DESIGN BUILD: CHARLOTTE-MECKLENBURG UTILITIES DEPARTMENT PROCESS FOR THE MCALPINE CREEK WWMF EFFLUENT FILTER UPGRADE AND EXPANSION

Transcription

1 DESIGN BUILD: CHARLOTTE-MECKLENBURG UTILITIES DEPARTMENT PROCESS FOR THE MCALPINE CREEK WWMF EFFLUENT FILTER UPGRADE AND EXPANSION Barry Shearin, P.E. - Charlotte-Mecklenburg Utilities Department Jackie Jarrell, P.E. - Charlotte-Mecklenburg Utilities Department Kit Eller, P.E. - Charlotte-Mecklenburg Utilities Department Brent Reuss, P.E. - Black & Veatch Jeff Wells, P.E. - Black & Veatch Morgan Young, P.E. - Black & Veatch

2 ABSTRACT Charlotte-Mecklenburg Utilities Department (CMUD) elected to use a design build delivery method for the McAlpine Creek WWMF Effluent Filter Expansion project. Black & Veatch (B&V) was retained to assist CMUD with this process as the Owner s Engineer. The Design-Build delivery method is used by many utilities in the United States for municipal water/wastewater treatment projects. However, this project is one of the first municipal water/wastewater treatment projects to use this method in North Carolina. CMUD established several goals for the project when considering this delivery method. These included: One point of responsibility for design and construction; Operator and engineering input to design was critical; The method must result in competitive overall costs; Maximize small business enterprise (SBE) participation. Several Design-Build delivery methods were considered. These included prescriptive Design-Build, construction management at risk, performance Design-Build, and progressive Design-Build. After a thorough evaluation, the progressive Design-Build method was selected. CMUD issued an RFQ and shortlisted three firms/teams who submitted detailed proposals and participated in an interview process. The Design-Build team of Crowder Construction and HDR Engineering was selected, and the contract was approved in February The Guaranteed Maximum Price (GMP) was agreed to in the fall of 2012, and construction began in late 2012 with a projected construction completion of early A paper was presented by CMUD and B&V at last year s conference on the process that CMUD went through to select the appropriate delivery method, the process for developing the Design-Build contract, the method to assure that operator input is provided, the strategy for educating City Council on the method, and the process for maximizing SBE participation. This year s paper by CMUD and B&V will discuss the GMP negotiation, the open-book contracting process, and the construction progress from CMU and B&V s perspective. A paper is also being submitted by the Design-Build team of Crowder Construction and HDR Engineering which will compliment this paper by discussing the project and delivery method from the Design-Build team s perspective. Keywords: Design-Build, Wastewater

3 1. INTRODUCTION Charlotte-Mecklenburg Utilities Department (CMUD) requires additional effluent filter capacity at its McAlpine Creek Wastewater Management Facility (MCWWMF). The current effluent filtration facilities have a firm capacity of approximately 40 million gallons per day (mgd) maximum month average day flow (MMADF). Firm capacity was defined with one of the ten existing filter cells in backwash and one additional filter cell out of service. The project design criterion is to expand the filter facility to provide at least 80 mgd MMADF effluent filter capacity. Black & Veatch (B&V) was retained by Charlotte- Mecklenburg Utilities District (CMUD) as the Owner s Representative for the above referenced project which would be delivered using a Progressive Design-Build methodology. A qualifications-based selection process was employed to select the Design-Build team. Ultimately, the team of Crowder Construction Company and HDR Engineering was selected. The team began to develop the project design and the Guaranteed Maximum Price (GMP) in February The GMP was eventually negotiated and agreed upon in the fall of 2012 with construction beginning late in Construction is projected to be complete in One of the most significant benefits of the Progressive Design-Build approach is that it promotes regular, effective communication between all team members throughout the project. The familiarity that develops between team members from this regular communication enhances the ability of the project team to tackle challenges like negotiation of the GMP or remedying design issues in the field. Additionally, this delivery method hinges on an open-book process; meaning that all members of the project team have access to project financial information. The combination of these two factors, communication and transparency, allow project team members to realize the benefits of the Progressive Design-Build approach. The negotiation of the GMP and the open-book contracting process are expanded upon herein. 2. METHODOLOGY At the time of this project, the State of North Carolina only allowed a Design-Build delivery method to be used if special legislation was approved. CMU was successful in obtaining approval of the special legislation and is allowed to execute water and wastewater projects using Design-Build delivery methods. In 2013, the State of North Carolina has passed legislation which allows Design-Build to be used on water and wastewater projects. Historically, implementation of municipal projects throughout the United States has been accomplished using firmly established procurement methods that have generally involved the selection of designers separate from contractors. With the emergence of integrated contracting in municipal project delivery over the past 10 to 15 years, procurement methodologies practiced in other industries have been introduced into the municipal marketplace. These methodologies have subsequently been adapted and modified by municipal Owners and practitioners around the country. Many of these new procurement methods offer Owners flexibility for adaptation to agency-specific needs as well as project-specific requirements. For the current project, CMUD selected the Progressive Design-Build delivery method to allow for the selection of the Design-Builder based on qualifications alone. Additionally, CMUD felt that this approach would maximize owner input during design development. Subsequently, once the project design reached approximately 60% design, the GMP was negotiated. The crux of the delivery method is outlined below.

