Title
Airport Basin Site Project Design Development Submittal And Award Of The Construction Manager-At-Risk (CMAR) Services Agreement To Hensel Phelps Construction New Mexico, LLC For The Airport Basin Site Project; Approval To Proceed On Preconstruction Services In The Amount Of $79,949 Plus Applicable GRT; And Approval Of The Project Budgets For Airport Basin Site, Trinity Site Demolition And Animal Shelter.
Suggested Motion
I move that Council approve the Design Development Submittal of the Airport Basin Site Project and direct staff to move forward with the current design concepts and proceed to Final Design; and
I further move that Council award the Construction Manager-at-Risk Services Agreement (AGR3399-08) for the Airport Basin Site Project to Hensel Phelps Construction New Mexico, LLC in a form acceptable to the County Attorney; and I further move that approval be granted to Hensel Phelps Construction New Mexico, LLC to proceed on preconstruction services in the amount of $79,949 plus applicable GRT; and
I further move that Council approve the project budgets for Airport Basin Site, Trinity Site Demolition and Animal Shelter as presented in Attachment B, and direct staff to amend the FY2009 adopted budget accordingly.
Recommendation
The County Administrator recommends that Council approve the motion as presented.
Body
Tonight's presentation will include discussion of the Design Development Submittal for the Airport Basin Site Project (ABS), milestones achieved, and recent project progress and review of the Construction Manager-at-Risk (CMAR) project delivery methodology, procurement process, and a request for approval of the Award of Construction Manager-at-Risk (CMAR) Services Agreement for the ABS project.
Overall, the current project documents are at the Design Development Milestone (approximately 60% complete). Civil and site design documents are near 90% complete. The mechanical and electrical system drawings are less than 60% complete at this time; however, they have been described in narrative form to a sufficient level to be accounted for in the project plans and estimates.
Copies of the presentation will be available to the general public at tonight's meeting and will be available for review on the website and in both libraries reference sections on May 16th.
Project History
The project history was formally presented in the staff report to Council on October 18, 2005, and updated in the December 19, 2006 staff report. The Schematic Design (approximately 30% complete) was formally presented to Council on May 1, 2007.
Update on Milestones and Project Progress
The key points to be presented as part of the Design Development presentation include a discussion of the Design Development submittal; Development Review application status; NM 502 improvements; Airport Basin Road (access road) construction; changes that occurred between the Schematic Design (30%) and the Design Development (60%) design; implemented cost-saving efforts; and status of the Construction Manager-at-Risk (CMAR) efforts. A summary of construction costs, project costs and the project schedule will also be presented.
Development Review Application Status - Site Plan Update: The site plan identifies major elements of the site design of the project. Site Plan requirements are included in the Site Plan application process, handled through the Community Development Department. The major elements of the ABS Site Plan include the access road design, site grading, drainage, lighting, parking, retaining walls, major utility infrastructure, and building elevations. The ABS Site Plan was presented to the Interdepartmental Review Committee (IDRC) on May 1, 2008. IDRC passed a motion recommending submittal of the Site Plan to the Planning & Zoning Commission on May 28, 2008.
Some major utility infrastructure has already been constructed on the ABS site that meets the needs of other adjacent development projects and ABS project needs. In accordance with an agreement between the State Historical Preservation Office (SHPO) and the County, the County prepared a Cultural Resource Mitigation Plan, which was approved by SHPO. One element of this plan requires training to be provided to all contractors and county staff working on the project site and involved with any construction activities at the ABS. Training has been and will continue to be provided by the Environmental /Archaeological consultant and the Project Manager as new contractors and staff prepare to work on the site. Physical barriers have been placed around specific resources for protection from construction activities. Staff will continue to work with the SHPO as necessary through the entire construction phase. The same training given to those working on the site will be provided to the County and Schools staff that will be located at the ABS, and periodically offered to new County and Schools staff as required.
NM 502 Improvements - The New Mexico Department of Transportation (NMDOT) has issued the Access Permit, and has approved the design of the improvements on NM 502 for the new access for the Airport Basin Road. The approved intersection improvements will accommodate a new access from NM 502 that will serve the Entrada Business Park, the De Colores / IMTEC property and the new ABS.
Staff is also preparing a Quitclaim Deed transferring right of way for the NM 502 access to the NMDOT to enable the NMDOT to maintain the improvements. Transfer of the right of way requires a Resolution that will be brought to Council, which is tentatively scheduled for the June 10, 2008 Council meeting.
Changes from the Schematic Design (SD, 30%) to Design Development (DD, 60%) Package
An expanded description of these changes will be included in the presentation.
Building Changes:
Building B - Schools Changes: From 1 to 2 story building, relocated Schools Transit from Building D to Building B, exterior walls from concrete sandwich panels to concrete skirt wall and metal panel walls above 3'-4".
