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Early Contractor Involvement: HPO’s Key to Success

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Presentation on theme: "Early Contractor Involvement: HPO’s Key to Success"— Presentation transcript:

1 Early Contractor Involvement: HPO’s Key to Success
Luis A. Ruiz, P.E. Chief, Geotechnical Branch Jacksonville District SAME Post Meeting Jacksonville, FL 28 August 2013

2 Agenda Background ECI Contracts Basics HPO Projects Solicitation
1828 Background ECI Contracts Basics HPO Projects Solicitation Design phase Contract administration Lessons learned Wrap-Up

3 **75 percent of the city of New Orleans flooded (per IPET)
**Illustrated flood depths based on preliminary data and high water marks. Numbers will become more specific as data is verified. (maximum New Orleans flood depths pending from MVN hydrology)

4 A Priority of Two Administrations
“Now, even as we continue our recovery efforts, we're also focusing on preparing for future threats so that there is never another disaster like Katrina. The largest civil works project in American history is underway to build a fortified levee system. And as I — just as I pledged as a candidate, we're going to finish this system by next year so that this city is protected against a 100-year storm.” President Barack Obama Xavier University, New Orleans August 29, 2010

5 Best Practices System Program Management
Acquisition Strategy Design Build / Cost Plus Contracts Best Value Source Selection Early Contractor Involvement (ECI) Program Management Support Contract Construction Materials Government Furnished Borrow Supply Contracts for Sheet Piles & Borrow Improved Techniques Value Engineering – systems study complete Pile Load Tests – in advance of contract award Press Pile, Spiral welded piles Deep soil mixing, sand blanket and wick drains Earned Value Management System (EVMS) Leverage National & Regional Resources

6 ECI Contracting A Fixed Price Incentive contract IAW FAR 16.403
A project delivery method where the Corps engages the services of a general contractor to provide “preconstruction services” concurrent with design effort The contract includes the Government’s ability to exercise an option for the construction Provides for successive target price adjustments as the design matures, with the objective of managing the final construction cost to optimum. Contract includes terms and conditions to allocate risk among the parties Data and information from 13 Jun 05 ENR, page 38.

7 What it ain’t… Design Contract Non-competitive acquisition
Government retains design responsibility either through in-house or with a separate AE contract. Preconstruction services are not “Brooks Act” services. Non-competitive acquisition Contract is procured IAW FAR 15 and application of FAR Price and non-price factors are evaluated. Design-Build Contract Two separate entities (designer & construction manager/general contractor) Both report to the owner (Government). Legal anaalysis by GSA determined legal sufficiency, supported by further review by COE lawyers.

8 Acquisition Strategies Comparison
Phase Traditional Acquisition (D-B-B) Early Contractor Involvement (ECI, also I-D-B-B) Design Completed prior to advertisement of construction contract Preconstruction Services – construction contractor provides input on design constructability, VE, means & methods, construction phasing, etc Award Complete designs are used to advertise and award construction contract Construction option - awarded when major design decisions are complete and price negotiated (designs may be <100%) Construction NTP and construction begins after award of contract Construction can begin prior to final designs being completed

9 Relative Project Delivery Timelines
P&D Funding Construction Funding Design Bid Build Project Delivery Design Construction ECI delivery advantage depends upon timing of design and construction funds. ECI Project Delivery Design Construction CM selection and design begins with P&D funds. Design-Build Project Delivery Design Construction Total duration equal or less than ECI, but cannot commence design/construction until construction funding is received. PY -1 PY Time

10 ECI Contract Fixed-price Incentive (successive targets) contract (FAR clauses and ) RFP will provide SOW for preconstruction services (Base) Concept engineering solution with typical sections for proposal preparation for construction initial target pricing (Option) Ceiling price Evaluation criteria, based on best value tradeoffs, including price Negotiated Procurement Award of preconstruction services (Base) as a Firm Fixed Price Exercise of Construction (Option) as a Firm Price Incentive