4 In progressive Design-Build projects the RFP generally does not include plans and specifications and the Owner selects the Design-Build team on qualifications only. After the Design-Build team is selected, the design is completed to between 30%-60% and then the Guaranteed Maximum Price (GMP) is negotiated with the Design-Build team. The advantages of this method are the Owner has maximum input over the project design and O&M costs because the construction portion of the contract is not authorized until a large portion of the design is complete, the procurement process is simple and can be completed in a short timeframe and the potential exists for increased competition due to relatively low proposal preparation cost. The disadvantages of this method are that the cost for the construction is not known at the time of initial contract signing (GMP is typically set at 30%-60%), cost is determined through a combination of negotiated and competitive processes, and an effective public education program may be needed to overcome concerns with construction price negotiation. 3. RESULTS Open-book contracting process In Progressive Design-Build, the construction cost is developed on an open-book basis using competitive bids solicited from subcontractors and materials and equipment vendors. The full cost combines this cost of work with the Design-Builder s negotiated general conditions, fees, and contingencies. This open-book approach provided CMUD transparent access to project costs and the ability to factor quality considerations into the selection of subcontractors and equipment. After the Design-Builder was selected in the current project, they submitted their cost to develop the design to approximately 60% complete; a phase termed Design Development Services. This cost was based on billing rates previously approved in the Proposal phase and an anticipated number of working hours. Since all of this information was open-book, CMU and B&V had the ability to review the cost proposal and ask any questions or provide parallel estimates. Once any issues were remedied, the Design Development Services contract was executed by the Design-Builder and CMUD. During design development, the open book process again provided value to CMUD. The Design-Builder collected competitive bids for a variety of services, materials, and equipment and allowed CMUD to perform a cost-benefit analysis. In this way, CMUD was able to make informed decisions in its selection of subcontractors, suppliers, and vendors. Another open-book benefit to CMUD during design development was the ability to discuss and evaluate the cost implications of a variety of approaches to design. Further, CMUD was able to develop a wishlist of scope additions that would be considered as design progressed and during GMP negotiation. The final benefit of the open-book process that will be discussed herein centers on the project contingency. In Progressive Design-Build projects, a project contingency is included in the GMP in order to protect the team members from any unforeseen project issues. These issues include design and estimating which is not complete at the time of the GMP as well as changed field conditions. Depending on how developed the design is before GMP negotiations, this contingency can vary. The more developed the design is the lower the contingency may be as there are less unknowns to account for. The contract for the current project included a savings clause to be applied to any project savings. Once project construction surpassed a point where risk was minimized, anticipated project savings could be made available to CMUD for potential use on the project. The open-book process ensured that this benefit would be available to CMUD through regular communication on the status of the project contingency and anticipated project savings.

5 GMP negotiation Once the design was developed to approximately 60%, the Design-Builder established its Guaranteed Maximum Price (GMP) based on the 60% complete design and current project scope. At this milestone, the Design-Builder guarantees that the project will be constructed within the GMP so long as no additional scope is added to the project. On the current project, the GMP included three primary components: The previously agreed-upon fee for Design Development Services; An itemized estimate to construct the facility as outlined in the original project scope; A project contingency. The Design-Builder also included in its estimate itemized costs to construct a variety of wishlist items as provide by CMUD. While these items were not determined to be critical to the overall successful operation of the effluent filters, they would benefit the project. As previously mentioned, one of the most important challenges of the Progressive Design-Build methodology is ensuring competitiveness during the development of the GMP. On the current project, this was accomplished through several key actions: Comparing proposed billing rates between shortlisted firms in the Proposal phase; Comparing proposed staffing plans between shortlisted firms in the Proposal phase; Requesting competitive quotes from major equipment suppliers during Design Development; Competitively bidding out significant material quantities; Having B&V run detail parallel estimates during GMP negotiation. During GMP negotiations, B&V reviewed the estimate provided by the Design-Build team. Any discrepancies were reviewed and resolved and the GMP was adjusted accordingly. Another critical facet to a successful GMP was CMUD s commitment to the City of Charlotte Small Business Enterprise (SBE) program. The Design-Builder committed to meeting a minimum goal of 8% SBE participation in the total project cost. With the help of an SBE consultant, the Design-Builder exceeded this goal in the final GMP. Construction progress The construction of the current project has benefitted greatly from the Progressive Design-Build delivery method. Principle benefits center on resolution of design issues in the field, coordination of key milestones with CMUD operations staff, and project schedule management. As previously mentioned, the Design-Build project team includes CMUD, B&V (the Owner s Engineer), and the Design-Builder (Crowder and HDR). The relationships between the team members have grown and strengthened throughout the duration of the project through regular meetings and partnering workshops. These strong relationships especially benefit the project in instances where there are required design clarifications or changes in the field. Since construction commenced when design was only ~60% complete, it is reasonable to expect some design issues to appear in the field. This delivery method provides for quick and effective resolution of these issues through honest and trusting conversations and meetings. Further, since the contractor has been involved with the project through its

