City responds to last week’s guest editorial, offers explanation of project delivery method under consideration

This is a response to a guest editorial written by State Representative Dominic LaRiccia on alocal media outlet dated 10/13/2017 titled “PROCESS CITY PLANS TO USE TO COMPLETE $13.6 MILLION IN CAPITAL PROJECTS BAD FOR ENTIRE COMMUNITY.” This article is in regards to the City of Douglas’s decision to explore and potentially use Construction Management at Risk (CMAR) versus using a sealed bid approach or other delivery method.  Hopefully, this response will clear up any confusion that the previous article may have conveyed.

First and foremost, the City of Douglas has the legal authority to use whichever service delivery method we determine to be the most cost effective to complete multiple capital projects. Currently, across the state of Georgia, there are at least three common approaches to construction projects: Sealed Bid (Hard Bid), Design Construction and Construction Management (with or without risk). Due to the number of projects and the short timeframe in which to deliver these projects, the City decided to explore the option of using the CMAR delivery method. 

What is the CMAR delivery method? The Construction Manager at Risk (CMAR) is a delivery method which entails a commitment by the construction manager (CM) to deliver the project within a guaranteed maximum price (GMP), which is based on the construction documents and specifications at the time of the GMP plus any reasonably inferred items or tasks. The CMAR provides professional services and acts as a consultant to the City in the design development and construction phases. Often times, the CMAR also provides some of the actual construction of the project depending on the availability of bidders and the expertise the company has. In addition to acting in the City‘s interest, the CMAR must manage and control construction costs to not exceed the GMP because,contractually, any costs exceeding the GMP, that are not change orders, are the financial liability of the CMAR.

Generally, the CMAR will give the City a GMP prior to bidding the project. Included in this GMP is a contingency line item to take care of bid overages, reasonably inferred items and other project related items that may arise during construction. By giving the City the GMP prior to bids, the CMAR assumes the risk of bids coming in higher as he is contractually bound to deliver the project per the plans and specifications and any additional allowances as defined in his GMP. 

City Benefits 

This delivery method has several unique benefits to the City, including:

· A higher level of cost control from the start – A successful CMAR project would involve hiring the CMAR prior to the architect and having the CMAR help select the architect. During the design process, the CMAR provides cost estimates at contractually established points. If these cost estimates are in line with the established budget, the architect then moves on to the next phase of design. If not, the CMAR, City and Architect assess the cost estimate and make design changes to bring the design back into budget alignment. This process ensures budget success. 

· The CMAR is a City advocate and manages the project with the City’s best interest in mind at all times.

· The CMAR takes the burden off of the City in managing and coordinating the project. 

· The City’s risk is limited by the CMAR process provided that the construction documents are complete and proper allowances and contingencies are built into the GMP. 

· Constructability and value to the City are afforded by the value engineering expertise brought to the process by the CMAR. 

· Since the CMAR is at risk and gives the GMP prior to bid, the CM does not have to select the low bid. Generally the thorough prequalification process minimizes the number of lowbidders that get disqualified and generally leads to lower long term costs, higher quality, and fewer claims because only pre-qualified contractors are performing work. 

· CMAR services are professional services like architectural, engineering, surveying, etc. The CMAR’s main purpose is not to construct the project, but to manage the construction of the project. This management focus adds much value to the project. 

As with any delivery method, incomplete and/or inaccurate construction drawings will result in change orders. The misunderstanding associated with the GMP is that this maximum price will not be exceeded in any case. It is important to understand that the GMP is based on the plans and specifications at the time of the GMP with some reasonable assumptions made and a reasonable contingency included. Major changes in scope will result in a change order, which increases the GMP contract. In addition, any City changes to the project and scope require a change order. By requiring the documents be 100 percent complete prior to receiving the GMP, the risk of unanticipated change orders are minimized.

As stated in the editorial, we admit that there were some words in the RFP that seemed to be confusing and needed to be clarified.  Also, we should have termed the document an RFQ/P as well. Nevertheless, the document needed to be changed to clearly articulate our position and what we want out of a CMAR provider. A pre-qualification meeting was held on October 13, 2017,which was mandatory for submittal.  At this meeting, we were seeking to gather input from the interested vendors to clarify andaddress questions about our expectations of the awarded firm.As of today, we have taken most of the questions, concerns and comments provided by proposing vendors to revise the RFQ/P. The revised RFQ/P will be sent out this week, along with minutes from the pre-qualification meeting and other related information to help each vendor respond appropriately to the City’s expectations for CMAR.

It is the intention of the City of Douglas to complete the RFQ/P process to determine if this should be the delivery method usedto build the eight capital projects.  We will choose the best qualified CMAR company out of the top three finalists. Once the selection process is completed and we select the best CMAR company, we willdiscuss the pros and cons of proceeding forward with CMARdelivery method based on the responses that we receive from the vendors. The next phase of the CMAR delivery method is the pre-construction phase. This is the phase when the GMP is negotiated and established. If we determine that CMARdelivery method is not the best option, we will make the recommendation to mayor and commission to use another method that would accommodate the best delivery of construction completion (CMAR hybrid approach or hard bid).

The City of Douglas is committedto having these eight projects come in within the established budget and time schedule that we have committed to the citizens and taxpayers.  If we do not explore other options on the table, we really do our citizens and the taxpayers a disservice by not looking at other ways that could possibly work better and/orbe more cost efficient as well. 

We appreciate Representative LaRiccia and others in thecommunity who have expressed concerns regarding this major decision for the City of Douglas. Therefore, we will consider these issues as we move forward with this process to be mindful of these concerns and be vigilant in our deliberation of this process.