Two Parts of our Discussion

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1 Two Parts of our Discussion Part One: The basics (what, why, how, when, etc) An overview of process By no means comprehensive (not enough time) Part Two: From the trenches stuff Not contained in statute From experience as a practitioner Hopefully participative (a.k.a., opportunity to share our war stories) Authorization Under Statute Title34,Chapter6,Art.1 ARCHITECT SERVICES, ASSAYER SERVICES, CONSTRUCTION SERVICES, ENGINEER SERVICES, GEOLOGIST SERVICES, LANDSCAPE ARCHITECT SERVICES AND LAND SURVEYING SERVICES Article 1 General Provisions Definitions Project delivery methods for design and construction services Procurement of professional services and construction-manager-at-risk, design-build and job-order-contracting construction services; definition Procurement of multiple contracts for certain job-order-contracting construction services and certain professional services; definition Requirements applicable to construction services and professional services and to contracts for construction services and professional services; definition Emergency procurements Multiterm contracts for job-order-contracting construction services Bid security for design-build and job-order-contracting construction services Contracts for construction-manager-at-risk, design-build and job-order-contracting construction services; payments to contractor; security; recovery of damages by contractor for delay; progress payments Construction-manager-at-risk, design-build and job-order-contracting construction services surety bond required; suit on bond; limitations Payment bonds for construction-manager-at-risk, design-build and job-order-contracting construction services Accounting standards; statutory applicability Failure to comply; civil penalty 1

2 Authorization Under Statute Title 41, Chapter 23, Art. 5 (under the APC) Procurement of Construction and Specified Professional Services Definitions Construction by state employees; construction by inmates of public institution Bid security Contract performance and payment bonds Contract payment retention; partial payment Progress payments Requirements applicable to construction services and professional services and to contracts for construction services and professional services; definition Procurement of certain professional services Project delivery methods for design and construction services Construction contracts; void provisions D-B Definition under Statute 13. "Design-build" means a project delivery method in which: (a) There is a single contract for design services and construction services, except that instead of a single contract for design services and construction services, the purchasing agency may elect separate contracts for preconstruction services and design services during the design phase, for construction and design services during the construction phase and for any other construction services. (b) Design and construction of the project may be either: (i) Sequential with the entire design complete before construction commences. (ii) Concurrent with the design produced in two or more phases and construction of some phases commencing before the entire design is complete. (c) Finance services, maintenance services, operations services, preconstruction services and other related services may be included. D-B Definition by DBIA Design-build is a method of project delivery in which one entity - the designbuild team - works under a single contract with the project owner to provide design and construction services. - Design-Build Institute of America 2

3 Project Organization: Design-Bid-Build v. Design-Build Construction Manager (In-house or contracted) Owner Architect Construction Manager (In-house or contracted) Owner Prime Contractor Trade Contractors D-B Entity (Architect + Prime Contractor) Trade Contractor s Selection procedure for One-Step and Two-Step design-build outlined in statute. Key difference from IFB and RFP processes agency must use of Qualifications Based Selection (QBS), as established by The Brooks Act (Public Law ). Prohibited from requesting or considering cost information as a part of the evaluation and selection process. Qualifications Based Selection for two-step design-build essentially includes: 1. Public Notice of Request for Qualifications; 2. Submittal & evaluation of Statements of Qualifications; 3. Development of a Short-List of at least 3 and not more than 5 top-ranked teams; 4. Issuance of RFP to short-listed teams; 5. Submittal of Preliminary Technical Proposals and discussions with short-listed teams; 6. Submittal & evaluation of Final Technical and Price Proposals; 7. Ranking of the short-listed teams; 8. Negotiation with the top-ranked team; 3

