Large Public Works Projects and the General Contractor/ Construction Manager (GC/CM) Procedure:

A New Way to Save Money, Time and Aggravation

Large Public Works Projects and the General Contractor/ Construction Manager (GC/CM) Procedure:

A New Way to Save Money, Time and Aggravation

PresentersDan Chandler, PEPrincipalOlympic Associates Company

Mark Henderson, AIAAssociate Principal, Health Care PracticeCallison Architecture

John Lynch, PEAssistant DirectorWashington State Department of General AdministrationDivision of Engineering and Architectural Services

Dick GoldsmithDirector, Legal Services and Health PolicyAssociation of Washington Public Hospital Districts

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

Setting the Stage

• Traditional method:“Design, Bid, Build”

• Alternative method:GC/CM procedure

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

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

Designer

Public Hospital District

GC/CM

Sub-contractors

Contractual Arrangements

Responsibilities

• GC/CM– Pre-construction services– Bidding the work– Construction services

• PHD– Design– Project administration– Financing

Selecting the GC/CM

• Timing (early in the process)

• Designing and planning

• Request for qualifications (RFQ)

• Pricing– General conditions– Fee only

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

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

Changing the Work and Owning the Risk• Change Order

– Owner’s contingency– Increases GCC

• “Team Change” Funds – GC/CM contingency– GCC unchanged

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

PHD Project Review Board Approval• Composition of board

• Duties

• Determinations

• Policies and procedures

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

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

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

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

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

Resources

• Washington Health Care Facilities AuthorityJohn Van Gorkom, Executive DirectorP.O. Box 40935Olympia, WA 98504-0935(360)753-6185

www.whcfa.wa.gov/

• Office of the Superintendent of Public Instructionhttp://www.k12.wa.us/SchFacilities/GCCM.aspx

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)

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

Questions ?

Comments?

Questions ?

Comments?Dan Chandler, PEdchandler@olympicassociates.com206-674-6103

Mark Henderson, AIAmark.henderson@callison.com(206) 623-4646

John Lynch, PEjlynch@ga.wa.gov(360) 902-7227

Dick Goldsmithrichardg@awphd.org(206) 216-2528