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City of Phoenix Regional Fiber Optic Backbone A

Final Construction Manager-at-Risk Process Evaluation

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City of Phoenix Project No. 89360003
Federal Project No. CM-PHX-0(37)X
TRACS No. 0000 MA PHX SS514 01C

Table of Contents
ITS FOB Phase A Construction Manager-at-Risk Process Evaluation

1. Introduction

The City of Phoenix recently completed construction of the first phase - Phase A - of the Regional Intelligent Transportation System Fiber Optic Backbone (ITS FOB). This fiber optic communication backbone will primarily serve as a citywide telecommunications system, but it also has the potential to serve as an integral component of a regional telecommunications system. The backbone was constructed using a combination of existing and new conduit and fiber infrastructure. The ITS FOB Phase A required the installation of over 9,000 feet (1.8 miles) of new conduit and 38,000 feet (7.3 miles) of new fiber optic cable to provide fiber optic communications connections between Phoenix City Hall and eleven traffic signal controllers, four rapid bus stop signs, and ADOT Administration Headquarters.

The City of Phoenix elected to utilize the Construction Manager-at-Risk (CM@R) contracting method, or process, for construction of Phase A of the ITS FOB. While the City has used this contracting method on a number of projects in the past, it is only the second time the City has used this method for ITS projects (the first ITS project to use CM@R was the Downtown Traffic Management System).

The CM@R process was expected to be suitable for the ITS FOB Phase A project for two primary reasons: first, the contractor selection is qualification-based, increasing the likelihood that the selected contractor is able to successfully implement the complex technical components of the project; and second, the Pre-Construction Phase of the CM@R contract method utilizes an extensive evaluation process, allowing constructability and design issues to be examined and addressed before construction commences. It was anticipated that using the CM@R process would improve the quality of the final product while also reducing the cost and time required to complete the project.

To meet evaluation requirements associated with the use of the CM@R process on the federally funded ITS FOB Phase A project, the City of Phoenix requested that Kimley-Horn and Associates, Inc. (KHA) evaluate how well the CM@R process worked for the ITS FOB Phase A project and provide recommendations for improving the CM@R process to better serve future projects.

2. Overview of CM@R Process

The CM@R process typically includes three distinct phases:

  • CM@R Selection Phase;
  • Pre-Construction Phase; and
  • Construction Phase.

During the CM@R Selection Phase, the owner selects the most qualified CM@R. Statements of qualifications are submitted to the owner by various contractors and evaluated based upon the experience and qualifications of the contractors, their overall understanding of the project, and proposed implementation approaches. If necessary, a shortlist of potential contractors is developed and these contractors are interviewed to further ascertain which contractor is most qualified.

Once the CM@R is selected, the Pre-Construction Phase begins. In this phase, the owner, CM@R, and the design professional review the project plans as a team for any potential constructability, design, and implementation issues and modify the plans as necessary. In addition to performing plan review, the CM@R acts in an advisory capacity, providing the owner with potential solutions to problems and highlighting areas where costs can be reduced without compromising the overall success of the project. The CM@R also learns the expectations the City staff has for the project during the Pre-Construction Phase to guide the CM@R through decisions that must be made later during construction. Upon completion of the Pre-Construction Phase, the CM@R provides the owner with a Guaranteed Maximum Price (GMP) and project construction/implementation schedule.

Once the Construction Phase begins, the CM@R is responsible for all coordination of subcontractors and project construction decisions. The owner acts primarily in an oversight capacity, leaving the task assignment and project direction decisions in the hands of the CM@R. With the CM@R contracting process, construction change orders are only issued in the event of major design changes or delays that could not have been foreseen during the Pre-Construction Phase of the project.

3. Evaluation Methodology

To evaluate how well the CM@R process worked for the ITS FOB Phase A project, a series of questions was developed by the City of Phoenix and KHA. Questionnaires were disseminated by KHA to staff from various organizations with major roles in the ITS FOB Phase A project:

These organizations and their respective roles in the ITS FOB Phase A project are as follows:

  • City of Phoenix Street Transportation Department - owner;
  • City of Phoenix Information Technology Department (ITD) - partner of owner;
  • Parsons Brinckerhoff Constructors, Inc. - replacement CM@R;
  • Utility Construction Company, Inc. - general contractor for replacement CM@R;
  • TelTech Networks, Inc. - subcontractor for fiber installation for replacement CM@R; and
  • Kimley-Horn and Associates, Inc. - design professional.

A replacement CM@R was needed because the initially selected CM@R withdrew from the project just before the contract for the Construction Phase was to be executed. The questionnaire touches on both the initial and replacement CM@R firms, although most of the focus is on the replacement CM@R firm because the replacement CM@R firm oversaw the construction of the project. The Appendix contains copies of the questionnaires and the responses received.

4. Benefits Received from the CM@R Process

Respondents listed several benefits that the CM@R process provided to the ITS FOB Phase A project. The benefits recognized by all or most of the respondents include the following:

  • Greater sense of partnership;
  • More flexibility in design and construction changes; and
  • High quality end-product.
4.1 Greater Sense of Partnership

On the ITS FOB Phase A project, the owner, replacement CM@R, and design professional had a lot of mutual respect and trust for each other and truly worked together as a team to successfully complete the project. Respondents consistently commented on how the CM@R process promoted a greater sense of partnership between the participating organizations than is typical using the conventional contracting process because each organization felt vested in the project.

It should be noted, however, that some respondents also indicated this sense of partnership and teamwork did not exist with the initial CM@R. This difference between the two CM@R firms suggests that the CM@R plays a critical role in fostering a sense of partnership among all the parties. An important qualification of a successful CM@R is the ability to work well with others and to promote teamwork.

The Pre-Construction Phase provided the opportunity for the CM@R, the design professional, and participating departments of the City to review the plans as a team and raise any issues that might compromise the overall success of the project.

In the Construction Phase, the City and design professional had much more interaction with the CM@R and the entire CM@R team than would typically occur in a conventional contracting process. The goodwill and trust built during the Pre-Construction Phase (with the replacement CM@R) were carried over to the Construction Phase, permitting quicker and better communication between organizations and resolution of challenges that arose. Even the general contractor and subcontractor for the CM@R noted the positive teaming atmosphere that existed in the Construction Phase.

