct, the City must provide for independent testing, and inspection services necessary for acceptance of the facility. • The City must select the construction manager -at -risk in either a one step or two step process: a. One step process. I. The City must prepare a request for proposals that includes general information of the projectsite, projectscope, schedule, selection criteria, estimated budget, and the time and place for receipt of proposals, and other information that may assist the City in its selection of a construction manager -at -risk. ii. Selection criteria is different from the general criteria for other methods and includes the offerer's experience, past performance, safety records, proposed personnel, and methodology and other appropriate factors that demonstrate the capability of the construction manager -at -risk. ill. The City may request as part of the - offerer's proposal, proposed fees and prices for fulfilling the general conditions. b. Two step process. I. The City prepares a request for qualifications including the same information required in the request for proposal in a one step process. ii. The City may not request fees or prices. W:\Southlake\LETTERS\Campbell.EBE.002.wpd 6A-9 February 13, 2002 Page 7 ill. The City may request that five or fewer offerers selected solely on the basis of qualifications, provide addit onal information including the construction manager -at -risk proposed fee and its price for fulfilling the general conditions. iv. The time and place the second step bids or proposals will be received may be published at the same time the request for qualifications are published. • At each step, the City must receive and publically open and read aloud the names of the offerers and any fees and prices stated in the proposal. • Not laterthan the 45' date after opening the proposals (orthe fees and costs in a two step process), the City must evaluate and rank each proposal submitted. in relation to the criteria as set forth in the request for proposals. • The City selects the offerer that submits the proposal that offers the best value based on the published .criteria, then attempts to negotiate with the selected offerer. If a contract cannot be successfully negotiated, the City negotiates with the next ranked offerer. • The construction manager -at -risk must competitively bid and receive proposals from trade contractors or subcontractors. The construction manager -at -risk may perform portions of the work only if it participates in the competitive bidding process and is determined by the City to provide the best A value for the City... • The manager -at -risk and the City review all trade contractor and subcontractor bids and the manager -at -risk may recommend to the City to accept a bid or proposal. The City makes the final determination as to which trade or subcontractor to pick based on the best value. However, if the City accepts a different bid or- proposal from the one recommended by the manager -at -risk, the City maybe required to compensate the manager -at - risk for changes in price, time or guaranteed maximum cost incurred because of the selection. • If a selected trade or subcontractor defaults in the performance, the manager -at -risk may; without advertising, fulfill the contract requirements itself or with a replacement contractor. • Must execute bonds. 5. Design -Build Method. (Section 271.119) Key points: - a. 'One contractor designs and constructs the facility. b. The City may negotiate with ranked offerers. Determination of Best Value. The City must make a determination that the design -build method provides the best value to the City. Design -Build Contract. A design -build contract means a single contract with a design -build firm for the design and construction of a facility. (Section 271.111(3)) 6A-10 W:tSouthlake\LETTERS\Campbell.EBE.002.wpd February 13, 2002 Page 8 • Design -Build Firm. A design -build firm means a partnership, corporation or other legal entity that includes an engineer or architect and builder qualified to engage in building in Texas. (Section 271.111(4)) Independent Architect or Engineer. The City must designate an engineer or architect independent of the design -build firm to act as its representative for the duration of the work on the facility. (Section 271.119(b)) • Request for Qualifications. The City must prepare. a request for qualifications that includes general information on the project site, project scope, budget, special systems, selection criteria, and other information that mayassist potential design -build firths in submitting proposals forthe project. (Section 271.119(c)) • Design -Criteria Package. - The City must also prepare a design criteria package that includes more detailed information on the project. A design criteria package means a set of documents that provides sufficient information to permit a design -build firm to prepare a response to the request for qualifications and any additional information requested, including criteria for selection. It must specify criteria the City considers necessary to describe the project and may include, as appropriate, a legal description of the site, survey information concerning the site, interior space requirements, special material requirements, material quality standards, conceptual criteria LL for the project, special equipment requirements, cost or budget estimates, time schedules, etc. (Section 271.111(5)) • Publish