CONSTRUCTION MANAGEMENT AT RISK Prepared by: Nancy Fouad Carey Attorney AGC Alabama Birmingham Section Meeting November 5, 2012

Project Delivery Methods Design-Build Job Order Contracting Integrated Project Delivery Multi-Prime Design-Bid-Build Construction Management at Agency Construction Management at-Risk

Public Works Any project performed on public property with public funds the construction, installation, repair, renovation, or maintenance of public buildings, structures, sewers, waterworks, roads,…bridges, docks, underpasses, and viaducts as well as any other improvement to be constructed, installed, repaired, renovated, or maintained on public property and to be paid, in whole or in part, with public funds Ala. Code §

Public Works Public works in excess of $50,000 must be advertised for sealed bids. Projects cannot be divided into parts smaller than $50,000 for the purpose of avoiding the competitive bid requirements. Exempt Professional Services Sole Source Contracts Emergencies Ala. Code §

Project Delivery Methods for Public Works Design-Bid-Build Construction Management at Agency Construction Management at-Risk

Design-Bid-Build

D esign Phase Owner enters a contract with an engineer to completely design the project B idding Phase Plans are put out for bidding Construction Phase Owner enters a second contract with the lowest responsive and responsible bidder to construct the project

Design-Bid-Build PlanningDesignBidConstructionOccupancy Design TeamContractor

Design-Bid-Build Advantages Most familiar system Competitive bidding Most suitable for projects with clear boundaries and for those with adequate time to prepare thorough documents and to execute the construction

Design-Bid-Build Drawbacks Contractor is not involved in design A slow delivery process – design must be 100% complete before bidding starts An initial low bid does not necessarily result in final best value Owner assumes risks of errors History of litigation

Construction Management Construction Management at Agency Construction Management at-Risk

Construction Management CM assists owner with any phase Construction Manager oversees: Scheduling Cost control Constructability Project management Building technology The bidding on or negotiating of construction contracts Construction CM’s Role: Consultant (CM at Agency) Contractor (CM at-Risk)

Construction Management at Agency

Assists and advises awarding authority: During bidding phase Scheduling and coordinating construction Observing work and managing construction Does not accept any risk Does not perform construction services

CM at Agency - Exempt Professional Services Exempt: Contracts with persons who perform only architectural, engineering, construction management, program management, or program management services. Cannot engage in actual construction, repair, renovation, or maintenance of the public works with their own forces, by contract, subcontract, purchase order, lease or otherwise. Ala. Code § (d)

Construction Management at Agency Advantages: Can reduce awarding authority’s staff CM may have more expertise Reviews design for constructability Drawbacks: Does not accept any risk Owner manages the contracts No single, guaranteed price Unnecessary cost possible

Construction Management at-Risk

Owner holds a contract with the CM and a separate contract with the designer CM at-Risk: Supplies preconstruction services Holds the subcontracts (competitively bid) Takes responsibility for the performance of the work Guarantees the construction costs and schedule

Construction Management at-Risk Design Phase Schematic Documents Design Documents Construction Documents Bidding Phase Construction Phase PlanningDesignConstructionOccupancy Design Team CM at-Risk …

Construction Management at-Risk Design Phase - Schematic Documents CM at-Risk: Updates budget Outlines specification Evaluates materials and construction systems Updates schedule Value Analysis Report

Construction Management at-Risk Design Phase - Design Documents CM at-Risk: Updates budget, specifications, schedule, Value Analysis Report Guarantees the price and assumes the risk for the project’s cost by providing the Guaranteed Maximum Price Assumption that the project’s scope, assumptions, and drawings will not materially change If costs exceed this price and if the client has not made any changes, CM at-Risk is responsible for costs exceeding GMP

Construction Management at-Risk Design Phase - Construction Documents Designer’s instructions to constructor Important phase – where CM at-Risk is tested This phase’s estimate should reflect the design documents segment of the design phase Guaranteed Maximum Price is finalized

Selecting the CM at-Risk Best if CM at-Risk selected early Selected using either: Qualifications-Based Selection = Qualifications Best Value Selection = Construction Cost + Qualifications

Selecting the CM at-Risk Qualifications-Based Selection Qualifications may include: Experience Personnel Performance Project issues and solutions Management, budget, schedule, safety Qualifications are evaluated in accordance with criteria and weighting approved by Owner

Construction Management at-Risk Advantages Strengthens coordination between the A/E and CM at-Risk Increases the speed of the project Transparency is enhanced because all costs in the open Owner hires CM at-Risk based on qualifications CM at-Risk, A/E and Owner all collaborate Reduces potential for errors and omissions

Construction Management at-Risk Legislation Some states have authorized CM at-Risk for only certain state agencies CM at-Risk is competitively bid in some states Some states only allow CM at-Risk for certain projects Specific requirements for Selection Team – Arizona: Minimum of 3, not more than 7 One licensed contractor, Senior Management One registered or architect or engineer Differences also arise between states over whether the CM can perform part of the work itself and, if so, how much and under what conditions.

Summary Project delivery method drives: Project cost Quality of design Construction Long-term maintenance Project completion date CM at-Risk involves: Early contractor participation Integration of design and construction teams Reduced project duration Reduced construction costs

Nancy Fouad Carey (205) Thank You! Questions? 800.GET.BURR | |