4.2 More Flexibility in Design and Construction Changes

According to respondents, the CM@R process provided more flexibility in changing the ITS FOB Phase A project to respond to changing conditions without having to go through the laborious and costly change order process that would otherwise have been utilized in a standard bid-build process.

For example, when the City experienced a traffic signal cabinet knock-down in another part of the City that damaged the fiber optic connection to that cabinet, the City saw the need to redesign the connection between the backbone and the traffic signal cabinet on the ITS FOB Phase A project to minimize the likelihood of similar fiber damage occurring in the future in the event of another cabinet knock-down. The CM@R process allowed the City, CM@R, and design professional to work together to expeditiously come up with a suitable alternative solution, without the need for change orders, even though construction had already commenced.

When it became apparent that Segment I and Segment II of the ITS FOB Phase A project were going to be completed well within the GMP, the City, CM@R, and design professional worked together to determine that the project could be expanded to include Segment III and Segment IV. Segment III and Segment IV had originally been part of the ITS FOB Phase A design but they had been dropped from the project because of budget constraints when the replacement CM@R was hired. The decision to include these two additional segments involved a minimal amount of paperwork and time because the flexibility of the CM@R process allowed such a decision to be made within the scope of the GMP.

4.3 High Quality End-Product

All of the respondents indicated that they believed the CM@R process aided in the achievement of a high quality end-product because the selection of the CM@R was qualification-based. Had the selection been low-bid, there was more likelihood that the selected CM@R would have focused less on quality and more on getting the lowest initial cost, despite the increased risk of lower quality work.

It should be noted, however, that even though the CM@R process increases the likelihood that the selected CM@R will have a qualified team, the initially selected CM@R did not perform in a manner that satisfied the City. The withdrawal of the initial CM@R allowed the City to select a replacement CM@R that proved to be well-qualified, produced a high quality end-product, and satisfied the City's requirements for the project.

5. Challenges Encountered with the CM@R Process

The most commonly listed challenge with the CM@R process was the amount of time it took to go through the CM@R process, especially the Pre-Construction Phase. Some of the respondents thought the additional review time taken at the front end of the project resulted in time savings, cost savings, and a better final product by the end of the project, but other respondents did not agree.

The following timeline shows how much time was required for the major components of the project:

  • May 2004 - 100% design plans submitted by the design professional to the City;
  • June 2004 - advertisement of project by City;
  • August 2004 - selection of initial CM@R;
  • January 2005 - delivery of signed contract to initial CM@R for Pre-Construction Phase;
  • May 2005 - GMP submitted by CM@R to the City;
  • July 2005 - revised 100% design plans submitted by the design professional to the City;
  • September 2005 - initial CM@R withdraws from project;
  • October 2005 - City enters negotiations with replacement CM@R;
  • January 2006 - delivery of signed contract to replacement CM@R for Pre-Construction Phase;
  • May 2006 - revised 100% design plans submitted by the design professional to the City;
  • July 2006 - GMP submitted by CM@R to the City;
  • October 2006 - delivery of signed contract to replacement CM@R for Construction Phase; and
  • July 2007 - substantial completion of construction of Phase A of the ITS FOB.

A step in the process that appeared to take an inordinate amount of time was the approval and processing of contracts by the City. As the CM@R process has two contracts with the CM@R - one for the Pre-Construction Phase and one for the Construction Phase - the time required to approve contracts for the project was significantly more than what would have occurred with a standard low-bid process where only one contract is used. The initial CM@R indicated that the lengthy contract processing time was one of the reasons for their withdrawal from the project.

To illustrate the delay introduced by the CM@R process, consider that if the standard low-bid process had been utilized, then the signed contract delivered in January 2005 would have been the contract that authorized construction to proceed. Assuming the same 12-month construction schedule originally proposed by the initial CM@R, construction of Phase A of the ITS FOB would likely have been completed by January 2006 using the standard low-bid process. Instead, the CM@R process resulted in a four-month Pre-Construction Phase plus at least four months of processing time for the Construction Phase contract (the initial CM@R withdrew before the Construction Phase contract was processed), resulting in at least eight months of delay compared to what would have been anticipated using a standard low-bid process. With the replacement CM@R, the Pre-Construction Phase took six months and the processing time for the Construction Phase contract was three months, for a total delay of nine months compared to the standard low-bid process.

Some of the respondents noted that the actual cost of constructing Phase A of the ITS FOB was significantly over the original budget for the project, resulting in a significant reduction in project scope (e.g., 11 miles of backbone were built, rather than 21 miles).

Part of the reason for the increase in cost can be attributed to the federal wage requirements that were adhered to because federal funding was utilized on the project, but the main reason appears to be related to external forces. Nationwide, construction material costs were already on the increase when Hurricane Katrina hit the Gulf Coast in August 2005, which resulted in construction costs increasing substantially in a short amount of time. The GMP pricing submitted by the initial CM@R in May 2005 was only guaranteed for 30 days. By September 2005, the initial CM@R could no longer obtain from material suppliers the same pricing used in the original GMP due to escalating material costs and shortages. The initial CM@R indicated that the expiration of the GMP pricing and the inability to obtain similar pricing in September 2005 were factors in their decision to withdraw from the project.

While there does not appear to be a strong direct correlation between the CM@R process itself and increased project costs, the significant delay caused by the CM@R process indirectly resulted in increased project costs in a market where material costs were increasing rapidly over a relatively short period of time. The aforementioned benefits of the CM@R process may have resulted in some cost savings during the actual construction of the project - evidenced by the Construction Phase ending under budget - but these cost savings were not enough to offset the increase in material costs between the initial CM@R's GMP and the replacement CM@R's GMP.