Notice. The City must publish notice of the time and place the response to a. request for qualifications will be' received and opened as outlined above. • Phase I of Evaluation and Selection Process. (Section 271.119(d)(1)) a. The City must evaluate each offerer's experience, technical competence and capability to perform, past performance of the offerer's team and members of the team, and other appropriate factors submitted by the team or firm in response to the request for qualifications. b. Cost related or price related evaluation factors are not permitted and may not be considered. C. Each offerer must certify that each engineer and architect was selected in accordance with the Professional Services Procurement Act. d. The City may qualify a maximum of five offerers to submit additional information and, if the City chooses, to interview for final selection. • Phase 11 of Evaluation and Selection Process. (Section 271.119(d)(2)) a: The City evaluates the information submitted by the offerers on the basis of the selection criteria stated in the request for qualifications and the results of an interview. b. The City may request additional information regarding demonstrated competence, qualifications, considerations of the safety and long term durability of the project, the feasibility of implementing the project as 6A-11 W:1SouthlakelLETTERS1Campbell.EBE.002.wpd February 13, 2002 r Page 9 proposed, the ability of the offerer to meet schedules, costing methodologies or other factors as appropriate. C. The City may not require the offerers to submit detailed engineering or architectural designs as part of the proposal. d. The City must rank the offerers and select the design -build firm that submits the proposal offering the best value to the City on the basis of the published selection criteria and its ranking evaluations. e. The City must negotiate with the offerers in the order they are ranked. If the City and offerer cannot successfully negotiate a contract, the City must end the _negotiations in writing and proceed to the next ranked offerer until a contract is reached or all ranked offerers are rejected. • Submission of Design Elements. The engineers or architects of the selected design -build firm will complete. the design and submit all design elements to the City for review. • Independent Testing. As in other methods, the City must provide for independent testing and verification services prior to acceptance of the facility. • Completed Plans. The design build firm is required to supply a signed and sealed set of construction documents after completion of the project 6. Job Order Contracts for Facility Construction or Repair. (Section 271.120) • The City must make a determination that this method provides the best value. • Applies to contracts for minor construction, repair or alteration of a facility if the work is of a recurring nature, and delivery times are indefinite. • The City may establish contractual unit prices for a job order. • Awarded based on a sealed proposal method. • The contract may be for a fixed lump sum payment based on estimated quantities, or be a unit price order. - The contract may be renewable without advertising if the original publication states the term and any renewal options. I hope this has been helpful, please do not hesitate to call with any questions. EBE/tc/ke Vc-ry to dv vnUrS, 6A-12 W:\Southlake\LETTERSiCampbell.EBE.002.wpd February 13, 2002 r Page 10 cc: Shana Yelverton City of Southlake 1400 Main Street Suite 460 Southlake, Texas 76092 W:1Southlake\LETTERS\Campbell.EBE.002.wpd 6A-13 CHOOSING THE BEST DELIVERY METHOD FOR YOUR FACILITY PROJECT by Biake Peck, CCM, McDonough Bolyard Peck, Inc. Introduction A college or university embarking on a construction project must make an important decision regarding the method by which the project is designed and constructed—the project delivery method. This decision has become more difficult in recent years as several "alternative delivery methods" have been developed to address weaknesses in the traditional design -bid -build scenario. Methods that have gained in popularity include at -risk construction management, fast-track construction, multiple prime contractors, and design - build. Proponents of particular alternative methods promise improvements over the traditional system in terms of cost, project control and reduction in disputes. For the facility owner, the wealth of choices can be both good and bad. The downside is that with the variety of delivery systems—along with the accompanying assurances of the superiority of one method over others—confusion can be inevitable. The good news is the increased number of alternatives offers the owner or developer more flexibility to choose an appropriate and effective system for its particular project. Construction management (CM) is a discipline uniquely tailored to the planning, design and construction process of capital projects. It has proven effective regardless of the chosen contract form or project delivery method. Indeed, CM has been used successfully in all contracting methods and delivery systems by owners who do not continuously maintain the staff expertise or numbers necessary to deal with the complex responsibilities involved in the management of major projects. The following is a brief review of project delivery systems, along with a discussion of some of the important points an owner should consider in