BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 1760|
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THIRD READING
Bill No: AB 1760
Author: Blumenfield (D)
Amended: 7/15/10 in Senate
Vote: 21
SENATE TRANSPORTATION & HOUSING COMMITTEE : 7-0, 6/22/10
AYES: Lowenthal, Huff, Ashburn, DeSaulnier, Harman,
Pavley, Simitian
NO VOTE RECORDED: Kehoe, Oropeza
SENATE APPROPRIATIONS COMMITTEE : 11-0, 8/12/10
AYES: Kehoe, Ashburn, Alquist, Corbett, Emmerson, Leno,
Price, Walters, Wolk, Wyland, Yee
ASSEMBLY FLOOR : 74-0, 5/6/10 (Consent) - See last page for
vote
SUBJECT : Design-sequencing
SOURCE : Author
DIGEST : This bill authorizes the California Department
of Transportation to use the design-sequencing method of
contracting until January 1, 2014, on not more than five
transportation projects.
ANALYSIS : Design-sequencing is 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
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entire project to be completed before commencing
construction, as is the case with the traditional
design-bid-build method of contracting. Design-sequencing
is different from design-build, the latter of which entails
the contracting of both the design and construction to a
single entity. With design-sequencing, the transportation
agency, in this case California Department of
Transportation (Caltrans) retains responsibility for design
but is able to award a construction contract prior to
completing the design for the entire project. Under
current law, a transportation agency may award a
construction contract when the design is at least 30
percent complete.
AB 405 (Knox), Chapter 378, Statutes of 1999, established
the Design-Sequencing Demonstration and Evaluation Program,
authorizes Caltrans to use design-sequencing for no more
than six transportation projects. One year later, AB 2607
(Knox), Chapter 340, Statutes of 2000, was enacted to
increase the number of projects to 12. This demonstration
program was repealed on January 1, 2005. In 2004, SB 1210
(Torlakson), Chapter 795, established Phase 2 of the
demonstration program, authorizing 12 more projects. This
authority expired on January 1, 2010.
Under these bills, Caltrans is required to provide to the
Legislature annual status reports that include information
on the procedures, costs, and delivery schedules of the
projects for which it used design-sequencing. In addition,
Caltrans is required to establish a peer review committee
to evaluate the outcomes of design-sequencing projects for
both Phase 1 and Phase 2 of the demonstration program. The
peer review committee is required to prepare a report for
submittal to the Legislature that presents its findings and
discusses the advantages and disadvantages of the
contracting method more fully after all of the projects are
completed.
This bill:
1. Authorizes Caltrans to use, until January 1, 2014, the
design-sequencing method of contracting for up to five
projects, subject to the following conditions:
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A. Caltrans must advertise design-sequencing
projects by special public notice to contractors.
B. Caltrans must require contractors to provide
prequalification information establishing
appropriate licensure and successful past history
with the proposed type of work.
C. Caltrans may use employees or consultants for
design-sequencing contracts.
2. Requires Caltrans compile data for each project
including the stage of completion, district, cost,
description, status, estimated time to complete the
project, and, as appropriate, actual time to complete
the project, and add the data as an attachment to any
annual status reporting performed by Caltrans, pursuant
to Section 3 of Chapter 795 of the Statutes of 2004, on
design-sequencing projects awarded prior to January 1,
2011.
3. Allows Caltrans to utilize design-sequencing authority
only on projects that are deemed to have a high
probability of success as determined by the
"Design-Sequencing Project Selection Criteria" contained
in the "Design-Sequencing Nomination Fact Sheet"
developed by the department.
4. Defines "high probability" as there is a likelihood that
a time savings will be realized, construction costs will
be reduced, or available state or federal funds will be
captured by utilizing design-sequencing.
Background
Status of Phase 1 . Under Phase 1, Caltrans awarded
design-sequencing contracts for 10 of the available 12
slots by January 1, 2005. All ten have completed
construction, but one remains to be closed out due to an
outstanding claim. Recent data are difficult to interpret,
but it appears that most projects achieved some time
savings.
In March 2008, Caltrans released an interim report
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evaluating the design-sequencing contracting method for
projects awarded under Phase 1. The interim report
included six of the 10 projects, which represented 12
percent of the total value of design-sequencing contracts
awarded.
