City Council - workshop

341 Inform the public about the location of the meeting act posted in the council chamber 309 North 5th Street, Norfolk, Nebraska and accessible to members of the public Roll call please.

Granquist?

Here.

Arns?

Here.

Webb? Here. McCarthy?

Here.

Beckman? Jensen? Lenge?

Here.

Hildebrand?

Here.

Mayer?

Here. All right at this time Philip Dupuis of... Go ahead. You got it?

Good afternoon, Mayor, Council. Today's work session is focused on delivering a... sort of a educational training workshop on collaborative delivery. Collaborative delivery is design build, construction manager at risk, progressive design build. Those are contract structures for delivering projects that are fairly new to us. We did do one here about three years ago, I think, with our baseball field. The new restrooms, locker areas. It was a fairly small one. But as we went through that, there were a lot of questions on that delivery method. And so as we are contemplating this delivery method, construction managers are at risk specifically for the wastewater project. I really wanted to get somebody in front of the city, specifically city council and staff, to kind of present on what collaborative delivery is and the process that we go through. So today I have Phil Dupuy with us. He is a long time from the industry, the construction industry. When he retired from that, him and some friends, co-workers that he worked with during his career, put together a consulting association, Sherpa Strategies, and now one of the things they do is work with the wastewater collaborative delivery association to develop and deliver these types of workshops around the country. So I will bring him up. Before I bring him up, In front of you, there is a book. This is the collaborative, the association's sort of book or handbook on the process and what all is included there. If you want to take it with you, you're welcome to. If you're not interested in it, just leave it there and I'll pick that up. If there's anybody as well in the audience or listening to the presentation this afternoon that would like one, just let me know and we'd be happy to get you one. I also have a notepad up there for each of you so that as Phil's going through his presentation that you can write down some questions. I'll let him kind of work through how he wants to do the presentation, whether he's going to take questions during or after. A lot of information to get through. Phil comes to us from Idaho, where I can tell based on a couple teams meetings I've had with him, he's a big fly fisherman. lives in an environment that a lot of us probably envy. So with that, I'm going to turn it over to Phil Dupuy with Sherpa Industries or Sherpa Strategies. Thanks. Thanks, Bill.

