Large Public Works Projects and the General Contractor/ Construction Manager (GC/CM) Procedure: A New Way to Save Mone

1. Large Public Works Projects and the General Contractor/ Construction Manager (GC/CM) Procedure: A New Way to Save Money, Time and Aggravation

2. Presenters Dan Chandler, PE Principal Olympic Associates Company Mark Henderson, AIA Associate Principal, Health Care PracticeCallison Architecture John Lynch, PE Assistant Director Washington State Department of General AdministrationDivision of Engineering and Architectural Services Dick Goldsmith Director, Legal Services and Health PolicyAssociation of Washington Public Hospital Districts

3. Topics • Setting the stage • Traditional and alternative contracting methods • The GC/CM process • Statutory requirements • Contractual arrangements • Contracting steps • The Public Hospital District (PHD) Project Review Board • “ The good, the bad & the ugly” • Panel perspectives

4. Setting the Stage • Traditional method:“Design, Bid, Build” • Alternative method:GC/CM procedure

5. Statutory Requirements • Determine if the project qualifies for GC/CM procedure • Value: over $10 million • Complex scheduling; or • Operation of existing facility during construction; or • Critical involvement of GC/CM during design phase • Value: between $5 million and $10 million • Authority for 10 demonstration projects

6. Statutory Requirements (cont.) • Submit application to Public Hospital District (PHD) Project Review Board for approval • Obtain preliminary and final determination from PHD Commissioners (RCW 39.10.030) • Public review and comment

7. Contractual Arrangements Public Hospital District Designer GC/CM Sub-contractors

8. Responsibilities • GC/CM • Pre-construction services • Bidding the work • Construction services • PHD • Design • Project administration • Financing

9. Selecting the GC/CM • Timing (early in the process) • Designing and planning • Request for qualifications (RFQ) • Pricing • General conditions • Fee only

10. Setting the Price • Guaranteed Contract Cost (GCC) • Specified general conditions • Maximum Allowable construction cost (MACC) • % fee X MACC • GC/CM contingency • Sales tax • GCC excludes • Architect/Engineer (A/E) fee • Furnishings, fixtures and equipment (FF&E) costs • Other costs typically borne by Owner

11. Bidding the Job • GC/CM bids out all work • Can bid in phases • Can self-perform up to 30% of MACC • Low bid • Work customarily performed • Bid opening managed by PHD • Notice of intent to bid in public solicitation

12. Changing the Work and Owning the Risk • Change Order • Owner’s contingency • Increases GCC • “Team Change” Funds • GC/CM contingency • GCC unchanged

13. Rewarding Good Work • Incentive Clauses • Up to 5% of the MACC (typically much lower than 5%) • Paid out of contingencies at end • Based on good management by GC/CM

14. PHD Project Review Board Approval • Composition of board • Duties • Determinations • Policies and procedures

15. Application Information • Current project total budget including • Estimated construction costs • Costs for professional services, equipment, and furnishing costs • Off-site costs • Contract administration costs • Other related project costs • Anticipated project design and construction schedule • Summary of PHD’s construction activity for the past six years

16. Application Information (cont.) • Detailed explanation of why the PHD believes the use of the GC/CM procedure is in the public interest • Detailed explanation of why the PHD is qualified to use the GC/CM procedure, including a summary of the relevant experience of the PHD’s management team

17. An Owner’s Perspective • Likes • Qualified contractors • Pre-construction services • Guaranteed MACC • Team approach • Management of project contingencies • GC/CM’s financial stake • Dislikes • Higher owner overhead costs • More management staff than with “Design, Bid, Build” • Higher A/E costs • Management of project risks

18. A Project Manager’s Perspective • Likes • Method and project matched • Necessary management skills obtained • RFQ and contract done correctly • Value of GC/CM in pre-construction services maximized • Risks and contingencies managed • Dislikes • Incentives can be risky • Advantages lost if not done well

19. An Architect’s Perspective • Likes • Qualified contractors • Real value in pre-construction services • Teamwork reduces disputes • Dislikes • Some increase in A/E workload • “Inequality” among GC/CMs

20. Resources • Washington Health Care Facilities AuthorityJohn Van Gorkom, Executive Director P.O. Box 40935Olympia, WA 98504-0935(360)753-6185www.whcfa.wa.gov/ • Office of the Superintendent of Public Instructionhttp://www.k12.wa.us/SchFacilities/GCCM.aspx

21. Legal Sources • Contracting process for GC/CM – RCW 39.10.061 • Composition, duties, determinations and application of PHD Project Review Board – RCW 39.10.117 • Authorization of demonstration projects – RCW 39.10.068(1)(b)

22. Legal Sources • Public review after PHD Public Review Board approval – RCW 39.10.030 • Other public works requirements include: • Licensed or registered contractors – RCW Chapter 39.06 • Bonded contractors – RCW Chapter 39.08 • Payment of prevailing wages – RCW Chapter 39.12 • Contract retainage – RCW 60.28.011

23. Dan Chandler, PE • dchandler@olympicassociates.com • 206-674-6103 • Mark Henderson, AIAmark.henderson@callison.com • (206) 623-4646 • John Lynch, PE • jlynch@ga.wa.gov • (360) 902-7227 • Dick Goldsmith • richardg@awphd.org • (206) 216-2528 Questions ?Comments?