6. Recommendations for Improving the CM@R Process

While the survey respondents generally agreed the CM@R process worked well on the ITS FOB Phase A project, they also recommended some improvements that could be made to the CM@R process to help the next project of similar scope run more smoothly. The recommended improvements include the following:

  • The City's contract approval process should be evaluated by the City to determine if there are ways to shorten the time it takes for contracts to be executed;
  • The CM@R selection criteria and evaluation process in the CM@R Selection Phase should be improved to increase the likelihood that a qualified CM@R is selected. Potential improvements include closer scrutiny of the available resources, bonding capacity, and work history of the potential candidates, and the inclusion of the design professional in the evaluation process - not as a voting member of the selection panel, but as a technical resource to help the City evaluate the technical qualifications and experience of the potential candidates;
  • The CM@R should include its contractors and subcontractors in the Pre-Construction Phase constructability review because it helps them feel more vested in the overall success of the project;
  • A joint walk-through of the project area should be conducted at the start of the Pre-Construction Phase that is comprised of the design professional, City staff, the CM@R and their contractors. A walk-through on Phase A of the ITS FOB would have clarified the scope of work, especially in the more complex areas, resulting in less confusion and fewer questions later on, potentially shortening the duration of the Pre-Construction and Construction Phases. A similar walk-through at the end of the project is also recommended to verify that what was built satisfies the intent of the design;
  • The CM@R should have the ability to negotiate prices with potential subcontractors and suppliers when preparing the GMP;
  • The owner (the City's project manager in the case of Phase A of the ITS FOB) should include its partners (the City's ITD in Phase A of the ITS FOB), as well as the design professional, in negotiating the scope of work and GMP so that there is consensus on the ultimate scope of the project and to ensure that impacts on the design of proposed changes to the scope are well understood; and
  • Consider utilizing the standard low-bid construction process rather than the CM@R process for projects that do not contain rapidly-evolving technologies, especially if the projects are timesensitive.

7. Conclusions

The benefits of the CM@R process that were recognized by all or most of those involved in the ITS FOB Phase A project are:

  • Greater sense of partnership;
  • More flexibility in design and construction changes; and
  • High quality end-product.

The most commonly listed challenge with the CM@R process was the amount of time it took to go through the CM@R process, especially the Pre-Construction Phase. In a market where costs are increasing over time, the additional time required by the CM@R process is likely to indirectly result in increased project costs. The aforementioned benefits of the CM@R process can result in some cost savings during construction, but whether or not these cost savings offset the higher overall project costs depends upon the rate at which costs are increasing.

When determining which contract mechanism to utilize on future projects, the anticipated benefits of the CM@R process should be weighed against the anticipated challenges. For projects like the Downtown Traffic Management System that contain rapidly-evolving technologies (e.g., complex fiber optic networks and software development), the CM@R process appears to be an appropriate process because the teamwork, flexibility, and high quality benefits of the CM@R outweigh the challenges associated with a longer project schedule.

For projects like Phase A of the ITS FOB that contain time-tested, proven technologies (e.g., installation of conduit, junction boxes, and fiber optic cable), or for projects that are time-sensitive, the CM@R process still provides the aforementioned benefits, but the anticipated impacts of a longer project schedule, which could potentially include increased costs or reduced scope, should be carefully evaluated against the CM@R benefits to determine if the CM@R process is the most appropriate process to utilize.

If the recommended improvements in the CM@R contracting process are implemented, it may be possible to minimize the process's challenges - most notably by shortening the duration of the CM@R process - making the CM@R process a more attractive process to use on projects of any kind.

Appendix - Questionnaires anD Responses

  1. Bob Steele - City of Phoenix Street Transportation Department/URS, ITS FOB Phase A Project Manager
  2. O. Don Park - PB Constructors Company, Inc., CM@R Project Manager
  3. Eric Whitaker - PB Constructors Company, Inc, CM@R Construction Oversight.
  4. Bob Martin - Utility Construction Company, Inc., Construction Manager
  5. Don Tappendorf - Kimley-Horn and Associates, Inc., Design Professional Project Manager
  6. Michael Grandy - Kimley-Horn and Associates, Inc., Design Professional Project Engineer

City of Phoenix ITS FOB Phase A Construction Manager at Risk (CM@R) Process Review
Response by Bob Steele of City of Phoenix/URS completed on July 11, 2007

1. Have you been involved in CM@R projects before? If so, how many, and in what capacity?

Yes. I was the project manager for the City of Phoenix for the Downtown Traffic Management System.

2. How did you like working through the CM@R process, as compared to the standard design-bidbuild process, for the ITS FOB Phase A project?

I like and prefer the CM@R contract mechanism compared to the standard design-bid-build process. The CM@R gives the project Team significant margin and flexibility to best fit the design and construction to the project needs.

3. What would you characterize as the advantages/benefits of having used the CM@R process on the ITS FOB Phase A project as opposed to the standard construction process?

From the beginning the Design Firm, the second CM@R, and the City worked as a Team. To elaborate, I'll break this down for the two phases of the CM@R process.

Pre-Construction Phase:
The CM@R worked with the City and the Design Firm and to do a constructability review. This allowed the CM@R to feel more comfortable with the potential risks involved and the CM@R provided a realistic cost estimate (guaranteed maximum price). The City benefited by the reduced risk for an unforeseen problem that could have led to a request for a change order.

During this phase, a better design was discovered, and the existing design was changed

Construction:
During construction the team met weekly for construction and schedule updates and to discuss any problems that surfaced. As problems arose, the team reviewed and formulated solutions to fit the budget. Again, design was changed "on the fly" provided the team was in agreement and budget was available.

4. What would you characterize as the disadvantages of having used the CM@R process on the ITS FOB Phase A project as opposed to the standard construction process?

Typically, the CM@R process takes longer to complete the project. Primarily, this is because of the two phase approach.

5. Did you find that fewer construction issues arose later in the project than is typical using the standard construction process because the CM@R process included a constructability review in the preconstruction phase?

Yes.

6. Do you feel that the CM@R process affected the City's ability to control the project? If the CM@R process altered the City's level of control, was there a negative impact to the project?

This relates to which firm and the people in that firm, that the City selects as the CM@R. Basically, it is a comfort and trust issue. For this project, the City was comfortable and trusted the second CM@R. The level of control for the City was limited due to the CM@R mechanism. However, the City did have ultimate oversight control. CM@R requires the owner to delegate some management based on trust.

I don't feel there was a negative impact.

7. Having worked through the CM@R process, would you change anything about your role in the ITS FOB Phase A project if you could go back to the start of the project and go through the CM@R process again? Why or why not?

My role was interrupted by my retirement from the City. If I had not retired, I would have been able to coordinate activities better. This short coming on my part was easily handled by other members of the team stepping up.

8. Do you think the CM@R process on the ITS FOB Phase A project was a good value for the City in terms of:

  1. Cost -Yes
  2. Time -No
  3. Minimization of conflict/controversy -Yes
  4. Teamwork -Yes
  5. Quality of end-product -Yes

Why or why not?