Building C - Public Works Internal Services, Pavement, and Transportation Changes: From 1 to 2 story building, exterior walls from concrete sandwich panels to concrete skirt wall and metal panel walls above 3'-4".
Building D - Utilities, Risk Management, and Parks Changes: Relocated Schools' Transit from Building D to Building B, eliminated Building G (heated parking for Vactor truck) and added function to Building D; relocated Utilities parking to be proximate to Utilities' facilities.
Building E - Warehouse, Purchasing, and Fleet Changes: Eliminated 2-story section for offices, added covered dock space, east side.
Building F - Vehicle Wash Facility Changes: Eliminated automated wash bay and equipment.
Building G - Vactor Truck Garage Changes: Eliminated Building G by adding this function to Building D.
Building H - Traffic Striper, Equipment Storage Changes: Revised design for Occupied Space, increased size and function to include Atomic City Transit Fare Collection (possible future need), added compressor space.
Building J - Central Plant Changes: Eliminated building, changed design to unitary packaged unit(s) for each building.
Site Design Changes:
The number of parking spaces for staff personal vehicles was reduced while still meeting County Code requirements. Concrete curb and gutter was removed from non-essential locations. Retaining walls and slope retention areas were reduced as the design progressed and as more geotechnical information was obtained. The pavement design was modified and strengthened in high traffic volume areas. The site layout was refined to accommodate other site changes and to minimize the amount of imported fill required. Site lighting design was modified to include energy efficient LED lighting where appropriate. Site grading and drainage was modified as the design progressed, and now includes three detention ponds on the project site. Two ponds will be located on the ABS but will be constructed by an adjacent project. These two ponds will flow into the one pond being constructed as part of the ABS project. This drainage system will detain the runoff from the ABS site, reducing the peak discharge rate. The storm drain management network will also include culvert pipes and riprap swales.
Other Changes:
Landscape Design: The County Parks Division will provide the landscape design for the ABS. It is anticipated that County staff will enlist the help of many volunteer organizations that typically participate in parks and trails projects to install some of the landscape elements for the project.
Utility Design: The utility infrastructure design has progressed through several iterations in order to accommodate the utility needs of adjacent development projects and the ABS project needs. Through collaboration and advanced planning, immediate needs have been met with little rework required as part of the ABS project. The efficient utility design that has evolved provides a more dependable level of service and additional flexibility to meet future needs of the County and local business.
LEED Rating: The project has been registered with the U.S. Green Building Council (USGBC). The goal is to attain a LEED Silver Rating and meet the Los Alamos County High Performance Green Building Standards per Resolution No. 06-18.
Value Engineering: The following information is based on the VE 2 Draft Report.
Value Engineering (VE) Workshop 1 was held on July 10-11, 2007. The PM and VE consultant made a presentation to Council on August 9, 2007. VE 1 focused on evaluation of the planning approach used for the project, identified possible areas to improve value for the project, identified potential risks and ideas to mitigate risk, and evaluated the approach to attain the LEED requirements.
VE Workshop 2 was held on January 17-18, 2008. VE 2 focused on the following: 1) Identify areas in building systems to improve value for the project; 2) Evaluate LEED principles to attain the LEED Silver rating; 3) Identify areas to improve operations and maintenance expectation; 4) Evaluate alternatives to improve overall schedule; and, 5) Consider alternatives to improve project constructability.
In Workshop 2, the VE team used three approaches to identify potential recommendations: 1) Options to meet Project budget; 2) Options to improve Life Cycle Cost Effectiveness; and, 3) Options to meet Project Schedule.
Some options recommended by the VE team have been implemented, and some may be implemented as the remaining design elements are completed. Some options were not implemented due to function, schedule, or cost impacts.
The VE review of the mechanical system was conducted via email and conference calls, with input from the VE team and the Commissioning Agents, because the information was not prepared until after the VE 2 workshop.
The presentation will include a discussion of the VE 2 workshop and the VE impacts to the project.
Construction Manager-at-Risk -During the early part of 2007, County staff performed a survey of construction project delivery methods as part of the effort to continuously improve the County's ability to deliver building construction projects on time and on budget. Based on this review, staff proposed that the County consider the use of the Construction Manager-at-Risk (CMAR) project delivery method for large building construction projects such as the Airport Basin Site (ABS).
CMAR is a method of project delivery where the owner contracts with a construction contractor to provide both preconstruction and construction phase services. As part of the procurement process, the contractor provides an Initial Guaranteed Maximum Price (IGMP) that covers construction costs, the contractor's fee, construction and bidding contingencies (due to incomplete drawings) and escalation.
Once the CMAR is selected, the first step is to execute an agreement for preconstruction phase services, which includes providing construction expertise to the Architect / Engineer during the planning and design phase (e.g. recommendations for materials and systems), reviewing design drawings for constructability, managing the design team to stay within the IGMP, and performing regular schedule and budget reviews.
