City Council

Summary/Final Minutes – Work Session – October 3, 2013 Savannah City Government SUMMARY/FINAL MINUTES MAYOR and ALDERMEN WORK SESSION CITY MANAGER’S BRIEFING October 3, 2013 – 11:00 am PRESENT: Alderman Van R. Johnson, II Mayor Pro-Tem, Presiding Alderman Tony Thomas, Chairman of Council Alderman Mary Osborne, Vice-Chairman of Council Aldermen John Hall, Mary Ellen Sprague, Tom Bordeaux Estella Shabazz and Carol Bell City Manager Stephanie S. Cutter City Attorney W. Brooks Stillwell (arrived at 11:45 a.m.) Asst. City Attorney William W. Shearouse ABSENT: Mayor Edna B. Jackson, (out of town) Alderman Osborne, Vice-Chairman of Council called the meeting to order. City Manager Stephanie Cutter stated Council requested a follow-up workshop on Construction Procurement, Management and Delivery Methods. Joy Kerkhoff, Purchasing Director presented a PowerPoint presentation to address some of the inquiries of Council. Construction Procurement, Management and Delivery Methods Ms. Kerkhoff stated during the presentation three methods for construction projects will be discussed: procurement - the method used to receive bids; management - the area where there is oversight and management of the actual project; and delivery - the method used to deliver the project from beginning to end which was the focus of the presentation. Alderman Shabazz stated there were two areas she was interested that were mentioned, the Construction Manager at Risk and the design build. She asked how many projects are currently on the books and how many are projected to use the Construction Manager at Risk method. Ms. Kerkhoff replied she is going to go into greater detail later in the presentation. The Construction Manager at Risk method has never been utilized by the City. Alderman Shabazz asked why. Ms. Kerkhoff stated that method is used when completing complex and expensive projects and the City does not do many projects over $10M. Alderman Shabazz asked why it is necessarily a dollar amount. Ms. Kerkhoff replied it has to do with the level and complexity of the contractual process and the management. There are some applications where it may be utilized such as the Cultural Arts Center and it will be a benefit to use on the Arena project. It’s a very complex process, not as basic as putting specifications and drawings together and putting out a bid. A few design build projects have been done; Whitaker Street Parking Garage and Waters Avenue Shopping Center are a few. 1  Summary/Final Minutes – Work Session – October 3, 2013 Alderman Osborne asked is there someone in the department experienced in the Construction Manager at Risk method. Ms. Kerkhoff referred to Cara O’Rourke who stated she has done design build, but not Construction Manager at Risk. Alderman Osborne stated she thought there were already some on board, but she will look into it further. Ms. Kerkhoff explained the difference between construction managers and construction managers at risk. A Construction Manager at Risk is a delivery method and not a means of managing a project, although it has managing in the project. The Management Methods are the processes of controlling, coordinating and guiding the project participants, the activities and efforts that go toward completing a construction project. Alderman Bordeaux asked for clarification on what the manager has at risk. Ms. Kerkhoff stated performance of the sub-contractors, the financial risk, and they have to meet the guaranteed maximum price. A construction manager is hired by the City and has direct responsibility, a design build type of relationship which is all contractual. A program/project manager is contracted by the City, but does not have a contractual relationship with the contractors or designer. Ms. Kerkhoff then explained the difference in delivery methods. She stated the most popular and traditional is the Design-Bid-Build method where there are 3 players: the City, the Architect/engineer and the builder. Two contracts, one between the City and architect/engineer and the other between the City and the builder. The final contractor selection is based on the lowest responsible bid. There are three phases: design, bid and build. The roles are well established and broadly documented, carefully crafted legal and procedural guidelines. The lowest responsible bid provides a reliable market price, contract documents are completed before construction begins, and complete specifications produce clear quality standards. She stated there is a collegial relationship between the architect/engineer and the general contractor. Ms. Kerkhoff discussed the advantages and disadvantages of the Design-Bid-Build method. Advantages were the City maintains control over design and construction independently; completes a set of documents available prior to construction; checks and balances exist because of independent contracts; it is well understood and accepted by all parties; with competition, work is contracted for the lowest price; selection disputes are less likely because of the transparency of the process. Disadvantages include the City must coordinate between the architect and the contractor; the contractor is not involved until the design is complete so their input is lost in the design process; it takes longer because of the linear process more than one step cannot go on at the same time; conflicts between the contractor and architect may lead to finger-pointing; changes are more common because the designer was not involved up front and it is the most litigious process. Alderman Bell asked what the general reaction to this method is. Ms. Kerkhoff stated it’s not a matter of being opposed it’s a matter of what they are accustomed to. You have to have very qualified individuals to do the other methods which involve looking at qualifications which are more stringent. 