Date: January 28, TriMet Contract Review Board. Daniel W. Blocher, P.E.

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1 Date: January 28, 2015 To: From: Subject: TriMet Contract Review Board Daniel W. Blocher, P.E. Evaluation of Public Improvement Project Not Contracted By Low Bidding West Segment of the Portland Milwaukie Light Rail Project Contract No. RH110163JB Stacy and Witbeck, Inc./Mowat Construction Company, A Joint Venture I. Introduction On May 26, 2010, the Board of Directors, acting in its capacity as the TriMet Contract Review Board ( TCRB ), approved an exemption to the competitive bid process (Resolution No ) for the procurement of construction manager/general contractor ( CM/GC ) services for the West Segment of the Portland Milwaukie Light Rail Project ( PMLR Project ). ORS 279C.355 requires TriMet to provide the TCRB with an evaluation of the outcome of the exempted procurement after completion of the Project. II. Background The West Segment is a portion of the PMLR Project, which will be TriMet s new MAX light rail Orange Line. The Orange Line in its entirety runs from downtown Portland, across the new Tilikum Crossing transit bridge, through southeast Portland and Milwaukie, to a terminus at Park Avenue in unincorporated Clackamas County, and is scheduled to open for revenue service on September 12, The West Segment begins near Portland State University, at the terminus of the existing Green Line light rail, and ends at the west abutment of the Willamette River. The West Segment includes at-grade alignment on SW Lincoln Street to the Harbor bridge structure, the Harbor structure from Naito Drive to the South Waterfront, and a light rail station on retained fill in the South Waterfront neighborhood. The overall length of the segment is just less than one mile. A Request for Proposals ( RFP ) for CM/GC services for the West Segment project was issued on November 8, In response, TriMet received four proposals, which were reviewed and scored by TriMet s Evaluation Committee ( EC ). The EC evaluated proposals based on the following criteria: (1) Proposer Experience; (2) Proposed Project Team; (3) Draft Project Approach and Work Plan; (4) Draft Contracting Plan; (5) Project Management; (6) DBE Program; and (7) Price. The competitive RFP procurement process was used to select the Contractor for this contract so that various risks and benefits to TriMet could be assessed prior to contract award, as opposed to an evaluation of price only. Completion of the West Segment project in the shortest possible timeframe for

2 Page 2 the least possible cost was critical, as was maintaining a safe work environment through the edge of Portland s downtown core. These risks were minimized through the negotiated procurement method utilized here, because TriMet was able to carefully evaluate each contractor s past performance, experience, expertise, and pricing prior to contract award. This procurement method also allowed TriMet to take account of market realities and innovative contracting and purchasing methods, which was consistent with the goals of lowering costs and encouraging competition. The five member EC evaluated each proposal against the criteria and awarded up to the maximum points for each of the specific criteria cited in the RFP, which are set forth above. The EC determined that all four of the contractors proposing were technically qualified to do the work. Stacy and Witbeck, Inc./Mowat Construction Company, A Joint Venture ( SW/M ) received the highest score during the evaluation process. Therefore, the EC recommended that the contract be awarded to SW/M, and the Board authorized award of the initial contract for preconstruction services at its January 2011 meeting through Resolution No III. Project Costs A. Actual Project Cost Compared with Original Project Estimates The independent cost estimate for this contract, performed at 90 percent design, was $73,292,749. The independent cost estimate was based on an analysis of the work expected to be performed under the contract at that time, including track, station, systems, structure and other construction, and estimated lump sum or provisional sum costs for permits, design services, and markup. At the conclusion of design, which was completed with input from SW/M into issues of constructability, schedule, sequencing, and other matters, the original construction contract price was $77,162,031. The final contract close-out cost was $78,394,394. This includes project-related change orders of $1,232,363. B. Amount of Total Contract Price, If Any The final total contract price for all work to be performed under the contract was $78,394,394. C. Change Orders The final cost of this contract for the West Segment project was $78,394,394, which included the full contract amount plus 159 change orders that totaled $1,232,363. Change orders for changes to the project scope were 1.58 percent of the final contract cost, which is extremely low for a complex construction project. Typically, TriMet would expect to see change orders in the 5 to 20 percent range on a project of this nature if procured via a low bid process. IV. Successes and Failures A. Design and Engineering 1. Successes

