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HomeMy WebLinkAbout01.P1-128 Mar Ad Hoc Construction Management Approach.docxHEADQUARTERS COMPLEX AD HOC COMMITTEE Meeting Date 03/04/19 To Bd. of Dir. -- AGENDA REPORT Item Number 1 Item Number --Orange County Sanitation DistrictFROM:James D. Herberg, General ManagerOriginator: Kathy Millea, Director of EngineeringSUBJECT:HEADQUARTERS COMPLEX AND SITE SECURITY AT PLANT NO. 1, PROJECT NO. P1-128 GENERAL MANAGER'S RECOMMENDATION Provide staff direction on procurement of construction management services. BACKGROUND Headquarters Complex and Site Security at Plant No. 1, Project No. P1-128, will construct a new Headquarters Building on the north side of Ellis Avenue to house approximately 350 staff with Board and public meeting spaces. Surface parking and a pedestrian/utility bridge over Ellis Avenue to Plant No.1, and demolition of five single-story buildings located on the site of the new Headquarters Complex, are also included in the project. At the October17, 2018 meeting, the Headquarters Complex Ad Hoc Committee directed staff to prepare a plan for managing construction of the Headquarters Complex and for obtaining construction expertise to advise Orange County Sanitation District (Sanitation District) staff in design and bidding. RELEVANT STANDARDS Ensure the public’s money is wisely spent PROBLEM The Headquarters Complex Ad Hoc Committee advised staff to seek construction management expertise specific to office/commercial space construction to support the design process. The goal is to design a building that can be constructed quickly and cost effectively. The Sanitation District manages its many construction contracts using its own staff, supplemented through astaff augmentation contract to handle peaks and to provide specialized engineering support.This approach ensures consistent and professional construction management of a wide range of projects. The construction management teams include construction managers, inspectors, cost estimators, schedulers, and administrative staff. Currently, 39 Sanitation District staff and 13 staff augmentation employees are performing construction management full time. Construction of the Headquarters Complex will last two to three years and require the equivalent of approximately five full-time staff for construction management. The work will involve construction, codes, trades, and specialties not typically involved with the construction of wastewater treatment and conveyance projects. The input of staff experienced with office building construction will also be important in the process of making cost-effective decisions during design. PROPOSED SOLUTION The two alternatives for design support and construction management services for the Headquarters Complex include utilizing the existing staff augmentation contract or procuring a Third-Party Construction Manager. The estimated cost of construction management for the Headquarters Complex is approximately $4million. Alternative 1 – Staff Augmentation With this alternative, construction management would use staff experienced with office building construction through the existing staff augmentation contract with Jacobs Project Management Co. (Jacobs). This approach has been staff’s plan since the staff augmentation request for proposal was issued in September 2015. This project was specifically listed in the scope of work for that contract. Headquarters Complex construction completion is expected by May2023, one month before the latest extension of the staff augmentation contract ends. In the event that construction completion were delayed past June, the staff augmentation contract would need to be extended, or Sanitation District staff would need to assume construction management through completion. The awarded value of the staff augmentation contract is $41million. While this project was part of the original budget request, staff now anticipates that the authorized contract amount might not be sufficient to extend augmentation for the entire Capital Improvement Program throughJune2023, when the last of the extensions would expire. Whether this alternative is chosen or not, staff will need to present alternatives for the Board on the management of the remaining staff augmentation contract budget and schedule. Alternative 2 – Third Party Construction Manager In this alternative, the Sanitation District would procure a separate firm to manage the construction contract. Selection would be based on the qualifications of the firm and the proposed team, as well as the firm’s approach. Fees would be negotiated based on the Sanitation District’s policies and procedures. The staff of the Third-Party Construction Manager would not be available to work on other Sanitation District projects, so staff could not be pooled on other construction contracts. Third-Party Construction Managers are used extensively by other agencies, particularly those agencies that have fewer large construction contracts. One risk with Third-Party construction managers is that they may not be as fully incentivized to proactively solve problems as Sanitation District staff.The Sanitation District has utilized Third-Party Construction Managers on only a few projects. The experience on those projects generally reinforced the value of managing construction in-house and with Staff Augmentation labor supervised by Sanitation District staff. Sanitation District staff would not recommend that Jacobs, the current staff augmentation firm, be considered eligible to compete for the Third-Party Construction Management contract since the existing and extensive integration of their staff with the Sanitation District staff would be perceived as an unfair advantage and discourage other consultants from pursuing the opportunity. Recommendation Either alternative