BILL ANALYSIS �
AB 2498
Page 1
Date of Hearing: May 16, 2012
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 2498 (Gordon) - As Amended: May 1, 2012
Policy Committee:
TransportationVote:11-2
Urgency: No State Mandated Local Program:
Yes Reimbursable: No
SUMMARY
This bill authorizes Caltrans to pilot an alternative
contracting method. Specifically, this bill:
1)Authorizes Caltrans to use a contracting method, consisting of
specified procedures, referred to as construction
manager/general contractor (CM/GC), whereby a construction
manager is procured to provide preconstruction services during
a project's design phase and construction services during the
construction phase.
2)Limits the authorization in (1) to four projects, and requires
Caltrans to provide annual progress reports to the Legislature
until all four selected projects are completed.
FISCAL EFFECT
Caltrans costs to administer and report on the new contracting
method will be minor and absorbable. To the extent the CM/GC is
successful, there will be significant savings on the four pilot
projects selected by Caltrans.
COMMENTS
Background and Purpose . The traditional public works contracting
method is known as design-bid-build, whereby project design is
done under contract by an architectural/engineering firm (or in
Caltrans' case, mainly in-house), then upon completion of the
design phase, the construction phase is put out to bid and the
contract is awarded to the lowest responsible bidder.
AB 2498
Page 2
In the last 10-15 years, the state has selectively used an
alternative contracting method known as design/build, whereby
entities with both design and construction management
capabilities compete for a single contract for both project
phases, typically for a fixed price. The intent of the
design/build alternative is to reduce the contracting agency's
risk with regard to project costs and schedule, expedite project
completion, and minimize change orders and claims. Design/build
has some drawbacks, however, including that the contracting
agency relinquishes significant control the details of project
design. In addition, at the point when the design/build entity
bids on a project, there are still many unknowns, and thus a
degree of risk, which are factored into their bids. Therefore,
even though the contracting agency is transferring risk, they
are still paying for it in some manner.
According to Caltrans, the use of CM/GC seeks to achieve the
best of both worlds, i.e maintaining design control while
minimizing overall risk. Under CM/GC, Caltrans would perform the
design in-house, thus maintaining control, but rather than
designing in a vacuum, this work would be done in partnership
with the construction firm that would have the right of first
refusal to construct the project, assuming a mutually agreed
upon price can be negotiated. The design would progress to a
significant stage of completion prior to negotiating a final
price, so that rather than just transferring risk, which
Caltrans still pays for in the bid, CM/GC can actually mitigate
much of the risk from the eventual project cost.
Analysis Prepared by : Chuck Nicol / APPR. / (916) 319-2081