choosing a delivery method. Owner's Requirements A facility owner has several areas of concern when embarking on a construction program. The following highlights some of the key considerations in developing a construction program: Budget The owner has an obvious need to determine a realistic budget before design to evaluate project feasibility, to secure financing, and as a tool to choose from among alternative designs or site locations. Once the budget is determined, the owner requires that the project be completed at or near the established figure without excessive overruns. Design Of foremost importance to the owner is that the desired facility function as envisioned, that the design program successfully fulfill the needs of the owner and users. Therefore, an owner requires that its design team be well qualified in the type of facility being designed. In addition, the owner must ensure that the owner's and users' program needs are clearly conveyed to the design team. Since the design of the facility actually must be buildable and properly communicated in order to be useful, the owner requires that the design documents are constructible, complete, and coordinated. The documents should properly incorporate unique features of the site to include subsurface conditions, interface with adjoining properties, access, and other characteristics. Schedule The owner has similar needs in the area of scheduling. The date of completion of a new facility can be critical, either in terms of generating revenue from the facility, or in terms of providing needed functional space by a particular deadline. Therefore, a realistic assessment of project duration and sequencing needs to be performed early in the planning process. The schedule should then be monitored throughout design and construction. 6A-14 Risk Assessment The development of any facility involves many risks. In construction, issues of risk are closely tied to schedule and budget issues. The owner requires an understanding of the risks involved in construction, and should make a conscientious decision regarding allocation of these risks among project participants, so that all areas of exposure are properly understood. In considering risk allocation, the owner should strive to assign risks to those parties that exercise control over those aspects. For example, it would typically be problematic to require that the contractor correct problems due to design errors at no extra cost since a contractor generally has little control over the cause or magnitude of such enors. Owner's Level of Expertise The owner's familiarity with the building process and level of in-house management capability will have a large influence over the amount of outside assistance required during the process and may guide the owner in determining the appropriate project delivery system. Review of Project Delivery Methods Traditional Design -Bid -Build The traditional design -bid -build system remains the most popular delivery method for construction projects. The owner engages an architect or engineer (A/E), which prepares the design of the complete facility, including construction drawings, specifications and contract packages. Once completed, the design package is presented to interested general contractors (GC), who prepare bids for the work, and execute contracts with subcontractors to construct various specialty items. In many cases, the contractor submitting the lowest responsive bid is selected to perform the construction. This contractor is then responsible for constructing the facility in accordance with the design. The A/E typically maintains limited oversight of the work and responds to questions about the design on behalf of the owner. The A/E may also assist the owner in administering the construction contract, including determination of project progress, for interim payments made to the contractor. This contracting system offers the advantage of being widely applicable, well understood, and with well- established and clearly defined roles for the parties involved. Furthermore, it offers the owner a significant amount of control over the end product, particularly since the facility's features are fully determined and specified prior to selection of the contractor. However, many construction owners have experienced a variety of frustrations using this system, leading to the development of other methods. Among the chief disadvantages of the traditional system are: • The process is time-consuming since all design work must be completed prior to solicitation of the construction contract. • The A/E may have limited ability to assess scheduling and cost ramifications as the design is developed which can lead to a more costly final product. • The owner generally faces exposure to contractor claims over design and constructibility issues since the owner accepts liability for design in its contract with the contractor. • The traditional approach tends to promote more adversarial relationships rather than cooperation or coordination among the contractor, the A/E and the owner. • The contractor pursues a least -cost approach to completing the project, requiring increased oversight and quality review by the owner. • The absence of a contractor's input into the project design may limit the effectiveness and constructibility of the design. Important design decisions affecting both the types of materials specified and the means of construction may be made without full consideration of a construction perspective. 