Contractor Prequalification is it RIGHT for your Project?

1. 2015 NC AWWA-WEA Annual Conference Raleigh, North Carolina Contractor Prequalification is it RIGHT for your Project? Peter F. Schuler, PE November 16, 2015

2. Presentation Overview • Why Prequalify Contractors? • Prequalification Process / Metrics Evaluated • Case Studies • OWASA – Aeration / Odor Upgrades - $10 million Contract • OWASA – Digester Rehabilitation - $2 million Contract • Salisbury, MD – BNR/ENR Upgrades - $50 million Contract • Conclusions

3. Why Pre-Qualify Contractors? Normal Procurement of Contractors Contractor submits price and “Qualifications” on bid day “Qualifications” – bonding Capacity, references, etc. Low bid wins unless “Qualifications” are not acceptable Owner then needs to either disqualify contractor (possible lawsuit) or “grin and bear it” Prequalification of Contractors – 2 Step Bid Process Contractors submit “Qualifications” first and Owner / Engineer decide whether or not they are qualified Only pre-qualified contractors can submit bids on bid day Low bid still wins – but you have a much better chance of getting a qualified contractor Process should not be used to limit the amount of bidders – just to make sure they are qualified

4. Pre-Qualification Package - Includes • Request for Qualifications • Purchasing requirements – detailed description of process • Detailed project description • Forms to fill out • Any State Forms – Minority / SB, AS&I, Wage Rates, etc. • Contract Drawings (60%, 75%, 90%) • Contract Specifications • Typically – Owner / Engineer must actively “market” contractors at this step • Normally – Include a “Pre-Bid” Meeting and Site Visit

5. Prequalification Process / Metrics Evaluated

6. Prequalification Process / Metrics Evaluated

7. Case Study 1– OWASA Mason Farm WWTP

8. Aeration / Odor Improvements – Case Study #1 New Odor System – NSL Cells New Turblex Blower Complete Odor Control Upgrades Nutrified Sludge Cells (NSL) Aeration Basin Influent Channel Aerated Cells Reduce Power Consumption and Improve Aeration Basin Performance Replace Jet Aeration with Fine Bubble Reduce Mixing Power Consumption Improve Blower Efficiency Complete Project by December 2014 to Fulfill Promise to Town Engineer’s Estimate = $9.5 million

9. Pre-Qualification Requirements– Case Study 1 • Minimum Experience to Be Demonstrated • 3 Water / WW Projects >$5 million in last 5 years • Experience with staged construction • Experience with construction of blowers, diffused aeration, odor control • Complete project in 18 months • 75% Contract Drawings / Specifications Provided

10. Pre-Qualification Results– Case Study 1 • 21 Contactors Submitted RFQs • 14 Contractors were “Qualified” • 7 Contractors were “Not-Qualified” • 3 due to safety practices • 3 due to lack of relevant experience • 1 due to claims and bad references • Used a 1-5 scale for ratings • Qualified contractors all scored better than 4.0 • Only contractor “not qualified” due to point rating scale scored 3.4 • New Invent Mixer

11. Bid Day Results / Lessons Learned– Case Study 1 • Only 4 of 14 Qualified Contractors submitted bids • Low bidder made a math error and bid was thrown out • Awarded to Haren Construction for $10 million or $500k over engineer’s estimate • Lessons Learned - Why only 4 bids? • Too many pre-qualified firms – GCs don’t want more than 6 or at most 8 “competitors”(4 firms) • Bigger more attractive projects bidding at same time (4 firms) • Other more local projects to chase (2 firms) • Too much pre-negotiated equipment (1 firm) • End Result – Project was completed ahead of time with less than 1.5% change orders – excellent project

12. Case Study 2– OWASA Mason Farm WWTP

13. Digester 1 and 2 Rehabilitation– Case Study #2 Digester 2 - Leaks Dystor and Roof Scope of Work Install new walls inside digesters 1 & 2 Install new gas membrane cover on digester 1 Repair damaged concrete inside control building Install new roof on old digester control building Install new doors, stairway, heaters and ventilation ductwork Demolish heat exchangers and piping that is no longer used Repair inoperable valves and other miscellaneous work Engineer’s Estimate = $1.9 million

14. Pre-Qualification Requirements– Case Study 2 • Minimum Experience to Be Demonstrated • 3 WWTP Projects >$5 million in last 5 years • Experience with staged construction • Experience with construction / structural rehabilitation of digesters or other concrete tanks • Complete project in 10 months • Attempt to “weed-out” really small contractors • 60% Contract Drawings / Specifications Provided

15. Pre-Qualification Results– Case Study 2 • 8 Contactors Submitted RFQs • 6 Contractors were “Qualified” • 2 Contractors were “Not-Qualified” • 1 due to safety practices • 1 due to lack of relevant experience • Used a 1-5 scale for ratings • Qualified contractors all scored better than 4.0 except 1 • OWASA previously had good experience with GC with <4 score • Dystor Removed

16. Bid Day Results / Lessons Learned– Case Study 2 • 5 of 6 Qualified Contractors submitted bids • Awarded to RTD Construction for $1.9 million or $400 under engineer’s estimate • Lessons Learned - Why 5 of 6 bid? • Only one that declined to bid had recently won too much work • All qualified contractors were small or mid-sized firms • Relatively easy bid to put together • Owner made an effort to avoid competing bid dates • Construction is just starting on this project – so too early to tell how it will go.

17. Case Study 3– Salisbury BNR/ENR Upgrade

18. BNR / ENR Upgrade– Case Study #3 Scope of Work Install new 4 Stage Bardenpho Process Install new Blower Building Install 4th Secondary Clarifier and rehab 3 existing Secondary Clarifiers Replace Upflow Filters with Disc Filters Install new UV Disinfection Building Improve Solids Processing System Install new Class A Lime Stabilization Engineer’s Estimate = $52 million MDE Reviewed Prequalification Solicitation

19. Pre-Qualification Requirements– Case Study 3 • Minimum Experience to Be Demonstrated • 3 WWTP Projects >$40 million in last 10 years • Experience with staged construction • Experience with blowers and activated sludge systems • Experience with UV, SCs, Disc Filters • Experience with Lime Stabilization • Complete project in 30 months • 90% Contract Drawings / Specifications Provided • Attempted to Prequalify General and Electrical Contractors

20. Pre-Qualification Results– Case Study 3 • 9 General Contactors Submitted RFQs • 7 General Contractors were “Qualified” • 2 General Contractors were “Not-Qualified” • 1 due to safety practices • 1 due to lack of relevant experience • Electrical Contractors • Were uninterested in the process • Even GCs were unable to get them to participate • Withdrew this RFQ solicitation

21. Bid Day Results / Lessons Learned– Case Study 3 • 4 of 7 Qualified Contractors submitted bids • Awarded to UllimanSchutte Construction for approximately $50 million • Lessons Learned – • Qualify enough contractors to make sure you have 4 or 5 bids on bid day • A lot of effort was required to put this bid together • Bid date conflicted with DBIA conference • Prequalifying Electrical Contractors or other subcontractors may be difficult • Construction is just starting on this project – so too early to tell how it will go.

22. Conclusions • In all three case studies, Owner was able to pre-qualify GCs that met reasonable standards • Bid prices received were generally equal or less than engineer’s estimate • Pre-qualification of the GCs, eliminated surprises and Owners were generally pleased with results

23. 2015 NC AWWA-WEA Annual Conference Raleigh, North Carolina