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1. Fire Station Delivery MethodsREPORT TO FROM: SUBJECT: City of Kalispell Post Office Box 1997 - Kalispell, Montana 59903-1997 - Telephone (406)758-7700 Fax(406)758-7758 Honorable Mayor and City Council Chris A. Kukulski, City Manager Project Delivery Options MEETING DATE: August 27, 2001 BACKGROUND: The decision to select the most effective and efficient delivery option to build the new fire station and retrofit City Hall has been on hold for nearly 60 days. Even though we cannot move forward with this project until after the public hearing is held regarding the Urban Renewal District project list, it would be beneficial, considering time constraints, to have all of our ducks in a row as to how we may proceed once given the go ahead. Attached are the previous memos that have been given to the Council from myself and Mike Absalonson. RECOMMENDATION: The Council direct the staff to place this item on the next regularly scheduled meeting for approval of "value engineering" within the design -bid -build project delivery system. FISCAL EFFECTS: Unknown. ALTERNATIVES: As suggested by the Council. Respectfully J submitted, �n Chris A. Kukulski City Manager Report compiled August 23, 2001 Page 1 of 1 REPORT TO: FROM: u SUBJECT: MEETING DATE: July 16, 2001 City of Kalispell Honorable Mayor and City Council Chris A. Kukulski, City Manager Project Delivery Options BACKGROUND: During the July 2 City Council meeting the issue ofdesign delivery options for the new fire station was tabled. Since that time, I have two additional pieces of information to help us in making this decision. 1", Glen is fairly certain that the City can NOT do a design -build project delivery option and fit within current state law. 2"d, Randy Brodehl has had first hand experience utilizing "value engineering" within the confines of the traditional design -bid -build contract. This is a process that occurs after the contractor is chosen. The contractor can then request review of different construction options that will decrease the cost of the project. The architect reviews the request with the city representative and approves, modifies, or denies it. The contractor splits the savings with the city at a percentage rate identified in the contract. The project book typically specifies brands and type of installation for everything from siding to paper towel dispensers. The contractor often finds an equal too or better option, for a lower price. When this happens, most of the savings are passed on to the city, and the contractor is rewarded for quality frugality. This is a wWwin option for all players and fits within Montana's laws regulating public project delivery options. Therefore, I would recommend we utilize "value engineering" language within the traditional design -bid -build project delivery option. RECOMMENDATION: The Council direct the staff to place this item on the next regularly scheduled meeting for approval of "value engineering" within the design -bid -build project delivery system. FISCAL EFFECTS: Unknown. .. ALTERNATIVES: As suggested by the Council. Respectfully submitted, C" Chris A. Kukulski City Manager Report compiled July 12, 2001 Page 1 of 1 Architects Design Group Number One Sunset Plaza • Kalispell, MT 59901 406-257-7125 FAX: 406-756-3409 June 25,2001 City of Kalispell P.O. Box 1997 Kalispell, Montana 59901 Attn: Chris Kukulski, City Manager Re: Fire Station Dear Chris, In response to your questions regarding the delivery methods the City might consider in the design and construction of a new Fire Station I enclose a discussion for three of the most utilized. They include design -bid -build, contractor -construction manager at risk, and design -build. Each methodology is described including a relationship diagram and the positive and negative aspects of each. In order to complete a recommendation about delivery, I have developed a draft schedule for your review. This schedule is important because it indicates there is ample time to enter a construction agreement prior to the June 17th deadline, utilizing any of the delivery methods. I believe there is some question as to the legality of entering into a publicly funded project by any construction delivery method other then those formed by competitive bid. In an effort to gain some current insight, I spoke with Mr. Russ Katherman, State of Montana Architecture & Engineering Division construction contracts administrator. In his opinion, because the legislature did not authorize the alternative forms of delivery before them in the last session, competitive construction bidding remains the single legal method. Regarding your question, the possible legal issues do not change my recommendation, which is to pursue the design -bid -build scenario. The recommendation is based upon the following: 1. In review, the primary factors that would direct one to consider any form of delivery methodology: A. Design -Bid -Build Positive Factors • Project scope, quality and time are understood by the owner and well defined prior to construction agreement execution. • Construction cost at the time of agreement execution is based upon full design documents. • Roles of the owner, architect and contractor are historically understood and time tested. Negative Factors • Construction cost, although estimated, is not confirmed until the time of bidding. FOR REVIEW John W. Pecerson,A.I.A. Michael A. Absalons