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Utah’s Use of CMGC & Project Delivery

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Presentation on theme: "Utah’s Use of CMGC & Project Delivery"— Presentation transcript:

1 Utah’s Use of CMGC & Project Delivery
Presented by: Michelle Page, P.E. UDOT Innovative Contracting

2 What is CMGC in Utah? Consists of a Project Team with Three Participants: An Owner A Designer A General Contractor with a Two Phase Contract Phase I – A “Construction Management” consulting contract to help with Design Phase II – A “General Contracting “ contract to build the project

3 Benefits of CMGC Public Expectation Political Capital
Open Road Political Capital Politicians Take Credit UDOT utilizes more state funds than federal User Cost Savings Reduce Construction Time Reduce Construction Delays Business Stays Open UDOT’s funding program consists of 85% State funding and 15% Federal funding. Prior to innovative contracting, UDOT was 80% Federal and 20% State.

4 Innovative Contracting Program

5 Engineering Solutions
Advances in Roadway Geometry: DDI, CFI, Flex Lanes, Movable Barrier, Reversible Lanes ABC Program: I-80 Bridge Farm Precast Structural Elements (Bents, Columns, Superstructure, Deck, Pavement Slabs) Bridge Moves – UDOT has gone from taking 6-8 months to build a bridge to moving into place in just a few hours.

6 Owner Controls the Design
UDOT Plan Build Design Consultant Design Contractor Bid Validate In this chart UDOT controls the design and has separate contracts with the design firm and the contractor. Not only does CMGC empower the owner to make cost, quality, and schedule decisions it also allows the owner to adjust scope. CMGC provides maximum flexibility with maximum information for the design process. Should the Owner not come to an agreement with the Contractor’s proposed price the project can go through a traditional advertisement and competitively bid the project.

7 CMGC Expectations Better Designs Better Schedules Lower Costs
Savings in Design Savings in Construction Savings from Innovation Savings from Mitigated Risks Risk Management – Risks are identified and assessed early on. Where they can be mitigated or avoided the Contractor bids accordingly, where the risks remain unknown the owner holds the contingency amount and pays actual costs as encountered through the traditional change order process.

8 Project Delivery Timelines
Traditional Design Adv Select Construct Design-Build Design Design Select Construct RFQ RFP Contractor selection does not occur on traditional projects until the design is complete and the project is advertised. This takes several months to over a year. Contractor selection on Design Build projects occurs after we have described what we want and given the contractor consultant team time to do 30% design. This can take a year or more on large projects. The RFP is typically over a 1000 pages of documentation and the contractor response is 1000’s of pages. A 1000 page RFP provides the opportunity for a lot of hidden errors. Contractor selection on CMGC projects occurs early in design. The RFP can be developed in a day but we typically take a month. The RFP on Mountain View Corridor ($700 mil) was 51 pages however most RFP’s are in the range of 31 pages. With early procurement we typically save money and time. Some projects have be able to eliminate a year in construction However to get the full benefit of the contractors knowledge and experience it is not recommended that we rush through design. CMGC projects should avoid schedule compression in design. CMGC Design Construct Select Early Construct RFP

9 CMGC Project Delivery Results
Speed Early start items of work before 100% Design Early Procurement Advanced Contractor Planning Brevity 30 to 50 Page RFP Control Owner makes design decisions with Contractor and Designer inputs Flexibility We can change scope during Design Speed ABC bridge at 4500 S over I-215 ordered girders before design Dixie Drive moved a golf course before they had a design Contractor can plan sequence and schedule with consideration for utilities and RoW Brevity The traditional process requires a design before a contractor is hired Design Build requires a performance spec of more than 1000 pages Control Only process where the owner make design decisions with advice from both the contractor and the designer Flexibility Summit Park Bridge widened the bridge to accommodate a future climbing lane in Parleys Canyon

10 When UDOT Uses CMGC Projects that need Contractor input
Project where UDOT wants to control the design Projects with a high need for innovation Projects that can benefit from early procurement or construction Projects with third-party risk Projects to introduce new technology

