About the Presenters

1. About the Presenters • John Robinson • General Manger/Illinois; Performance Services, Inc. • David Binkley • Director/Business Development; George Sollitt Construction Co. • Tim Thoman • Owner/President; Performance Services, Inc.

2. Program Outline • Introductory Remarks - Bob Lanzerotti • Construction Delivery Alternatives – David Binkley • Guaranteed Energy Savings – John Robinson • Questions?

3. Construction Delivery Alternatives Traditional Architectural Design PhasesPercentage of Architect’s Professional Fee • Programming (5%) – Information gathering and definition of building issues • Schematic Design (10%) – Transform building issues into a graphic solution. • Ideally, the Construction Manager becomes involved during this phase • Design Development (20%) – Refine the design solution • Construction Documents (40%) – Convert the design into technical drawings • Bidding (5%) – By General Contractor or subcontractors (under CM) per Illinois Procurement Code • Construction Administration (20%) – Confirm building in accordance with Construction Documents

4. Construction Delivery Alternatives General Contractor Also referred to as; Design-Bid-Build or Lump Sum Construction Manager (2 basic forms) CM as Advisor (CM/a) – also referred to as “Agency” CM as Constructor CM/c) – also referred to as “At-Risk” with or without a Guaranteed Maximum Price

5. OWNER Construction Delivery Alternatives Relationships – General Contractor No Contract ARCHITECT CONTRACTOR HVAC Plumbing Fire-Protection Electrical Mason Roofing Glazing Paving Excavator Landscape Flooring Painting Drywall Ceiling Rough Carpentry Millwork Elevator Specialties Equipment Interior Designer Cost/Scheduling Consultant Acoustical Consultant Theatrical Consultant Roofing Consultant Food-Service Consultant Lighting Consultant Security Consultant Technology Consultant A/V Consultant MEP/FP Engineer Structural Engineer Civil Engineer

6. Construction Delivery Alternatives Pros/Cons - General Contractor • PROS • Roles clearly defined - traditional and straightforward • Best suited for well defined, uncomplicated projects • Competitive – perhaps lowest cost depending on Change Orders • One contract to administer • Single-source responsibility • CONS • No Contractor input during design • Contractor and subcontractor selection based solely on cost • Slowest delivery method • Contractor may attempt to enhance profit with Change Orders • Potentially antagonistic relationship with the Owner and Architect

7. OWNER CM ARCHITECT Construction Delivery Alternatives Relationships – Construction Manager as Advisor (CM/a) No Contract Glazing Paving Excavator Landscape Flooring Painting Drywall Ceiling Rough Carpentry Millwork Elevator Specialties Equipment HVAC Plumbing Fire-Protection Electrical Mason Roofing Interior Designer Cost/Scheduling Consultant Acoustical Consultant Theatrical Consultant Roofing Consultant Food-Service Consultant Lighting Consultant Security Consultant Technology Consultant A/V Consultant MEP/FP Engineer Structural Engineer Civil Engineer

8. Construction Delivery Alternatives Description – Construction Manager as Advisor (CM/a) • CM’s Professional Fee and General Conditions are negotiated; subcontractors are bid (per Illinois Procurement Code) • CM is an “agent” and “advisor” to the Owner • CM provides administrative and management services during pre-construction and construction phases • Owner holds and manages contracts with subcontractors • CM does not provide a Payment & Performance Bond; individual subcontractors provide this bond • Advisable for complex, fast or phased construction • Flexible for projects of ill-defined scope or that are subject to change

9. Construction Delivery Alternatives Pros/Cons – Construction Manager as Advisor (CM/a) • PROS • CM selection based on QBS process - Owner can choose their CM • CM is District’s advocate throughout the process • CM input is available during the design phase • Cost / Schedule / Construction Logistics / Constructability • Flexibility with regard to scope changes • Allows for “Fast Track” construction • CONS • Owner holds many contracts – Architect, CM and all subcontractors • More paperwork due to multiple contracts held by District • CM may lack leverage over subcontractors • CM makes no promises relative to cost • Architect’s authority during construction may not be clearly defined

10. Construction Delivery Alternatives Time Saved using a Construction Manager Traditional Schedule Design Bid Build Fast Track Schedule Design Bid Bid Bid Time Savings Build

11. OWNER ARCHITECT CM Construction Delivery Alternatives Relationships – Construction Manager as Constructor (CM/c) No Contract HVAC Plumbing Fire-Protection Electrical Mason Roofing Glazing Paving Excavator Landscape Flooring Painting Drywall Ceiling Rough Carpentry Millwork Elevator Specialties Equipment MEP/FP Engineer Structural Engineer Civil Engineer Interior Designer Cost/Scheduling Consultant Acoustical Consultant Theatrical Consultant Roofing Consultant Food-Service Consultant Lighting Consultant Security Consultant Technology Consultant A/V Consultant

12. Construction Delivery Alternatives Description – Construction Manager as Constructor (CM/c) • CM’s Professional Fee and General Conditions are negotiated; subcontractors are bid (per Illinois Procurement Code) • You can essentially chose your GC utilizing this method • CM serves as an “open book” GC • Guaranteed Maximum Price (GMP) Option • Cost-Plus Option (no promises relative to final cost) • CM assumes risk for construction • CM holds contracts with subcontractors

