BILL ANALYSIS Ó
AB 2126
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ASSEMBLY THIRD READING
AB
2126 (Mullin)
As Introduced February 17, 2016
Majority vote
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|Committee |Votes|Ayes |Noes |
| | | | |
| | | | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Transportation |16-0 |Frazier, Linder, | |
| | |Baker, Bloom, Brown, | |
| | |Chu, Daly, Dodd, | |
| | |Eduardo Garcia, | |
| | |Gomez, Kim, Mathis, | |
| | |Medina, Melendez, | |
| | |Nazarian, O'Donnell | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Appropriations |19-0 |Gonzalez, Bigelow, | |
| | |Bloom, Bonilla, | |
| | |Bonta, Calderon, | |
| | |Chang, Daly, Eggman, | |
| | |Gallagher, Eduardo | |
| | |Garcia, Holden, | |
| | |Jones, Obernolte, | |
| | |Quirk, Santiago, | |
| | |Wagner, Weber, Wood | |
| | | | |
| | | | |
AB 2126
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SUMMARY: Expands from six to 12 the number of projects for
which the California Department of Transportation (Caltrans) is
authorized to use the Construction Manager/General Contractor
(CMGC) procurement method. Of the 12 projects, at least 10
projects have to have construction costs greater than $10
million and at least eight projects have to use Caltrans
employees or Caltrans consultants.
FISCAL EFFECT: According to the Assembly Appropriations
Committee, based on Caltrans experience to date, potential
significant savings could be realized from additional CMGC
projects.
COMMENTS: For decades, the traditional process for procuring
public works projects has been the design-bid-build process.
This process relies on the project owner: 1) preparing, or
causing to be prepared, complete project design specifications
and estimates; 2) putting the complete package out to bid for
construction; and 3) awarding the construction contract to the
lowest responsible bidder. The design-bid-build process was
developed to protect taxpayers from extravagance, corruption,
and other improper practices by public officials as well as to
secure a fair and reasonable price for public works construction
by injecting competition amongst bidders into the process.
In the early 1990s, public works agencies grew frustrated with
design-bid-build and began experimenting with more innovative
project delivery methods, namely design-build. Design-build is
an alternate method for procuring design and construction
services that provides for the delivery of public works projects
from a single entity. Design-build combines project design,
permit, and construction schedules in order to streamline the
traditional design-bid-build environment.
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The CMGC process, as provided for in this bill, is yet another
method of contracting that 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
department to the contractor, and ensure project
constructability. Additionally, CMGC allows Caltrans to have
greater control of design decisions. It also allows the
department 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:
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
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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 increases the number of projects for which Caltrans
can use CMGC from 6 to 12. The author introduced the bill to
increase the opportunities to reduce costs and expedite highway
congestion relief projects in the state.
Committee comments: As a part of the authority granted in AB
2498 (Gordon), Chapter 752, Statutes of 2012, Caltrans is
required to report each year on the progress of its CMGC
contracts. Last year, Caltrans reported that, although it was
still early in the process, it appears that the department will
realize substantial savings through the use of CMGC on these
projects. These early indications are consistent with those
reported by other transportation agencies that have been granted
statutory authority to use CMGC in recent years. Consequently,
modestly increasing the number of projects for which Caltrans
can gain additional experience with the use of CMGC seems
reasonable and prudent.
Please see the policy committee analysis for full discussion of
this bill.
Analysis Prepared by:
Janet Dawson / TRANS. / (916) 319-2093 FN:
0002824
AB 2126
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