on, A.I.A. Glen D.Anacker,A.I.A. Frank], di Scefano.A.I,A. B. Contractor/Construction Manager at Risk Positive Factors Capability to reduce overall time lines through fast -track project management. Negative Factors Not in an agency role with the owner, but a vendor to the owner. • Under guaranteed maximum price or fixed price, project cope or quality is subject to revision to meet contractor cost commitments. Quality and cost may be in question. C. Design -Build Positive Factors • Capability to reduce overall time lines through fast -track project management. Negative Factors Under guaranteed maximum price or fixed price, project cope or quality is subject to revision to meet design -builder cost commitments. Quality and cost may be in question. Owner does not have the ability to select "designer" -architect based upon qualification to project type. Owner may not be in a position to write performance criteria as a basis to select design -build team. 2. Time, or lack of time, is not an issue on this project. My assessment of the schedule leaves time for the Design -Bid -Build sequence. Schedule does not seem to require the City to enter into alternative forms of delivery that may increase complication or risk exposure. Architects Design Group has provided services to clients within all of the delivery options described in this letter and the attachments. We have also provided services in the design -build scenario, both as a project developer. Through these experiences, I feel my recommendation to pursue Design -Bid -Build is given from a practical perspective and not just an academic view. I attached contract forms provided by the American Institute of Architects for you further reference. They are included because their review will enlighten you to the complications and nuances of each delivery method in contractual language. If you have questions regarding this information, please feel free to call Sincerely, Michael A. Absalonson, A.I.A. Cc File Encl Noted PROJECT DELIVERY METHODOLOGY INTRODUCTION There are three predominant methods for the delivery of a building project. These methods include the traditional Design -Bid -Build, Construction Management and Design Build. There are several variations to each of these delivery methods, and each variation reflects special project requirements. This discussion addresses Design -Bid -Build, Construction Management where the General Contractor -Construction Manager is at risk and Design - Build. Each method of delivery has positive and negative aspects, and may place the owner and the various design and construction professionals in different role relationships. References have been made to American Institute of Architects documents. Review of this information greatly enhances ones ability to understand the specific demands of each delivery method. 1 Project Delivery Methods DESIGN -BID -BUILD Design -Bid -Build is the predominate method of project delivery of both publicly funded and private projects in Montana. In its most usual form the process allows for the selection of an architectural/engineering team who provides design, bidding and construction contract administration services on the owners' behalf, in close association with the owner. Usually a single general contractor constructs the project. The relationship diagram below shows the owner has separate agreements with the architect and the contractor. Communication between the owner and the contractor is generally through the architect. The architect acts as an administrator between the prime contracting parties. Owner Architect & Consultants General Contractor I Subcontractors I Reference: A.I.A. Document A101- 1997-Stipulated Sum Positive Aspects of Design -Bid -Build Roles of the owner, architect and contractor are well defined Owner is highly involved in the design process and the design is fully developed before bidding proceeds • At the time of bidding, project scope, quality and time are well defined Construction cost is based upon a full design documents, and usually developed based upon the competitive bidding process Scheduling is generally not complicated Negative Aspects of Design -Bid -Build • The sequential process may be more time consuming then some alternative delivery methods Cost, although estimated, is not confirmed until the time of bidding 2 Project Delivery Methods CONTRACTOR -CONSTRUCTION MANAGER AT RISK Over the last thirty years the "time" factor relating to construction projects has become more focused. Construction management as a profession formed a method of delivery that may allow a project to be divided into any number or types of smaller contracts. This division and scheduling often allows the project to begin construction before all of the issues are identified. The construction manager may serve the owner as either an advisor or as a construction contractor. In the role of an advisor, the CM manages the separate construction contracts, but has no financial responsibility for the actual construction work. When acting as the construction contractor, the CM undertakes financial risk by entering agreements under fixed -price, cost-plus or a guaranteed maximum price scenario. This removes the risk of cost and control responsibilities from the owner. The later scenario is the Contractor -Construction Manager at Risk. From "The Architects Handbook of Professional Practice, vol. 2, page 395 "Specific CM responsibilities may vary from project