Mayor, Council, thanks for having me today. We've got a lot of material to cover, about 65 slides, I think. A lot of animation, so we'll get through it as quick as we can. I think the best way to do these is to engage in dialogue as the questions come up. And I'd like to try to do that today. If we get too many of them and I need to say, let's cut it off for a while, that's just to get through. Try to save a half hour. Turn one of them on. There you go. OK. So let's get started here. So who is the Water Collaborative Delivery Association? We're a professional organization composed solely of practitioners, a lot of engineers, a lot of contractors. And our mission is to educate, to research, and advocate for collaborative delivery, specifically in water and wastewater markets. And we've got quite a group of members in front of us that support us and lead us. We just celebrated our 20th anniversary. It started out 20 years ago with three engineering companies up there, Brown and Caldwell, Jacobs and Black and Beach. And from that we've grown to include all of these members. So one of the things that I said earlier is our mission was education. You've got the handbook there in front of you. We're gonna cover just a very small amount of that today. I encourage you guys to read through that. It's a great tool if you have any questions. If Steven and his team need other assistance, we've got a lot of advisory guides, procurement guides, a lot of how-to. and very detailed hands-on information that we can make available to you. So let's talk a little bit about what collaborative delivery is. I'm gonna use the term collaborative delivery kind of all encompassing today to include CMAR, as Steven said, and progressive design build, but it also includes other delivery methods that we're not gonna dive into today. So as I said, there's a spectrum of collaborative delivery projects. We're familiar with the traditional design-bid-build approach. And then we move, as we get more collaborative, to see them at risk and design-build. There's two methods there, progressive design-build or fixed price design-build. And then you get into more of some of the one-off situations with design-build-operate or public-private partnerships, sometimes also referred to as finance-design-build-operate-maintain. So as you look at these wheels, we're going to see these wheels again. You've got the cast of participants that round out the circle, and then the types of relationships that exist between those participants. And as I said, we'll get into that in quite a bit more detail. So design-bid-build is the traditional delivery method that most of us are familiar with. It's how most public entities have done their projects in the past. The owner holds separate contracts with the designer and the contractor. And it's the most widely accepted linear process. You know the price on bid day. That appeals to a lot of owners. And of course, the design is completed prior to bidding so that that price can be known. One of the downsides of this method is the designer doesn't know who his engineer, or the designer doesn't know who his contractor is, right? So he has to design the project to the lowest common denominator. He has to make sure that everything is spelled out and is not as efficient as perhaps if he knew who the contractor was. And then you've got the construction management at risk delivery method. Now in this method, the owner still has separate contracts. There's a contract with the engineer or the designer. There's a contract with the contractor. or the CMR, right? But there's a new party involved. There's the owner-advisor that has come into the equation at the very top there, that light green. We'll talk more about what that owner-advisor does and how important he is later. But there's also some key interactions. The owner-advisor is going to interact with the CMR during the phase one, the pre-construction phase. And there's also going to start to be interaction between the designer and the CMAR. Recall in design-bid-build, there was a solid white line there. There was no interaction. There was a bit of a Chinese wall there. So two separate contracts with the owner. Traditionally, the designer is selected first, and then the contractor or the CMAR comes on later. And sometimes this is called design build light. We'll explain that in a little bit. And then we have progressive design build. This is going to advance where there's just one entity, the design build team, that is contracting with the owner. So you still have the owner, you still have the owner advisor, but now you've got the design builder. That could be a joint venture between an engineering company and a contractor. It could be a situation where the contractor is in the lead, or it could be the engineer is in the lead, but they form one entity to build and design the project. So there's gonna be a lot more concurrent activities in this method, which can shorten the schedule. Selection is based on quals, and you can also use a quals-based selection for the CMAR in the CMAR procurement. This can be done as a GMP or a lump sum, and both options, both delivery methods, the CMAR and the progressive design build, have an off-ramp. And we'll talk more about what that off-ramp is and what it entails But essentially, at the end of the first phase, if you don't agree on a price with the design builder or the CMAR, you can off ramp them and deliver the project the traditional design bid build way. Any questions so far? OK. So let's think about how CMAR and PDB are compared. So in phase one, we have a number of activities. We kick off the project. There's a basis of design that's developed. And then you start to move through the design milestones, a 30% design, a 60% design, and then you reach to the final design phase. And somewhere in that final design phase, somewhere between 60% and 90% complete of the design, You're going to develop a GMP estimate that you agree on with the Progressive Design Builder or the CMAR. And then you're going to proceed directly to construction. And that's going to initiate the phase two of the project or construction. As you near the end of construction, you're going to start to commission and start up the facility. And you're going to go through your acceptance testing. reach substantial completion, and then the warranty period will start. So in a CMAR project, you've got two entities that are engaged in that, as we said earlier, right? There's the designer of record or the engineer that's procured separately, and then you've got your CMAR. In a progressive design build, that's a single entity that's doing all that. but you still have that division of responsibility, the design and then estimating and construction. So something you guys are probably all interested in is when do you know the price? When do you know how much it's gonna cost? Well, in the traditional design-bid-build, the design is 100% complete, it's put out for bid, contractors bid on it, and you get a price for the project on bid day. That's the as-bid construction price. But it's not really the final price of the project because there could be change orders that come in. And you won't know the final price of the project until the project is completed. In a construction management at risk or progressive design build delivery method, you complete the design to 30, 60, or 90% complete. And then the CMAR will be doing iterative estimates throughout that design. We'll talk more about that in a little bit. And you're going to come up with a GMP or a lump sum when the design is somewhere between 60% and 90% complete. Then it's going to go to construction. And then there still may be some change orders at the conclusion of the construction period, but not near to the extent that you would see in a design bid build project. And then finally, on the fixed price design build project or delivery method, at the proposal phase, the design builder develops a fixed price. That's a closed book price. They're taking a lot more risk on that price. And then they move through design and construction. So design bid build, you really know the final price at the end of the job. CMAR, progressive design build, you know the final price when you reach the GMP. And on a fixed price design build, you know the final price at the proposal stage. So the next thing I'd like to talk about is leveraging the owner advisor and what that role