Project Delivery Options in the California Construction Market CSI Fresno Chapter - February 16, 2010 PROJECT DELIVERY OPTIONS in the CALIFORNIA CONSTRUCTION MARKET Presentation for Construction Specifications Institute, Fresno Chapter By Rick Barton, LEED AP

Project Delivery Options in the California Construction Market CSI Fresno Chapter - February 16, 2010 Overview During this Presentation we’ll… Review goals towards project success Review why various delivery methods exist Explore various delivery methods

Project Delivery Options in the California Construction Market CSI Fresno Chapter - February 16, 2010 Goals for Project Success

Project Delivery Options in the California Construction Market CSI Fresno Chapter - February 16, 2010 Delivery Methods Overview Agency Construction Management Lease-Leaseback

Project Delivery Options in the California Construction Market CSI Fresno Chapter - February 16, 2010 Traditional Design-Bid-Build Characteristics Detailed plans and specifications prepared in advance of bidding Contractor bids on completed construction documents Price-based contractor selection Publicly funded projects governed by Public Contract Code Most successfully used with Agency CM for large/complex projects Application Traditional public sector delivery Prescriptive scope requirements Widely understood methodology

Project Delivery Options in the California Construction Market CSI Fresno Chapter - February 16, 2010 Traditional Design-Bid-Build Benefits Clear-cut division of responsibility and accountability Public sector comfortable with process/methodology Well defined and detailed design Lower cost at bid day Owner controls change order contingency Drawbacks Minimal to no control over contractor or subcontractor selection Difficult to gain time through fast-tracking or phasing Contractor has no incentive to contain change order costs Potential for adversarial relationships due to conflicting goals

Project Delivery Options in the California Construction Market CSI Fresno Chapter - February 16, 2010 CM-Multiple Prime Characteristics CM fulfills GC role – Agency relationship Scope is segregated into prime packages Owner holds contracts with prime contractors Application Common in K-12 education projects Clear trade segregation High concentration of one (or few) trade(s) Sparse or hostile GC market

Project Delivery Options in the California Construction Market CSI Fresno Chapter - February 16, 2010 CM-Multiple Prime Benefits: CM is an advocate for the Owner Reduced contractor fees Affords fast tracking of design and construction Continuous on-site supervision for Owner Drawbacks: Owner assumes more risk Typically low bid contractor selection More administration for multiple packages

Project Delivery Options in the California Construction Market CSI Fresno Chapter - February 16, 2010 CM At-Risk Characteristics CM/GC early involvement CM/GC typically holds subcontracts Guaranteed Maximum Price (GMP) established at bidding GMP typically includes change order contingency Often open book Application Popular private sector delivery Public sector application dependent on legislation -K-12 -UC -CSU -AOC

Project Delivery Options in the California Construction Market CSI Fresno Chapter - February 16, 2010 CM At-Risk Benefits: CM at Risk selection typically qualifications-based Provides cost containment Reduces Owner’s risk exposure Owner-CM/GC-Designer collaboration potential Shared savings potential Drawbacks: Could result in overall increased construction cost Owner could experience loss of advocacy once GMP is established Requires a GC with strong in-house conceptual estimating and management skills and experience in CM at Risk approach

Project Delivery Options in the California Construction Market CSI Fresno Chapter - February 16, 2010 Lease-Leaseback Characteristics Similar to a builder-developer delivery Owner leases property for $1/year – Builder-developer delivers project & leases back the improvements Quasi-private work Application K-12 - Ed Code Section CCD – Ed Code Section Fee generating facilities – Gov Code 5956

Project Delivery Options in the California Construction Market CSI Fresno Chapter - February 16, 2010 Lease-Leaseback Benefits: Increased control over subcontractor selection Flexible project financing options Flexible delivery options Cost containment through establishing a GMP Reduces Owner’s financial risk exposure Shared savings potential Drawbacks: New delivery – not widely understood by the industry Highly flexible LLB statutes could lead to faulty contractual practices More time required to develop and negotiate the LLB contracts

Project Delivery Options in the California Construction Market CSI Fresno Chapter - February 16, 2010 Design-Build Characteristics Owner contracts with a single entity for design and construction Project requirements defined through design criteria & outline specifications Owner may develop bridging documents through schematic design phase Application Private sector – no restrictions Public sector -Redevelopment Agencies -Counties -Through LLB Straight forward scope -Parking structures -Storage facilities

Project Delivery Options in the California Construction Market CSI Fresno Chapter - February 16, 2010 Design-Build Benefits Single point of responsibility and accountability Owner shielded from most disputes between architect and contractor Accommodates accelerated project delivery Early establishment of fixed cost and limited potential for change orders Promotes non-adversarial team environment Heavy contractor involvement and freedom to recommend construction efficiencies and innovations Drawbacks Success is contingent upon Owner’s ability to clearly define design criteria Owner may have less control over the end result

Project Delivery Options in the California Construction Market CSI Fresno Chapter - February 16, 2010 Characteristics Program manager acts as extension of Owner’s staff Typically used in carrying out multi-project capital programs PM establishes program-wide budgets, schedules, standards, etc. PM assists Owner in hiring consultants – typically in a prequalified resource pool Individual projects are delivered in a variety of ways Application Multi-project capital programs Program Management

Project Delivery Options in the California Construction Market CSI Fresno Chapter - February 16, 2010 Program Management Benefits Provides needed assistance to Owners with limited staff, expertise or time Provides specialized management tools, systems and skills to enable sound decisions early Can set design standards to achieve consistency Can coordinate and accelerate project delivery Owner can realize economies of scale through combining smaller projects Lessons learned from one project more easily transfer to subsequent projects Drawbacks Perception of additional cost of PM fees; although, must be compared to maintaining owner staff positions

Project Delivery Options in the California Construction Market CSI Fresno Chapter - February 16, 2010 Integrated Project Delivery (Lean) Characteristics Joint Owner-Architect-Contractor agreement Shared risk-reward Modeled after Toyota mfg processes Early subcontractor involvement Decentralized decision making Heavy use of technology – BIM Maximize prefabrication Application Emerging private sector delivery Current bidding laws limit public sector application

Project Delivery Options in the California Construction Market CSI Fresno Chapter - February 16, 2010 Integrated Project Delivery (Lean) Benefits Highly collaborative Shared risk-reward creates performance incentives Innovation encouraged Drawbacks New delivery – Not well understood Interdependent lines of responsibility Limited public sector application M/E/P Cluster Leaders Structure Landscape Material Handling Vertical Transp Site Improvements Interior/ Finishes Building Envelope

Project Delivery Options in the California Construction Market CSI Fresno Chapter - February 16, 2010 Q & A