BILL ANALYSIS
AB 732
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Date of Hearing: April 13, 2009
ASSEMBLY COMMITTEE ON TRANSPORTATION
Mike Eng, Chair
AB 732 (Jeffries) - As Introduced: February 26, 2009
SUBJECT : Transportation projects: design-sequencing contracts
SUMMARY : Extends for two years, from January 1, 2010, to
January 1, 2012, a design-sequencing pilot project within the
California Department of Transportation (Caltrans).
EXISTING LAW :
1)Requires Caltrans to award construction contracts based on a
process referred to as "design-bid-build," generally. This
process requires Caltrans, before it enters into any contract
for construction of a project, to prepare full, complete, and
accurate plans, specifications, and estimates of cost, "giving
such directions as will enable any competent mechanic or other
builder to carry them out."
2)Defines "design-sequencing" as a method of contracting that
enables the sequencing of design activities to permit each
construction phase to commence when design for that phase is
complete, instead of requiring design for the entire project
to be completed before commencing construction.
3)Authorizes Caltrans to use the design-sequencing contract
method on a pilot basis: up to 12 projects in each of Phase I
and Phase II of the pilot program.
4)Requires Caltrans to prepare an annual status report on the
progress of design-sequencing contracts; also, requires a
final report of the pilot program, detailing the positive and
negative aspects of design-sequencing.
5)Sunsets the design-sequencing pilot program on January 1,
2010.
FISCAL EFFECT : No significant initial costs to Caltrans
associated with continued use of design-sequencing are expected
because the department has some experience in this method of
contracting; uncertain contract costs savings or overruns due to
the use of design-sequencing.
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COMMENTS : In its interim report of the design-sequencing pilot
program, dated March 2008, Caltrans compared six of the initial
design-sequencing projects against nine control projects.
Results of the program to date have been mixed. Some of the
findings are:
The impact on contract schedules has ranged from 2
months delay to 18 months saved with an average time
savings to date of 4 months when compared to the original
design-bid-build timeline. Projects with the largest
amount of design completed (e.g., 75% and 90%) before going
to construction saved the greatest amount of time overall
(18 months and 10 months).
Support costs for design-sequencing contracts are about
13% greater when compared to control projects delivered by
design-bid-build.
Capital construction costs (i.e., the final construction
cost minus the contract bid amount) did not increase with
design-sequencing projects when compared to traditional
delivery methods. (While this is generally true for five
out of six of the design-sequencing projects, it excludes
the largest of the six projects (I-680 widening) which had
an increase in capital construction costs of 51%,
approximately $16 million.)
On average, design-sequencing projects produced 50
construction contract change orders per project compared to
49 for the control projects, resulting in $88,654 per
contract change order on average for design-sequencing
projects, compared to $34,203 for control projects.
On average, design-sequencing early contract awards
saved 19% on the bid amount representing $2,667,588 per
project due to construction cost escalation avoidance.
(Again, however, if the I-680 project is excluded from the
calculation, the average cost avoidance per contract is
less than half of this amount, or about $1.2 million per
project.)
The average design-sequencing project generated $4.4
million in contract change orders per project versus $1.7
million per project for control project.
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In discussions with Caltrans, staff acknowledges that not all
design-sequencing projects have met with success. In fact,
Caltrans suggests that lessons learned from some of these
early failures caused the department to take a more
conservative approach in its use of design-sequencing
contracts. This, in turn, resulted in some of the allowable
design-sequencing projects going unused to date. (Of the 12
design-sequencing projects authorized as part of Phase I of
the pilot program, Caltrans initiated 10 projects before the
end of that phase. Phase II of the pilot program, authorizing
an additional 12 design-sequencing projects, has been in place
since January 2005 and only 6 contracts have been awarded
under Phase II of the program.)
Caltrans is sponsoring AB 732 so that it can award the remaining
six projects, using refined guidelines, and garner additional
lessons upon which to base its final evaluation of the pilot
program. Caltrans asserts that design-sequencing has the
potential to accelerate project delivery (or avoid project
delays) with minimal risks.
Design-sequencing is not without detractors. A State Route
60/91/215 interchange project in Riverside and Moreno Valley
drew heavy criticism in the media last year. Articles in the
Press Enterprise asserted Caltrans failed repeatedly to follow
its own procedures for design-sequencing and, as a result, the
project suffered cost overruns and delays.
According to Caltrans, more needs to be learned regarding
design-sequence contracts to develop the appropriate
procedures, engineering mind set, and agency culture needed to
effectively implement this approach. Consequently, it argues,
extension of the sunset date and the ability to utilize the
six remaining slots, would enable staff to continue improving
project selection criteria and procedures and ultimately to
make a more effective determination regarding the types of
projects that would most benefit from use of this approach.
Previous legislation :
AB 405 (Knox), Chapter 378, Statutes of 1999, initiated the
original design-sequencing pilot program within Caltrans for
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up to 6 projects. The provisions of that bill were to become
inoperative on July 1, 2004.
AB 2607 (Knox), Chapter 340, Statutes of 2000, increase the
number of projects in the pilot program to 12 and extended the
inoperative date on the program until January 1, 2005.
SB 1210 (Torlakson), Chapter 795, Statutes of 2004, initiated
Phase II of the pilot program and authorized 12 additional
design-sequencing projects, until January 1, 2010.
REGISTERED SUPPORT / OPPOSITION :
Support
California Department of Transportation (sponsor)
California Association of Council of Governments
Opposition
None on file
Analysis Prepared by : Janet Dawson / TRANS. / (916) 319-2093