should be providing for you on a project. So the first thing we have to do is we've got to make sure all your team, all the internal stakeholders to a project are on the collaborative delivery bus. And there's a lot of stakeholders that have a lot of different impacts that the city needs to consider. You've got your executive management. You've got your procurement, your legal counsel, planning and building departments. Could be O&M staff involved. You need to make sure all these people are comfortable with the delivery method, know what's going to happen, know the route that the bus is going to take. I want to tell you a quick story from my personal experience about how important this is. We were working on a project down in California for a city, and the public works director was the leader of the opportunity. He took everyone through it, thought everyone knew what was going to happen. We did a market sounding. We got five teams that were very interested, released the RFQ. Our SOQs came back. We shortlisted to three, and we were scheduling one-on-one meetings. It's very common in a collaborative delivery method to have private meetings with the shortlisted bidders to talk about different aspects of the contract, different strategies that they see to save money. Well, the procurement manager didn't know we were going to have those meetings. She found out that we were going to have private meetings and basically put a stop to it and said, no, you can't do that. You have to have the meetings with everyone at the same time. She needed time to be convinced. We convinced her, but everybody wasn't on the bus. Everybody didn't know the route, right? So that caused delays. That caused people to question the city's sincerity. So it's super important to get people on the same page within the city. So how do you do that? How do you do that? Well, you can talk. You can train. You can go to conferences. You can talk to other cities that have done it. You can use research. You can use existing templates like Water Collaborative Delivery has. But the best way to do it is to find a good owner's advisor. So let's go back to the wheels that we had earlier, right? And every wheel that was a collaborative delivery had the owner advisor up there. So the OA is your advocate to focus on strategy, tactics, and making sure that your collaborative delivery project is successfully implemented. Typically, the owner advisor role is filled by someone who has done that in the past. Could be an engineering company, could be a sole practitioner, or it could be a firm that just provides owner advisory services. So if you looked inside the cover of our guide to owner advisors, you'd see this graphic. And what this graphic is doing is it's looking at what are the traditional engineering role that an owner-advisor fills, and what is some of the traditional tasks that a program manager fills, and how do those come together? So in a traditional engineering role, we're very familiar with that. They provide the design. They may be the designer of record. They may support construction through RFIs. Whereas the program manager is basically facilitating multiple projects. They're probably augmenting the owner's staff. They're not doing design. They're not doing the designer of record. They're helping more with the backroom side of administering the project. So in a collaborative delivery environment, you actually want kind of the best of both worlds. Those need to be brought together to provide perhaps some limited design support, to definitely support the procurement, draft the procurement documents, manage the procurement, and then they may be involved in clarifying requirements, perhaps validating acceptance, and coordinating with other advisors, okay? So various labels that that can fill. I've mentioned some of them. Owner's rep, owner's engineer, owner's advisor, construction manager. And there's various ways you can get that. You can get that, as I said, from a sole practitioner. There could be engineering companies out there that provide that role. Or there could be just strict owner advisory firms. So what are some of the tasks that that entity should be doing or some of the functions. Well, early in the project, they're going to be helping you with feasibility and planning, could be helping you make sure your budget's right, could be going out and helping you get other funding sources, could be helping with permitting. As you move through the project, they're going to be providing some technical services. They could be helping with the design criteria, making sure everything fits together and works. They could be doing conceptual preliminary design. As you move into procurement, they're going to validate the model, make sure that you've picked the right model, and they're going to help you facilitate your approach, draft your documents, implement the procurement, review the SOQs and the proposals, and evaluate your overall methodology. But they may not be the only party that you need to execute this project. There could be some other advisors and stakeholders that you need to help you with this. You could need an independent cost estimator to help validate the cost. You may need some outside legal support. This is your first CMAR contract or your first PDB contract it might not be a bad idea to spend a little bit of money on outside legal support to make sure you've got your bases covered So a lot of different hats a lot of different things going on so let's think about and go back to The the map we had of the project how its implemented phase one the design phase two construction and then the warranty period and But let's add on another phase. Let's add on a phase zero, a planning phase. And let's think about how all these functions that have to be done spread across those phases. And they spread not uniformly. Some are done early. Some carry all the way through the project through the end. And some are shorter or longer in duration. So as we think about all the tasks that need to be done and how they spread across the project, you could develop a list like this. And this might be something that you want to consult in the future as you move through your project. There's another, though, huge intangible that your owner's advisor needs to bring. and that's leadership. Your owner advisor needs to establish a clear vision for the project. They may need to provide motivation to help others overcome obstacles and to help achieve the goals and realize the vision that you want. Your owner advisor can really be a cheerleader, but they can also be a psychiatrist. There's gonna be some times when you're gonna have some doubts in the process. And a good owner advisor can encourage you to keep moving forward, to trust the process, to be that sounding board and help staff achieve the goals. So now I'd like to cover just a few bullets of some of the different phases to help you get the most out of your CMAR experience. So let's talk about some pre-construction phase considerations. This is where the value, this is where the real value in a CMAR or a progressive design build gets created. It's critical as we work through these pre-construction phase tasks that you preserve the off ramp. If you preserve the off-ramp, you'll get the benefit of the products we're going to talk about here. And if you move on to decide that you need to off-ramp the CMAR and move on to a design bid build opportunity, you still have the benefit of all this work that was done. The other thing I want to encourage you strongly to do is when you go out for your CMAR bids, put a list of tasks that you want the CMAR to complete and then build a spreadsheet for them that has those tasks in one column and across the top has the different labor classifications of people that might be involved in that project. The project manager, the lead estimator, the engineers, the schedulers, etc. Have them write up their hourly rate that they charge those people out for and then have them fill in the number of hours that each of those key people is going to complete on that task. It's going to help you make a very definite informed buying decision. You're going to see how much time is their project manager actually spending on my job. Who's carrying the bulk of the water for this thing? Is it the estimator? Is it the scheduler? How is the labor distributed for what I'm buying for these services? So to fully optimize