6A-15 While the most common approach to bidding a project in building construction is for general contractors to submit a sealed lump -sum bid, many variations in contractor procurement exist in the traditional system. Other methods include unit -price contracting, which is generally limited to projects that can be easily divided into small work units and quantified prior to construction. This is commonly found in heavy construction projects. At the other end of the spectrum is cost-plus contracting, generally used in circumstances where there is such high risk or variability in the work that preparing a responsible bid is impossible. Most successful owners make some effort to pre -qualify contractors, either through invitation, or through an objective set of criteria considering construction experience and financial capability. Doing so helps assure the owner that the contractor is capable of providing a high-quality product. Once the field of bidders is established, an owner bidding a lump -sum project may choose to require sealed bids, wherein the lowest responsible bidder will earn the right to perform the work. However, many private owners prefer to negotiate bids with'pre-selected GC's. This can be an especially powerful technique if the owner considers qualifications, history of claims and experience in related work along with price in its evaluation. What the owner should really be seeking is the best value for its money, not necessarily the lowest initial cost. Through a careful negotiation or contractor evaluation, the owner can maintain the maximum amount of control over the resulting construction portion of the project. Construction Management at Risk (CM as GC) This system, adopted and promoted by many large general contracting firms, is similar in many ways to the traditional system, in that the CM acts as a general contractor during construction. That is, the CM holds the risk of subletting the construction work to trade subcontractors and guaranteeing completion of the project for a fixed, negotiated price following completion of the design. However, in this scenario, the CM also provides advisory professional management assistance to the owner prior to construction, offering schedule, budget and constructibility advice during the project planning phase. Thus, instead of a traditional general contractor, the owner deals with a hybrid construction manager/general contractor (CM/GC). In addition to providing the owner with the benefit of pre -construction services which may result in advantageous changes to the project, the CM -at -risk scenario offers the opportunity to begin construction prior to completion of the design. The CM/GC can bid and subcontract portions of the work at any time, often while design of unrelated portions is still not complete, In this circumstance, the CM/GC and owner negotiate a guaranteed maximum price (GMP) based on a partially completed design, which includes the CM/GC's estimate of the cost for the remaining design features. Furthermore, CM -at -risk may allow performance specifications or reduced specifications to be used, since the CM/GC's input can lead to early agreement on preferred materials, equipment types and other project features. The primary disadvantages cited in the CM -at -risk system involve the contractual relationship among A/E, CM/GC and owner once construction begins. Once construction is underway, the CM/GC converts from a professional advisory role of the construction manager to the contractual role of the general contractor. At that time, tensions over construction quality, the completeness of the design, and impacts to schedule and budget can arise. Interests and stake holding can become similar to the traditional design - bid -build system, and adversarial relationships may result. While the fixed GMP is supposed to address the remaining unfinished aspects of the design, this can in fact increase disputes over assumptions of what remaining design features could have been anticipated at the time of the negotiated bid. One mitigating approach to this problem is for the CM/GC to share with the owner its subcontractor bids, to ensure openness in the process. The CM/GC may further assume risk by taking some responsibility for design errors discovered during contraction, if it was involved in the review of the design prior to establishing the GMP. In addition, arrangements can be made regarding risk -sharing and profit sharing if there are over -runs or under -runs in the GMP. 6A-16 An owner wishing to use the construction management at -risk approach can realize many benefits. Chief among them are the opportunity to incorporate a contractor's perspective and input to planning and design decisions and the ability to "fast-track" early components of construction prior to full completion of design. However, since a commitment is made to a contractor earlier in the process, a premium is placed on the proper selection of the CM/GC to provide the best value to the owner. Multiple -Prime Contracting Another alternative procurement system is multiple prime contracting, in which the owner holds separate contracts with contractors of various disciplines, such as general const: action, structural, mechanical, and electrical. In this system, the owner, or its CM, manages the overall schedule and budget during the entire construction phase. This