As design drawings for specific parts of the project such as the civil and site work package or the building foundation package are completed, the CMAR provides the owner with a Guaranteed Maximum Price (GMP) for that specific package. The owner then amends the initial agreement with the contractor to incorporate the GMP for that specific package (GMP Amendment). When design drawings for subsequent packages such as the foundation or the building package become available, the CMAR provides a GMP for each package. The agreement is again amended to include these GMPs.
This phased approach enables the CMAR to begin construction of the project prior to 100% drawings being complete and thus expedite completion of the project. Some other advantages of using the CMAR method of project delivery include selecting a contractor based on qualifications rather than low bid; having construction expertise on the design team to ensure that plans are complete and consistent; reducing the project schedule; reducing change orders due to the contractor's input to the development of plans; early visibility into actual construction costs; and the open book process with CMAR that provides the owner with details about costs. All of these advantages should save the owner money and improve the value of a construction project.
On August 14, 2007, Council approved staff's recommendations to develop a Request for Proposal (RFP) and Services Agreement template for CMAR, and to use the CMAR delivery method for the Airport Basin Site Project. Subsequently, staff from Public Works, Utilities, Solid Waste, Purchasing and the County Attorney's office worked collaboratively to develop a RFP and Services Agreement template for CMAR that would provide maximum value and risk protection to the County. Once completed, this template was used to prepare documents for the Airport Basin Site Project. The Services Agreement for the Airport Basin Site Project is structured to allow for initial compensation of preconstruction phase services, and provides for Amendments to the Agreement as GMPs are submitted to permit compensation for construction phase services.
The CMAR RFP for the Airport Basin Site Project was sent to several Plan Rooms and was advertised in the Albuquerque Journal on February 17, 2008. Three firms attended a non-mandatory pre-proposal meeting. The procurement process followed a two-step qualification procedure, the first of which was for firms to submit an Initial Proposal. The Initial Proposal included the following criteria and possible rating points: Qualifications and Experience - 15; References - 5; Approach - 25; and, Fee for Preconstruction Phase Services - 5. Two firms submitted such proposals. These proposals were evaluated by a Committee of six staff members scoring proposals based on the stated criteria.
Both firms were short-listed to proceed to the second step of the procurement process, the IGMP Proposal. The IGMP Proposal included the following criteria and possible rating points: Initial Guaranteed Maximum Price (IGMP) - 30; and, Project Schedule - 20. The firms based their IGMP on design documents prepared to an approximately 60% level of completion. Some parts of the plans were more fully developed, such as the Civil elements, while other parts were described in narrative form and were developed to a much lower level of completion. This is typical of a set of construction documents prepared by Architects for a 60% or Design Development Submittal package and was anticipated in the RFP and in the proposals from the two firms. The RFP required the firms to submit assumptions made for items shown in the plans, as well as for items not shown or completely developed in the plans, but assumed to be needed to complete the project in accordance with the stated project scope. Each firm's IGMP was based on its assumptions. The two firms made some common and some different assumptions.
The two firms were interviewed by the Evaluation Committee that scored them based on the stated criteria, except in the scoring of the IGMP. The IGMP was scored in the following manner: the team with the lowest IGMP was assigned full points for this criterion; the other team was assigned a score for this item based on the following formula: (Lower IGMP) / (Higher IGMP) x 30 points. The criteria and associated points used in the ABS RFP were established by the Project Manager, and reviewed by the Public Works Director and several other County staff. As indicated previously, the selection of a CMAR need not be based on lowest cost as is typical for County Construction projects using the Design-Bid-Build project delivery method. The CMAR RFP uses a qualifications-based selection process, with some weight given to cost, but more weight given to qualifications.
Once interviews were conducted, an extra step, the request for a Best and Final Offer (BAFO), was added to the procurement process, in accordance with the County's Procurement Code. The teams were invited but not required to submit a BAFO. Staff prepared a list of items for clarification, in order to provide a basis for more common assumptions. Both firms submitted a BAFO with lower IGMPs. Based on the overall evaluation results, staff is recommending award to Hensel Phelps Construction New Mexico, LLC. As part of the presentation, several of the Evaluation Committee members will be present and will be prepared to discuss the evaluation process with Council, upon request.
The project team anticipates at least three Amendments to the Airport Basin Site Services Agreement to authorize compensation for phased construction packages. Since the civil and site work package is almost complete, the first Amendment will be requested by June 2008 to allow for this work to proceed as soon as possible. Staff anticipates a foundation package to follow for a possible foundation construction start date before Winter 2008. As other packages such as the building package become available, subsequent Amendments will be requested. Additional information will be provided as part of the presentation.