the pre-construction project, bring the CMAR on as early as you can. I can't stress this enough. If it was my job, I would bring them on when I hired the engineer. It's that important. Make sure that they do construction reviews of the drawings. If you're around me more than one day, you'll hear me talk a lot about the abilities. What do I mean by the abilities? Constructability, durability, maintainability, sustainability, operability. CMAR needs to look at just more than how is it being built. How is it going to operate? How is it going to be maintained? Is it going to withstand the test of time? Is it going to be a 30 or a 50 year project? As the CMAR works through those design drawings, have them keep a log, a log of all the ideas that people came up with. And then what happened to that idea? Was it abandoned? Was it carried forward? Why was it abandoned? That's called a DART log, a Decision and Recommendation Tracking log. It's like the project's memory of what happened during these pre-construction meetings. The other thing that the CMAR is going to provide is they're going to provide cost estimates, iterative cost estimates at each phase of the design, 30, 60, 90, and released for construction. It's super important at the very beginning of the job that they create a model and maintain an estimate model that everyone understands. Everyone knows how to use, not just them, everyone involved in the project. It's super important that they maintain a book of quantities. The quantities are what drive the estimate. The quantities are what drive the work. You should be seeing the quantities reduce as the design progresses because the work is becoming better defined. They should develop estimates at every stage using a cost-based, bottoms-up approach. In CMAR estimating, we focus on cost, not on price. They should manage the procurement of long lead items, and they should bid out trade packages as appropriate and applicable. One thing on trade packages is make sure that the design is sufficiently advanced that the subs are willing to give you a good price. Subs don't like to take quantity risk. And if your CMAR is going out for bids when the design is 30% complete, your sub prices are going to be sky high. The quantities have to be defined in those sub packages. They're going to build, maintain, and advance the project schedule as the design is advanced. They're going to chair the risk review workshops and maintain the risk register. Who should create the risk register, the first risk register? The owner advisor should. But after he creates it and everyone agrees on the model, the CMAR is the guy that needs to carry that forward throughout the course of the project. So let's talk about some procurement considerations. I want you guys, when you're developing your procurement docs, to front load your transparency. You've got to tell the industry what you want. If you have unique circumstances, say maybe you're in a design to budget situation, or you have complicated phasing considerations, let the industry know that. The industry can't solve your problem if you don't tell them what your problems are. When you select your CMR, select them for the right reasons. You're choosing a long-term partner. You're not choosing somebody, hopefully, just because they wrote down the lowest number for their fee. And keep your selection qualification-based. Describe the characteristics of your ideal CMR. If you want a CMR that's done Two jobs just like yours? Tell them that. And then don't relax your standards. Don't relax your standards. So let's talk about some other considerations. Use a market sounding. Communicate to the industry what you want. The best market soundings that I've seen are four or five page documents. First couple pages describe the project. Second, other pages describe your needs, your unique needs for the project, what you're looking for. That's where your brutal transparency comes into play. And then you maybe follow that up with eight to 12 questions that you would really like the industry to talk about. Have them give you those written responses back, but then get on the phone with them. Get on the phone and schedule a meeting with them and talk with them for about an hour. And that's your meeting to shape. It can be an open forum. It can be you reviewing their responses. It can be whatever you want it to be. But you need to telegraph that you're open to cite ideas and suggestions to attract the best and the brightest CMARs. Maintain two-way communication throughout that process. The next procurement consideration I want to toss out there to you is don't use a Frankenstein contract. Start with a clean contract. By Frankenstein contract, I mean if you've got a great contract from a school that you did, and you've got a great contract from a fire station that you built, don't think you can smash them together and make it a CMAR contract. Two different worlds. Start with a fresh sheet of paper. And get that contract out to them as soon as you can. Get them thinking about that. Get them talking about that. Get them giving you comments back in their procurement documents. Ask for two or three projects just like yours. If you've got an $80 million project, don't settle for CMARS that have only done $40 million jobs. Set the bar high. Focus on the top people that drive the project's success. I've seen a lot of procurement documents where owners will say, hey, give us 10 people, give us 12 people. 10, 12 people don't build a job. There's three or four people that really control the success of any project. And those are the people that you want to focus on. Those are the people that you want to understand their qualifications. Communicate your evaluation criteria. Communicate your project goals to the CMARs. If respondents don't know, they're going to guess. And it's possible that you're going to give the contract to the CMAR that guesses the right the most. Don't let that be your fate. Tell them what you want, they'll give it to you. Ask for their fee as a percentage. We're going to talk about this more later, but if you get the cost right, understanding the GMP or lump sum is then just adding on that fee and agreeing on the general conditions. Engage your designer in the selection. I'm not suggesting the designer should be a voting member of the panel, but the designer's going to have to work with that CMAR. And at the end of the day, Stephen's going to need to look down at that designer and say, can you work with this guy? That's the level of interaction you need. Let's go on to some other early action items that I want to talk with you about briefly. There's no substitute for the right start. Slow is smooth and smooth is fast. That's the same from the seals. It's true in construction too. Go slow to go fast later. Develop a one system approach. I'll talk a little bit more about that shortly. And focus on the basis of design first so you can understand the basis of the estimate later. Because if you don't understand the basis of design as your price changes, you won't know why. So the one system that drives the project is composed of four components. The model of the design, the basis of design, the estimate, the schedule, and the risk register. Those should all be tied together with work breakdown structure codes. Have the CMAR development estimate as soon as possible. It's important to get that first stake in the ground. And if you have a $60 million job, and the first estimate comes in at 90, don't freak out. We'll talk about that in a little bit. Establish a contingency structure and a drawdown protocol early. It's really important that everyone knows how contingency can be accessed and who can do it. Develop a team charter, define roles and authority. It helps drive camaraderie and the dart log. We already talked about that. Decision and recommendation tracking log, but it's super important to get that done early So now let's talk about the cost estimate Remember I said that we're going to talk in the cost estimate first just about cost So how do you define cost? Simplest way is if you have a receipt for it, it's cost Okay, that's composed of a couple different things subs Equipment cost and materials and labor and then you've got this big thing on top. That's really big at the beginning unknowns allowances and contingencies, right but as we move through this process and we go through early estimates and then we the design