BILL ANALYSIS �
AB 797
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Date of Hearing: May 11, 2013
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
AB 797 (Gordon) - As Amended: April 15, 2013
Policy Committee:
TransportationVote:12-4
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill authorizes the Santa Clara County Valley
Transportation Authority (VTA) and the San Mateo County Transit
District (SMCTD) to use an alternative 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. Specifically, this bill requires each of the
two transit authorities:
1)In order to use CM/GC, to make a written finding that its use
in lieu of the traditional design-bid-build contracting method
will reduce project costs, expedite completion, or provide
other benefits otherwise not achievable.
2)On projects using CM/GC, to comply with existing prevailing
wage monitoring and enforcement requirements, including
providing reimbursement to the Department of Industrial
Relations, or alternatively to enter into a project labor
agreement that includes a mechanism for resolving disputes
regarding payment of wages.
3)Upon completion of a project using CM/GC, to prepare a
specified project report and post that report on its website.
FISCAL EFFECT
Costs for VTA and SMCTD to administer and report on the CM/GC
contracting, including prevailing wage monitoring and
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enforcement, will be absorbable and are not state reimbursable.
To the extent the use of this alternative methods is successful,
there should be significant savings on those projects selected
by VTA and SMCTD.
COMMENTS
1)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, 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.
In the last 10-15 years, contracting agencies have 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 over 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. 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, VTA or SMCTD would engage a design and
construction management consultant to act as its consultant
during the preconstruction phase and as the general contractor
during construction. During the design phase, the construction
manager acts in an advisory role, providing constructability
reviews, value engineering suggestions, construction
estimates, and other construction-related recommendations.
Later, the agencies and the construction manager can agree
that the project design has progressed to a sufficient enough
point that construction may begin. The two parties then work
out mutually agreeable terms and conditions for the
construction contract, and, if all goes well, the construction
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manager becomes the general contractor and construction on the
project commences, well before design is entirely complete.
The CM/CG process is meant to provide continuity and
collaboration between the design and construction phases of
the project.
2)Prior Legislation . SB 1549 (Vargas)/Chapter 767 of 2012,
authorized the San Diego Association of Governments to use
CM/GC for public transit projects within its jurisdiction.
AB 2498 (Gordon)/Chapter 752 of 2012 authorized Caltrans to
use CM/GC on a pilot basis for six projects.
Analysis Prepared by : Chuck Nicol / APPR. / (916) 319-2081