Construction Manager / General Contractor CM/GC Procurement Case Study February 2016

Transcription

1 Construction Manager / General Contractor CM/GC Procurement Case Study February 2016 WORLD TRADE CENTER PATH TERMINAL PROJECT MBTA GREEN LINE EXTENSION PROJECT Federal Transit Administration Wendy A. Lee, Regional Counsel, Cambridge, MA 1

2 Observations and Lesson Learned The use of non-traditional contracting methods for major FTA-funded construction projects is on the rise. The CM/GC approach is the most innovative but difficult to manage Selection of the right Joint Venture, Design, and other consulting teams is critical Early involvement of in-house legal counsel Requires experienced owner to manage competing interests; significant and continuous involvement of owner Need to be willing to terminate agreement if Guaranteed Maximum Price (GMP) not established within the contractual time frame and execute contingency plan 2

3 Project Background World Trade Center (WTC) PATH Terminal Project Port Authority of NY & NJ Rebuild former WTC PATH Terminal Executed Construction Agreement in May 2006 Project Budget - $2.501B Required Completion Date - April 30, 2012 Utilized CM/GC procurement strategy Engage Phoenix Constructors J.V. in January 2006 (Fluor, Skanska, Bovis, Granite) Green Line Extension (GLX) Light Rail Project MBTA Extend existing light rail service 4.3 miles Executed Full Funding Grant Agreement in January 2015 Project Budget - $2.297B Required Completion Date June 29, 2022 Utilized CM/GC procurement strategy Engaged White Skanska Kiewit, J.V. in August

4 WTC PATH Terminal Project Justification for CM / GC Approach A single CM/GC approach would: Fast-track project delivery that could save between months Yield cost of between $95-$243 million Produce higher quality work Provide a single point of responsibility and control of construction activities Establish a guaranteed maximum price (GMP) prior to completion of final design 4

5 WTC PATH Terminal Project Known Challenges and Risks Highly challenging conditions include: Aggressive Schedule Complex Construction Coordination with 16-acres site Scope and Quality of Construction 5

6 WTA PATH Terminal Project WTC Site PAC Tower 2 Oculus Dey St Connector Tower 3 Freedom Tower Tower 4 Deutsche Bank Chiller Plant 1 Line Subway Route 9A VSC Memorial 6

7 WTC PATH Terminal Project Stakeholders 7

8 WTC PATH Terminal Project Procurement Shift In September 2008, the PA and CM/GC mutually agreed to terminate the contract Design process was delayed due to several factors: Complexity of the site Interdependence of each redevelopment project on others Conflicting and changing demands of multiple stakeholders Conscious effort by PA to re-examine certain aspects of design to reign in costs and accelerate schedule Failure to negotiate a realistic GMP Failure to establish comprehensive schedule to meet program milestones Market conditions improved thereby softening the construction market 8

9 WTC PATH Terminal Project Cost and Schedule Update Construction Agreement April 25, 2006 Project Budget $2.201B Federal; $2.501B Total Required Completion Date April 30, 2012 Revised and Restated Construction Agreement September 18, 2012 Project Budget $2.872B Federal; $3.995B Total Required Completion Date December 17, 2015 Hurricane Sandy October 26 29, 2012 Current Completion Date December 31,

10 MBTA Green Line Extension Project Project Area 10

11 MBTA Green Line Extension Project Justification for CM / GC Approach A single CM/GC approach would: Allow owner to maintain ownership of the design Integrate contractor into design process to improve constructability, reduce changes and minimize schedule risk Reduce construction contingency since pricing not established by contractor until risk items are assigned 11

12 MBTA Green Line Extension Project Justification for CM / GC Approach 12

13 MBTA Green Line Extension Project Project Delivery Method Advantage/Disadvantage Summary Project Level Issues Rating 1. Project Size 2. Cost 3. Schedule 4. Schedule Flexibility 5. Risk Management 6. Risk Allocation 7. Sustainability/LEED Certification Agency Level Issues Rating 8. Agency Experience 9. Staffing Required 10. Staff Capability 11. Agency Goals and Objectives 12. Agency Control of Project 13. Third Party Agreement(s) Public Policy/Regulatory Issues Rating 14. Competition 15. DBE Impacts 16. Labor Unions 17. Federal/State/Local Laws 18. FTA/EPA Regulations 19. Stakeholder/Community Input Lifecylel Issues Rating 20. Lifecycle Costs 21. Maintainability Other Issues Rating 22. Construction Claims 23. Adversarial Relationships DBB CM GC DB Most Appropriate Appropriate Least Appropriate 13

14 MBTA Green Line Extension Project Known Challenges and Risks Massachusetts laws limited use of Construction Management delivery methods to vertical construction In 2012, Mass legislature authorized use of CM / GC for the Green Line Extension Project as a pilot project Further authorization was provided by the MBTA Board and Massachusetts Office of Inspector General Align MBTA had virtually no experience with use of CM /GC for large, complex, horizontal construction project Heavy reliance on outside consultants by MBTA project team CM/GC required to perform no less than 50% of overall contract value No incentive for sharing savings; savings benefited MBTA exclusively 14

15 MBTA Green Line Extension Project Project Phasing Phase 1 Phase 4 Phase 3 Washington St Phase 2 Phase 1 Phase 2A Phase 1 Union Sq Phase 1 Harvard Street Rail Bridge; Medford Street Rail Bridge; & 21 Water Street Demolition Phase 2 Lechmere to Washington Street Phase 2A Union Square Branch Phase 3 Vehicle Maintenance Facility Phase 4 Washington Street to College Avenue 15

16 MBTA Green Line Extension Project Baseline vs. Actual/Projected Cost $3,000,000,000 $2,500,000,000 Projected $2,000,000,000 $1,500,000,000 $1,000,000,000 FFGA Executed IGMP 4 CM/GC Cancelled Baseline $500,000,000 IGMP s 1 3, 4a $0 Dec-11 May-13 Sep-14 Jan-16 Jun-17 Oct-18 Mar-20 Jul-21 Dec-22 16

17 MBTA Green Line Extension Project Project Redirect In December 2015, the MBTA terminated its contractual relationship with the CM/GC Not financially feasible to proceed with GMP #4 FFGA (60% Design) - $487,306,862 CM/GC - $889,081,221 Established conditions for moving forward with GLX Undertaking value engineering and redesign to reduce costs while maintaining functionality Developing a re-procurement strategy Putting in place new project management team Focusing on other non-federal funding sources 17