to project. While the A.I.A. and others publish standard forms of CM agreement, the delivery approach is sufficiently new that there is no widespread agreement on roles, responsibilities, risks, and rewards." Architect & Consultants Owner Construction Manager at Risk Subcontractors I I Subcontractors I I Subcontractors Reference: A.I.A. Document A121/CMc-1991 [Guaranteed Maximum Price] 3 Project Delivery Methods Positive Aspects of the Construction Manager at Risk Capability to reduce overall time lines through fast -track project management Negative Aspects of the Construction Manager at Risk • Not in an agency role with the owner, but a vendor to the owner • May represent additional management fees to owner • May effect traditional relationship management expectations May effect traditional allocation of risk expectations Under guaranteed maximum price or fixed price, project scope or quality subject to revision to meet cost commitments Under cost-plus a fee there is no guarantee of cost 4 Project Delivery Methods DESIGN -BUILD Where design -bid -build and construction manager at risk options usually provide the owner with contractual relationships that separate the design and construction portions of the work, the Design -Build option offers a single point of responsibility with no separation of design and construction. From "The Architects Handbook of Professional Practice, Vol. 2, page 398 Design -Build is described; ..."most appropriate in situations where the owner is in a good position to specify requirements, is reasonably sure of what the market -place will supply and has confidence in a single entity's ability to both design and construct the project' Consulting Architect ` Owner Option Owner Design -Build Entity Record Architect I I Trade Contractor I I Trade Contractor Reference: A.I.A. Document A191 Where the owner does not have the ability to fully define the project in terms the design builder may use to establish quality and cost, the owner may retain an architect to assist in a "consulting" role, not a prime design and administration role. Communication generally occurs between the parties of the agreement, not the architect. Positive Aspects of Design -Build Avoids owner interface coordination of designer -contractor Capability to reduce overall time lines through fast -track project management • May provide financing, or land acquisition where owner is not financially capable May provide build -leaseback May build -operate -transfer as options 5 Project Delivery Methods Negative Aspects of Design -Build • Single point responsibility places no traditional entity in a position to represent the owner' interests Unless owner is sophisticated, owner may have to retain architect to assist with writing of performance requirements used as a basis to select design -build team. • Owner may be required to retain consultant to evaluate proposals, administer contracts, payments and site quality -contract performance issues • Under guaranteed maximum price or fixed price, project scope or quality subject to revision to meet cost restrictions There are similar hybrid delivery methods referred to as "design build". They may include various fortes of design and general contracting where either the architect or the general contractor undertake "team leader" responsibilities. The defining feature is that each is involved in the process at an early stage and at the same time, although one is administratively subservient to the other. Consulting Architect Owner Option Owner Design -Build Entity Contractor Record Architect I I Trade Contractor I I Trade Contractor Contractor is Design Builder and Single Point of Contact 6 Project Delivery Methods sulting Architect Owner Option Owner Design -Build Entity Architect Contractor Trade Contractor I I Trade Contractor I I Trade Contractor Architect is Design Builder and Single Point of Contact 7 Project Delivery Methods CITY OF EALISPELL NEW FIRE STATION & REMODELING SCHEDULE KALISPELL • MONTANA ARCHITECTS DESIGN GROUP ADO: 01-111 C 06/25/01 PROJECT SCHEDULE ACTIVITY BEGIN END PERIOD 2001 Begin Advertising for Architects 06/22/Ol 07/20/01 29 Interview 07/24/01 07/24/01 1 Select Design Team 07/25/01 07/27/01 3 Negotiate Fees & Execute Agreeements 07/27/01 07/31/01 5 Begin Project Programming 08/01/01 08/13/01 13 FIRE DEPARTMENT PHASE 1: Build Fire Station Schematic Design 08/13/01 09/07/01 26 Schematic Design Costing 09/10/01 09/17/01 8 Authorization to Proceed 09/17/01 09/17/01 1 Revision to Urban Renewal Plan 12/01/01 ' 2002 Design Development 10/03/01 01/11/02 40 Design Development Costing 01/14/02 02/04/01 22 Authorization to Proceed 02/05/02 02/05/02 2 Construction Documents 02/05/01 04/08/02 63 Construction Document Costing 04/08/02 04/26/02 19 City Authorizes Bidding 04/29/02 04/29/02 1 Reproduction of Bidding Documents 04/29/02 05/03/02 5 Let Bids 05/06/02 Receive Bids 05/30/02 Evaluate Bids & Recommend Contractor 05/31/02 05/31/02 1 Prepare Agreements & Bonds 05/31/02 06/07/02 8 Execute Construction Agreements 06/10/02 06/10/02 1 Begin Construction Phase Station 06/11/02 NOTES Project Schedule 1 2003 Construction Substantial Completion Fire Department Moves to New Station CITY HALL PHASE 2: Remodeling of Fire Station Begin Construction Phase 2 Remodeling Construction Substantial Completion Departments Move to New Offices 06/13/03 363/12M 06/16/03 06/27/03 12 06/30/03 02/27/04 211/8M 03/01/04 03/12/04 12 Project Schedule 2