Understanding Construction Manager at Risk: Benefits and Lessons

1. www.NAEPnet.org

2. Understanding the Construction Manager at Risk Project Delivery Method Presented by Steve Skabla, Vice President Chief Estimator/Preconstruction Manager

3. Presentation Overview • Overview of Various Project Delivery Methods • Traditional (Lump Sum) Bid • Competitive Sealed Proposals • Design/Build • Job Order Contracting • Construction Manager at Risk • Explanation of Construction Manager at Risk • Definition • Characteristics • Pros/Cons • Project Examples • Lessons Learned • How to Evaluate Best Value

4. What is a “Project Delivery Method” The process of how a project will be planned, designed and built OR Procurement strategy for designing and constructing a facility OR Means of contractually communicating expectations and basis of reimbursement OR The process of managing how a project will be planned, designed and built

5. Overview of Delivery Methods Traditional & CSP Design/Build Job Order Contract Owner Owner Owner A/E or Consultant A/E Design/Builder General Contractor JOC Contractor Self-Perform S u b c o n t r a c t o r s S u b c o n t r a c t o r s S u b c o n t r a c t o r s o rE m p l o y e e C r e w s Design Bid Construct Select Design Construct Select Design Construct Traditional Price only CSP Price and Technical Qualifications Price & Technical Qualifications Price & Technical Qualifications

6. Select Design Construct CM A/E Sub Sub Sub Sub Sub Overview of Delivery Methods Construction Manager at Risk Owner Fees, general conditions and qualifications

7. Construction Manager at Risk (CM at Risk) • What to Expect from Your CM • Provide constructability reviews • Provide detailed cost estimates at Schematic Design, Design Development and at Guaranteed Maximum Price (GMP) • Deliver GMP prior to completion of Construction Documents • Begin construction before design is 100% complete • Bring best subcontractors and best prices to the project • Control costs/budget • Take a business risk • Provide financial guarantees • Act in the Client’s best interest

8. Dependable Budgets & Schedules ComprehensivePlanning & Coordination Preconstruction (Not Just an Estimate & Schedule) Solicitation & Pre-QualificationProcess Bid Package Development GMP Development Value Engineering Options Purchasing Process Budgeting Over-the-Shoulder Design Reviews Coordination & 3D Collision Check ConstructabilityReview & Improvement Site Management Planning Team Communication Protocols Scheduling Weekly & Monthly Reporting Process FF&E Coordination & Management Meeting Management Life-Cycle Analysis Job Hazard Analysis Site Logistics Severe Weather Preparedness Testing & Commissioning Process Occupancy Planning Quality Management Process Planning for Service After Completion OCIP/CCIPPlan

9. CM at Risk PROS CONS Price is not guaranteed at time of selection Owner must have more involvement in the process Difficult to evaluate actual cost between CM at Risk candidates • Opportunity for bid strategies on inflationary materials • Reduces the risk of proprietary specifications • Change flexibility • Flexibility in selecting a builder • CM provides preconstruction services and works in team concept with A/E & Owner • Usually brought on early in design (program/SD) • Constructability reviews at each stage of documents • Opportunity to phase/fast track • Better opportunity to maximize HUB/MBE subcontractor participation through bid package strategic initiatives

10. Lowest Cost vs. Best Value Best qualified firm will give you the most value for the 91%.

11. Project Candidates for CM at Risk Best Suited Least Suited Small or simple projects • Large new or renovation projects • Schedule sensitive • Difficult to define • Subject to change

12. Example: South Texas Research Facility

13. Texas A&M Univ., Veterinary Imaging & Cancer Treatment Center

14. CM at Risk Lessons Learned • The best performers at CM at Risk are the same best performers at CSP and hard bid. • State procurement laws may vary the process. • Example: For Texas, 100% CDs and public subcontractor proposals on each package are required prior to any real work. • It is more work, not less for the Architect and Contractor. • Allow adequate time for review and approval of the Guaranteed Maximum Price (GMP). • Allow adequate time for the subcontractor selection process by the CM and Owner approval

15. CM at Risk Lessons Learned • Agree on the subcontractor selection criteria and process early. • The project design must be sufficiently advanced to have accurate general conditions proposals in the RFP. • Clearly define what is to be included and excluded from “general conditions” in the RFP. • Lump sum general conditions - not cost plus. • The most issues/problems. • 90% of contract administrator or Owner’s representative’s time on 5% of cost.

16. CM at Risk Lessons Learned • Draft a total project schedule, not just a construction schedule. • Give the CM the entire project budget. Tell the CM what parts it is responsible for. • Add example schedule, decision milestones

17. Benefits of CM at Risk Delivery Example: 1 Million GSF Public Hospital • 4-year project duration • Items bought early • Potential cost savings

18. Pick the Right Delivery Method • Before starting the selection process, determine which delivery method will provide “best value” • Factors to consider (add more): • Project size and complexity • Time allocated for the construction • Competitiveness of the current/local construction market • Desired flexibility • Availability of contractors and subcontractors in the local market • After deciding on key factors, evaluate the various delivery methods and formally adopt the method you deem “best value.”

19. Hand-out

20. Thank You Steve Skabla 713.243.8301 steves@vaughnconstruction.com