  1. I believe the cost is equal to or less than if the City had used the design-bid-build method.
  2. Discussed earlier
  3. Again, because of the team approach for both phases
  4. The CM@R process is perfect for developing a good team.
  5. The CM@R process is vastly superior to conventional adversarial bid build process in producing a quality end product.

9. What lessons did you learn, or see others learn, about the CM@R process during the ITS FOB Phase A project?

  • Pick the right Design Firm and CM@R. Look carefully at the firm and the project manager. Carefully examine the CM@R firm's resources, financial stability and track record with similar projects.
  • The value of organizing a good team
  • Excellent and timely communications is essential
  • By allowing team members to fully participate, they accept ownership/responsibility and this leads to quality work.

10. How was your relationship different with the CM@R than it would have been for a standard construction manager?

The CM@R is required to fully evaluate the project. This allows the CM@R the flexibility to request design changes and shared risk. Because of this process, a good relationship is usually developed between the CM@R and the owner. If it doesn't, the owner can pick another CM@R.

Most bid-build projects that I have been involved with tended to be adversarial. Without the pre construction phase to allow discovery by the contractor, the contractor may become defensive, thus reducing the possibility of developing a good team.

11. During the project, the project manager for the City retired and a new City project manager was selected. The former project manager was then hired by the City as a contractor to provide assistance to the new project manager. How did this change of City project managers impact the project, if at all, and did the CM@R process help or hinder in the transition between project managers?

I don't believe the change had a significant impact on the outcome of the project. Primarily due to the nature of the CM@R team building process.

12. Did the City provide adequate and timely project management and coordination? If not, what was lacking and what does the City need to do to improve these activities?

I believe the City provided adequate and timely project management and coordination.

13. Would you recommend that the City utilize the CM@R process in the future on projects of a similar nature? Why or why not?

Yes. For technical projects like the FOB A there is a need for margin and flexibility during the pre-construction (constructability) and construction phases. Technology and street conditions are in constant change. What works best now, may not work six months from now.

14. If you could change one thing about the CM@R process, what would it be?

I wish it were possible to proceed faster with the process. Although the pre construction phase is essential, it adds a lot to the project time.

15. How did the City decide that a CM@R process should be used for this project?

Because of the success of the previous Downtown Traffic Management System, the City decided from the very beginning to use CM@R. Also, the City Engineer prefers CM@R.

16. What firms were interviewed for this project?

  • ITS Engineers
  • PB Farradyne (PB America)

17. What criteria were used to determine which firm was the most qualified CM@R?

  • General Information (firm experience, legal organization, organization chart, licenses, terminations, claims)
  • Experience and qualifications of the firm on similar projects, prior City work
  • Key personnel's experience and qualifications, including sub-contractors
  • Understanding of the project and approach to performing the services
  • Principal office location and local participation
  • Overall evaluation

18. Do you think the CM@R process was a contributing factor to why the initially selected CM@R walked away from the project right before construction was to begin? Why or why not?

The City is not sure why ITS Engineers walked away.

19. What were the impacts on the project of the initially selected CM@R walking away from the project and the City selecting a replacement CM@R? How would the impacts on the project have been different if the standard design-bid-build process had been used and the initially selected contractor had walked away from the project and the City had selected a replacement contractor?

The impacts to the City were substantial both in schedule and cost. Because the initial CM@R walked away, the City could not afford to build the entire 21 miles.

I don't know how the impacts on the project would have been different if the City had used the standard design-bid-build process.

20. During the project, the replacement CM@R firm was acquired by another firm. How did this corporate acquisition impact the project, if at all?

It was potentially a significant problem, however, the parent firm of the firm that originally had the contract worked out a deal with the acquiring firm that allowed the project to continue into the construction phase with little delay.

21. Any other comments you would like to make regarding the CM@R process on the ITS FOB Phase A project?

The ITS FOB Phase A project was successfully completed with a reduced scope despite the original CM@R leaving. This success was made possible by the City selecting a good second CM@R and the CM@R mechanism allowing the Team to have the flexibility to change as needed to best design and build the project.


City of Phoenix ITS FOB Phase A Construction Manager at Risk (CM@R) Process Review
Response by O. D. Park of PB Constructors completed on July 18, 2007

1. Have you been involved in CM@R projects before? If so, how many, and in what capacity?

Yes - three times. One other project as the CM@R company construction manager, once as the client's project manager, and once as a member of the CM@R selection panel.

2. How did you like working through the CM@R process, as compared to the standard design-bidbuild process, for the ITS FOB Phase A project?

I favor CM@R based on my experience. It gives the selected CM@R contractor an opportunity to thoroughly review the Scope of Work and site conditions and factor the findings and related cost into the Guaranteed Maximum Price.

3. What would you characterize as the advantages/benefits of having used the CM@R process on the ITS FOB Phase A project as opposed to the standard construction process?

See response to Item 2. Also, the client agency has the opportunity to select the CM@R contractor by evaluation vs. selecting a contractor by low bid, and in turn the CM@R contractor may select their subcontractors by invitation to bid rather than accepting low bids from any and all possible qualified applicants.

4. What would you characterize as the disadvantages of having used the CM@R process on the ITS FOB Phase A project as opposed to the standard construction process?

It may be possible to get a lower price by competitive bidding through the standard design/bid/build method. (Of course, you have a greater risk of change orders inflating the project cost.)

5. Did you find that fewer construction issues arose later in the project than is typical using the standard construction process because the CM@R process included a constructability review in the preconstruction phase?

Yes.

6. Do you feel that the CM@R process affected the City's ability to control the project? If the CM@R process altered the City's level of control, was there a negative impact to the project?

No. The city maintained full control. Once the contract was under construction, I really saw little or no difference in respective agency roles vs. the typical design/bid/build. The city had the right and the authority to approve or reject the work in progress and to approve or reject payment. Also, the same specifications, i.e. MAG Specs, plus the Contract Special Provisions applied to the CM@R contract as with the more conventional construction contracts.

7. Having worked through the CM@R process, would you change anything about your role in the ITS FOB Phase A project if you could go back to the start of the project and go through the CM@R process again? Why or why not?

No. I think the methodology and project approach that we utilized served the client and the project well. Based on our results I see no reason to make changes of any significant nature.

8. Do you think the CM@R process on the ITS FOB Phase A project was a good value for the City in terms of:

  1. Cost
  2. Time
  3. Minimization of conflict/controversy
  4. Teamwork
  5. Quality of end-product

Why or why not?