4 Public Notice of Request for Qualifications: Public notice required under (C)2 to be in the same manner as provided by (Competitive Sealed Bidding). The notice may include publication one or more times in a newspaper of general circulation a reasonable time before bid opening. If the invitation for bids is for the procurement of services other than those described in sections , , and , the notice shall include publication in a single newspaper or in multiple newspapers within this state. The publication shall be not less than two weeks before bid opening and shall be circulated within the affected governmental jurisdiction. The notice may also be posted at a designated site on a worldwide public network of interconnected computers. Submittal of Statements of Qualifications: Firms with an interest in the project must submit Statements of Qualifications. Statement of Qualifications generally provide the agency with information on the proposed project DB team, capabilities of the team, key personnel, size of the firms involved, and past experience. Evaluation of Statements of Qualifications / Ranking / Develop Short List of Firms: Procurement agent selects appropriately qualified selection committee; Typically either 3, 5 or 7 members; in exceptional circumstances statute allows maximum of 9 members (best advice is 3 or 5); Committee must include agency member, at least one person who is a senior management employee of a licensed contractor, and one person who is an architect or engineer registered pursuant to Outside contractors, architects, and engineers serving on a committee may be reimbursed for travel, lodging, and related expenses but may not receive compensation for serving. May conduct discussions with at least 3 but no more than 5 firms as specified by the RFQ regarding the method of approach to the project. Selection committee evaluates and scores statements of qualifications in accordance with the criteria established and published in the RFQ. Based on ranking based on published evaluation criteria, selection of short list of most qualified firms based on qualifications and demonstrated competence only. PROHIBITED from requesting or considering fees, price, man-hours or cost information in the selection of the short list or order of preference. 4

5 Evaluation of Statements of Qualifications / Ranking / Develop Short List of Teams: If you care about the mental well-being of your selection committee members, strongly recommend including a maximum allowed page count (not including resumes, etc.) within the RFQ to eliminate page fluff. Your selection committee members will thank you and they just may be willing to serve on another future committee for you. ISSUANCE OF RFP TO SHORT-LISTEDTEAMS Description of the scoring method, including factors & points allocation: DB entity s demonstrated compliance with the design requirements; DB entity s qualifications; DB entity s financial capacity; DB entity s compliance with project schedule; Compliance of DB entities price with stated project budget, if RFP states agency will spend its project budget and not more than, or life-cycle budget if the project includes maintenance or operations services; DB entity s quality management plan; Any other evaluation factors determined by the agency Required RFP Statements: 1 If discussions are to be held, requirement that each short-listed firm submit a preliminary technical proposal prior to discussion. 2 Statement requiring separately sealed final technical proposal and price proposal submitted together. Price proposal is fixed or guaranteed maximum price (GMP). 3 Statement that final technical proposals will be evaluated prior to opening and evaluating the price proposals. 4 Statement that award will be made to the DB entity whose final proposal receives the highest number of points under the scoring method. 5 Percentage to be used in calculating stipend required by statute to be offered to unsuccessful short-listed DB entities. Discussions with the Short-Listed Teams: Held with all DB entities that submit preliminary technical proposals to ensure full understanding of, and responsiveness to, the RFP requirements. Agency must provide fair treatment to all shortlisted DB entities. DB entities permitted to revise preliminary technical proposals prior to final proposal submission. Agency prohibited from disclosing any information from competing DB entities during discussions. 5

6 Evaluation/Ranking of the Short-Listed Teams: 1 Evaluation committee MUST open, evaluate, and score final technical proposal FIRST; 2 Evaluation committee then opens, evaluates, and scores price proposals; 3 Agency notifies short-listed DB entities of rankings; 4 Agency enters into contract negotiations with the topranked DB entity; 5 Agency offers a stipulated fee not less than two-tenths of one percent of the project budget to each unsuccessful short-listed DB entity. If a DB entity accepts the stipend, the agency may use any ideas or information contained in their final technical proposal in any contract awarded for the project. If the stipend is waived, agency may not use ideas or information contained in their final technical proposal. Negotiation with the Top-Ranked Team: The procurement officer shall enter into negotiations with the highest qualified (top-ranking) DB entity on the final list. The negotiations shall include consideration of compensation and other terms that the procurement officer determines to be fair and reasonable. The procurement officer shall take into account the estimated value, the scope, the complexity and nature of the professional services/construction services to be rendered. If unable to negotiate satisfactory contract with top rated DB entity, procurement officer may formally terminate negotiations with that firm and commence negotiations with then next highest rated firm on the final list. There is no going back once negotiations are terminated with a firm. Design-Build Dogma & Trends The Dogma: Design-Build is always faster. Design-Build is always cheaper. Design-Build always reduces likelihood of project disputes. The Reality Check: Single point of responsibility for owner. More unsophisticated teams moving into D-B due to growth in DB projects by owners. DB may be a little faster and/or cheaper - if done correctly. Increased risk of project misunderstandings and ambiguities related to DB. 6

