Draft Findings of Fact in Support of CM/GC Contract Methodology

FINDINGS OF FACT IN SUPPORT OF THE USE OF CONSTRUCTION MANAGER/GENERAL CONTRACTOR METHODOLOGY FOR THE 2018 EUGENE SCHOOL DISTRICT 4J GENERAL OBLIGATION CONSTRUCTION BOND

Background/Discussion

In November 2018 District voters approved a school bond measure which will provide $319.3M in funds for the construction, additions and repairs of school facilities and other property used for district purposes. As part of the initial pre-design and planning phase, the district staff have identified the need to consider alternative contracting methodologies to address specific types of work.

The staff have reviewed various contracting methods best suited to address the most complex, technically and logistically challenging projects within the proposed bond program. The staff has also reviewed contracting methods most recently utilized by other Oregon school districts. Based on the experience of staff and the review of projects completed in other districts, it is recommended that Eugene School District 4J use a Construction Manager/General Contractor (CM/GC) construction contracting methodology for projects with an estimated construction cost of $5M.

Traditionally public construction projects are competitively bid and awarded to the responsible low bidder using the Design-Bid-Build (DBB) methodology. ORS 279C.335 permits the Eugene School District 4J Board of Directors, acting in its capacity as the Local Contract Review Board, to exempt certain projects from the requirements of DBB, competitive low bid contracting. In doing so, the statute specifically says that the Local Contract Review Board shall:

• if appropriate, direct the use of alternative contracting methods that take account of market realities and modern practices and are consistent with the public policy of encouraging competition; and
• require and approve or disapprove written findings by the contracting agency that support awarding a particular public improvement contract or a class of public improvement contracts, without the competitive bidding requirement.

Additionally, ORS 279C.335 requires the District to hold a public hearing of the Local Contract Review Board to allow comments on the District’s draft findings prior to approval. Notice of this public hearing must be advertised in at least one trade newspaper of general statewide circulation not less than 14 days prior to the hearing to allow any interested party to appear and comment.

The Eugene School District 4J Director of Facilities and Capital Improvement Program Manager both have extensive experience using the CM/GC contracting method on multiple public agency and private construction projects of similar complexity as the 2018 Bond projects. In addition, to name a few, the CM/GC contracting methodology has been successfully used or is the selected methodology by Oregon school districts including:

Selection of the CM/GC firms will include a vigorous Request for Proposal (RFP) process. The RFP will include a detailed description of the project, contract terms and conditions, and specific criteria which will be used for the CM/GC selection.           Firms selected to provide CM/GC services will be an integral member of the project teams from early design through construction.

The proposals from the CM/GC firms will include a competitive bid for their fee based on the known general conditions for the project. At the appropriate milestone of the project, the selected CM/GC will provide the District with a Guaranteed Maximum Price (GMP) and a full performance/payment bond for the work.

Findings of Fact

Project Description and Criteria for Use

The Eugene School district 4J is currently in the pre-design phase for the construction, additions and repairs of school facilities and other property used for district purposes as included in the November 2018 bond measure. Projects identified in the bond are complex in terms of the types of work involved and the logistics of integrating an active construction site into residential neighborhoods. In addition, multiple projects will need to proceed adjacent to existing school facilities during the school year. The types of work will include new construction, major additions, demolition, non­routine maintenance, safety and security upgrades as well as ADA enhancements, all of which require an integrated and comprehensive design and construction approach such as CM/GC. The projects will require detailed planning and coordination that identify and accommodate academic program requirements that will be disrupted during construction to minimize the associated impacts to the teaching and learning environment while ensuring the safety of staff, students and the general public. The ability to involve construction expertise during the design process to develop the unique schedules, processes, and methods necessary for successful project delivery is a critical component of the overall bond program. Staff recommends the use of CM/GC contracting methodology for projects that meet the following criteria:

• Exceed $5 million in estimated construction costs.
• Require new construction, additions, and/or renovations.
• Require unique logistical planning and coordination during design and construction to address the complexities of an active construction site with an active school campus, surrounding neighborhood and/or adjacent business activities.

1. Finding in consideration of the exemption being unlikely to encourage favoritism

The District staff’s past experience indicates that the use of the CM/GC methodology will not result in favoritism in the awarding of public contracts or substantially diminish competition for public contracts. The CM/GC firms will be selected through an open, competitive process among experienced and qualified contractors. The District will receive written proposals from contractors with the experience and staff required to complete the project. The process will utilize an RFP process that will be publicly advertised.  The District will evaluate proposals, interview selected firms, and make CM/GC firm selections based on the advertised criteria in the RFP.

2. Findings in consideration of operational, budget and financial data

Many general contractors and subcontractors are being impacted by the quantity of work to be bid in the next three to five years. Currently the cost of materials and labor is adjusting to the market demand. With these current market conditions, the use of traditional design-bid-build contracting could result in bid costs which exceed the approved budget, or with no bids at all. The use of CM/GC will better enable the District to monitor and control the impact that market conditions will have on the cost and time necessary to complete the projects. Securing qualified key subcontractors earlier in the bid and award cycle is estimated to reduce costs. Due to the factors identified below, the use of CM/GC in lieu of Design-Bid-Build will likely result in substantial cost savings to the District.

A.  Availability of Bidders – Pursuant to ORS 279C.400, the CM/GC Request for Proposal solicitation will be advertised in local and regional publications of general and industry specific circulation. Local and regional contractors have already expressed interest in the proposed projects and the use of a CM/GC contracting strategy provides contractors with the certainty provided in this type of selection process.