evolves and we go through more estimates the 30 to 60 90 and we continue to move that needle to the left, or to the right, I'm sorry, our defined cost becomes tighter, our risk-related contingency is reduced, and our undefined scope contingency is reduced. Then at the end of the day, that scope, that cost, plus the fee that you asked for in the proposal gives you your GMP or lump sum, right? So you've just got to get your cost right. CMAR already gave you their fee percentage. You're off to the races. So let's talk a little bit about the estimate detail, right? We already mentioned the bottoms up organized by WBS. But what should not be in the estimate? Unknown things, risks that shouldn't be in there. The fee markup, we're going to put that on at the end, right? Any scope included in an allowance should not be in there. Escalators shouldn't be in there. It should only be cost. Some things to think about when you're thinking about the cost model. Let the CMAR or the design builder do it their way. They've been estimating and bidding work for a long time. Don't force a system on them they're not accustomed to. Understand the layouts and the formats. Agree on them early. Know how to use the tool. But also, don't forget about your designer's scope. Your designer's gonna have some dollars and some things that they need to do. They're gonna need to do many design iterations. They're gonna require a commitment to collaborate with the CMAR. It's hard to put teeth in it, but it's worth talking with them about. They're gonna need to have scope for design progress meetings. You're gonna need to have something about life cycle cost analysis. O&M is super important to include in this. Now let's talk about some cost mitigation strategies. What do you do when the cost comes in too high? What do you do when the cost comes in too high? Well, you make sure that the cost model and the work breakdown structure are aligned. You make sure that you understand the basis of estimate, what assumptions underlie the cost. You make sure that the risks are in the risk register, not in the cost estimate. And you validate the costs if you need to. What you shouldn't do is you shouldn't freak out. No panicking. Don't blame the gap on price, because we're not talking about price yet. This is all cost. Don't assume that you need to cut scope yet. Dismiss the impact of legacy specs and approaches. Be flexible. This is the key action right here. I want you to think about stop, the old stop, drop, and roll. Your price came in too high. Stop everything. Don't progress the design until scope aligns to budget. Drop. Focus on where the cost matters. Look at the items that are five to 10% over budget, over where you think they need to be. Focus on those. And don't leave the room until everything's mitigated. So when you're looking at scope elements that are in the 5% to 10% range of the gap, three things to think about. First, verify the quantities. Do we have the quantities that work right? Look at the quality and the specs. Are we being inflexible? Is that driving up our cost? And then go back and validate the basis of the cost. Validate the risk, clarify the assumptions, and understand the comparables. Watch for scope creep. It's easy on one of these projects for somebody to come into a room and say, hey, I'd like this. And then somebody else comes into the room and says, I'd like that. And then somebody else comes in and says, don't forget this. And pretty soon your $20 million project is 35. Track scope changes as they happen. I like to make only one or two people that can change the scope. Construction project manager the design manager and the clients manager Immediately determine the cost of changes don't kick the can down the road Somebody says I want to add something in that's great. What's it going to cost can we afford it? When scope is left out some important things to do I Understand the basis of the estimate. Make sure that everything's still aligned. But what you shouldn't do is you shouldn't assume there's a windfall. Don't run down to the mayor and say, hey, mayor, I found 10 million bucks. You might not have found it. Don't dismiss the impact of lifecycle cost considerations. That's what we're going to talk about next is how you involve the O&M people. Super important that you bring those guys into these meetings and engage them. They're going to have to operate and maintain this wastewater treatment plant after it's built. And you don't want to build something or design something that's going to cost them money and time down the road. Determine the desired lifecycle of the asset. How long do you want this thing to last? Do you want it to last 10 years? Do you want it to last 50 years? Very different. Set consistent variables. Most of the O&M cost is composed of labor, electricity, and chemicals. So how do you optimize those? And then finally, make life cycle analysis a part of your decisions. So now let's talk about early works packages. When this is done, we're going to have a pretty good understanding of what early works packages are and the benefits of them and how you decide to use them and some contractual considerations for early works packages. So what are early works packages? Could be a number of different things. We're going to move forward here. So what are early works packages? Could be site permitting, demo. Could be some permit support that you need. Could be a geotechnical investigation or utility investigation that you need to get completed. Could be something that you're going to use to create an economic advantage. Maybe there's a piece of equipment you can go buy that would be cheaper today than it would be in a year. Or there could be some community benefits associated with getting out and doing the work early. So some of the benefits of early works packages. The first trip to the board. What do we mean by that? Well, eventually Stephen's going to need to come to the city council and say, I want to get your permission to go forward with this project for X million dollars. He can do those same types of things in smaller increments to bring your knowledge up associated with the project and get in front of the cycle of contract amendments and permissions. So when do you use early works packages if it's gonna reduce project risk? If it's going to lower your cost Commodities may be going up If it gets people on site and it can be convenient for better collaboration Or it gets the CMAR in a cash positive position and The not so good it could be super complex to get the approval done It may not add value It may reduce negotiating position or leverage, or it doesn't gain time on the overall schedule. It's not worth it if the benefits aren't tangible. So how do you determine if the benefits are tangible? I'm gonna talk about three tests, really simple tests. The sniff test, first test, does it make sense? Are the benefits clear of the early works package? The math test. Does it pencil? Is there an economic advantage? Does it align to the funding requirements? And then finally, the bar exam. Is it contractually allowed? Are there administrative permits or approvals that need to be attained? Is it funded? And is it regulatory possible? If you get to yes, Then there's maybe five questions that you need to answer. Is the off-ramp still open? So remember, this is a project, a small project within the project that you may wanna do before you've gotten the GMP agreed to with the CMAR. The off-ramp could still be in play. You still might not be able to reach agreement with them. So if you do this early works package, Does that impact the off ramp? Does it impact the project? Is the total project cost estimate protected? Is there a risk and reward balance? Is there agreement on implementation? Is the early works package gonna be done as a GMP? Or is it gonna be done as a lump sum? And is it worth the inevitable administrative friction? Is it worth the hassle? Is it worth the time? The answer to all these should be yes. And then you use the mini-me approach. If you want to move forward with it, you use the same terms and conditions. You use the same cost scrutiny and cost definition, the same risk assessment and contingency process. It's just like you're going to do on the big contract, except it's a smaller one. And that concludes my presentation. I had to run through it a bit at the end for time, but I'd be happy to entertain any questions.

