BILL ANALYSIS Ó
SENATE COMMITTEE ON TRANSPORTATION AND HOUSING
Senator Jim Beall, Chair
2015 - 2016 Regular
Bill No: AB 1171 Hearing Date: 6/16/2015
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|Author: |Linder |
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|Version: |4/21/2015 |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant|Eric Thronson |
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SUBJECT: Construction Manager/General Contractor method:
regional transportation agencies: projects on expressways
DIGEST: This bill authorizes all regional transportation
agencies to utilize the construction manager/general contractor
(CM/GC) procurement method to design and construct projects
under certain limited circumstances.
ANALYSIS:
Traditionally, state and local entities develop and construct
transportation projects with a process known as the
design-bid-build (DBB) delivery method. This method requires
the public agency to fully design a project and then ask general
contractors to bid on the construction contract based on the
agency's design. DBB procurement results in project risks being
largely borne by the agency that designs the project, because
the agency bears the financial burden if the plans are
inadequate or unanticipated construction issues arise.
Unlike traditional DBB procurement, the CM/GC project-delivery
method allows an agency to engage a construction manager during
the design process to provide assistance to the design team,
which can ultimately lead to a more constructible project. When
design is nearly complete, the agency and the construction
manager negotiate a guaranteed maximum price for the
construction of the project based on the defined scope and
schedule. If this price is acceptable to both parties, they
execute a contract for construction services, and the
AB 1171 (Linder) Page 2 of ?
construction manager becomes the general contractor. Studies
suggest CM/GC often leads to less costly or more expediently
delivered projects because of the construction manager's
involvement in the design process.
In 2012, the Legislature passed and the governor signed SB 1549
(Vargas, Chapter 767), which authorized the San Diego
Association of Governments (SANDAG) to utilize other alternative
project-delivery methods for transit projects within its
jurisdiction, including CM/GC. That same year, the Legislature
passed and the governor signed AB 2498 (Gordon, Chapter 752),
which authorized the California Department of Transportation
(Caltrans) to utilize CM/GC on a pilot basis. In 2013,
legislation authorized both Santa Clara Valley Transportation
Authority (VTA) and the San Mateo County Transit District to use
CM/GC for transit projects.
Before electing to use CM/GC, existing law requires that SANDAG,
VTA, and San Mateo County make a written finding declaring that
the CM/GC project delivery method will either reduce costs,
expedite completion, or provide features not achievable through
DBB. In addition, to determine the benefits of CM/GC, existing
law requires SANDAG, VTA, and San Mateo County staff to present
a report to the agency's governing body on its experience upon
completion of a CM/GC project and to post the report on its
Internet website.
This bill:
1)Authorizes all regional transportation agencies to utilize the
CM/GC procurement method to design and construct projects if
the projects are developed in accordance with a voter-approved
expenditure plan, as long as:
a) The expenditure plan was approved prior to January 1,
2014.
b) The project is the construction of an expressway that is
not on the state highway system.
1)Defines CM/GC as a project-delivery method in which a
construction manager is procured to provide preconstruction
services during the design phase and construction services
during the construction phase of the project.
AB 1171 (Linder) Page 3 of ?
2)Defines preconstruction services as advice during the design
phase of a project in order to assist the regional
transportation agency to design a more constructible project.
3)Requires regional transportation agencies to follow the same
process, procedures, and requirements laid out in Caltrans'
CM/GC authorizing statutes.
4)Specifies that the entity responsible for the maintenance of
the local streets and roads within the jurisdiction of the
project is responsible for the maintenance of the project upon
completion.
COMMENTS:
1)Purpose. According to the author, this bill will provide an
innovative project delivery method for regional transportation
agencies to use on expressway projects contained in local
measure expenditure plans. Supporters state that the CM/GC
method has been identified by several entities, including the
Federal Highway Administration, to be an innovative way to
reduce time and cost of project delivery.
2)Why pursue alternative project delivery approaches? For
decades, state and local agencies have relied on the DBB
procurement method for transportation projects. DBB reduces
the risk for the construction contractor because the state or
local agency has a completed design, procured right-of-way,
and achieved environmental clearance before letting the
contract. Agencies using this traditional method generally
receive the lowest initial-cost construction contracts for a
given project, because contractors are competitively bidding
on a relatively risk-free project. Drawbacks to DBB can
include longer completion times, constructability challenges
unforeseen by the designers, and increasing costs over time
due to change orders and claims.
The CM/GC process is meant to provide continuity and
collaboration between the design and construction phases of
the project. Construction managers have an incentive to
provide input during the design phase that will enhance
constructability of the project later, because they know that
they will have the opportunity to become the general
AB 1171 (Linder) Page 4 of ?
contractor for the project. Furthermore, CM/GC promises to
save project delivery time, provide earlier cost certainty,
transfer some risks from the public agency to the contractor,
and ensure project constructability. Finally, it allows each
agency to design the project to complement the general
contractor's strengths and capabilities, thereby providing
maximum competitiveness in a low-bid procurement.
3)Pre-selection determination and reporting requirements. While
generally successful nationwide, CM/GC has not been utilized
much in this state, and therefore it is unclear whether it
will lead to better outcomes than traditional DBB. As stated
previously, existing law requires SANDAG and others to present
an evaluation comparing CM/GC and other project delivery
alternatives before choosing to utilize the CM/GC method. In
addition, existing law requires each of these regional
transportation entities to present a report on its experience
with this alternative procurement method to its governing
board, as well as post the report on its website. It seems
reasonable to require other entities to similarly utilize a
pre-selection determination and provide a report on their
experiences in order for their boards and the Legislature to
evaluate the effectiveness of CM/GC. To that end, the
committee may wish to amend the bill to include similar
pre-selection determinations and reporting requirements to
those in existing law that apply to SANDAG and other's use of
CM/GC.
Related Legislation:
AB 1724 (Frazier, 2014) - would have granted regional
transportation agencies broad authority to use CM/GC. This bill
was held in the Senate Transportation and Housing Committee.
AB 2498 (Gordon, Chapter 752, Statutes of 2012) - authorized
Caltrans to use CM/GC on no more than six projects, at least
five of which must have construction costs greater than $10
million.
SB 1549 (Vargas, Chapter 767, Statutes of 2012) - authorized
SANDAG to use CMGC contracting on transit projects.
AB 797 (Gordon, Chapter 320, Statutes of 2013) - authorized the
VTA and the San Mateo County Transit District to use CMGC
contracting on transit projects.
AB 1171 (Linder) Page 5 of ?
Assembly Votes:
Floor: 78-0
Appr: 17-0
Trans: 16-0
FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes
Local: Yes
POSITIONS: (Communicated to the committee before noon on
Wednesday,
June 10, 2015.)
SUPPORT:
Associated General Contractors
Capital SouthEast Connector JPA
El Dorado Hills Chamber of Commerce
Riverside County Transportation Commission
Sacramento Metropolitan Chamber of Commerce
OPPOSITION:
None received
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