system, which many state agencies are required to use, gained favor in part as another method of "fast -tracking" construction. Work in each construction discipline is bid separately, allowing the flexibility of awarding construction contracts oft the first portions of the project as soon as the respective aspect of design is completed. This fast-track approach appears to be a highly desirable feature of this method of procurement in cases where time of performance is a critical element. Furthermore, the system allows the owner to have more control over the project schedule, since the owner sets the schedule for bidding individual portions of the work. For example, if an initial phase of construction (such as foundation construction) is delayed, the owner may reduce liability for delays by postponing the bidding of follow-on work Another advantage of this system is that the owner can realize savings by directly procuring major material items, such as structural steel or major mechanical equipment, avoiding contractor mark-ups. However, the very nature of this system is one of its primary disadvantages. There have been numerous cases where this method did not work well, due to the absence of overall authority and coordination once construction is underway. The problems primarily arise from lack of coordination and contractor delay issues. While the general construction prime contractor is often given contractual responsibility to coordinate the work among trades, including schedule, this contractor lacks the contractual authority to dictate the schedule of another contractor. For example, during the construction of a university laboratory/classroom facility, delays arose due to coordination issues involving installation of laboratory equipment. The general contractor sought damages from the owner for delays by the mechanical contractor, while the mechanical contractor blamed the general contractor for its delays. This type of dispute is far from unique in this form of contracting, even in cases where the owner has used an independent CM to coordinate schedule issues. Design -Build The design -build (D -B) project delivery system has grown in popularity, and is seen by some in the industry as the perfect solution in addressing the limitations of other methods. For an owner, the primary benefit is the simplicity of having one party responsible for the development of the project. While the other systems often give rise to disputes among various project participants—with the owner acting as referee (or party ultimately to blame)—in D -B many of these disputes become internal D -B team issues which do not affect the owner. Under this system, the owner contracts with a D -B team, which is often a joint venture of a general contractor and an A/E. Since GC's are comfortable in the role of risking corporate capital in performing projects, they usually are the lead members of this sort of team. One variation of the typical D -B team structure, known as fee -paid developer, involves the owner engaging a developer, which then selects its own A/E and contractor partners. However formulated, the D -B team performs the complete design of the facility, usually based on a preliminary scope or design presented by the owner. 6A-17 At some point early in the process, the D -B team will usually negotiate a fixed price to complete the design and construction of the facility. Once underway, the D -B team is then responsible for construction of the project, and for all coordination between design and construction. Since the construction team is working together from the outset, D -B offers the opportunity to save time and money. However, the advantages of the system are offset by a significant loss of control and involvement by the owner. Accordingly, it is difficult for the owner to verify that it is receiving the best value for its money, without a great deal of confidence in the D -B team. The primary caution for an owner considering D -B is that it considers the level of involvement it requires for a successful project. First, the owner needs to recognize the effort and completeness that must be behind its initial scope/preliminary design which forms the basis of its contract with the design -builder. Often, the owner will require needs additional consultants to help it develop its scope or preliminary design, in the role of a traditional A/E firm. Owners with highly specialized program needs or desires may not find it advantageous to turn over responsibility to an outside team, without ensuring adequate levels of oversight and communication. For example, a government owner constructed a high-technology'research facility involving highly specialized equipment using D -B. During project development, the D -B team made several key design and equipment selection decisions without full involvement of the owner, resulting in an unsatisfactory facility that required costly changes. With this lesson in mind, it appears that D -B is best suited to conventional projects for which project requirements can be clearly defined and for which expertise is widely available. For example, a classroom / office facility or dormitory complex might be projects ideally suited for D -B. In projects of this type, the owner is not assuming undue risk in conceding control over the project, and may benefit from the advantages of D -B. Another primary consideration for the owner is proper selection of