BILL ANALYSIS �
SENATE TRANSPORTATION & HOUSING COMMITTEE BILL NO: AB 2498
SENATOR MARK DESAULNIER, CHAIRMAN AUTHOR: Gordon
VERSION:
6/15/2012
Analysis by: Art Bauer FISCAL: yes
Hearing date: June 26, 2012
SUBJECT:
Construction manager/general contractor procurement
DESCRIPTION:
This bill authorizes the California Department of Transportation
(Caltrans) to use an alternative procurement method referred to
as Construction Manager/General Contractor (CM/GC) for up to
four projects.
ANALYSIS:
Under the State Contract Act, public entities must fully
complete the design of a project prior to awarding a
construction contract and must award that contract to the
"lowest responsible bidder." This process, commonly known as
design-bid-build, is intended to ensure that the project is
built for the lowest possible cost. Although this is by far the
most common method of public contracting, for certain projects
it may not result in the lowest cost, nor be the most efficient
method of delivery.
Under design-bid-build, the project designer (whether
consultants or employees of a public entity) has sole ownership
of the project design and does not have the benefit of
consultation with the contractor that will ultimately be
responsible for construction of the project. Thus, there may be
significant construction issues that the designer does not
anticipate which can result in change orders later in the
process. This can drive up the project cost and shift all the
risk to the agency commissioning the project. Moreover, because
under design-bid-build, all design, permits, right-of-way
acquisition, etc., must occur prior to contract award, the
opportunity to save time by fast-tracking certain elements of a
project while work continues on other elements is lost.
AB 2498 (GORDON) Page 2
Existing law establishes the Design-Build Demonstration Program,
which authorizes Caltrans to use the design-build method of
procurement for up to ten projects, subject to the California
Transportation Commission (CTC) approval. The design-build
entity is made up of a design firm and a construction firm.
This ensures collaboration between the designer and the
contractor. It also allows the design-build firm to fast track
aspects of a project as issues around other elements are
resolved. However, the potential weakness of this method is
that the owner of the project relinquishes substantial control
over the design. Collaboration occurs between the design and
construction members of the design-build team, but design-build
limits the role of the project owner.
This bill :
1.Defines a CM/GC method of procurement as one in which Caltrans
selects the construction manager to provide preconstruction
services during the design phase of a project, plus actual
construction services when the project is being built.
2.Authorizes Caltrans to use CM/GC procurement method for four
projects, with at least three of the projects having a
construction value greater than $10 million each.
3.Selection of the CM/GC team is a competitive procurement
process where Caltrans evaluates bids on the basis of
qualifications of the firm, proposed approach to design,
experience, and other factors.
4.Requires Caltrans to prepare and submit a status report to the
Legislature no later than July 1 of each year during which a
CM/CG project is underway.
COMMENTS:
1.Purpose . The purpose of this bill, according to Caltrans, the
bill's sponsor, is to use CM/CG to expedite project delivery.
Caltrans states that it intends to use CM/CG "where unusual
constructability issues are likely to emerge. In such cases,
having the insight and cooperation of the construction
contractor early in the process can yield innovative solutions
that save significant time and cost."
AB 2498 (GORDON) Page 3
2.Alternative project delivery methods . In the last several
years, public agencies have been adopting alternative project
delivery methods. The principle reason for this is the desire
to shift construction risk from the agency/owner to the
project contractor. The most widely used alternative project
delivery technique is design-build.
3.The Construction Manager/General Contractor. The CMGC project
delivery method allows an agency to engage a construction
manager during the design process to provide assistance to the
design team, including advice regarding scheduling, pricing,
phasing, and other matters that helps the owner design a more
constructible project. According to the Federal Highway
Administration (FHWA), when design reaches approximately 60 to
90 percent completion, 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, a contract is executed
for construction services, and the construction manager
becomes the general contractor. The FHWA has found that the
benefits of this procurement method include that the public
agency does not sacrifice control over the design of the
project and during the construction phase, the contractor is
very familiar with the project design resulting in less
disputes over design issues.
RELATED LEGISLATION:
SB 1549 (Vargas) authorizes the San Diego Association of
Governments to use the CM/GC project delivery method for
projects that it sponsors. SB 1549 passed this committee
earlier this year 9-0. The bill is currently in the Assembly
Local Government Committee.
Assembly Votes:
Floor: 71-0
Appr: 17-0
Trans: 11-2
POSITIONS: (Communicated to the committee before noon on
Wednesday,
June 20, 2012)
AB 2498 (GORDON) Page 4
SUPPORT: Department of Transportation (sponsor)
Associated General Contractors
OPPOSED: None received.