B.  Construction Budget in accordance with Bond Estimated Budget – The Eugene School District 4J carefully established the budget for all of the projects to be funded under the 2018 November bond measure and discussed that funds provided by the bond measure must be utilized in the most efficient manner. Utilizing the CM/GC will allow the staff to use CM/GC pre-construction services during the design phase. Tasks to be performed by the CM/GC during this period include scheduling, logistics planning, constructability review, cost estimating and value engineering. These services will allow for the project team to develop a design, project schedule and budget that make the best use of available funds.

C.  Public Benefits that May Result – The CM/GC methodology offers many public benefits such as the cost containment derived from a GMP and an integrated delivery schedule. The CM/GC process allows for greater collaboration and integration of constructability, maintainability and sustainability aspects in the project while maintaining the project schedule.

D.  Whether Value Engineer Techniques May Decrease Cost – The CM/GC, working with the design team during the design phase will assist the project team in identifying and implementing potential cost savings. The Value Engineering (VE) process allows the project team to continually evaluate the quality of materials, life cycle costs, and the constructability, maintainability, and sustainability of the components of the project. This inherent collaboration is expected to result in completing the projects within established budgets.

E.  The Cost and Availability of Specialized Expertise that is Necessary for the Project – Completing a complex school project on time, within budget, and in full compliance with construction documents and specifications requires the CM/GC firm to dedicate a qualified team with the experience and expertise to work collaboratively with the District, architects, engineers, and the project management team. The collaborative process is expected to reduce or eliminate rework and minimize disruptions to ongoing school activities and surrounding communities. The Request for Proposals (RFP) process used to select the CM/GC firms will enable the District to select the best contractor for each project.

F.  Any Likely Increases in Public Safety – The CM/GC firms will be required to prepare a project safety plan for each of the projects. The project safety plan will help ensure the project is conducted safely and help to minimize any school and neighborhood impacts. With the CM/GC retained during the design phase they will have a specific understanding of the project, its complexities, neighborhood impacts and schedule impacts – allowing the Safety Plan to accommodate all of the relevant factors.

G.  Whether Granting the Exemption May Reduce Risks to the Contracting Agency or the Public – The most significant risk to the District on bond projects is the inability for a contractor to complete the project on schedule. The CM/GC process allows the selection process to evaluate proposals based on a demonstrated ability to perform work in accordance with the construction schedule.

The construction schedules will be complex; technically and logistically challenging due to the types of the work to be completed at multiple sites – in some cases, during an active school year. The CM/GC method enables the completion of construction documents to facilitate timely subcontractor bids and awards and will allow for schedule efficiencies during the construction of the project.

H.  Whether the Exemption Will Affect Sources of Funding – CM/GC projects will be funded as part of the Eugene School District 4J bond measure on the November 2018 ballot. Establishment of a preliminary and final guaranteed maximum price will better enable the District to budget its bond resources among these projects.

I.  Whether Granting the Exemption Will Better Enable the District to Control the Impact of Market Conditions – The cost of materials and labor is continually adjusting to the market demand. Ordering materials and equipment may take longer when manufacturers and distributors are fully engaged with bond work throughout the region. The CM/GC firms will order materials and equipment in a timely manner from manufacturers and distributors that can deliver the material and equipment on time to avoid delays caused by late shipments. The use of CM/GC will better enable the District to control the impact that market conditions have on the cost and time necessary to complete the projects. Securing qualified subcontractors earlier in the bid and award cycle is more likely to ensure that both materials and labor are available in accordance with the project schedule. The CM/GC method will also identify and allow for the early procurement of long-lead materials and equipment such as mechanical and electrical equipment, windows and doors to prevent schedule impacts.

J.  Whether Granting the Exemption Will Better Enable the District to Address the Size and Complexity of the Projects – Completing a complicated, technically and logistically challenging construction project in residential neighborhoods will be challenging. In addition, some of the projects will be completed on an occupied campus. The CM/CG firms will develop a construction plan for district approval that will minimize disruption to the site’s surrounding neighborhoods, educational activities and master schedule.

K.  Whether the Public Improvement Involves New Construction, Renovation or Remodel – The projects to be funded by the 2018 bond measure include new construction, renovations and remodels. The CM/GC selection process will allow the District to select a contractor with the qualifications most relevant to the specific project.

L. Whether the Project will be Occupied During Construction – While the major construction, renovation and remodel projects will not occur in occupied buildings, some projects are scheduled to occur on existing campuses and in close proximity to existing facilities. An intense and well thought out safety and coordination plan must be implemented to ensure members of the public, staff members and students are kept safe and instructional activities are not disrupted. Utilizing the CM/GC process will allow the District to select a contractor who has the sensitivity and experience to safely and successfully work in close proximity and in direct coordination with ongoing activities.

M. Whether the Project Will Require a Single Phase or Multiple Phases of Construction – The preliminary schedule for design and construction of the new construction projects suggest that there may be significant benefits to establishing an early work package to include demolition and/or site preparation work. The CM/GC process will allow for improved coordination and implementation during the multi-phased construction process.

N.  Whether the District Has Personnel with Substantial Experience in Alternative Contracting Methods – The District’s Director of Facilities and CIP Manager together have an estimated 40 years of experience in the use of alternative contracting methods. This experience will provide for the ability to negotiate, administer and enforce the terms of a CM/GC agreement.

Conclusion of Findings of Fact

Based on the Findings identified, the CM/GC contract method meets the requirements of ORS 279C335 and it is in the best interest of the Eugene School District 4J to utilize the CM/GC project delivery method for the above referenced scope of work.