11 Contract Schedule An example of ECI Solicitation Line Items are shown below. This is remitted with the proposal. Additional line items may be added for long lead items if required. ITEM NO. SUPPLIES/SERVICES QUANTITY UNIT UNIT PRICE AMOUNT 0001 BASE Preconstruction Services FFP 1 Lump Sum $____________ 0002 OPTION Construction Phase FPI Initial Target Cost Initial Target Profit NTE $____________ The contract schedule shown above is a representative example for an ECI contract. The contract is composed of two major parts – the preconstruction services base which is a service contract. The second part is the construction option. This part is the equivalent to a normal construction contract and is subject to Davis Bacon. The preconstruction services phase is awarded as a fixed price contract. At this step of the contract, the ECI contractor will be providing the typical services: cost estimating, design review, constructability reviews, design and construction scheduling and construction phasing. This is where the ECI contract is a bit different than a normal construction contract by allowing input from the construction contract during the design phase of the project. The construction phase is awarded at a point where major design decisions are complete but the design package is not necessarily at 100%. This allows us to get to construction sooner than a normal design bid build process. This schedule will be remitted with the proposals. The contractor will fill in the prices for the preconstruction services and the initial target cost and profit.

12 When to Use ECI Urgency - very tight mandated schedules
Funding - funding stream is available Complex “one of a kind” project, with no standard design Size - large enough to attract experienced firms Uncertainty – risk in delaying award while requirements are being developed

13 When to Use ECI - Other Challenging site, or other unique aspects that would benefit with a Contractor’s input during design phase It would be advisable to have a collaborative effort during design and construction between Designer, Builder, Owner, User to ensure Project success

14 New Orleans ECI Projects
Seabrook Gate IHNC LPV 111 27,720 FT DSM LPV 145 30,800 FT T-Wall LPV 146 36,600 FT T-Wall LPV 148 43,100 FT T-Wall West Closure Complex (PRO)

15 New Orleans East Largest Deep Soil Mixing Project in the World
LPV (CSX Railroad to Michoud Canal) Scope: Raise existing levee via deep soil mixing and landside alignment shift; raise T-wall around Pump Station 15; add a floodwall tie-in from the levee to the IHNC Surge Barrier. Status: Construction is 78 percent complete and will be finished in June 2011. The deep soil mixing project along this 5.3-mile stretch of levee in New Orleans East is the largest deep soil mixing project in the country, and one of the largest in the world. Approximately 1.7 million cubic yards of land is being treated with the deep soil mixing method to strengthen the underlying soil. The next largest deep soil mixing project in the U.S., part of Boston’s Central Artery/Tunnel Project (also known as the “Big Dig”), is a distant second, with 650,000 cubic yards of ground treated. There are 8 deep soil mixing rigs, each with their own batch plant, on the construction site. More than 500,000 tons of cement/slag is being incorporated into the new levee. The deep soil mixing rigs inject a concrete slurry into the underlying soil to produce stabilized soil columns. Each stabilized soil column is about 5.25 feet in diameter and extends about 67 feet deep. A row of columns, or a panel, is about 54 to 98 feet long, depending on the properties of the different soil layers. The distance from panel to panel along the levee is roughly 15.5 feet. The project is budgeted at about $295 million.

16 Bayou Sauvage National Wildlife Refuge
New Orleans East Levee Bayou Sauvage National Wildlife Refuge Old Levee New Levee Over 1 Superdome of Clay (4.9 mil cy) Required ~1 Football Field

17 Raise and Strengthen Levees / Floodwalls Higher Floodwalls and Levees
New T-wall Orleans Metro St. Bernard Parish Old I-wall New 32-foot T-wall Old Levee Elevation New Orleans East

18 (2 miles constructed per month)
St. Bernard Floodwall MRGO MRGO 50 Eiffel Towers of Steel (2 miles constructed per month) 23 Miles Long In St. Bernard Parish, work is under way to construct new structural features that, when complete, will reduce the risk associated with a storm surge that has a one percent chance of occurring in any given year. Risk reduction features will be operational in June 2011. Approximately 23 miles of T-wall and 3 gates constitute the St. Bernard Parish risk reduction system. Approximately 115,000 linear feet of sheet pile, with each ranging in length from 20 feet to 40 feet, is being used to support the floodwall’s foundation. Approximately 42,000 H-piles, with each H-pile ranging in length from 90 feet to 160 feet, are being used to support the floodwall’s foundation. In other words, the project includes about 994 miles of H-piles, which is approximately the distance between New Orleans and Chicago. Approximately 25,000 tons of rebar is being used to reinforce the concrete flood-walls. Approximately 300,000 cubic yards of concrete, or roughly 6.5 million square feet, is being used in floodwall construction. That is 1.75 times the amount of concrete used in construction of the Louisiana Superdome. Approximately 207,000 tons of steel H-pile is being used in floodwall construction. That is approximately 28 times the amount of metal used to construct the Eiffel Tower. If the total tonnage of steel is included, the St. Bernard floodwalls incorporate about 50 Eiffel Towers worth of metal. Approximately 250 construction workers from St. Bernard Parish are employed by the various contractors. The entire risk reduction system in St. Bernard Parish is budgeted at approximately $1.5 billion. Central Wetlands

