BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Kevin de Le�n, Chair
AB 797 (Gordon) - Transit districts: alternative project
delivery methods.
Amended: April 15, 2013 Policy Vote: T&H 11-0
Urgency: No Mandate: No
Hearing Date: June 24, 2013
Consultant: Mark McKenzie
This bill does not meet the criteria for referral to the
Suspense File.
Bill Summary: AB 797 would authorize the Santa Clara County
Valley Transportation Authority (VTA) and the San Mateo County
Transit District (SamTrans) to utilize the construction
manager/general contractor (CMGC) project delivery method for
transit projects.
Fiscal Impact:
Unknown transit project costs or savings (State Transit
Assistance funds, local funds, federal funds). Before using
the CMGC method, the transit district must make a finding
that the alternative method would provide a benefit that may
be deemed to have a greater value than project cost alone,
such as expedited project delivery or other features not
achievable through design-bid-build. The overall value of a
project may be measured by criteria other than cost. This
could result in a higher overall project costs than
design-bid build, but use of CMGC must be justified by
providing other benefits, as specified.
Likely minor costs to the Department of Industrial
Relations (DIR) to perform prevailing wage monitoring and
enforcement, reimbursed by VTA and SamTrans (State Public
Works Enforcement Fund).
Background: The traditional project delivery process is the
design-bid-build method, whereby complete plans and
specifications are prepared prior to the advertising, bidding,
and awarding of any construction contracts. The agency awards
the contract to the lowest, responsible bidder. Although this
method is structured to ensure a project is built for the lowest
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cost, oftentimes project costs escalate dramatically as change
orders are necessary to address unforeseen problems encountered
during the construction phase. In addition, the bulk of project
risk remains with the sponsoring agency.
Existing law also allows public agencies to use alternative
project delivery methods. The most widely used alternative
project delivery technique is design-build, which allows both
design and construction services to be performed by a single
entity before the development of completed plans and
specifications. Design-build contracts may be awarded on the
basis of "best value" or "lowest responsible bidder," as
specified in existing law. Design-build is structured to shift
risk associated with the adequacy of plans to the contractor and
expedite project delivery by allowing construction to begin
before design is complete. AB 985 (Scott), Chap 541/2000,
authorized transit districts to use design-build for public
transit projects.
The construction manager/general contractor (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 input that helps the owner design a more
constructible project. The agency selects the construction
manager on the basis of qualifications, past experience, or a
best-value basis. According to the Federal Highway
Administration, 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 benefits of this procurement method is
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
fewer disputes over design issues.
The Legislature has authorized the Department of Transportation
to use the CMGC method on a pilot basis to construct up to four
projects (AB 2498, Gordon, Chap 752/2012). In addition, the San
Diego Association of Governments (SANDAG) has been provided with
general authority to use CMGC for public transit projects (SB
1549, Vargas, Chap 767/2012). Before electing to use the CMGC
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method, existing law requires SANDAG to make a written finding
declaring that use of CMGC will reduce costs, expedite
completion, or provide features not achievable through the
design-bid-build method. In addition, to determine the benefits
of CMGC, SANDAG staff must present a report to the agency's
governing body on its experience upon completion of a CMGC
project and to post the report on its internet web site.
Existing law creates the VTA as the congestion management agency
in Santa Clara County. In addition to other specified
transportation responsibilities, VTA operates bus, light rail,
and paratransit services in Santa Clara County. Existing law
also creates SamTrans, which is responsible for providing public
transit and transportation programs in San Mateo County.
Proposed Law: AB 797 would authorize VTA and SamTrans to use the
CMGC project delivery method for transit projects in their
jurisdictions. VTA and SamTrans would be subject to the same
criteria and requirements that apply to SANDAG in existing law.
Staff Comments: AB 797 would require VTA and SamTrans to adopt a
finding at a public meeting prior to authorizing the use of the
CMGC method for a transit project only after evaluating the
traditional design-bid-build methodology and making a
determination that use of the alternative methodology would
provide lower costs, accelerated project schedule, or provide
features that are not achievable through traditional project
delivery. Staff notes that "features not achievable through the
design-bid-build method" is a subjective and very broad term to
describe a benefit of using an alternative delivery method. It
is assumed that the transit agency would make a determination
that the alternative method would provide some public benefit
that may be a local priority, but could result in a higher
contract cost than design-bid-build. Even if costs are higher
for some projects, the bill is not expected to result in an
increased allocation of State Transit Assistance funds to the
specified transit agencies.