3 Page 3 The West Segment will provide an important connection from Portland State University to an expansion of the Oregon Health and Sciences University campus at South Waterfront. As part of the project, TriMet successfully designed and constructed the first eco-track and eco-roofs on the TriMet system and utilized a busy downtown street without a significant encroachment on private property, thanks in part to assistance received from the contractor during pre-construction design. 2. Challenges The Harbor Structure portion of the project crosses over a major interstate freeway off-ramp and weaves between columns of an existing interstate bridge, presenting design challenges. Also, vibration mitigation was required for a length of nearly 1,000 feet of embedded track, which has not been used on the TriMet system and very rarely in the United States. In both instances, the contractor provided valuable resources and insight through pre-construction services to provide constructability feedback that resulted in a successful final product design. B. Construction 1. Successes The West Segment was a complex construction project on the edge of downtown Portland. There were many challenges associated with performing this type of construction in that type of environment, including maintaining access to downtown streets, office buildings and retail establishments for pedestrians, bikes, and automobiles. In spite of these challenges, the contractor was able to complete the project on time and on budget, with no claims, and a project change order allowance of less than 1.58 percent. The contractor also obtained over 22 percent DBE subcontractor utilization on the project. 2. Challenges Construction of the West Segment required a significant amount of underground utility work in a difficult, constrained downtown environment. As-built drawings of downtown water and sewer lines were often inaccurate, or non-existent. Furthermore, SW/M experienced multiple problems with the utility subcontractor, who quickly got behind schedule. However, the contractor stepped in to assist the subcontractor with this difficult work, and avoided delaying project completion. V. Comparison with Findings A. Exemption Unlikely to Encourage Favoritism or Substantially Diminish Competition 1. Competition Not Diminished TriMet received four strong proposals (consisting of a total of seven firms) in response to its RFP. There was significant competition for this procurement, and competition was not diminished. 2. No Favoritism

4 Page 4 TriMet s RFP set forth a broad range of criteria against which to evaluate the proposals it received. Each criterion specified exactly what information TriMet s Evaluation Committee would be reviewing and scoring and how many points were associated with each criterion. The criteria were established to ensure that to be competitive, a proposer had to have a well-rounded team, and submit a well-reasoned and detailed proposal. A total of 240 points were available to proposers, 165 for the technical portion of the RFP and 75 for price. Scores for the technical portion of the RFP ranged from 87 to 119 out of 165 possible points. Final scores, including price, ranged from 161 and 178 out of 240 possible. Both of these score ranges are competitive. TriMet s EC consisted of six TriMet staff members with varying areas of expertise, one City of Portland staff member and one Portland State University staff member. Three of the EC members had extensive experience managing complicated public works projects, one specialized in trackwork, one specialized in safety, one specialized in DBE utilization, and one specialized in CM/GC negotiation and construction methods. This allowed the EC to fully and fairly evaluate all proposals against all criteria set forth in the RFP. B. Exemption Likely to Result in Substantial Cost Savings Original Finding: savings to TriMet. Award of the contract pursuant to the exemption will result in substantial cost Assessment: The West Segment project was completed within the project budget, with no claims, and with less than 1.58 percent change orders. Beginning with pre-construction services during the design phase, the contractor made key suggestions related to project scope that reduced the price of the base project and resulted in constructability improvements. C. Operational, Budget and Financial Data Original Finding: A procurement process that involves the construction contractor during final design will allow TriMet to better control costs and protect operations requirements related to the Portland Streetcar. Low bid provides insufficient opportunity to involve the construction contractor during design, while the CM/GC process enables this interaction. Assessment: The contractor came on board at 60 percent design, and helped provide commercial pricing at a time when TriMet still had an opportunity to make design changes in response to contractor suggestions on ways to reduce project cost and respond to budget constraints. This early contractor involvement helped the West Segment project be completed within the project budget, with no claims, and with 1.58 percent change orders for project work. D. Public Benefits Original Finding: Low bid offers no opportunity for a construction contractor to work with the public and address its concerns during project design. For the West Segment, the risk that the contractor may not perform to public expectations must be minimized. The CM/GC negotiated procurement is the best method to identify a contractor who can work with all public stakeholders and benefit the public through development of optimized conduct of construction plans.