19 Katrina storm surge elevations were much higher elsewhere
Top of Floodwall: EL +32’ Katrina storm surge elevations were much higher elsewhere along the Gulf Coast. Top of Base Slab: EL +21’ 500-YEAR STILL WATER ELEVATION*: EL +22.5’ 100-YEAR STILL WATER ELEVATION*: EL +18’ HURRICANE KATRINA’S STILL WATER ELEVATION* AT THIS LOCATION: EL +18’ Designed for a 100-year Surge Top of Stabilization Slab: EL +17.5’ St. Bernard Floodwall, near the IHNC Tie-In (not to scale) *Still water elevation does not include waves

20 Seabrook Floodgate Complex
The Seabrook Floodgate Complex will consist of a 95-foot-wide sector gate and two 50-foot-wide vertical lift gates approximately 540 feet south of the Ted Hickey Bridge with floodwall tie-ins on the east and west sides. Other components of the Seabrook Floodgate Complex include upgrading the Alabama Great Southern Railroad gate to 100-year heights, constructing new T-walls that will tie into the lakefront risk reduction system and raising the Hayne Boulevard ramp. When complete, the Seabrook complex will close the only remaining gap along the lakefront in Orleans Parish. Construction is under way and will continue into 2012; however, the 100-year level of risk reduction will be achieved in June 2011 with the completion of the Seabrook Interim Closure Structure, a cofferdam inside which the floodgates will be built.

21 Seabrook Floodgate Complex

22 West Closure Complex The WCC removed 26 miles of levees and floodwalls from the first line of defense

23 West Closure Complex The GIWW West Closure Complex will consist of a navigable floodgate, a pumping station, floodwalls, foreshore protection, and an earthen levee. The project will also require the dredging of Algiers Canal, as well as the realignment of Bayou Road. Project challenges are maintaining navigation traffic on the GIWW (a Federal navigation channel with heavy commercial barge traffic) and the location of the complex in relationship to the Environmental Protection Agency’s Bayou aux Carpes Clean Water Act (CWA) 404(c) area, a wetland area of national significance. A 225-foot navigation navigable floodgate will be constructed to ensure safe navigation on the highly trafficked GIWW and tie in to a pumping station. The design of the navigation gate closure is being done in collaboration with representatives from the navigation industry and the US Coast Guard to ensure that the safest and most reliable system will be constructed. When the gate is closed during a storm event, 19,140 cubic feet per second (cfs) pump station is required to evacuate the rainwater pumped into the Harvey and Algiers canals by 9 pump stations along the canals. The pump complex will be the largest of its type in the nation. To minimize environmental impacts to the Bayou aux Carpes 404(c) area, the floodwall will be constructed on the eastern edge of the wetlands, within 100 feet from the western bank of the GIWW for a length not to exceed 4,200 feet. The floodwall will start in the north with a water control structure across the Old Estelle Outfall Canal, extend southward along the eastern edge of the Bayou aux Carpes 404(c) area and tie into the navigable floodgates on the GIWW. A protective berm will be constructed on the channel side of the floodwall to protect it from barge impacts, provide concrete scour protection, and serve as a maintenance access road. Foreshore protection will be constructed along the GIWW, adjacent to, but not within, the Bayou aux Carpes 404(c) area. A new earthen levee will be constructed east of the closure complex to tie into the existing levees. Bayou Road will be realigned to provide access around the new levee on the protected side. Dredging of the Algiers Canal will be required from the Belle Chasse Tunnel south to the confluence of the Harvey and Algiers canals, a distance of approximately 4.8 miles. Approximately 700,000 cubic yards of material will be excavated from the Algiers Canal. The dredged material will be used beneficially in a marsh restoration project in the Jean Lafitte National Historical Park and Preserve (JLNHPP) or placed in the Walker Road borrow sites.

