BILL ANALYSIS Ó
SENATE COMMITTEE ON TRANSPORTATION AND HOUSING
Senator Jim Beall, Chair
2015 - 2016 Regular
Bill No: AB 2126 Hearing Date: 6/21/ 2016
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|Author: |Mullin |
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|Version: |2/17/2016 |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant|Manny Leon |
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SUBJECT: Public contracts: Construction Manager/General
Contractor contracts
DIGEST: This bill increases the number of authorized
Construction Manager/General Contractor (CM/GC) projects from
six projects to twelve, as specified.
ANALYSIS:
Existing law:
1)Sets forth provisions governing public works contracting.
These provisions generally prohibit public agencies from
contracting with the same firm for both the design and the
construction phases of a project.
2)Generally requires public works construction contracts to be
awarded to the lowest responsible bidder.
3)Describes the CM/GC procurement method and makes legislative
findings and declarations regarding benefits related to risk
transfer and project phasing using CM/GC.
4)Authorizes the California Department of Transportation
(Caltrans) to use CM/GC on no more than six projects, at least
five of which must have construction costs greater than $10
million.
5)Authorizes the Santa Clara County Valley Transportation
Authority, the San Mateo County Transit District, and the San
AB 2126 (Mullin) Page 2 of ?
Diego Association of Governments to use CM/GC for transit
projects.
6)Authorizes a regional transportation agency (RTA) to use the
CM/GC 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.
7)Defines key terms relative to the authority granted to RTA's
to use CM/GC, as specified.
8)Provides 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.
9)Sets forth provisions governing the process for procuring
CM/GC services.
This bill expands, from six to 12, the number of projects for
which Caltrans is authorized to use the CM/GC procurement
method. Further specifies that of the 12 projects, at least 10
projects must have construction costs greater than $10 million
and at least eight projects are required to use Caltrans
employees or Caltrans consultants, as specified.
COMMENTS:
1)Purpose. The author notes that "this bill will extend CM/GC
authorization by increasing the number of projects that
Caltrans can build using CM/GC delivery method from six to
twelve, thus increasing the opportunities to reduce costs and
expedite congestion relief projects in the state."
2)Traditional project delivery. 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.
AB 2126 (Mullin) Page 3 of ?
3)What is CM/GC? 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.
4)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
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.
5)Prior authorization. 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
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greater than $10 million. At that time, the author introduced
AB 2498 to authorize Caltrans to use CM/GC to start evaluating
the effectiveness of this emerging project-delivery method
that combined the best of both design-bid-build and
design-build. To date, all six authorized slots have been
granted and the projects are moving forward to completion.
This bill proposes to double the amount of authorized CM/GC
projects from six to twelve; however, preserves all the
design, engineering, inspection, and reporting requirements
established in AB 2498.
6)Current status. Regarding current CMGC projects underway,
while none of the projects have yet been completed, no
significant problems have been reported. As these projects
move toward completion, a more thorough examination of the
advantages and disadvantages of CM/GC contracting will be
required. However, as the pros and cons continue to be
evaluated; utilizing CM/GC for various types of transportation
projects may be beneficial for evaluation purposes.
Related Legislation:
AB 2374 (Chiu) - extends existing authority for regional
transportation agencies to use the CM/GC procurement method to
include ramp projects that are not on the state highway system,
as specified. AB 2374 will be heard by the Committee at the
same hearing as AB 2126.
AB 1171 (Linder, Chapter 413, Statutes of 2015) - provided
limited authority for regional transportation agencies to use
CM/GC on expressway projects that are not on the state highway
system but are in sales tax measure expenditure plans.
AB 1724 (Frazier, 2014) - would have granted regional
transportation agencies broad authority to use CM/GC. This bill
was held in this 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
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million.
SB 1549 (Vargas, Chapter 767, Statutes of 2012) - authorized
SANDAG to use CM/GC contracting on transit projects.
AB 797 (Gordon, Chapter 320, Statutes of 2013) - authorized the
VTA and the San Mateo County Transit District to use CM/GC
contracting on transit projects.
FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes
Local: Yes
Assembly votes:
Floor: 77-0
Appr: 19-0
Trans: 16-0
POSITIONS: (Communicated to the committee before noon on
Wednesday,
June 15, 2016.)
SUPPORT:
Associated General Contractors
Bay Area Council
City/County Association of Governments of San Mateo County
California Transportation Commission
San Mateo County Economic Development Association
San Mateo County Transportation Authority
OPPOSITION:
None received
-- END --
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