the D -B team. Since the owner selects a team that has been created prior to selection, it may be difficult for the owner to maintain the proper balance of design expertise, financial capability, construction experience, and experience in D -B team roles. In particular, the owner should strongly favor D -B teams with a successful track record working together on previous projects in the same D -B roles. More so than in any other delivery system, the success of a D -B project may hinge on the initial selection process. Agency Construction Management Services Agency construction management (ACM), or construction management -for -fee, encompasses a range of services provided by a CM on behalf of an owner. It is a common misconception that CM -for -fee represents a distinct project delivery system. In fact, agency construction management consists of a distinct set of services that are applicable to any project delivery system. These services can be used by the owner as necessary to extend or supplement the owner's own expertise, its own staff, and to manage the construction process to help address some of the shortfalls of the project delivery system chosen. A CM working as an agent to the owner primarily provides the benefit of independent, professional services provided on the owner's behalf throughout the project. In contrast to some other project participants, the ACM has no vested interest in the project — in either its design or construction — and maintains a fiduciary duty to act on the owner's behalf and provide to provide impartial advice concerning the construction project. As such, ACM firms should be selected based on qualifications, and not on a cost or low -bid basis. Services offered by an ACM include the following. Pre -Design and Design: As discussed earlier, there are often advantages to obtaining construction expertise during the early planning stages of a project. Some services typically offered by ACM firms dieing planning stages include the following., • Selection of a design team: An ACM firm, based on historical experience in the market, can assist the owner in selecting the most qualified A/E team to develop project plans and specifications. Similarly, an ACM firm can also assist the owner in evaluating various potential construction sites. • Budget and Cost Estimating: Preliminary budgets, based on historical data for similar projects, will assist the owner in determining the feasibility of initial scope. More refined estimates are developed during the design process to pinpoint the necessary construction budget, and provide a basis of comparison to contractor bids. • Constructibility Review: A review of design plans and specifications will help the owner verify that the design as presented is clear to the contractor, poses no construction conflicts, and is economically feasible to build. • Value Engineering: A multi -disciplined team reviews project features to ensure that the owner's necessary functions are provided in the most cost-effective way, both in terms of initial and life -cycle costs. • Contract Bidding: An ACM firm can assist the owner in pre -selection of contractors and development of the bid package to ensure that the contractor selection process is fair and provides the best value to the owner. In fact, an ACM is often most cost effective during the planning stages of the project, since the ACM firms can provide the careful planning and organization skills that can help prevent costly problems during construction. Properly executed services such as constructibility reviews and preliminary scheduling can result in significant risk reduction and cost savings many times initial cost in terms of limiting change orders, delays, and contractor claims. Here the owners can maximize the benefits of CM in a professional advisory role throughout the design and construction process because the CM has no stake in the construction contracting. Construction Phase: ACM firms provide a variety of services during construction, including the following: • Construction Inspection and Surveillance: Virtually all owners desire some type of examination of project performance on a continuous or periodic basis to review progress, ensure compliance with specifications and plans, and to review housekeeping and safety issues. • Project Controls: These services are provided to ensure that the project is efficiently and effectively managed. They include maintenance of project correspondence, conducting progress meetings, handling submittals and requests for information, documentation of progress, review of pay requests, schedule reviews and schedule updates. • Change Order Review: These services include negotiation of change orders with the contractor, coordination with A/E over design changes, determination of responsibility for changed conditions or coordination conflict, and review of price and schedule changes. • Project Closeout: Review of the project to ensure orderly and timely completion, including development of punch lists; monitoring of implementation, training and warranty periods; resolution of outstanding issues; review and analysis of claims or disputed issues. The most frequently cited criticism of ACM services is that the CM adds a level of bureaucracy to a project, resulting in added cost. While it can be argued that such costs may actually reduce overall project costs, it should be noted that an owner can realize the benefit of the