BILL ANALYSIS Ó
-----------------------------------------------------------------
|SENATE RULES COMMITTEE | AB 1171|
|Office of Senate Floor Analyses | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
-----------------------------------------------------------------
THIRD READING
Bill No: AB 1171
Author: Linder (R)
Amended: 6/19/15 in Senate
Vote: 21
SENATE TRANS. & HOUSING COMMITTEE: 11-0, 6/16/15
AYES: Beall, Cannella, Allen, Bates, Gaines, Galgiani, Leyva,
McGuire, Mendoza, Roth, Wieckowski
SENATE APPROPRIATIONS COMMITTEE: 7-0, 7/6/15
AYES: Lara, Bates, Beall, Hill, Leyva, Mendoza, Nielsen
ASSEMBLY FLOOR: 78-0, 5/14/15 (Consent) - See last page for
vote
SUBJECT: Construction Manager/General Contractor method:
regional transportation agencies: projects on
expressways
SOURCE: Author
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:
Existing law:
AB 1171
Page 2
1)Authorizes the San Diego Association of Governments to utilize
other alternative project-delivery methods for transit
projects within its jurisdiction, including CM/GC.
2)Authorizes the California Department of Transportation
(Caltrans) to utilize CM/GC on a pilot basis.
3)Authorizes both Santa Clara Valley Transportation Authority
and the San Mateo County Transit District to use CM/GC for
transit projects.
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.
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)Requires 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 Web
site.
5)Specifies that the entity responsible for the maintenance of
the local streets and roads within the jurisdiction of the
AB 1171
Page 3
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)Background. 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
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.
3)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
AB 1171
Page 4
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
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.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: Yes
According to the Senate Appropriations Committee, this bill will
have unknown local expressway project costs or savings
(primarily local funds). Since a contract for preconstruction
and construction services for CM/GC is a negotiated process with
the most qualified construction manager, rather than a
traditional "lowest responsible bidder" process, it is difficult
to determine whether the negotiated price would be lower or
higher than project delivery costs through a traditional DBB
process. It is expected that use of the CM/GC method would
minimize change orders, which is currently a significant factor
in unexpected cost escalation on transportation projects.
Projects authorized for use of CM/GC by this bill will be funded
solely with non-state funds in nearly all circumstances, but
could involve some state funds in rare circumstances (State
Highway Account, bond funds).
AB 1171
Page 5
SUPPORT: (Verified7/8/15)
Associated General Contractors
Automobile Club of Southern California
Capital SouthEast Connector JPA
El Dorado Hills Chamber of Commerce
Riverside County Transportation Commission
Sacramento Metropolitan Chamber of Commerce
Santa Clara Valley Transportation Authority
OPPOSITION: (Verified7/8/15)
None received
ASSEMBLY FLOOR: 78-0, 5/14/15
AYES: Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bloom,
Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chang,
Chau, Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle,
Daly, Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina
Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez,
Gordon, Gray, Grove, Hadley, Harper, Roger Hernández, Holden,
Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine, Lopez, Low,
Maienschein, Mathis, Mayes, McCarty, Melendez, Mullin,
Nazarian, Obernolte, O'Donnell, Olsen, Patterson, Perea,
Quirk, Rendon, Ridley-Thomas, Rodriguez, Salas, Santiago,
Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber,
Wilk, Williams, Wood, Atkins
NO VOTE RECORDED: Linder, Medina
Prepared by:Eric Thronson / T. & H. / (916) 651-4121
7/8/15 16:33:16
**** END ****
AB 1171
Page 6