"Wrap Ups" For Schools: IT S ABOUT TIME

Transcription

1 Owner Controlled Programs Presented By: Bill Poland, Keenan & Associates Owner Controlled Programs (OCIPs) "Wrap Ups" For Schools: IT S ABOUT TIME Legislative History Schools & Risk Management Pre 1999 Other Than Construction Full Control Construction Management Other Than Surety No Control Surety No Control January 1, 1999 Other Than Construction Full Control Construction Management Other Than Surety Full Control Surety No Control "Wrap Ups" What Are They? Owner Controlled Programs (OCIPs) "Wrap Up" insurance programs traditionally provide a single source construction insurance program to cover all of the contractors and subcontractors on a given project for purposes of general liability and workers compensation. Construction Project Traditional Approach

2 OWNER INSURANCE COVERAGES: Worker s Compensation, General Liability, Automotive Liability, Excess Liability, Permanent Property & Builders Risk Companies A, B, C, D GENERAL CONTRACTOR INSURANCE COVERAGES: Worker s Compensation, General Liability, Automotive Liability, Excess Liability, Equipment Floater & Builders Risk Companies B, G, K, R SUBCONTACTOR INSURANCE COVERAGES: Worker s Compensation, General Liability, Automotive Liability, Excess Liability, Equipment Floater & Builders Risk Companies A, B, C, D, E, F, G, H, I, J, K, L, M, N, etc. Construction Project Wrapped Up Government Code Section (Senator Polance SB 1466) THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

3 SECTION 1. It is the intent of the Legislature to lower construction related costs and risks through the controlled use of owner-controlled or wrap-up insurance. SECTION 2. Section is added to the Government Code, to read: (a) Subdivision (b) of Section 4420 does not apply to any construction or renovation project undertaken by a school district. (b) The district may use owner-controlled or wrap-up insurance with regard to a construction or renovation project if the district makes the following determinations: (1) Prospective bidders, including contractors and subcontractors, meet minimal occupational safety and health qualifications established to bid on the project. The evaluation of prospective bidders shall be based on consideration of the following factors: (A) Serious and willful violations of Part 1 (commencing with Section 6300) of Division 5 of the Labor Code, by a contractor or subcontractor during the past five-year period. (B) The contractor s or subcontractor s workers compensation experience modification factor. (C) The contractor s or subcontractor s injury prevention program instituted pursuant to Section or of the Labor Code. (2) The use of owner-controlled or wrap-up insurance will maximize the expenditure of public funds on the project in conjunction with the exercise of appropriate risk management. (c) For purposes of this section, "owner-controlled or wrap-up insurance" means a series of insurance policies issued to cover all of the contractors and subcontractors on a given project for purposes of general liability and workers compensation (d) Any use of owner-controlled or wrap-up insurance pursuant to this section shall be subject to subparagraphs (B), (C), (D), and (E) of paragraph (1) of subdivision (d) of Section 4420 and paragraphs (2) and (3) of that subdivision. "Wrap Ups": Where Did They Come From? United Kingdom 1930 s United States 1940 s California Schools 1999 "Better Late Than Never!"

4 "Wrap Ups": What s the Point? Significant Cost Savings Reduced Administrative Burden More Local Qualified Bidders Higher Limits of Broader Coverage Increased Control of Jobsite Safety Elimination of Gaps "Wrap Up" Savings?

5 "Wrap Ups" What Are the Savings Premium Project Type Cost Traditional Wrap Up Savings STATEWIDE Statewide Needs $3.8 Billion $114,000,000 $62,900,000 $51,100,000 INDIVIDUAL FACILITIES Elementary School $7,750,000 $232,500 $200,000 $32,500 (14%) (600 ADA) Middle School $13,750,000 $412,500 $300,000 $112,500 (27%) (1,000 ADA) High School $36,000,000 $1,080,000 $720,000 $360,000 (33%) (2,000 ADA) XYZ Unified School District Construction Project Comparison Traditional vs. Owner Controlled Program 123 Middle School Modernization

6 Total Project Cost $4,643,730 Estimated Labor Cost $1,711,400 Traditional Cost of $464,373 OCIP Premium 250,500 OCIP Savings $213,873 (46%) Y2K Elementary School Modernization Total Project Cost $2,798,250 Estimated Labor Cost $1,017,000 Traditional Cost of $279,825 OCIP Premium 148,311 OCIP Savings $131,514 (47%) Administrative Offices Tenant Improvements Total Project Cost $849,750 Estimated Labor Cost $325,530 Traditional Cost of $84,750 OCIP Premium 33,003 OCIP Savings $51,972 (61%)

7 "Wrap Ups" What Are the Disadvantages? Contractor Resistance Bidder s Market Purchasing/Facility Departments Resistance Perceived Administrative Burden "Wrap Ups" Who Gets Savings? K-12 Schools Retain Community Colleges "Nice to Have" Deductive/Additive Alternatives "Wrap Ups" Who s Doing It? San Francisco Airport Los Angeles Metro L.A.U.S.D. Rolling New York City Schools Rolling Contractors Owner Controlled Programs "Wrap Ups" For Schools IT S ABOUT TIME!