Certainly time, minimization of conflict/controversy, teamwork, and quality of end-product were all present in the project. Cost may or may not be a factor. It is possible that bid price might have been cheaper; however, our prices were based on competitive bidding of our subcontractors and we did not utilize any of our contingency fund, so it is doubtful in this case that a significant cost savings would have been achieved by the conventional process.

9. What lessons did you learn, or see others learn, about the CM@R process during the ITS FOB Phase A project?

I saw at least one city official develop a better appreciation for the CM@R process. The fact that we did not need to utilize any portion of our contingency fund for unforeseen or unanticipated costs that were our responsibility was a factor. Also, the quality of the work, teamwork, and joint effort that went into the project from start to finish was appreciated.

10. How was your relationship different with the CM@R than it would have been for a standard construction manager?

Not too different if comparing the CM@R construction manager to a construction manager of a conventional contract. It was different in that typical projects that I have managed have been as a representative of the client, where I am evaluating the contractor's performance and reporting the results to the client. In this case, I was evaluating our own performance and working with the client's staff to achieve desired results.

11. During the project, the project manager for the City retired and a new City project manager was selected. The former project manager was then hired by the City as a contractor to provide assistance to the new project manager. How did this change of City project managers impact the project, if at all, and did the CM@R process help or hinder in the transition between project managers?

The question is really not relevant because although the city did assign a new city project manager, the person never took an active role in the project, and by the time we were under construction the original project manager was back on board. I can say, however, had there been a change I think it could have been a determent to the project because the new individual would not have had any project history, and it would have been an educational process for that individual at the same time the project was moving through construction stages with issues and construction questions that arise with any project. The new individual would probably not been able to provide guidance and would not have been comfortable being part of the decision making process.

12. Did the City provide adequate and timely project management and coordination? If not, what was lacking and what does the City need to do to improve these activities?

Yes. Timely project management and coordination was very good. We enjoyed excellent working relationships throughout construction.

13. Would you recommend that the City utilize the CM@R process in the future on projects of a similar nature? Why or why not?

Yes. I can think of no reason why the city wouldn't want to use the CM@R process on similar projects, as long as there is care in selecting the CM@R contractor and the firm is qualified and has the resources and personnel to do the work. I mention this simply because the first contractor selected for the subject project did not perform. Had the city looked more closely at that contractor's bonding capacity and work history they might have realized that they were not qualified to do the job.

14. If you could change one thing about the CM@R process, what would it be?

Shorten the process time if possible from selection to start of construction.

15. Any other comments you would like to make regarding the CM@R process on the ITS FOB Phase A project?

I very much enjoyed being a part of this project. I think it is apparent that we had a very good team composed of the CM@R contractor, their subcontractors, the city staff, the designer, and ADOT support personnel, all of which made this project move forward flawlessly and without problems. When questions or issues came up, they often times were resolved during the weekly meeting, or at least we had a good handle on where we were going to go with the issue by the time the meeting ended. It is that type of team work and quality effort that made the project a pleasure.


City of Phoenix ITS FOB Phase A Construction Manager at Risk (CM@R) Process Review
Response by Eric Whitaker of PB Constructors completed on June 27, 2007

1. Have you been involved in CM@R projects before? If so, how many, and in what capacity?

No.

2. How did you like working through the CM@R process, as compared to the standard design-bidbuild process, for the ITS FOB Phase A project?

I prefer the CM@R because it allows for an enhanced role and involvement with field design changes and control over the Project.

3. What would you characterize as the advantages/benefits of having used the CM@R process on the ITS FOB Phase A project as opposed to the standard construction process?

A constructability review led to the creation of a bid schedule and addendum to the specials. This allows the CM@R to develop a bid schedule and addendum geared specifically to the needs of the Project.

4. What would you characterize as the disadvantages of having used the CM@R process on the ITS FOB Phase A project as opposed to the standard construction process?

There should be a more clearly defined meaning of what is risk.

5. Did you find that fewer construction issues arose later in the project than is typical using the standard construction process because the CM@R process included a constructability review in the preconstruction phase?

Yes.

6. Do you feel that the CM@R process affected the City's ability to control the project? If the CM@R process altered the City's level of control, was there a negative impact to the project?

The impact to the City must be taken in retrospect. There were a lot of design changes to the fiber equipment but little to the structural side (conduits and pull boxes). The City did not have to use the change order process. Rather, they simply modified the equipment to suit their needs and the bid schedule was just modified to accommodate this. Also, the fiber installer simply billed the City directly for the changes to equipment. (The city provided much of the equipment).

7. Having worked through the CM@R process, would you change anything about your role in the ITS FOB Phase A project if you could go back to the start of the project and go through the CM@R process again? Why or why not?

No changes.

8. Do you think the CM@R process on the ITS FOB Phase A project was a good value for the City in terms of:

  1. Cost
  2. Time
  3. Minimization of conflict/controversy
  4. Teamwork
  5. Quality of end-product

Why or why not?

Yes to all the items listed. The main reason was having enough money in both the bid schedule and contingency allowances to just make the Project work.

9. What lessons did you learn, or see others learn, about the CM@R process during the ITS FOB Phase A project?

I believe taking on risk means having a better qualified group of people. If the risks are low, there is no reason to put out your starting line up.

10. How was your relationship different with the CM@R than it would have been for a standard construction manager?

Much higher level of involvement. For me personally, there is an intrinsic value that comes with the higher level of decision making and responsibilities.

11. During the project, the project manager for the City retired and a new City project manager was selected. The former project manager was then hired by the City as a contractor to provide assistance to the new project manager. How did this change of City project managers impact the project, if at all, and did the CM@R process help or hinder in the transition between project managers?

No impact.

12. Did the City provide adequate and timely project management and coordination? If not, what was lacking and what does the City need to do to improve these activities?

Yes.

13. Would you recommend that the City utilize the CM@R process in the future on projects of a similar nature? Why or why not?

Yes.

14. If you could change one thing about the CM@R process, what would it be?

Negotiate prices. As it stands now, this is not possible due to the competitive bidding process.

15. Any other comments you would like to make regarding the CM@R process on the ITS FOB Phase A project?

The CM@R worked well because we had enough money in it to meet the changes and unforeseen conditions. This allowed for resolving problems without having to worry and argue over money.