ACM services without necessarily committing to large increases in expense by supplementing its own project management as necessary and selecting ACM on a service -specific basis. The owner has the option of tailoring its use of ACM services to its needs in order to provide the best combination of project control and cost. For example, many public agencies have a large contingent of inspection personnel, but may lack sufficient management experience to enact effective project cost 6A-19 controls. Or, an owner may wish to have more construction knowledge built into the design process by engaging an ACM firm to perform a value engineering or constructibility review. An owner may also desire enhanced scheduling expertise in coordinating its various designers and contractors for a multiple - phase effort. Other owners may be very comfortable with their A/E team, but may need assistance in finding qualified contractors to perform the work. Many owners use an ACM's construction closeout services to resolve intractable problems on projects which degenerate due to disputes with a contractor over schedule and delay issues. Recommendations and Conclusion Clearly, there is no one right project delivery method for a given project. All of the methods discussed have been used successfully, and have weaknesses which can limit their success. The following considerations should guide the owner in selecting the proper delivery method: • Type of Project: The owner should gauge the level of complexity and uniqueness of the project, and maintain an appropriate level of control. • Size of Project: The amount of outside assistance and number of project participants should match the significance of the project. Obviously, the more complex and costly a project, the greater the need for professional management and advice. • Owner Capabilities: The owner should realistically assess its own in-house capabilities in evaluating project procurement methods. • Time Considerations: If the project needs to be constructed in a severely compressed time limit, methods adaptable to fast-track construction should be considered. However, the owner must weigh the need for the compressed time limit against the increased risk of fast tracking. • Likelihood of Changes: If the owner is aware that its requirements may change considerably during the project, this should be evaluated against the potential cost of such changes. For example, a D -B team may present the most fluid method of incorporating changes during construction, but those changes may come at a higher cost than through other methods. The Construction Management Association of America (CMAA) believes professional construction management can help owners in constructing the best facilities possible, on-time and on -budget. From our vantage point, professional constructional management is highly desirable, if not essential, to a successful project. These services are adaptable to any project delivery system, and are scalable to meet the specific needs of the project. We recommend that an owner thoroughly explore available options for construction procurement, and consider the benefits of professional management services regardless of the contractual approach used to deliver the project. We also urge owners to look for the Certified Construction Manager (CCAS designation in evaluating firms and individuals they are considering for upcoming projects. This certification identifies a potent resource that can help you have a successful project. Blake V. Peck, CCM, is a founding principal of McDonough Bolyard Peck, an ENR Top 100 CM Finn and is president-elect of CAI". Originally printed in the March/Apri12001 issue of Facilities Manager, published by APPA. 6A-20 City of Southlake, Texas MEMORANDUM November 1, 2002 TO: Southlake Crime Control and Prevention District Board of Directors FROM: Rick Black, Director of Public Safety SUBJECT: Election of Board Officers Action Requested: Election/appointment of board officers, to serve one year terms. Background Information: Section 363.103 of the Local Government Code provides that the board shall elect from its members a president and vice president to serve as officers, and shall appoint a secretary who need not be a director. Historically, the board has appointed a city staff member to serve in this capacity. The person performing the duties of auditor for the political subdivision (Finance Director Sharen Elam) serves as treasurer. Each officer serves for a term of one year. Terms for current officers will expire in December. Financial Considerations: N/A Financial Impact: N/A Citizen Input/ Board Review: N/A Legal Review: N/A Alternatives: The board may choose any individual it wishes to serve as president, vice president or secretary. Supporting Documents: N/A Staff Recommendation: It is recommended that the Board elect/appoint officers at the November meeting, given the likelihood that there will be no December board meeting. RB 7A-1 NOTE: NO CHANGE FROM OCTOBER MEETING SOUTHLAKE CRIME CONTROL AND PREVENTION DISTRICT 1/2% SALES TAX REPORT 2001-02 Collected Budget Balance Buda to Date 'Balance Percent $ 2,214,268 $ 2,385.486 (171.218) -7.73% 8A-1 Fiscal Year Percent Fiscal Year Percent Fiscal Year Percent 1999-00 Increase/ 2000-01 Increase! 