You talked a lot about the off-ramp part of the process. What's that look like? What is that? Can you explain that a little better?

Well, it's usually messy. Nobody really wants it to happen. But... It happens from time to time. It's usually done because you don't reach agreement on price. Yeah, I would recommend that you, in your procurement documents, you lay out what could make you take the off ramp. And what I mean by that is, would it be a disagreement of 5% between your budget and their price? disagreement of 10%, disagreement of 5% on the total estimate. Are you going to break the estimate up into certain packages and look at it? It's something that needs to be thought out. But it's not something that you should hold over the CMAR. If you have to off-ramp somebody, my opinion, this is just Phil talking, everybody's failed.

I see. You talked a little about cost and price too. So obviously if you've got your cost and your price, how do you dial in to where you're getting the cost from your subcontractors in your project too, like with this?

So the CMAR is going to need to hold some level of cost for that. and there'll be some contingency associated with that until he goes out for bid with those trade packages. I would not recommend you do that until the design is at least 60% complete. Because as I said, subs don't like quantity risk. So when the design is 60% complete, he goes out and gets those trade package quotes. Then he can go back and say, this is what I had in my estimate for this cost. This is what I had for contingency. Now, because I have these trade packages, I know these costs, these are real. I have sub-prices for those. So these numbers replace these. And then all this contingency I had here I'm going to do this with because I have these known costs.

So, but you talked about the CMAR having the least amount of change orders at the end. So how is that, just explaining that process right there, how do you end up focusing it enough with only 6% of the design done that you end up with minimal amount of change orders at the end?

Because it's a collaborative process where the engineer and the contractor work through that together.

You're still working through that process, yeah.

All the way during the pre-construction phase, all through design. Those unknowns, those questions that drive change orders are being answered up front, and that knowledge is being folded into the GMP price as it's developed. Does that answer your question?

Yeah, yeah, yeah.

So you talked earlier, too, about the owner-advisor. So how long does the owner-advisor stay as a member of the team from beginning all the way through?

I would recommend that, yes.

Okay. And the other question with the CMAR, you know, there are CMARs that do work themselves. Is that advisable or not?