City of Phoenix ITS FOB Phase A Construction Manager at Risk (CM@R) Process Review
Response by Bob Martin of Utility Construction Company, Inc., completed on July 5, 2007

Utility Construction Company, Inc. was the primary (sole) contractor to CM@R contractor Parsons Brinckerhoff, and was responsible for construction activities on the project.

1. Have you been involved in CM@R projects before? If so, how many, and in what capacity?

My only experience with CM@R projects prior to this project is participating in Pre-Construction Site Activities / Investigations for a CM@R contractor to aid in the CM@R Contractor's preparation of a GMP Proposal.

2. How did you like working through the CM@R process, as compared to the standard design-bidbuild process, for the ITS FOB Phase A project?

I liked the CM@R process for this project. The CM@R delivery method allowed for the CM@R contractor to investigate and mitigate risks / problems / concerns / etc. about existing site conditions and existing infrastructure before and during construction. In comparison to a design-bid-build process, the CM@R process seemed to keep the Owner, Designer / Engineer, and CM@R Contractor & Subcontractors working together towards a common goal of constructing the best and most useful product possible, within the Owner's budget. The CM@R process helped mitigate claims and problems between the Owner and CM@R contractor, by essentially vesting the CM@R contractor in the project from the beginning. It also kept the large number of project stakeholders committed to the project, instead of just "pointing the finger" at the Contractor anytime an unknown condition or change was encountered. I would like to work on a CM@R project again.

3. What would you characterize as the advantages/benefits of having used the CM@R process on the ITS FOB Phase A project as opposed to the standard construction process?

Advantages vs. Standard Construction (Design-Bid-Build): See #2 above. The CM@R process was especially useful for this project due to the unknowns about many different segments of infrastructure though the entire project, and also due to the large number of project stakeholders (ADOT ROW, ADOT Maintenance, Phoenix Traffic, Phoenix ITD, Phoenix Fire, Phoenix DCM, Phoenix ROW, Work in / at Municipal & State Buildings, etc.).

4. What would you characterize as the disadvantages of having used the CM@R process on the ITS FOB Phase A project as opposed to the standard construction process?

Disadvantages vs. Standard Construction (Design-Bid-Build): I can not think of any disadvantages.

5. Did you find that fewer construction issues arose later in the project than is typical using the standard construction process because the CM@R process included a constructability review in the preconstruction phase?

Yes. I feel that fewer construction and fewer design issues arose during construction, due to the pre-construction constructability review that was completed by the CM@R contractor. The constructability review allowed for feedback from the "construction" view-point of the CM@R contractor, for incorporation of items such as "means & methods", and additional views for the best-design, least impact to the public, and/or cost savings.

6. Do you feel that the CM@R process affected the City's ability to control the project? If the CM@R process altered the City's level of control, was there a negative impact to the project?

No, I do not feel that the CM@R process affected the City's ability to control the project.

7. Having worked through the CM@R process, would you change anything about your role in the ITS FOB Phase A project if you could go back to the start of the project and go through the CM@R process again? Why or why not?

No, I would not change anything. Though there were changes in design & work during construction, the changes were insignificant in the scheme of things, and would have been difficult and costly to identify during the pre-construction constructability review or design phase of the project.

8. Do you think the CM@R process on the ITS FOB Phase A project was a good value for the City in terms of:

  1. Cost: DEFINITELY
  2. Time: DEFINITELY
  3. Minimization of conflict/controversy: DEFINITELY
  4. Teamwork: DEFINITELY
  5. Quality of end-product: DEFINITELY

Why or why not?

If this project was set-up with a typical design-bid-build process, I believe that the project would have veered off-track very quickly from conflicts and unknowns, ultimately resulting in the project being completed late and over-budget. Due to the large number of project stakeholders, the large project site, and likely the frustration / additional burden / stress from the problems that would have been suffered by a Bid-Build Contractor, teamwork would then have suffered. When small changes in conditions / scope were encountered on this project, the CM@R and subcontractors did not "nickel-and-dime" the Owner with change orders and claims, as would typically be the case / be expected in bid-build projects. Instead, work continued and issues were addressed and resolved by the CM@R contractor or subcontractor without additional burden to the Owner.

9. What lessons did you learn, or see others learn, about the CM@R process during the ITS FOB Phase A project?

During this project, the most important lesson I learned about the CM@R process was about the CM@R process itself. For example, I learned about the importance and benefit of pre-construction constructability review of site, plans, and contract specifications, the pre-qualification of subcontractors, and the preparation / negotiation of a final scope and price for a GMP. I learned that the CM@R process can truly work to mitigate and alleviate risk for all parties, to better allow for the delivery of a project on-time and under budget, but only if all parties are truly dedicated to the success of the project.

10. How was your relationship different with the CM@R than it would have been for a standard construction manager?

I believe that my relationship with the CM@R contractors was different that that of a standard construction manager. I feel that I was more vested in the project, but only because I participated in the pre-construction constructability review. If I had not participated in the constructability review, I do not believe that my relationship would have varied much.

11. During the project, the project manager for the City retired and a new City project manager was selected. The former project manager was then hired by the City as a contractor to provide assistance to the new project manager. How did this change of City project managers impact the project, if at all, and did the CM@R process help or hinder in the transition between project managers?

The change in City Project Managers had no impact to the project, but only because the original City PM was hired to provide assistance to the new City PM. I do not believe that the CM@R process helped or hindered the changes and transitions in PMs. The project would have been negatively impacted if the City did not hire the original PM to assist the new City PM on the project. The new PM was skilled and more than qualified to manage the project, but did not have the background / history on the project.

12. Did the City provide adequate and timely project management and coordination? If not, what was lacking and what does the City need to do to improve these activities?

Yes, the City did provide adequate and timely project management and coordination. I am pleased to say that all City parties involved on the project worked to promote the success of the project. The City's PM, and the former City PM hired as a contractor to provide assistance, were both committed to the project, and continued to provide timely and useful support and management throughout the project. City DCM was always prompt and proactive in inspections, testing / QC. City Right-of-Way Management was always responsive and supportive in the issuance of Right-of-Way Restriction permits (more than 110 ROW permits were requested & issued, and the project suffered no delays from City ROW).

13. Would you recommend that the City utilize the CM@R process in the future on projects of a similar nature? Why or why not?

Yes, I would recommend the City utilize the CM@R process for future projects, for all of the different reasons I discuss above.