13. Construction Delivery Alternatives Pros/Cons – Construction Manager as Constructor (CM/c) • PROS • CM selection based on qualifications - Owner can choose their CM • Single-source of responsibility • CM input is available during the design phase • Cost / Schedule / Construction Logistics / Constructability • CM has “leverage” over subcontractors • Allows for “Fast Track” construction • CONS • CM’s allegiance may be divided between the Owner and profit, if under a GMP • Possible adversarial relationship with the Owner and Architect • Architect’s authority during construction may not be clearly defined

14. Construction Delivery Alternatives Construction Manager as Constructor (CM/c) Guaranteed Maximum Price • Definition and Characteristics • GMP = Cost of Work + Contingency/Allowances + CM Fee/General Conditions • GMP based on a specific set of design documents at a given time • GMP is subject to additions and deletions due to changes in scope of work. All costs above the GMP that are not approved by change order are absorbed by the CM. • Sharing or Return of Savings • Unused contingency and/or allowances • Anything that causes the Cost of Work to be less than the figure used to establish the GMP

15. CONSTRUCTION DELIVERY METHODS IASBO Annual Conference May 16, 2012

16. Advantages to Guaranteed Energy Savings Contracts • Sole accountability – no finger pointing • Integrated team • Guaranteed performance • Energy savings • Optimal learning environment • No “change orders” • Lower costs • Lower soft costs • Lower overall construction costs

17. Plan-Spec Project Accountability Lots of cooks in the kitchen – who is accountable?

18. Guaranteed Contract Project Accountability One chef = full accountability

19. Contractual Accountability Plan & Spec Guaranteed Contract Owner Owner Architect Architect Construction Manager Contractors Qualified Provider Suppliers Sub-contractors Suppliers Sub-contractors No direct accountability Full accountability

20. Integrated Team Provider’s integrated team consists of architects, engineers, project managers and contractors working collaboratively together, shoulder-to-shoulder, to deliver the Best Value proposal. If this team doesn’t out-listen, out-think and out-work the other two teams, they lose the job. This collaboration and increase effort delivers better designs and more value. • Value of Team: • Several brains are better than one – collaborative synergy • Contractors often know more about what works best

21. Advantages to Guaranteed Contracts • Sole accountability – no finger pointing • Integrated team • Guaranteed performance • Energy savings • Optimal learning environment • No “change orders” • Lower costs • Lower soft costs • Lower overall construction costs

22. Energy Savings Guarantee • Monthly measurement • Utility bills • Equipment operating data • Monthly collaboration with operators • Annual utility bill reconciliation • Goal: Energy Star certification • Hard guarantee

23. Learning Environment Guarantee • Temperatures: +/- 2 degree F • Carbon Dioxide: < 1,000 PPM • Humidity: < 65% RH • Background noise: < 45 dB • Drafts: none • Illumination: 50 – 80 foot candles

25. No “Change Order” Guarantee • Owner can still add scope to project • Not a transfer of contingency accounts • Owner’s cost for errors and omissions are eliminated • Since PSI team pays for mistakes • Measure twice, cut once • Spend far more time investigating existing conditions • Persistent focus on processes that eliminate mistakes

26. No “Change Order” Guarantee • No “value added” change orders • Very limited “unforeseen condition” contingency costs • Only exceptions • Unknown below the ground issues • Unknown hazardous materials (i.e. asbestos) • Examples

27. Advantages to Guaranteed Contracts • Sole accountability – no finger pointing • Integrated team • Guaranteed performance • Energy savings • Optimal learning environment • No “change orders” • Lower costs • Lower soft costs • Lower overall construction costs

28. Lower Soft Costs • Architectural – engineering fees • Plan & Spec: 7 – 10% • Guaranteed Contract: 3 – 6% • Contingency • Plan & Spec: 5 - 7% • Guaranteed Contract: 2% • 2% is for scope additions

29. Lower Soft Costs Penn State Study Design-Build vs. Plan-Spec • Design Build delivered: • Quality: 10% Higher • Cost: 6% Lower • Speed: 33% Faster • Source: Project Delivery Institute, 1999 Integrated team approach is better!

30. U.S. Dept of Commerce Study Summary Results Lower Soft Costs “The use of the design-build delivery system tended to yield better performance outcomes for owner-submitted projects. These projects tended to have better performance in cost, schedule, changes, rework and practice use. “ Source: U.S. Dept of Commerce Report. “Measuring the Impacts of the Delivery System on Project Performance – Design-Build and Design-Bid-Build,” Pg 49. November 2002

31. Plan-SpecDesign-Build Cost Structure Comparison Owner’s Cost Multiple Layers of Compounded Markup Owner’s Cost Flat Markup Architect GESC Contractor A&E/CM/GC/MC/CC Construction Manager Insulator Masonry Sheet Metal Electrical Suppliers Other Contractor General Contractor Mechanical Contractor Suppliers Masonry Control Contractor Suppliers Subcontractor

32. Advantages to Guaranteed Contracts • Sole accountability – no finger pointing • Integrated team • Guaranteed performance • Energy savings • Optimal learning environment • No “change orders” • Lower costs • Lower soft costs • Lower overall construction costs