24 Solicitation Award Preconstruction Services early in design phase (15 – 30%) Pricing schedule includes: Preconstruction services Initial Target Cost: option Initial Target Profit: option Selection of Contractor – ECI Specific Evaluation Factors Experience with preconstruction services Local market knowledge Plan to involve major subcontractors Oral interviews Sufficient design information for contractors to adequately provide an Initial Target Cost SOW section defining preconstruction services and expectations ECI specific clauses 7 Factors: 1. Corporate Experience (experience w/ Complex buildings/IT infrastructure/preconstruction services 2. Past Performance 3. Oral Interviews 4. Preconstruction services major subcontractor involvement Local Market Knowledge Small Business participation Price Escape Clause: Construction (Option) Competitive pricing of subcontracted work Minimum three sources Govt participates in bid opening and price/quality trade-offs Self-preformed work permitted if competitively priced & in the best interest of the Govt Subcontractors submit drawing and spec reviews Award of Construction Option Negotiate within ceiling price Satisfactory participation during preconstruction Otherwise, issue for competitive bidding

25 Solicitation – Scope of Work
Preconstruction services and expectations Cost estimating (live market conditions) Design consultation Constructability reviews Subcontractor input Value engineering – cost control Bid package development Design and construction scheduling Construction phasing Risk management Project orientation and partnering Construction/design integration – design liaison

26 Solicitation – Scope of Work
Escape clause – Govt. not obligated to exercise option: Poor preconstruction participation Excessive team turnover and lack of commitment Lack of Congressional authorization/appropriation Can’t negotiate within funds available Competitive subcontractor pricing – Govt. attends subcontractor bid openings Defines production point for use in FAR (100% design) Addresses payment processes

27 Solicitation - Clauses
Successive Target Pricing Midway Target Price scheduled when all major design decisions have been made Midway Target Price includes: + Midway Target Cost (MTC, Based on 35-90% Design) + Midway Target Profit (MTP, 1.5% - 3% of MTC) Midway Target Price < Ceiling Price Midway Target Price recognizes significant scope changes If Midway Target Price is under ceiling, the contracting officer may elect to exercise the construction option Addresses similar details for final Firm Target Cost and Profit at 100% design

28 Solicitation - Clauses
Adequate Accounting System: Self certification that accounting system is in compliance with FAR (c)(1) Earned Value Management System (EVMS) Certification Offeror’s accounting capable of supporting EVMS EVMS - Size dependent: Under $20M: not applicable $20M to $50M: offeror self-certifies compliance Over $50M: offeror self-certifies and is audited

29 Solicitation - Clauses
FAR , Incentive Price Revision – Successive Targets Defines ceiling price (ECC) Outlines alternative if firm fixed price agreement is not reached: Profit adjustment formula (% negotiated) Profit increases if final price is lower than Initial Target Cost Profit decreases if final price is higher than Initial Target Cost Final price determined after completion of work, using profit from profit formula Failure to agree is not subject to Disputes clause Incentive Profit can go up as CM controls/cuts costs between the Midway and Firm Target Prices.

30 Example: Profit Adjustment Formula
Scenario: Example Paragraph (d)(3) blanks are negotiated at the Midway Target Pricing with the following values: Increase/Decrease Profit by 5%, Range of FTP is 2% - 6% Initial Trgt Cost (ITC): $17,000,000 Firm Trgt Cost (FTC) : $16,000,000 Initial Trgt Profit (ITP): $800,000 Firm Trgt Profit (FTP): * $850,000 Initial Trgt Price: $18,140,000 Firm Trgt Price: $17,170,000 Ceiling Price: + $18,300,000 Ceiling Price: ** $18,300,000 + The ceiling price was inserted in the solicitation [paragraph (a), blank no. 2] as $18,300,000. * The Firm Target Profit is calculated based on the following: FTP = ITP – (5%) [FTC-ITC] - or – FTP = 800,000 – (5%) [$16M-$17M] = $850,000. ** Under this scenario, the project scope did not change between the initial target pricing and the Midway Target Pricing. Therefore, no change to the ceiling price was warranted and the FTC is lower than the ITC and the Contractor’s profit increased. You should notice that the Construction Reserve amount (2% of the FTC) has been lowered to $320,000.