14. If you could change one thing about the CM@R process, what would it be?

I can not think of anything I would change about the CM@R process.

15. Any other comments you would like to make regarding the CM@R process on the ITS FOB Phase A project?

The success of this project is absolutely contributed to 1) the CM@R process, and 2) the team and teamwork on the project.

The project presented many challenges and conflicts that could have been costly or resulted in delays if the project was a set-up as a traditional design-bid-build project (i.e. concrete encased trolley-train tracks, existing conduits found at 25' below pavement, night-work, working in front of high profile municipal, federal, and private buildings downtown, rock-and-roll marathon, working around other contractors, large spread-out job-site, working in ADOT ROW etc).

Also, retaining the original project designer / engineer to help mitigate problems and provide input on conflict resolution through construction was very helpful to the project.

In summary, the CM@R process, and the experience and dedication of the project team were of paramount importance in the great success of the project, and a project that I believe all are proud of.


City of Phoenix ITS FOB Phase A Construction Manager at Risk (CM@R) Process Review
Response by Don Tappendorf of KHA completed on November 14, 2007

1. Have you been involved in CM@R projects before? If so, how many, and in what capacity?

Yes, I have been involved in several CM@R projects with the City of Phoenix, including the Downtown Phoenix Parking, Sky Harbor East Economy Garage A and B projects, the Sky Harbor Premises Distribution System, among others.

My role has been the project designer, and during construction we have provided technical assistance to the owner in answering contractor questions, resolving construction issues, etc.

2. How did you like working through the CM@R process, as compared to the standard design-bidbuild process, for the ITS FOB Phase A project?

I generally prefer the CM@Risk process better, as it generally promotes a more professional working relationship rather than the low bid mentality. A CM@Risk process tends to approach a project with the attitude that all parties will do what it takes to get the project done, even if there are some changes along the way.

I am not sure that I see the "at risk" part of CM@R aspect in play as much as in previous CM@R projects

3. What would you characterize as the advantages/benefits of having used the CM@R process on the ITS FOB Phase A project as opposed to the standard construction process?

The CM@Risk process tends to provide more flexibility in a project compared to a standard construction process. There were several changes made during the Phase A construction where this was an advantage. We were able to add additional Segments as it became clear that there would still be additional funding available, and this was beneficial to the project.

4. What would you characterize as the disadvantages of having used the CM@R process on the ITS FOB Phase A project as opposed to the standard construction process?

The initial bid prices seemed higher from the CM@Risk Contractors than what we have typically seen in a low bid standard construction process. Whether this was purely CM@Risk related, or whether there are extenuating circumstances (post hurricane Katrina bid price escalation, or others) would be speculation.

5. Did you find that fewer construction issues arose later in the project than is typical using the standard construction process because the CM@R process included a constructability review in the preconstruction phase?

Some of the requirements for the preconstruction phase were not carried out entirely (for example, proofing all of the existing downtown conduit runs), and there were several construction issues that occurred during construction that could probably been mitigated earlier had the preconstruction phase been completed in its entirety. I'm not sure that the preconstruction phase really identified any major issues, but it certainly added time to the process, so I'm not convinced it was as beneficial as I might have expected it to be.

6. Do you feel that the CM@R process affected the City's ability to control the project? If the CM@R process altered the City's level of control, was there a negative impact to the project?

I did not see any negative impacts as it relates to City's level of control by using the CM@Risk process on this project.

7. Having worked through the CM@R process, would you change anything about your role in the ITS FOB Phase A project if you could go back to the start of the project and go through the CM@R process again? Why or why not?

As the designer of record, I would probably have appreciated more day to day involvement in the construction progress, and finding out about construction issues sooner than at the weekly meeting. However, I understand this has budget implications.

8. Do you think the CM@R process on the ITS FOB Phase A project was a good value for the City in terms of:

  1. Cost
  2. Time
  3. Minimization of conflict/controversy
  4. Teamwork
  5. Quality of end-product

Why or why not?

Cost - No. Overall, my impression is that the City paid high prices for the work done within the project. Again, it may have been external forces (i.e., post Katrina high bid prices) that affected this as much or more than the CM@Risk process.

Time - Overall ok, although the preconstruction activity and time to get an acceptable Guaranteed Maximum Price was not quick by any means.

Minimization of conflict/controversy - Yes. This was one of the primary benefits of the CM@Risk process.

Teamwork - Yes. Again this was a major benefit of the process.

Quality of end-product - Yes. What was built was built well.

9. What lessons did you learn, or see others learn, about the CM@R process during the ITS FOB Phase A project?

There were several instances when the City's project manager was not talking to the other stakeholders on the project, and the ultimate project scope (cuts) were not known by everyone for a period of time. I believe everyone realized there should have been more consensus building and involvement among the stakeholders during this time in the "negotiations on the scope of work".

10. How was your relationship different with the CM@R than it would have been for a standard construction manager?

The project was less confrontational. When there was an issue to solve, there were times when collective solutions were developed. You didn't feel like you had a time bomb ticking that there would be delay claims coming if you couldn't answer the question in the next 10 minutes.

11. During the project, the project manager for the City retired and a new City project manager was selected. The former project manager was then hired by the City as a contractor to provide assistance to the new project manager. How did this change of City project managers impact the project, if at all, and did the CM@R process help or hinder in the transition between project managers?

COP ITD stepped up through the change of project managers and took ownership of the project, which I believe was beneficial to the project. Overall, the CM@R process helped get the City through the transition between project managers.

12. Did the City provide adequate and timely project management and coordination? If not, what was lacking and what does the City need to do to improve these activities?

From my perspective, the City's project management and coordination was relatively timely. Given the nature of this project, it was definitely helpful to have COP ITD involved heavily during the construction timeframe of the process. Their relationship with the CM@R fiber sub was a definite benefit to the project.

13. Would you recommend that the City utilize the CM@R process in the future on projects of a similar nature? Why or why not?

Overall, I think the CM@R process can be a good process for complicated projects. If it is very cut and dry as to what the project scope entails and if the construction is relatively straight forward, a low bid process is probably adequate.

14. If you could change one thing about the CM@R process, what would it be?

Shorten the time frame to go through the preconstruction and GMP pricing.

15. Any other comments you would like to make regarding the CM@R process on the ITS FOB Phase A project?

No.