6 entirety, their familiarity with the design allows them to more effectively evaluate potential financial implications stemming from design changes. As is the case with any functioning infrastructure, it is critical that the facility continue operation throughout construction. Further, key construction milestones at wastewater management facilities must be sequenced considering additional constraints such seasonal flows, permit limits, and public perception. Since CMUD staff has been heavily involved in the project, their advice on construction sequencing was sought early and often. A primary example of this benefit can be found in the evaluation of filter shutdown. This project required that work be performed on the existing filter structure which would require that it be shut down for a period of time. CMUD expressed a desire to maximize the trial operation of the new filter structure before shutting down the existing filter structure. Additionally, CMUD wished to minimize the shutdown of the existing filters, altogether. This goal was accomplished through several workshops where B&V, Crowder, HDR, and CMUD analyzed a variety of different approaches. In the end, a plan was developed that accomplished CMUD s goals, improved the project schedule, and did not adversely impact the project cost. The final construction-related benefit described herein relates to management of the project schedule. Projects that are delivered using alternative methods are often able to compress project schedules when compared to traditional design-bid-build methodologies. One of the key aspects of this schedule compression is the ability to sequence permitting in a way that allows for construction to begin before the overall project design is 100% complete. On the current project, this was accomplished by teaming with the North Carolina Department of Environment and Natural Resources (NCDENR) during Design Development and submitting portions of design for approval as they were finalized. One example of this is that the Permit to Construct was granted for excavation and foundations early in the project to allow excavation and foundation construction to begin. The remainder of the design was finalized and submitted for permitting in a parallel; thereby, reducing overall project schedule. 4. DISCUSSION AND CONCLUSIONS Currently, the project is in construction and is anticipated to be completed in early While a previous paper focused on the qualifications-based selection, subsequent shortlisting, and team selection, this paper focuses on the tangible benefits realized from employing the Progressive Design-Build methodology. The open-book contracting approach allowed CMUD significant input in the design of the project. CMUD was afforded the ability to select equipment vendors and subconsultants that had a proven record of delivering quality work on critical projects. Additionally, CMUD was able to regularly evaluate the costbenefit of design changes and scope additions. Finally, the open-book process also allowed for transparency when tracking contingency usage and subsequent contingency release for use on the project site. As previously mentioned, one of the biggest challenges with Progressive Design-Build is ensuring financial competitiveness throughout the project. On the current project, the competitiveness of the GMP was evaluated using parallel estimates from B&V among other comparative factors. Further, CMUD was able to realize significant value during GMP negotiation through the inclusion of a large quantity of their wishlist scope additions.

7 Construction progress has proven the benefit of the delivery method through resolution of design issues in the field, coordination with CMUD regarding critical milestones, and project schedule reduction; all of which stem from the formation of trustworthy relationships between project team members. Regular education of governing bodies (in this case, Charlotte City Council), is critical to the success of the project. It was critical for the project team to help the City of Charlotte promote its SBE participation plan through the allotment of significant project costs to SBE approved firms. Overall, the Progressive Design-Build project delivery method has been well received by all stakeholders; and it is anticipated that this approach will result in completion of a successful upgrade to critical infrastructure. REFERENCES Black & Veatch, Design-Build Delivery Methods. Charlotte, NC. City of Charlotte Small Business Opportunity Program Design-Build Institute of America, Document No. 530 Standard Form of Agreement Between Owner and Design-Builder, Second Edition, Washington, DC. Design-Build Institute of America, Document No. 535 Standard Form of General Conditions of Contract Between Owner and Design-Builder, Second Edition, Washington, DC.