will provide the project with a highly qualified team experienced with office building construction. Staff recommends utilizing the staff augmentation contract subject to a comprehensive plan for managing the use of that contract capacity and time limits. This recommendation is based on the following conclusions: The Staff Augmentation Contract allows better integration and pooling of resources among other Sanitation District projects. Jacobs has committed a team of highly experienced professionals with relevant local experience and experience working together. The Staff Augmentation contract has a very competitive net multiplier for full-time field staff of 2.46 times actual salary. A third-party consultant might have a significantly higher salary multiplier, which are typically based on a firm’s audited overhead rates. Jacobs’ experience and the qualifications of its proposed team members are included under Additional Information in this Agenda Report. TIMING CONCERNS The proposed construction management team members will be completing existing assignments for other clients around June 2020 when the time the Headquarters Building is scheduled to advertise for bids. Procurement of a third-party would take approximately six months, which allows sufficient time for construction management, but would limit the design support function. The Sanitation District would continue to utilize the staff augmentation staff for constructability and value engineering during design. RAMIFICATIONS OF NOT TAKING ACTION The recommended alternative to use Sanitation District and Jacobs staff is the standard approach, so it will be used unless other direction is given. PRIOR COMMITTEE/BOARD ACTIONS March 2016 -Board of Directors approved a Professional Services Agreement with Jacobs Project Management Co. to provide supplemental engineering and support staff services, Contract No.PSA2015100, commencing May 1, 2016 through June 30, 2020, with three one-year renewal options, fora total amount not to exceed $41,000,000 over the period of up to seven years. ADDITIONAL INFORMATION Jacobs has more than 30 years of experience in building design and construction in Orange County and has managed construction of major buildings programs for local clients such as Children’s Hospital of Orange County (CHOC), Orange County Public Works, the City of Orange, Hoag Hospital, UC Irvine, City of Tustin, Orange County Transportation Authority, Kaiser Permanente, St Joseph Health, and St. Jude Medical Center. As the client’s construction manager in a staff augmentation capacity, the firm and proposed team have managed construction of 27 multi-story office buildings ranging in size from 100,000 to 500,000 square feet, three of which had pedestrian bridges, the longest at 290 feet. In addition, twenty of these administration buildings included carefully sequenced phased construction to allow for demolition of adjacent facilities, relocation of large utilities and new construction within a constrained footprint of existing operational facilities. The proposed Construction Management team has worked together on various administration buildings similar to the P1-128A project. Their proposed Construction Project Manager, John O’Conner, has over 30 years construction experience in large public and private buildings. John has been the construction project manager for nine administrative buildings for a total of 5million square feet, all of which were for public agencies. The proposed Field Construction Manager, Kristi Appelhans has over 30 years of building construction experience. Kristi has managed the construction for seven administrative buildings for a total of 1 million square feet. Three of these were for public agencies. Their proposed Building Inspector, Steve Goss, has been supporting the Sanitation District since 2014 and has over 30 years of experience in building construction with over ten special inspection certifications. He also has been working very successfully with the City of Fountain Valley permit inspections on Title 24 Access Compliance and Building Rehabilitation, Project No.P1115. Ricardo Gallardo, is proposed to serve as a Construction Advisor to the District. He is a licensed California General Contractor with over 20 years of experience. Ricardo has managed the construction of seven office buildings for a total of 2 million square feet. Four of these projects were for public agencies. The team will also be supported on an as-needed basis by local experienced estimators, schedulers, and a commissioning agent to deliver the project to the expectations of the Sanitation District. CEQA The City of Fountain Valley recently designated the area bounded by Ward Street to the west, Talbert Avenue to the north, the Santa Ana River to the east, and Ellis Avenue to the south as the Fountain Valley Crossings. The new Headquarters Building will be located within this area. Additionally, the City has certified an Environmental Impact Report for the Fountain Valley Crossings. CEQA work for the Headquarters Building will consist of the preparation and adoption of an Addendum to the Fountain Valley Crossings Environmental Impact Report. FINANCIAL CONSIDERATIONS The proposed action would not have a significant project budget impact because the staff augmentation or Third-Party Construction Management costs would be offset by reduced Sanitation District staff costs, which have already been budgeted. This request complies with authority levels of the Sanitation District's Purchasing Ordinance. The proposed action would be funded by the existing budget for Headquarters Complex and Site Security at Plant No. 1, Project No. P1-128.(Section 8, Page 59). ATTACHMENT The following attachment(s) may be viewed on-line at the OCSD website (www.ocsd.com) with the complete agenda package: N/A JM:dm:gc