Design-Build Project Delivery

1. Design-Build Project Delivery The J. K. Spruce Experience Katherine Yates Assistant General Counsel

2. Overview • J.K. Spruce #2 planned as early as 1986. • Chose Design-build methodology. • Issued Two Phase RFP. • Two Offerors Responded/Awarded July 2005. • Provisional acceptance expected no later than March 2010.

3. Traditional Process • Chapter 252 of Local Gov. Code governed procurement activities. • Design-Bid-Build was only available method. • Bids advertised, opened and awarded publicly. • Award based on Lowest responsible bidder.

4. New Processes • Chapter 271, Subchapter H added in 2001. • Authorized “best value” determination. • Five new methods for project delivery: • Competitive sealed proposals • Design-build • Construction manager-agency • Construction manager-at-risk • Job-order contracting

5. Design-Build process • Single entity provides design and construction. Structure depends on various factors. • Two phase procurement process: • Phase One RFQ based on qualifications, references, past experience. • Phase Two RFP based on schedule, implementation plan, technical approach, cost. • Award to “best value” offeror.

6. Design-Build Advantages • Fast-track schedule of construction achievable. • Single point of contact for owner and design-builder contractually accountable. • Cost savings due to close working relationship and cooperative exchange of value engineering ideas. • Less owner administrative burden due to single selection process. • Construction efficiency improved. • No need to mediate designer/constructor interface. • Ability to fix project costs earlier in the process.

7. Potential Disadvantages • Greater project cost or schedule extensions due to owner design changes or permit or environmental conditions. • Owner-engineer oversight poorly constructed. • Labor intensive preparation of RFQ/RFP and design criteria package. • Owner loss of control over design and designer’s independent oversight on construction. • Designer selected on basis of price rather than qualifications. • Fewer entities have capacity to provide design-build services so larger entities dominate process. • Influence by non-design team member to maximize profit over design standards. • Designer has greater magnitude of liability because linked to construction.

8. Initiation of CPS Energy Process • Board Resolution selecting “best value” process. • Engage Owner-Engineer to develop Design Criteria Package. • Functional specification and conceptual layout. • Desired equipment margins. • Quality and performance guarantees. • Transmission access. • Geotechnical and environmental information. • Engaged the services of a surety consultant • Joint development of RFQ/RFP and evaluation matrices. • Pre pre-bid meeting held with interested parties.

9. Phase One-RFQ • RFQ advertised and sent to attendees. • Pre-bid meeting held with Site visit. • Evaluation criteria: • Ability to bond penal value of $250 million. • Financial status. • Reputation in industry. • Past experience. • Resumes of proposed project team. • References. • Two offerors qualified to proceed to Phase Two.

10. Phase Two • Offerors given the RFP. • Agreement to reimburse losing entity of up to $1 million for preparation costs. • Evaluation criteria: • Costs • Implementation plan • Project schedule • Safety record • Workforce and training plans • Costing methodology • Initial Design drawing and schematics

11. (con’t.) Phase Two • Interviews conducted to clarify exceptions and technical response. • Offerors asked to resubmit responses based on discussion and to provide pricing to remove exceptions. • Signed agreement “fixing” responses for evaluation. • Evaluation and recommendation of selected offeror. • Negotiations with selected offeror and award based on reaching satisfactory contract.

12. Keys to Success • Clear and comprehensive Design Criteria package and project scope fully defined. • Effective integration of proposed Design-Build Team. • Full and consistent communication between all parties. • Project does not require extensive environmental permitting or ROW acquisition. • Designer retains authority to make design decisions and maintains direct line of communication to owner. • Multiple entities compete and adequate bonding/financing and insurance are available. • Owner involvement and capability of effectively overseeing and administering design-build system.

13. Commercial Considerations • Testing and commissioning done by third party. • Contract price. • Payment and performance bonds. • Construction risks. • Bidding stipend. • Bonus for early completion. • Payment of prevailing wage.