2001-02 Increase/ MONTH Actual Decrease Actual Decrease Actual Decrease October $137,412 9.75% $169,140 23.09% $199,217 17.78% November 134,564 45.68% 157,886 17.33% 192,022 21.62% December 123,346 20.54% 162,373 31.64% 190,845 17.53% January 160,790 18.56% 237,687 47.82% 281,020 18.23% February 133,181 34.89% 157,640 18.37°x6 159,364 1.09% March 122,112 27.40°% 147,534 20.82% 158,580 7.49°x6 April 167,030 21.31% 206,912 23.88°% 210,042 1.51°% May 149,947 18.45°% 185,555 23.75°% 201,261 8.46°% June 149,028 23.05°% 213,711 43.40°% 196,725 -7.95% July 170,640 8.05°% 223,490 30.97°% 224,631 0.51% August 153,942 27.19°% 190,151 23.52°% 190,257 0.06°% September 145,397 18.70°% 180,172 23.92°% 181,522 0.75°% $1,747,389 $2,232,2511 $2 385,486 TOTAL Three Year Revenue Comparison by Month 30=- 00000 250000200000 25=."- 20(M 150000 100000 i 50000 0 i 4^q6 Q%,6� 3�^6� ���6 �A �� 3�6 �1� 31�1� �1hoo 0 Fiscal Year 1999-00 Actual ■ Fiscal Year 2000-01 Actual ❑ Fiscal Year 2001-02 Actual Actual Budget Actual Estimated (budget -est.) % 2000-01 2001-02 2001-02 2001-02 Difference Change October $ 169,140 167,777 199,217 199,217 $ 31,440 18.59% November 157,886 156,614 192,022 192,022 35,408 22.43°% December 162,373 161,065 190,845 190,845 29,780 18.34°% January 237,687 235,772 281,020 281,020 45,248 19.04°% February 157,640 156,370 159,364 159,364 2,994 1.90°% March 147,534 146,345 158,580 158,580 12,235 8.29°% April 206,912 205,245 210,042 210,042 4,797 2.32°% May 185,555 184,060 201,261 201,261 17,201 9.27°% June 213,711 211,990 196,725 196,725 (15,265) -7.14°% July 223,490 221,690 224,631 224,631 2,941 1.32°% August 190,151 188,619 190,257 190,257 1,638 0.86°% September 180,172 178,720 181,522 181,522 2,802 1.56°% TOTAL $2,232,251 $ 2,214,268 $ 2,385,486 $ 2,385,486 $ 171,218 8A-1 NOV-04-2002 MON 04:46 PM TAYLOR OLSON ADKINS FAX NO. 817 332 4740 z 6000 WaTa w KACE Sunk 200 '1'a lA ISO �a ffi I-30 AT BRYANM1IRVM ROAD - FoRr WORTH. TEXAS 76107-4654 EMAR.: TOASEOTOASE.COM - AMrneys ...,MW TCp=ggjprs WEBSRE: WWW.TOASE.COM ELUAKTH ELAM EXT. 211 WMIAMMOGN.Mn. November 4, 2002 VIA FAX TRANSMISSION Rick Black Department of Public Safety City of Southlake - 667 North Carroll Avenue Southlake, Texas 76092 RE: Definition of Best Value Dear Rick: P. 02/03 TELEmow: (8 17) 332-2580 Tnu. FREE: (800) 31 &3400 FACSIMILE: (817) 332-4740 DENTow: (940) 383.2674 E)MTow W ma-, (972) 434.3834 You have asked this office for an Interpretation of the meaning of "best value" in Section 271.114(a) of the Local Government Code. As you know, Subchapter H of Chapter271 establishes alternate project delivery methods forcertain construction projects and requires a determination of best value for the city in two contexts. First, the governing body or its designated representative must determine which method provides the best value for the city. Second, once the method has been chosen, the contract must be awarded to the bidder offering the best value to the city according to selection criteria established by the city. The statute sets forth specific criteria the city may consider in determining best value in awarding the contract, but provides no specific guidance about the meaning of best value in choosing the method. Since best value in Section 271.114(a) is an undefined term, the city council has wide latitude in determining which method provides best value to the city. Each method has advantages and disadvantages and the method providing best value will depend on factors surrounding each project. Some factors to be considered are the size of the project, whether the project is time sensitive, cost, whether staff has the expertise to be involved in the project, the flexibility of the project budget, the likelihood that the project design will evolve during the project, and the degree of control the city wants over the project. For example, the standard competitive bidding method for selecting a contractor is suited for projects that are not schedule sensitive or subject to potential changes. It is a slower delivery method because bids can not be opened until after the design is completed, and the contractor does not have any input into the design. However, it is W.\,%Mthiake\LL7TERS1Black-13E.001.wpd NOV-04-2002 MON 04:46 PM TAYLOR OLSON ADKINS FAX NO. 817 332 4740 P. 03/03 November 4, 2002 Page 2 suited for small projects or projects where the city wants to maintain control. The construction manager at risk method provides a faster delivery schedule because the contractor can be selected before the design is completed. This reduces the need for change orders and the architect and contractor can act as a team. This is best suited for projects which are schedule sensitive or subject to potential change. The construction manager at risk is not a good method for small projects or projects where the city wants direct control over the subcontractors. The design build provides a faster schedule for delivery and allows for team work between the contractor, engineer, and architect. It is s good method when the city has a clear idea of the project design and concept before the selection of the design build contractor. However, it is a difficult method for the city to manage or have direct involvement. In conclusion, the governing body or its designee is given wide latitude to determine which construction method provides best value to the city. The determination of best value is dependent upon the circumstances of each project. I hope this answers your question, and please call if I can be of further assistance. Sincerely, Betsy EAE/ke W:1Southlake\LE1TERS1B1aok.BE.001.Wpd