BILL ANALYSIS Ó
AB 1171
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CONCURRENCE IN SENATE AMENDMENTS
AB
1171 (Linder)
As Amended June 19, 2015
Majority vote
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|ASSEMBLY: | 78-0 | (May 14, |SENATE: | 38-0 | (July 16, 2015) |
| | |2015) | | | |
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Original Committee Reference: TRANS.
SUMMARY: Authorizes regional transportation agencies (RTAs) to
use an alternative procurement method referred to as
construction manager/general contractor (CMGC) contracts, under
limited circumstances.
The Senate amendments:
1)Define "regional transportation agency."
2)Require a regional transportation agency to evaluate the CMGC
contract method against the traditional design-bid-build
contract method prior to proceeding with a CMGC contract.
3)Require regional transportation agencies to prepare progress
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reports on CMGC projects.
AS PASSED BY THE ASSEMBLY, this bill:
1)Authorized a regional transportation agency to use the CMGC
project delivery method to design and construct projects on
expressways that are not on the state highway system if the
projects are developed in accordance with an expenditure plan
approved by the voters as of January 1, 2014.
2)Provided that the entity responsible for maintenance of local
streets and roads within the same jurisdiction of the
expressway shall be responsible for the maintenance of the
expressway.
3)Set forth provisions governing the process for procuring CMGC
services.
FISCAL EFFECT: According to the Senate Appropriations
Committee, unknown local expressway project costs or savings
(primarily local funds). Since a contract for preconstruction
and construction services for CMGC 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
design-bid-build process. It is expected that use of the CMGC
method would minimize change orders, which is currently a
significant factor in unexpected cost escalation on
transportation projects.
Staff notes that the projects authorized for use of CMGC by this
bill would 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).
COMMENTS: This bill provides limited authority for regional
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transportation agencies to use CMGC, an emerging project
delivery method that potentially combines the best of both
design-bid-build and design-build, similar to authority already
granted to the Department of Transportation (Caltrans), the
Santa Clara County Valley Transportation Authority, the San
Mateo County Transit District, and the San Diego Association of
Governments. Using CMGC, regional transportation agencies will
be able to engage a design and construction management
consultant (construction manager) to act as its consultant
during the pre-construction phase and as the general contractor
during construction. During the design phase, the construction
manager acts in an advisory role, providing constructability
reviews, value engineering suggestions, construction estimates,
and other construction-related recommendations. Later, each
agency and the construction manager can agree that the project
design has progressed to a sufficient enough point that
construction may begin. The two parties then work out mutually
agreeable terms and conditions for the construction contract,
and, if all goes well, the construction manager becomes the
general contractor and construction on the project commences,
well before design is entirely complete.
The CMGC process provides 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, CMGC
promises to save project delivery time, provide earlier cost
certainty, transfer risks from the regional transportation
agency to the contractor, and ensure project constructability.
Additionally, CMGC allows each agency to have greater control of
design decisions. It also allows each agency to design the
project to compliment the CMGC's strengths and capabilities,
thereby avoiding the need to over-design the project to provide
maximum competitiveness in a low-bid procurement.
There are potential drawbacks of using CMGC contracts.
According to guidance published by the City of Seattle, CMGC
contracts carry risks, including:
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1)They are difficult and complex.
2)The procurement process takes longer and consumes greater
project staff time than traditional design-bid-build
contracts.
3)Project teams face steep learning curves.
4)Successful construction cost negotiations require experienced
staff.
Other literature on the use of CMGC contracts is generally
consistent with Seattle's guidance regarding concerns for risks
associated with CMGC contracts and cautions that CMGC is not
appropriate for every project. However, the same literature
suggests that, if carefully implemented, CMGC has the potential
to significantly improve project delivery.
This bill provides limited authority for regional transportation
agencies to use CMGC on expressway projects that are not on the
state highway system, similar to authority already granted to
Caltrans, Santa Clara County Valley Transportation Authority,
the San Mateo County Transit District, and the San Diego
Association of Governments to use CMGC for transit projects.
These other entities have not yet completed any projects using
CMGC so their overall experience with this procurement method is
not yet known.
Supporters of this bill suggest that early collaboration and
coordination between the designer and the construction
contractor should lead to innovations that reduce costs,
increase efficiency, or accelerate project delivery,
particularly on large and complex projects. One of the projects
for which CMGC would be used if this bill is successful is the
Capital Southeast Connector project in Sacramento County.
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There is no opposition on file.
Analysis Prepared by: Janet Dawson / TRANS.
/ (916) 319-2093 FN: 0001147