Estimated Costs -The project cost estimate, which includes the ABS estimated construction costs and "soft costs" will be reviewed in detail as part of the presentation.
Escalation - The May 2007 costs presented to Council included a 6% annual escalation factor for construction costs. This escalation factor was applied to the subtotal of the construction costs, including LEED, Contingencies, Contractor Overhead and Profit, Bonds, and NMGRT. The Architect's estimate for construction costs was escalated through the Q3 2007, at a 6% annual escalation rate. The construction costs presented by Staff were escalated for one year at 6%, for an assumed construction bid date of Q3 2008. The Architect's estimate for construction costs presented with the 60% Design Development submittal include a 7.5% annual escalation factor for Q1, Q2, and Q3 2008.
The inflation rate and escalation rate for construction materials and labor has varied from what was assumed in May 2007 to what we currently are experiencing. Costs for construction materials and fuel continue to change at unpredictable rates. The Turner Construction Company, which publishes the Turner Building Cost Index, published annual rates of 10.5% for 2006, and 7.7% for 2007. This index is determined on a nationwide basis and includes labor rates, labor productivity, material prices and marketplace competition conditions.
In the April 15, 2008 Construction News press release from the Associated General Contractors of America, they stated that the Producer Price Index (PPI) for inputs to construction rose 2.1% in March 2008 alone, driven by fuel and steel cost increases. Diesel fuel costs impact construction costs from several different sources, including diesel powered off-road and construction equipment, fuel charges for material deliveries, and fuel costs for hauling materials off construction sites. They report a 13% rise in asphalt costs over the past year.
The Bureau of Labor Statistics (BLS) publishes Percentage Changes in Producer Price Indexes for Construction Materials and Components. The annual increase from February 2007 to March 2008 is reported as 4% for the Consumer Price Index (CPI) and 6.9% for the PPI. It is clear that one can not assume that construction costs rise at the same rates as the CPI that impacts each household. Based on the BLS April 15, 2008 update, they report the following increases from February 2007 to March 2008: 12.8% for Highway and Street Construction, 9.9% for Other Heavy Construction, 61.4% for Diesel Fuel, 13.1% for Asphalt, -18.7% Gypsum Products, 12.4% for Steel Pipe and Tube, 10.9% for Structural Steel Shapes, 22% for Copper and Brass Mill Shapes, 92.6% for Crude Petroleum, 12.8% for Plastic Resins and Materials, 23.5% for Copper Ores, and 28.2% for Copper Scrap.
In summary, many of the reported annual increases in construction materials and inputs (PPI) far exceed the 6% escalation rate assumed in May 2007, and the 7.5% escalation rate assumed in the April 2008 cost estimates prepared by the Architects. However, the IGMP validated the May 2007 estimate and the staff's efforts towards remaining within that estimate was challenging in light of inflationary pressures and project modifications that added costs. The resulting proposed budget reflects very little margin for contingencies.
Demolition Costs
The Trinity Site Demolition estimate from inception never included the demolition costs associated with parcel A-11. Staff had hoped that A-11's demolition costs would have been paid for by DOE as part of the parcel transfer. However, the County must now pay this cost estimated at $1,335, 136 as of June 15, 2006.
Animal Shelter
In accordance with the presentation made to Council on May 6, 2008 $960,546 would be moved from the ABS project budget into a separate Animal Shelter budget. There are additional costs due to separating the locations that will bring the estimated costs to approximately $1.2 million which is the cost target that Council established.
Fiscal and Staff Impact/Planned Item
In May 2007, the Architect's estimate solely for construction of ABS was $54,647,636. Total Estimated Project Cost in 2007 as presented with the Schematic Design (SD 30%) was $75,240,545. The comparable current project estimate based upon the CMAR IGMP is $74,984,146 as detailed in Attachment A. In addition as described above the total project budgets for the ABS, Trinity Site Demolition, and Animal Shelter projects are $65,894,285; $9,686,617; and $1,200,000 respectively, and include the additional costs as described in Attachment B.
It is important to remember that the costs referenced above represent the total project costs; however, the County expects to recover up to $3,222,920 from the Schools for demolition costs as well as future lease revenues from the Schools for their new facilities.
Approval of the requested project budgets will require amending the FY2009 adopted budget.
Before the County proceeds to building construction at the ABS, the anticipated issuance of bonds will need to take place. This is anticipated to occur late summer/early fall 2008.
There will continue to be significant staff time dedicated to this project through the end of construction. With the addition of the CMAR to the project team, staff anticipates both construction and design activities to occur simultaneously for the next several months. Additional staff resources will have to be allocated to this project to manage the construction activities while others continue to manage the design activities. Staff allocation will be addressed once the exact needs are identified.
Attachments
A. ABS Estimated Project Cost (Design Development - 60%);
B. Project Budget Requests;
C. Floor Plans and Site Plan