31 Design Phase Jointly develop bid packages & design schedule: design team, CM, Corps & User Design estimates shared until negotiation point reached (IGE still close hold) Exercise construction option at optimum stage of design (project dependent) Establish Final Target 100% design - settle as FFP w/incentives Tie payment during design to design milestones Control designer bright ideas after construction option is exercised

32 Validation Phase (HPO Only)
Construction of access roads Necessary for Project Access & Pile Load tests Construction of Working Platforms Set-up of Contractor’s staging areas Perform Pile Load Tests Support completion of Final Designs Establishment of No-Work Zones Allowed Pre-Ordering Steel H-Piles Test Sections Complete DSM Mix Designs

33 Managing Cost & Pricing Data After Construction Award
Cost and Pricing data were required for the firm target proposal only. Otherwise, consent packages and Vouchers gave the Government a good look at the Contractor’s actual pricing without a further requirement for cost and pricing data.

34 ECI Contracting Benefits
Model allowed to arrive at well documented fair and reasonable costs ECI contract vehicle allowed the Government to make common sense changes to the contracts prior to fixing the price Facilitated both price increases/decreases Encompassed the Non-Federal sponsor concerns Eliminated the need for modifications Streamlined the administrative process for both the Government and the Contractor and saved costs for both parties Allowed for additional resources as necessary to maintain the contract completion dates

35 Lessons Learned Approach ECI with different mindset – more open way of doing business on all sides Better education of entire team of what ECI means (particularly customer) Staff big and staff early (Voucher Validators, Scheduler, Cost Estimators) Coordination - SOW for A-E and ECI contractor Collocation of Team Members Facilitate interaction between designers and contractor Review risk analysis at each major milestone

36 Lessons Learned (cont.)
Establish control of late sponsor comments by emphasizing schedule and bid packages Clearly define process for notifying PDT of design changes, amendments and modifications Allocate resources according to design schedule (more Civils early, more Mechanicals later) Allow more time for joint estimates or different approach to joint estimates Improve sub-contractors involvement in pre-construction phase Good risk decisions made w/ contractor input

37 HQUSACE Policy Legal Sufficiency Requirements
Why FFP contract not suitable Use FAR , Incentive Price Revision – Successive Target clause Ensure the contractor has an adequate accounting system Ensuring adequate price competition and fair and reasonable pricing (include cost realism) Negotiating the ceiling price – Recommend offerors to propose Level of design at award of preconstruction services Scope of preconstruction services Structure of the contract and predominance Funding the construction management contract (P&D vs Constr.)

38 Final Negotiated Price
ECI Results HPO Contract Initial Target Price Initial Ceiling Price Final Negotiated Price Difference LPV Archer, Western, Alberici $294,894,736 $411,600,000 $342,275,251 $69,324,749 LPV 145 Chalmette Levee Constructors $357,245,988 $488,000,000 $237,128,127 $250,871,873 LPV 146 St. Bernard Levee Partners $280,484,886 $452,000,000 $272,294,417 $179,705,583 LPV Cajun Construction $300,000,000 $380,000,000 $349,999,235 $41,582,109  IHNC-01 Seabrook Alberici Constructors $154,000,000 $181,450,000 $164,511,456 $16,938,544 Sub-Totals >>> $1,462,857,130 $1,924,850,000 $1,366,427,142 $558,422,858 Savings to the Government: 29%

39 The Delivery Team TEAM NEW ORLEANS: COLLABORATION AND SHARED REPONSIBILITY Team New Orleans has made significant progress on the HSDRRS in the last six years. The accomplishments of this team of federal, state, local governments, levee authorities, levee boards, academia, industry and many more is historic and unparalleled. Committed to ensuring that New Orleans could handle a 100-year storm surge by 1 June 2011.

40 **75 percent of the city of New Orleans flooded (per IPET)
**Illustrated flood depths based on preliminary data and high water marks. Numbers will become more specific as data is verified. (maximum New Orleans flood depths pending from MVN hydrology)



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