City of Phoenix ITS FOB Phase A Construction Manager at Risk (CM@R) Process Review
Response by Michael Grandy of KHA completed on November 7, 2007

1. Have you been involved in CM@R projects before? If so, how many, and in what capacity?

Yes. I provided construction support services as the design professional on the City of Phoenix Downtown Traffic Management System project.

2. How did you like working through the CM@R process, as compared to the standard design-bidbuild process, for the ITS FOB Phase A project?

I think it promotes more teamwork between the various parties involved but adds another layer of bureaucracy to the process.

3. What would you characterize as the advantages/benefits of having used the CM@R process on the ITS FOB Phase A project as opposed to the standard construction process?

Better communication between various parties (at least with the 2nd CM@R) and better response times to needed field design changes.

4. What would you characterize as the disadvantages of having used the CM@R process on the ITS FOB Phase A project as opposed to the standard construction process?

Introduced significant delay to the project with the addition of the pre-construction phase, which ultimately resulted in significantly increased project costs and reduced project scope

5. Did you find that fewer construction issues arose later in the project than is typical using the standard construction process because the CM@R process included a constructability review in the preconstruction phase?

Not really. Much of the project used existing conduit, so there were fewer unknowns.

6. Do you feel that the CM@R process affected the City's ability to control the project? If the CM@R process altered the City's level of control, was there a negative impact to the project?

I did not feel like the City's ability to control the project was negatively impacted.

7. Having worked through the CM@R process, would you change anything about your role in the ITS FOB Phase A project if you could go back to the start of the project and go through the CM@R process again? Why or why not?

I think a joint walk-through of the project area comprised of the design professional, City staff, the CM@R, and the subcontractors at the beginning of the project would have helped avoid a lot of the confusion and questions that arose later in the project. I also think the design professional, City staff, CM@R, and subcontractors should have done a walk-through at the end of the project to see if what was built satisfied the intent of the design.

8. Do you think the CM@R process on the ITS FOB Phase A project was a good value for the City in terms of:

  1. Cost -No
  2. Time -No
  3. Minimization of conflict/controversy - No with 1st CM@R, Yes with 2nd CM@R
  4. Teamwork -Yes
  5. Quality of end-product -Yes

Why or why not?

The pre-construction phase added delay to the project. The delay more than doubled when the 1st CM@R walked off the job at the end of the pre-construction phase and a 2nd CM@R was hired and went through the pre-construction phase. These delays resulted in increased costs because costs increased significantly during the pre-construction phase, in part due to damage to supply factories caused by Hurricane Katrina. I also thought costs were higher than they typically would be with a standard bid process because of the extra project management costs associated with the extra layer of the CM@R managing the subcontractors.

The 1st CM@R was fairly confrontational and was not much of a team player, which resulted in a fair amount of distrust and conflict among the involved parties. The 2nd CM@R was much more amicable and restored trust among the involved parties. Any conflicts that did arise were resolved quickly.

The CM@R process (with the 2nd CM@R) provided a forum for dialogue among the parties, which allowed for the expansion of the project beyond the original scope when it was determined that the original budget would not be expended in full.

9. What lessons did you learn, or see others learn, about the CM@R process during the ITS FOB Phase A project?

I learned that the quality and capabilities of the CM@R play a large role in determining the success of the CM@R process and of the project overall.

10. How was your relationship different with the CM@R than it would have been for a standard construction manager?

It was much more involved and much less confrontational.

11. During the project, the project manager for the City retired and a new City project manager was selected. The former project manager was then hired by the City as a contractor to provide assistance to the new project manager. How did this change of City project managers impact the project, if at all, and did the CM@R process help or hinder in the transition between project managers?

The change in project managers provided some uncertainty over who was in charge and lack of appropriate City oversight during the first few months of construction when the former project manager could not be hired back on as quickly as originally anticipated. The new City manager also had to be brought up to speed on the project, which took some time. I don't think the CM@R process really impacted the transition either way.

12. Did the City provide adequate and timely project management and coordination? If not, what was lacking and what does the City need to do to improve these activities?

I thought that for the most part, the City provided adequate and timely project management and coordination. An area where improvement is needed is in processing the CM@R contract (the inordinate amount of time this took was part of the reason the 1st CM@R walked off the job and the resulting delay increased project costs).

13. Would you recommend that the City utilize the CM@R process in the future on projects of a similar nature? Why or why not?

I would not recommend the CM@R process for projects of this nature. The CM@R process tends to be more beneficial when it involves rapidly-evolving technologies because it provides for more flexibility in on-the-fly design changes to adapt to new technologies. The ITS FOB Phase A project was essentially about conduit, junction box, and fiber cable installation, for which there is a fairly long history of successful implementation, and for which unique specialized subcontractors are not generally required. The standard bid process would likely have resulted in more contractors competing for the project, and would have had less schedule delay than the CM@R process, both of which would have likely resulted in reduced project costs.

14. If you could change one thing about the CM@R process, what would it be?

Shorten the time of the pre-construction phase.

15. Do you think the CM@R process was a contributing factor to why the initially selected CM@R walked away from the project right before construction was to begin? Why or why not?

I think the 1st CM@R's unfamiliarity with the CM@R process was a contributing factor to why the CM@R walked away from the project, although I think it was a fairly small factor.

16. What were the impacts on the project of the initially selected CM@R walking away from the project and the City selecting a replacement CM@R? How would the impacts on the project have been different if the standard design-bid-build process had been used and the initially selected contractor had walked away from the project and the City had selected a replacement contractor?

The impacts were increased delay and increased cost, along with an improved working relationship with the 2nd CM@R compared to the 1st CM@R. I don't think the type of contracting process would have changed the overall impacts to the project except that having a second pre-construction phase with the CM@R did increase project delay.

17. During the project, the replacement CM@R firm was acquired by another firm. How did this corporate acquisition impact the project, if at all?

I don't think it had much impact because the firm doing the acquisition wisely left the CM@R project manager in place.

18. Any other comments you would like to make regarding the CM@R process on the ITS FOB Phase A project?

I would also like to see the design professional be involved in the CM@R selection process - not as a voting member of the selection panel, but as a resource to help the City evaluate the technical qualifications and experience of the CM@R candidates.

Contact

Jerry Yakowenko
Office of Program Administration
202-366-1562
E-mail Jerry

 
 
Updated: 04/07/2011
 

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