BILL ANALYSIS                                                                                                                                                                                                    



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          ASSEMBLY THIRD READING


          AB  
          2374 (Chiu)


          As Introduced  February 18, 2016


          Majority vote


           ------------------------------------------------------------------ 
          |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   |                    |
          |                |     |                      |                    |
          |                |     |                      |                    |
           ------------------------------------------------------------------ 


          SUMMARY:  Extends existing authority for regional transportation  
          agencies (RTAs) to use the Construction Manager/General  
          Contractor (CMGC) procurement method to include ramp projects  
          that are not on the state highway system; removes the limitation  
          that a CMGC project is in a sales tax measure expenditure plan.


          EXISTING LAW:  








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          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.  Public works construction  
            contracts are generally to be awarded to the lowest  
            responsible bidder.  
          2)Authorizes a RTA 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.
          FISCAL EFFECT:  Unknown.  This bill is keyed non-fiscal by the  
          Legislative Counsel.


          COMMENTS:  Last session, the Legislature passed and the Governor  
          signed AB 1171 (Linder), Chapter 413, Statutes of 2015, to  
          provide limited authority for RTAs to use CMGC on expressway  
          projects that are not on the state highway system.  AB 2374  
          extends that authority also to include ramp projects, so long as  
          the project is not on the state highway system.  This bill also  
          removes the restriction that projects have to be in a local  
          sales tax measure expenditure plan.  


          CMGC is an emerging project delivery method that potentially  
          combines the best of both design-bid-build and design-build.   
          Using CMGC, RTAs 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  








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          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 RTA 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:  they are difficult and  
          complex; the procurement process takes longer and consumes  
          greater project staff time than traditional design-bid-build  
          contracts; project teams face steep learning curves; and  
          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.  


          The author introduced this bill to assist the San Francisco  
          County Transportation Authority (SFCTA) to complete its Yerba  








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          Buena Island West-Side Bridges Retrofit project.  This 


          $66 million project will retrofit or replace eight locally-owned  
          bridge structures that connect Treasure Island to the San  
          Francisco-Oakland Bay Bridge.  According to the author, this  
          project is a complicated public safety project that involves  
          unique topographical, environmental, and construction staging  
          issues.  SFCTA has analyzed the potential use of CMGC for this  
          project and estimates that this procurement method could reduce  
          construction time by an estimated six months, reduce costs by  
          between 10% and 15%, and reduce project risk.   


          Regarding current CMGC projects underway since the initial CMGC  
          authority was granted in 2012, none of the projects have yet  
          been completed.  Consequently, a more thorough examination of  
          advantages and disadvantages of CMGC contracting in California  
          is still pending.  However, those agencies that have initiated  
          projects using CMGC report that early indications suggest CMGC  
          will have positive project delivery outcomes. 


          Please see the policy committee analysis for full discussion of  
          this bill.




          Analysis Prepared by:                                             
                          Janet Dawson / TRANS. / (916) 319-2093  FN:  
          0002695















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