2  Summary/Final Minutes – Work Session – October 3, 2013 Ms. Kerkhoff discussed the Construction Manager at Risk method which has three players: the owner, architect and Construction Manager at Risk. There are two contracts one between the owner (City) and the architect and the other between the owner (City) and the Construction Manager at Risk. The final provider selection is based on aspects in addition to total cost. The Construction Manager at Risk is hired early in the design phase. Preconstruction services are performed by the Construction Manager at Risk, in conjunction with the design consultant. Specific contractual arrangements determine the roles of the players, there is a more stringent budget which controls complex projects and it enhances opportunities for local and M/WBE participation. Alderman Shabazz stated she has a concern about the City utilizing the Design-Bid-Build method for years. She stated the City needs to start moving towards the Construction Manager at Risk method in an attempt to provide opportunities for local business owners to get involved in the process and be a fair and transparent City. City Manager Cutter addressed the comments of Alderman Shabazz stating the Mayor along with herself, Bret Bell, PIO Director and Alderman Sprague met with the community and one thing that was discussed was if SPLOST passes in the Fall, in order to move projects and do just that, opportunities for local businesses will be provided to participate in the management of SPLOST projects. These methods will be a part of that to help make sure these projects get underway timely and to make sure we are maximizing the financial benefit by having the oversight of the projects. Alderman Sprague asked is the architect and the Construction Manager at Risk hired at the same time. Ms. Kerkhoff responded ideally yes. Alderman Sprague then asked how the construction manager has an idea of what the project is going to cost. Ms. Kerkhoff stated the first part of the process is not based on cost of the actual construction; the competitive pricing in the first part of the process is based on things that will occur in the administrative process. M/WBE or local participation will be looked at for fees that may be incurred in working with the design process, which becomes the overhead cost in running the project; this is where the competitive pricing process comes into play. Alderman Hall stated his reasoning for wanting to utilize the Construction Manager at Risk method is because it would provide an opportunity for local and minority contractors to get work. Ms. Kerkhoff discussed the advantages and disadvantages of the Construction Manager at Risk method. Advantages included the Construction Manager at Risk process which begins early in the design phase and provides real-time input; the Construction Manager at Risk holds the sub- contracts and provides bonds as well as holds the financial risk in the form of Guaranteed Maximum Price; there is a higher quality due to coordinated efforts and change orders are minimized. Disadvantages are there is a more complex contract structure to manage and the conflicts can arise between the Construction Manager at Risk and the design team during the design phase. 3  Summary/Final Minutes – Work Session – October 3, 2013 Ms. Kerkhoff explained the Design-Build method, which has two players, the owner (the City) and the design-build team with one contract between the owner and the design/build team. The selection of the design-build team is based on a competitive sealed proposal. The approach is on a project-by-project basis for establishing and documenting roles; continuous execution of the design and construction; overlapping phases: design and build (fast track); there are carefully crafted legal and procedural guidelines for public owners and the overall project planning and scheduling is done by the design-build team. The advantages of this method are the combined expertise of the design and construction reduces changes; the single source of responsibility reduces the City’s risk, it is well-suited for schedule- driven projects and work can begin before the design is complete; the selection is based on qualifications, experience, capabilities and price and a Guaranteed Maximum Price can be negotiated early in the design process. Disadvantages of this method are the City has less control over the project in the design phase and loses the benefit of the designer as an independent observer; the City becomes the sole watchdog and must monitor carefully; there is a more intensive contract administration and the subjective source selection can increase disputes in the award process. Mayor Pro-Tem thanked Ms. Kerkhoff for providing Council with such a detailed presentation. Executive Session Upon a motion by Alderman Bell, seconded by Alderman Osborne and unanimously carried, approval was given to go into Executive Session to discuss personnel and litigation. Upon a motion by Alderman Osborne, seconded by Alderman Shabazz and unanimously carried, approval was given to come out of Executive Session. Council broke for lunch City Manager Stephanie Cutter presented the City Manager’s Briefing of the agenda items for the Council Meeting of October 3, 2013. The agenda is attached and made a part of the permanent record. Mayor Pro-Tem Johnson adjourned this meeting. Dyanne C. Reese, MMC, Clerk of Council 4