Well, I personally think it is, but I'm fairly institutionalized. I worked for Kiva for 30 years. The thing you have to ask yourself if you're going to have a self-perform CMAR is on the scopes of work that they're self-performing, how are you going to satisfy your curiosity that you're getting a good price? or getting a good cost, right? Some owners do that by making their CMARS on self-performed work competitively bid it and making sure that they're low. Others do it by just an open book comparison of their estimate. They have an ICE. an independent cost estimator. The independent cost estimator can look at that estimate and say, yes, I think you're getting a good deal. I think this is reasonable. Or no, I don't think you are. It can be either way.

How's that work too when we go out with cities particularly? We pretty much almost every time look for low bid. So how's that all... How do you guarantee your citizens you're working with a low bid part of this, with this process?

Well, how do you guarantee your citizens are getting a low bid?

Because right now, I mean...

They're not getting a low bid.

Right. So how do you... You've got to be able to share that. Because we've got... We're going to have people coming up and questioning... the you know here's your price here's what you're spending uh whatever the project's coming from these tax dollars are coming from here for that so then you've got it as an elected official you got to say well i'm getting the best price i'm getting the best value for the amount of taxpayer dollars that's going in so how do you through this process what's really easy when we just say we got six bids this one's the lowest bid yeah but they may not demand to be the lowest

add in change orders and everything else, right? There's a couple different ways that come to mind. You could be wildly transparent with the community and show them how the quantities are being reduced. Show them how cost is being reduced. Show them how contingency is being reduced. And give them the same information in a summarized format that your project team is using to make decisions. That's one way. You could run a public sector comparator and have someone mirror that and say, at the start of the job, we think this is an $85 million project. We're completely independent. Here we're done with the GMP, and it's 84.9. The city's getting a good deal. Those are the two things that come to mind.

You had indicated that the owner advisor initially overlooks that project and then hands it off to the CMAR.

On the risk review.

On a risk review. What's the timeframe on that, that the owner advisor typically hands that off?

As soon as the CMAR is on board.

Okay.

As soon as the CMAR has got the pre-construction phase services agreement signed and they're engaged, should be one of the first things they look at.

That's the sooner than later comment.

Yeah, so I would recommend that when your CMAR comes on, the first thing they do is develop the estimate model. Not the estimate, but just the model. What's it look like? Where's the tasks go? Where's the column for labor, et cetera, right? So you get that template. You get that raw template. And the numbers and all the detail will be populated later, right? And then the next thing that they look at is that risk register. It's super important to think about what could go right and what could go wrong.

So when it comes to the selecting of the CMAR, is that coming through the design team? Or how's that process work at that point in time? So I think that's another question your citizens will have. Or how does this person get selected? Because you're not really doing the low bid process.

I'll answer that a little bit for Phil. That process is established in state statute. and in city code. And there's a committee that is selected. The structure of the committee is spelled out in state statute and city code in terms of who's on that.

Okay, great. Thank you. Just asking all the questions I think are going to be asked of us.

Yeah, no, it's fair.

It's fair.

Steve, since you're talking about state statute, can you explain to me what the difference in state statute of design build versus progressive design build is?

I can. Design build developed, oh, I don't know, my earlier run-ins with it were probably back in the early 90s. In the design build world, you're hiring a, oh, I'd have to see the names there, but a professional criteria developer, they take the project to 25, 30%. So it'd be like hiring any one of our consultants, JEO, Olson. You tell them what you want to do, they take it to about 30%. At 30% design, now you go out on the market with an RFQ and ask for a design build team. And somebody like an Olson and a Housman would join do a joint venture or some structure and then they propose on your project and you'd get multiple Hopefully multiple design build teams proposing So at that point you're getting the your design build cost you're starting to fix that at 30% design My view of progressive design build like CMR is you can pull the trigger on a GMP at just about any point. If you walk into a project and you know, my budget on this project is 20 million. You can ask your CMR to give you a GMP at 20 million, you just might not exactly know what you're gonna get completely for 20 million. You could ask him, at 60% design. You're gonna know a lot more about the actual scope, sizes, capacities at 60% than you do at 30%. So again, it's still gonna be a $20 million project at 60% design. You're just gonna have a lot more information about what you're getting. Likewise at 90%, if you go out and ask for a GMP at 90%, you're a lot further down the design path. You're gonna know a lot more about the project you're gonna get. My impression of what happened with progressive design build is there was a recognition somewhere in the early 2000s-ish, and they recognized a need to push the design build process down the road, allow that to mature to maybe 60% design before you go out and get your design build teams on board. That's my impression. Phil, you wanna fill in the blanks?

Yeah, I would say that from my perspective, it's very expensive to put fixed price lump sum design build proposal together. You have to get the quantities, you have to get the job fully quantified when you bid it. That means you have to do a lot of advanced design work. And I think that from my perspective, the design and construction industry started to push back and realized a more progressive approach was better for everybody.

