BILL ANALYSIS Ó
SENATE COMMITTEE ON TRANSPORTATION AND HOUSING
Senator Jim Beall, Chair
2015 - 2016 Regular
Bill No: AB 2374 Hearing Date: 6/21/2016
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|Author: |Chiu |
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|Version: |2/18/2016 |
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|Urgency: |No |Fiscal: |No |
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|Consultant|Manny Leon |
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SUBJECT: Construction Manager/General Contractor method:
regional transportation agencies: ramps
DIGEST: This bill extends existing authority for regional
transportation agencies (RTAs) to use the Construction
Manager/General Contractor (CM/GC), 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.
AB 2374 (Chiu) Page 2 of ?
5)Authorizes the Santa Clara County Valley Transportation
Authority, the San Mateo County Transit District, and the San
Diego Association of Governments to use CM/GC for transit
projects.
6)Authorizes an 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 extends existing authority for RTAs to use CM/GC
procurement method for ramp projects that are not on the state
highway system, and additionally removes the limitation that an
authorized CM/GC project must be included in a sales tax measure
expenditure plan.
COMMENTS:
Purpose. The author notes that this bill will extend CM/GC
authorization to ramps that are not on the state highway system
and remove the requirement that authorized projects be included
in a voter-approved expenditure plan. As a result, this bill
authorizes the San Francisco County Transportation Authority to
utilize CM/GC for the Yerba Buena Island West-Side Bridges
Retrofit project - which is a seismic safety project on a
locally owned and operated road facility.
Major transportation project: The Yerba Buena Island (YBI)
West-Side Bridges Interchange Improvement Project includes two
major components:
a)On the east side of Treasure Island, the YBI I-80 Ramps
project will construct new westbound on and off ramps to the
new Eastern Span of the Bay Bridge.
AB 2374 (Chiu) Page 3 of ?
b)On the west side of the island, the YBI West-Side Bridges
Retrofit project will seismically retrofit the existing bridge
structures-critical components of island traffic circulation
between the islands and the Bay Bridge.
Specifically, the $66 million Yerba Buena Island West-Side
Bridges Retrofit project will seismically retrofit or replace
eight locally owned bridge structures that connect Treasure
Island to the San Francisco Bay Bridge. The facility is locally
owned and not a part of the state highway system, and partially
funded with state transportation revenues. This project has
been identified by the San Francisco Transportation Authority as
a "complicated public safety project, dealing with unique
topographical, environmental, and construction staging issues."
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.
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.
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
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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.
Current status. Regarding current CMGC projects underway, while
none of the projects have yet been completed, no significant
problems have been reported. In fact, the San Francisco
Transportation Authority has analyzed the potential use of CM/GC
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.
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 other types of
projects may be beneficial for evaluation purposes.
Related Legislation:
AB 2126 (Mullin) - increases the number of authorized
Construction Manager/General Contractor (CM/GC) projects from
six projects to twelve, as specified. AB 2126 will be heard by
AB 2374 (Chiu) Page 5 of ?
this Committee at the same hearing as AB 2374.
AB 1171 (Linder, Chapter 413, Statutes of 2015) - provided
limited authority for RTAs 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
million.
SB 1549 (Vargas, Chapter 767, Statutes of 2012) - authorized San
Diego Association of Governments (SANDAG) to use CM/GC
contracting on transit projects.
AB 797 (Gordon, Chapter 320, Statutes of 2013) - authorized the
Santa Clara Valley Transportation Authority (VTA) and the San
Mateo County Transit District to use CM/GC contracting on
transit projects.
FISCAL EFFECT: Appropriation: No Fiscal Com.: No Local:
No
Assembly Votes:
Floor: 77-0
Trans: 16-0
POSITIONS: (Communicated to the committee before noon on
Wednesday,
June 15, 2016.)
SUPPORT:
Automobile Club of Southern California
California Transportation Commission
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San Francisco County Transportation Authority
Santa Clara Valley Transportation Authority
OPPOSITION:
None received
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