5 Page 5 Assessment: The public received the expected benefit. Use of the CM/GC contracting method allowed for the contractor to engage in a dialog with interested parties during the design phase of the project, which was important given the nature of the project. The West Segment project was conducted within a portion of downtown Portland, adjacent to offices, businesses and residences. The project was completed with input from public stakeholders. For instance, the contractor worked closely with the Citizens Advisory Committee, developed a detailed conduct of construction plan that was focused, among other things, on keeping downtown functioning during construction, and on maximizing public involvement. E. Value Engineering Original Finding: The CM/GC procurement method allows TriMet to capture value engineering ideas prior to completion of final design, thereby maximizing potential savings. Assessment: The contractor came on board at 60 percent design, and helped provide commercial pricing at a time when TriMet still had an opportunity to make design changes in response to suggestions on ways to reduce project cost and respond to budget constraints. This early contractor involvement helped the West Segment project be completed within the project budget, with no claims, and with less than 1.58 percent change orders for project work. The contractor helped to reduce costs during design, beginning with pre-construction services during the design phase, by suggesting key scope revisions and constructability improvements. Furthermore, savings identified during the design process accrued 100 percent to TriMet, rather than being split with the contractor. F. Specialized Expertise Required Original Finding: CM/GC procurement can employ a best value selection basis, which allows TriMet to evaluate and rank the expertise of each contractor. It puts the owner in the best position to select a construction contractor who is a proven performer for the specific, specialized work required on the West Segment. Low bid entails more risk that the needed special expertise may not be obtained. Assessment: The West Segment project was a complex construction project in downtown Portland. It also included much highly specialized work, such as a tie in to the existing light rail system, construction of four streetcar rail crossings, and construction of a new steel structure. Use of a best value process allowed TriMet to consider specialized expertise in making its selection. In part because the contractor had these areas of expertise, the West Segment was successfully completed on schedule and within budget. G. Public Safety Original Finding: A CM/GC procurement offers TriMet the best opportunity to carefully evaluate the contractor s prior safety performance and mitigate safety risk in a collaborative way through the contractor s work plan. Assessment: As part of a negotiated incentive program, TriMet and the contractor agreed on certain goals to address safety issues on the project, without increasing contract costs. The contractor s safety performance on the project was well above the state average. H. Market Conditions

6 Page 6 Original Finding: A CM/GC procurement will allow the TriMet to mitigate market risk by allowing the contractor and TriMet to discuss and apportion this risk. Assessment: Use of an alternative procurement and a CM/GC contracting method allowed TriMet and the Contractor to minimize negative market conditions by providing additional flexibility with contracting packages. As a negotiated contract, risks related to material escalation and subcontractor pricing were capped through the use of a risk table. Also, selecting the most qualified contractor provided the ability to generate creative and cost-effective solutions to overcome challenges that were encountered during construction. I. Technical Complexity Original Finding: The technical complexity involved in this segment requires a contractor who is familiar with work in highly trafficked roadways, successful with construction of structures adjacent to operating roadways and railroads, able to minimize construction impacts on natural parks and water resources, and able to assist the owner with developing construction approaches in concert with complicated projects by others that are adjacent and are to be integrated. Low bid procurement does not allow for evaluation and scoring of a bidder s technical qualifications in these areas. Failure to perform the work in the West Segment in accordance with the agreed-upon project objectives would result in adverse impacts to the public and adverse cost impacts to TriMet. A negotiated procurement allows TriMet to select a contractor with due consideration given to the contractor s past technical performance in similar work. Assessment: The West Segment project was a complex construction project in downtown Portland. It also included much highly specialized work, such as a tie in to the existing light rail system, construction of four streetcar rail crossings, and construction of a new steel structure. Use of a best value process allowed TriMet to consider specialized expertise in making its selection. In part because the contractor had these areas of expertise, the West Segment was successfully completed on schedule and within budget J. Funding sources Original Finding: Early budget certainty is highly desired. A CM/GC procurement is a better method than low bid to achieve early budget certainty. Assessment: Selection of a contractor with the necessary areas of expertise was essential in allowing TriMet to complete this complex project on time and within budget. Furthermore, use of the CM/GC process allowed early contractor involvement in the design process, which reduced unknowns and increased cost certainty. Multiple contractor pricing exercises during the design phase ensured that there were few unknowns at the time that final pricing was negotiated. Use of the CM/GC process also allowed TriMet and the contractor to negotiate a risk table, capping TriMet s risk on certain items. As a result of these and other benefits associated with the CM/GC process, the project was successfully completed on schedule and within budget.

7 Page 7 VI. Summary Competition existed for this contract award, even though factors other than cost were considered. TriMet received proposals from four different proposers consisting of seven different firms. The proposals received were objectively evaluated and scored, with the contract being awarded to the proposer with the highest total score for its technical and pricing proposals. Therefore, the exemption of this solicitation from the low bid process did not diminish competition or encourage favoritism in any way. Furthermore, as explained above, use of this procurement method allowed TriMet to achieve significant cost savings on the West Segment project.

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