7 Select the Right Owner s Team! Issue: The most common complaint from design-build firms is unsophisticated owners. The agency unsophisticated or otherwise is on its own. Like Design-Bid-Build, no substitute for in-house staffing and oversight --- $$$$$. Solution: Realistically assess in-house capabilities and experience. Educate all stakeholders prior to using designbuild. Assign roles specific to design-build project. Draft Well-Written D-B Documents! Issue: DB hands over more control much earlier than in traditional design-bid-build. The less involvement and control the owner has, the more critical the documents become. Some forget the basics with new project delivery methods. Solution: Understand DB under statute. Documents: Who is responsible for what? Money: What is the maximum budget? Performance: What is the minimum performance expected from the completed project? Don t necessarily rely on standardized forms (one size does not necessarily fit all). Tie Scope to Budget & Schedule! Issue: Owner hasn t established a project program or budget. DB team doesn t set limitations. Owner establishes unrealistic budget or schedule. Solution: Make certain both sides have realistic expectations. Owner understands and provides succinct project program and performance specs. Everyone shares in refining the budget and schedule. 7

8 Document & Track D-B Project! Issue: Lack of decision making documentation / issue escalation procedures. Stakeholders do not sufficiently document during the project. Solution: Everyone s participation role is understood. Set mutually agreed and realistic project milestones. Maintain accurate documentation during the project to speed future decision making. Ensure project is adequately documented throughout the project cycle (e.g., QA/QC, etc). Don t Continuously Tinker w/ Design! Issue: Owner and DB entity are working independently and not as a true partnered team. Owner does not make timely decisions. Design phase of project is never allowed to end. Solution: Owner sets well-defined project program/ performance specs/substantiation criteria all up front. Team efforts provide decisions that everyone lives with throughout the project. No going backwards. Select the Right D-B Firm! Issue: Belief that DB will solve all problems. Inexperienced DB firms out there. Owners & inexperienced DB firms agreeing to bad contract terms due to their desire to do design-build. Solution: Know the true capabilities, experience & track record of the design-builder. Understand your in-house capabilities. 8

9 Understand D-B Principles! Issue: One party conducts the job as design-build, while the other party does not. Failure to accurately communicate the design-build. Common inaccurate attitudes of the parties Common Inaccurate Attitudes of the Parties: When only THE D-B FIRM is Familiar with D-B Design-Builder: You have had your chance to make design changes, now no tinkering allowed. Owner: It s design-build, so I can change anything I want at any time. The DB contract says I have design approval. Our design changed, but we believe it s still within the scope. I m building to meet your aggressive schedule, please don t bother me. No matter what design changes I want to make, you are still on the hook to comply with budget and/or schedule. Common Inaccurate Attitudes of the Parties: When only THE OWNER is Familiar with D-B Design-Builder: Here is a change order, because we had more design costs than planned. Owner: Sorry, that s your risk. Here is a change order for changed quantities of concrete. Sorry, that s your risk. 9

10 Project Life Cycle Must Still Be Followed STRATEGIC STAGE (Program Execution Plan) All Projects have these same stages CONCEPTUAL STAGE (The tool for implementation is shown in the box) (Project Manual/Performance Specs) DESIGN (Construction Documents) PROCUREMENT (Contracts & P.O. s) CONSTRUCTION (Project Construction) PROJECT TURNOVER (Commissioning, Start-up & Testing) OPERATIONS (Product Manufacturing) PROJECT LIFE CYCLE WORK STEPS Strategic - Concept - Design Procurement - Construction - Turnover Operations Owner Designer Constructor Designer Owner Understand D-B Principles! Solution: Follow the same project life cycle steps, but acknowledge different overlaps required by design-build. Have all parties understand design-build project delivery methods and what it means to use it. Define the Program Appropriately! Issue: The D-B Agreement is silent (Yikes) The D-B Agreement is ambiguous (Yikes) Ongoing disputes over performance and/or prescriptive specifications. Solution: Well-written D-B contract documents. Invest time to create Project Program, Performance Specifications & Substantiation Criteria. 10