The evaluation examined 14 criteria in four performance
areas including schedule, cost, contract administration,
and stakeholder satisfaction. Caltrans compared the
results of these factors for the six design-sequencing
projects to nine "shadow projects," which Caltrans had
identified as similar types of projects. What follows is a
brief summary of some of the major findings regarding cost
and schedule.
Capital cost . Comparing the bid amount to the final
construction cost, Caltrans found that the cost for
design-sequencing projects increased by 30 percent on
average per project, compared to an average increase of 12
percent for the shadow projects.
Support cost . The total support costs for
design-sequencing projects is 46 percent of their
construction allotment compared to 32 percent for the
shadow projects.
Change orders . On average, the design-sequencing projects
generated 50 contract changes per project compared to 49
for the shadow projects.
Impact of change orders on cost growth . The change orders
increased the construction capital cost an average of 37
percent for design-sequencing projects and 12 percent for
the shadow projects.
Time savings . Time savings for each of the
design-sequencing projects was measured by calculating the
difference between the estimated contract acceptance date
had the project been built using design-bid-build and the
actual design-sequencing contract acceptance date. The
time savings on the six design-sequencing projects ranged
from 2 to 18 months, with an average time savings of 4
months.
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It should be noted that the interim report did not include
four projects, including the three largest of all Phase 1
projects, either because construction had not been
completed or because the contractor had claims against
Caltrans for cost increases. Since the interim report was
released, all four projects have been completed and all
four involved claims.
Status of Phase 2 . There are fewer data available for
Phase 2 projects. To date, Caltrans has awarded eight
design-sequencing projects, one of which has been
completed. It achieved a time savings of one month.
Related legislation
Last year Caltrans sponsored legislation, AB 732
(Jeffries), to extend by two years, from January 1, 2010 to
January 1, 2012, the sunset date on Phase 2 of its
design-sequencing authority. Because Caltrans had not yet
issued its report on Phase 1 of the demonstration program,
let alone its report on Phase 2, the bill was amended in
the Senate Transportation and Housing Committee to extend
the program by six months, but reduce the overall number of
projects that Caltrans may undertake from 12 to 9. AB 732
died in the Senate Appropriations Committee.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee:
Fiscal Impact (in thousands)
Major Provisions 2010-11 2011-12 2012-13 Fund
Project delivery impact unknown costs related to
using Special*
design-sequencing rather than
design-bid-build, potentially offset
by savings from accelerated schedule
(see staff comments)
* State Highway Account
SUPPORT : (Verified 8/16/10)
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Interstate-5 Consortium Cities Joint Powers Authority
Planning Conservation League
Professional Engineers in California Government
ARGUMENTS IN SUPPORT : According to the author's office,
the most current design-sequencing indicators have provided
generally good assessments of the program, especially in
the second phase. Due to the January 1, 2010 sunset,
however, Caltrans is no longer authorized to use this
contracting method. As Caltrans gains further experience
with design-sequencing, greater time- and cost-savings may
be realized on future projects. By reauthorizing
design-sequencing, this bill will give Caltrans an
additional contracting option it may use to expedite
project delivery.
ASSEMBLY FLOOR :
AYES: Adams, Ammiano, Anderson, Arambula, Beall, Bill
Berryhill, Tom Berryhill, Blakeslee, Blumenfield,
Bradford, Brownley, Buchanan, Caballero, Charles
Calderon, Carter, Chesbro, Conway, Cook, Coto, Davis, De
Leon, DeVore, Emmerson, Eng, Evans, Feuer, Fletcher,
Fong, Fuentes, Fuller, Furutani, Gaines, Galgiani,
Garrick, Hagman, Hall, Harkey, Hayashi, Hernandez, Hill,
Huber, Huffman, Jeffries, Jones, Knight, Lieu, Logue,
Bonnie Lowenthal, Ma, Miller, Monning, Nava, Nestande,
Niello, Nielsen, Norby, V. Manuel Perez, Portantino,
Ruskin, Salas, Saldana, Silva, Skinner, Smyth, Solorio,
Audra Strickland, Swanson, Torlakson, Torres, Torrico,
Tran, Villines, Yamada, John A. Perez
NO VOTE RECORDED: Bass, Block, De La Torre, Gilmore,
Mendoza, Vacancy
JJA:dok 8/16/10 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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