I don't know for sure, but I believe some of the early state statutes that were wrapped around design-build talked about getting that going out at about 30% design. And then again, just recognizing some of the inherent risk there. They saw that they would get probably a better project and a better price if they created a structure that allowed you to move that down more towards the 60% design before you started to lock in on a price.

Other questions for Phil?

If there's none from the council, we will open it up for the general public if there's a question from the public.

Steve, I was going to ask you, Waterloo just did a project not too long ago. Are you familiar with that at all, what Waterloo did? Okay. I think they did a PCD project where the performance criteria.

Progressive design build.

Performance criteria developer. So we'll talk about that. Yeah. That's good.

You know, that's the people in a CMAR world. that would be the design team. In a design build world, where you don't have anybody that's actively working on a design, you go out and you hire that performance criteria. Owner-advisor performance criteria, those are all the same, sort of the same thing. Depends on who you bring to the table, but you can't go out and until you've got that roughly 30% design, In the design build world, that's your performance criteria. What are you asking a design build team to bid on to give you a GMP on? And it's all that performance criteria. How many in a wastewater plant? You know, are you, you have ammonia issues, pH issues, is it BOD, total suspended solids? What are you designing around? How much flow is coming into the plant? What's the characteristics of that flow and how much, you know, what are you trying to treat and So it's getting that criteria together to present to it so somebody can put a price around. Phil, any other wisdom for us as a community or us as elected officials or engineering staff?

Bring the CMAR on as early as you can. Tell them what you want. You won't You won't get it if you don't tell the industry what you want. I'd say those three slides in the middle there were kind of the most important stuff.

Thank you for your presentation today. You're welcome. Sorry, one last question. Sure. Do you have a percentage of savings, you think, on projects overall with each different type?

Would you say? Personally, I wouldn't even hesitate. I wouldn't want to give you a percentage because I've seen them so varied. I mean, I've seen some savings that were significant. I've seen some that were not so much, right? But I think... you need to think in terms, and the community needs to think in terms of not just dollars, right? But we all need to think in terms of schedule savings, long-term lifecycle cost savings, And, of course, price. I mean, everybody wants to know everything. That's the first question anybody ever asks, right? Hey, I got a new car. Nobody says, I love the color. How much did it cost? I got a new stereo. Oh, cool. How much did it cost? But we have to change our way of thinking to realize there's other things in life besides price. The agency may have some data for you on that. I can check. Or the association. But it's going to be... Yeah.

Bill, this might be totally out of your will, but you don't know unless you ask. So have you been involved in the funding of these projects, how the communities have funded these?

Yeah.

Can you share, like, so from industrial usage, how they... gave revenue to these projects versus what the city generated through federal dollars or through rate increases or just any experience you have with that?

Well, so I heard you ask a question, but then I heard you ask another question. I heard you ask initially, how do people get these projects funded? But then I heard you ask, how is cost shared? So Let's take the second one first. Costs are usually shared based on use and benefit of a project. If someone doesn't get a benefit or a use out of a project, they're probably not too interested in sharing the cost of it. Unless they got a lot of money and they're really good people. So if you're thinking about sharing the cost with industrial users or something like that. How do they benefit from the project? But then if they're going to share costs, they're probably going to want to have a say in the project. So how are they going to be engaged in the delivery and the execution? It's just more of a question. As far as the methods, the funding methods, there are... a large number of grants and loans and stuff like that that's available. The best advice I can give you is find someone who specializes in that process and engage them.

Thank you. Sure. Maybe you mentioned this, who's the main point of contact? The main point of contact, like the designer, the contractor, who's the main point?

Well, in a collaborative delivery, it's a team. I often use the analogy in collaborative delivery, you've got to sail a ship. There's three guys that have to sail a ship, and they're tied to the mast with 30 feet of rope, and they've got to figure out how to do it. In some aspects, the designer is the leader. In some aspects, the CMAR is the leader. If I had to pin the tail on the donkey, I'd say it's that guy right there. But it takes a team. I mean, there's a reason they call these collaborative delivery, because it is collaborative. Maybe I pointed at the wrong guy. Maybe it's him. I don't know. I know it's not me.

So we will make Phil's presentation tonight available on our website if anybody wants that. It'll be available tomorrow. And again, if anybody out there, council, I think I handed out six or seven of these handbooks. If you all want them, I've got extras. If there's folks in the audience that want one, I certainly make those available.

Yeah, it's an incredibly practical guide. And I guess I'll throw one other thing out there before I leave I talked about the contract the Frankenstein contract don't don't use one The DBIA has some really good contracts out there They have one specifically for CMGC Seymour The the association is developing a contract as well. That'd be a really great place to start. They're very fair very balanced They cut both ways And they're good tools.

That's all I had for the workshop, Mayor. All right. Well, thank you very much.

We will adjourn.