BILL ANALYSIS Ó
AB 2374
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ASSEMBLY THIRD READING
AB
2374 (Chiu)
As Introduced February 18, 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 | |
| | | | |
| | | | |
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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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