11 D-B Project Program D-B Program: Defines which spaces are required, how big those spaces must be, and any specifics for the spaces. How many people will occupy. General FF&E required. Utility requirements. Relationships between spaces (need to be together due to work duties, etc.). D-B Performance Specifications Performance Specifications: Define only the end product or performance for the project, not the methods required to achieve results. Satisfy Owner s quality concerns without committing the project or DB entity to particular material or system choices. Accurately define Owner s project expectations while providing DB entity the greatest possible flexibility to devise the most cost-effective solutions to the Owner s needs. D-B Performance Specifications (cont.) Allow innovation without compromising the Owner s performance and quality requirements, especially when on a tight budget. Help to avoid scope creep or losing control of the budget without specifying too much detail. Help to establish credible performance criteria by referencing accepted industry standards. 11

12 D-B Substantiation Criteria Substantiation Criteria: Any form of evidence that is used to: (A) predict whether the proposed design will comply with the requirements or, (B) to verify that the construction based on the approved design actually does comply. During Preliminary Design, Design Development, and Construction Documents, requirements to submit substantiation criteria are primarily intended to forestall the proposed use of non-compliant designs or construction solutions. While construction is ongoing, substantiation criteria are presumed to be only a prediction of design and may subsequently be invalidated by actual results. During closeout, substantiation criteria confirm that functional performance complies with the project program. Substantiation Criteria Example 1 FIRE SPRINKLER AND EXTINGUISHER SYSTEMS Performance - Basic Function: 1. Provide fire sprinkler or fire extinguishing systems for all interior spaces. 2. Provide wet pipe sprinkler systems unless otherwise required by code. 3. Fire Sprinklers: Design and construction in accordance with code and NFPA Standpipes and Hoses: Design and construction in accordance with code and NFPA Accessibility: Provide fire department connections as required by code. 6. Nozzle Performance: As required by code and NFPA Sprinkler Head Performance: As required by code and NFPA Determine minimum water supply requirements using the hydraulic calculation method defined by NFPA Substantiation: 1. Preliminary Design: Identification of water source. 2. Design Development: Water supply for sprinkler systems shown on the drawings. 3. Construction: Tests of each sprinkler system in accordance with code and requirements of design standard. Substantiation Criteria Example 2 NATURAL GAS SUPPLY Performance - Basic Function: 1. Provide natural gas for use by HVAC and plumbing equipment in accordance with code and as follows: 2. Comply with ICC International Fuel Gas Code Comply with ICC International Mechanical Code System Design Pressure: 125 psig, minimum. 5. Natural Gas System Working Pressure: 5 psig, maximum. 6. Natural Gas Entrance into Facility: Locate service meter minimum 3 feet from ignition sources. Substantiation: 1. Design Development: Distribution system and equipment connections shown on drawings. 2. Construction: Functional performance testing; proper fuel supply, combustion, and venting. 12

13 Substantiation Criteria Example 3 VOICE AND DATA Performance - Basic Function: 1. Comply with ANSI/TIA/EIA-568 and -569 Standards, latest additions, including for installation and labeling. 2. Operational computer network is PC-based. 3. Connection between Internet and internal network will be via T-1 line. 4. Wiring shall support Gigabit Ethernet to RJ45 data connections. 5. Provide CAT 6 cable with RJ33 connectors for fax machines, modems, and other analog devices. 6. Wiring shall terminate at CAT 6 certified jacks and patch panels. Substantiation: 1. Preliminary Design: Outline description of systems, inter-system interfaces, and functions provided. 2. Design Development: Details of each type of input and output device; capabilities of systems; manufacturer data. 3. Construction Documents: Detailed layout of input and output device locations. 4. Closeout: Complete functional performance testing under Commissioning. Test and certify all network wiring is in compliance with CAT 6 Standards per ANSI/TIA/EIA-568-B.2-1. In Conclusion Projects should be appropriately matched to the design-build delivery method. One size doesn t fit all. Well-written contract documents are crucial: Communication is key to project success. Project program is appropriately defined. Strongly recommend performance specs & substantiation criteria in addition to project program. Owners need to: Utilize people on both sides of the project that are experienced in design-build project delivery method. Understand DB principles and accept that DB is not acureall. Pennington Street Garage Tucson, Arizona 13

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