11 Cost & Schedule Influences
Knowledge and Experience Design errors Risk Identification Trust Site Conditions Innovation Design Process Constructability Contractor Means and Methods

12 Mountain View Corridor Influence of Risk and Innovation on Cost
Opinion of Probable Cost of Construction OPCC OPCC1 did not include the contractors inputs. It only included the Designers assessment of risk. It should be obvious that Contractors do not view risk the same way as designers. Designers tend to underestimate the risk. Contractor increase cost to cover risk. The design at OPCC2A was 30% complete which is the point at which contractors are typically selected in a Design Build Process. If this project had been awarded at 30% design it would have cost $126 million more than the $220 price agreed to at the award of construction contracts. Innovation and Risk management saved the project $126 million. The project cost 36.4% less than what it would have been at 30% design. This savings would not have occurred in traditional projects because the contractor is not involved in the design. This savings may occur in Design Build but the owner is not likely to see the cost benefit. CMGC is therefore the only process in which the owner has any hope of reducing project cost with contractor knowledge, experience, and creativity. The other processes rely solely on a competitive bid. The OPCC included risk and innovation. However, the contractor tracked innovation savings separately. They identified $24 million in innovation savings or 12% of the awarded value of the project. This would suggest that the risk savings was 15 to 22% of the construction contract award.

13 Innovation Savings This is the recorded innovation savings for other CMGC projects. Direct construction cost savings are difficult to track because some of them occur in the reduced cost of line items and others eliminate line items. The I-80 project for example saved a $ 1 million dollar expenditure because of a contractor solution that avoided moving a power line. This savings does not show up in a line item in the construction bid but the project experienced a cost savings. (Taken from 2010 Annual Report)

14 Who Gets the Savings? Contractor Risk Owner Risk Risk
In traditional projects the owner holds the risk associated with design and change orders and overruns/underruns are 10.35%. In Design Build projects we push the risk onto the contractor. However change orders and overruns/underruns are 11.2% because (1) we have not worked through the design and do not know what we need and/or (2) we are uncertain of how much scope to include because of funding constraints. In CMGC projects the goal is to reduced the risk and decide who is best able to deal with it. Very few change orders occur because of design errors. In addition because the contractor participated in design decisions they tend to fix things on their own instead of asking for more money. Reduce risk, and share the savings DBB DB CMGC

15 CMGC Projects Save on Change Orders & Overruns
good way to look at overall savings is to consider Change Orders and Overruns on closed projects. We have to look at closed projects to get actual data. Prior to closing a project we only have estimated costs on change orders and overruns. The savings differential between CMGC and Design Bid Build is 6.9% The savings differential between CMGC and Design Build is 6% (Taken from 2010 Annual Report)

16 Owner Implemented Innovation
No contractor will win a hard bid proposing a solution never used before. CMGC enabled us to introduce new technology to the State of Utah. ABC was possible because CMGC enabled the owner to share risk with the contractor This technology has now been transferred to other delivery methods.

17 Flexibility This project was begun with insufficient funding.
Portions of the project were executed as money became available and scope was expanded as funding was added. Developers added funding to the project and CMGC provided the scope flexibility to deal with additional funds without initiating additional contracts.

18 Fair Price Strategy Proposal Items State Averages & Ratio
Prices set in Competitive Process State Averages & Ratio Comparison to Other projects Total Cost Compared to Independent Cost Estimate Engineers Estimate Selection Bid Items State Average Prices ICE, EE Traditional line item pricing versus production rate pricing. Although we can show cost savings for risk, innovation, and change orders we are still asked to look at line item prices This is our strategy for managing cost on CMGC projects.

19 We Save on Bid Item Costs Compared to State Averages

20 Where Owner Spends the Effort
Define Goals Describe Project RFP Development Proposal Evaluations Risk Analysis Innovation Analysis Cost Comparisons Design Decisions Contractor Construction

21 Available Tools & Resources
UDOT Website: CMGC Description Advertising Checklists Analysis and Reports Process Documents Sample Documents Rudy Alder, UDOT Innovative Contracting Engineer

22 Questions

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