Outline. Owner Perspective CM Definition Working Relationships Why CM? Project Approach Pre-construction Construction. Iowa League of Cities // 2011

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1 Building the Case for Construction Management Dick Hierstein, IaCMA and Larry Gleason, CPMI Handouts and presentation are available Iowa League of online Cities // 2011 at Outline Owner Perspective Construction Manager as Agent (Cma) Early Involvement of CM

2 Timing of Decisions/Change Owner Perspective Outline Planning Pre-Design Design Construction $ Case Studies Advantages of CM

3 WHAT IS CM? Construction Management is a project delivery method that applies modern management techniques to project planning, design and construction in order to control time and cost and assure quality for the project owner. The CM s primary task is to represent the interests of the owner throughout all phases of the project. Outline Contract Relationships CONTRACTORS OWNER CM DESIGN TEAM

4 Bridging Competing Project Interests BUDGET ADVOCATES Project Costs Contingency 5% Other Owner 20% Outline PROGRAM ADVOCATES CM DESIGN ADVOCATES Direct Construction 68% CM Fee 1% On-Site Staff 4% Genr'l Cond. 2%

5 Why CM? Early Construction Expertise Checks & Balances Value Engineering Targeted Bid Flexibility Bid Package Flexibility Cost Savings Managing Risk Managing Risk When an entity is allocated a risk that it cannot adequately control, it will seek to protect itself against that risk in at least two ways: (1) up front, by increasing its contract price in order to build in additional contingency to cover the risk; and (2) later in the project, by bringing claims or demanding change orders to recover costs resulting from the risk.

6 Managing Risk Bid Strategy Bid Strategy Low Individual Trade Package Bids Low Trade Combination Package Bids Low Traditional General Contractor Bid Sample Contingencies 18% Design Contingency 13% 8% 3% Construction Contingency Design Contract Concept Schematic Development Documents Construction REQUEST BIDS FROM INDIVIDUAL TRADE CONTRACTORS REQUEST COMBINED BIDS FROM TRADE CONTRACTORS REQUEST BIDS FROM GENERAL CONTRACTORS P1 Multi-Scope 1,174,000 $ P1-13,21 Grooms Co. 2,588,000 $ P1-21 Grooms Co. $ 6,585,000 P2 Arch. Woodwork 113,495 P3 Alum,Glass,Glazing 228,311 P4 GWB Systems 496,907 P5 Ceramic Tile 53,832 P6 Terrazzo 35,888 P7 Acoustical 202,962 P8 Aud Floor (Alt #1) - P9 Carpet & Resilient 133,989 P10* Painting,Wallcover 171,190 P11 Lockers 92,000 P12 Lab Casework & FH 106,480 P13 Aud Seating (Alt #1) - P14 Test, Adjust & Bal. 23,575 P14 Systems Mgmt. 23,575 P15 Plumbing & Piping 917,875 P15 AAA Mech. 917,875 P16 Mech. Insulation 142,000 P16 Eller Insulation 142,000 P17 Fire Protection 213,700 P17 Midwest Fire 213,700 P18 Ventilating 951,100 P18 Winger Contract. 951,100 P19 Controls 261,480 P19 Accurate Mech. 261,480 P20 Electrical 1,090,000 P20 DeVries Elec. 1,090,000 P21 Aud Sound (Alt #1) - Total Bids $ 6,408,784 $ 6,187,730 $ 6,585,000 CM Coordination Fee $ 161,310 $ 161,310 $ - Comparative Cost $ 6,570,094 $ 6,349,040 $ 6,585,000

7 Pekin City Hall BID STRATEGY BENEFITS BID STRATEGY BENEFITS Low Combination Trade Package Bids Low Traditional General Contractor Bid P1 Concrete/Earthwork 827,400 $ P1-20 $ 4,831,000 P2 Sewer/Drainage 73,000 P3 Paving 87,000 P4 & 12 Multiscope 380,772 P5 Masonry 658,000 P6 Steel 410,500 P7 Drywall/ACT 299,800 P8 Roofing 87,100 P9 Alum. Storefronts 184,600 P10 & 11 Flooring 89,918 P13 Elevator 48,145 P14 Fire Protection 59,000 P15 Plumbing, Piping 299,500 P16 HVAC & Elec 708,800 & 19 P17 Mech Insulation 68,264 P18 Controls 64,300 SECURE TRUE LOW BIDS REDUCED MARKUPS AND FINANCING COSTS INCREASE LOCAL CONTRACTOR PARTICIPATION INCREASE TRADE CONTRACTOR COMPETITION REDUCE CHANGE ORDER COSTS REDUCE CONSTRUCTION COST BY UP TO 10% P20 Data/Telecom 75,550 $ 4,421,649 $ 4,831,000

8 Outline Pre-construction Process Scope Development Team Development Contract Preparation Master Schedule Cost Estimating/Value Engineering Constructability/Document Review Bidder Interest Campaign Bid Strategy Budget Development Checklist COST COST COST COST PROJECT BUDGET OTHER BUDGETS PROJECT BUDGET OTHER BUDGETS FUNDING ADMINISTRATION Capital Funds $ $ Internal Staff Costs $ $ Bond Proceeds $ $ Advertising $ $ State & Federal Grants $ $ Printing $ $ Historic Preservation Grants $ $ Legal Fees $ $ Hotel and Restaurant Taxes $ $ Building Permits $ $ Department of Commerce & $ $ Builders Risk Insurance $ $ Community Affairs Capital Improvement Budget $ $ Finance Costs $ $ Fund Raising Campaign & Contributions $ $ Grant or Financing Proposal Preparation $ $ Sales Tax Refunds $ $ Feasibility Study $ $ Reinvestment Income $ $ Utility Plant Investment Fees $ $ Utility Rebates $ $ Utility Connection Fees $ $ Code Review of Documents $ $ LAND/BUILDING PREPARATION Bond Printing $ $ Bond Administration $ $ Land/Building Purchase Price $ $ Purchase Closing Costs $ $ PROFESSIONAL CONSULTING SERVICES Land Surveys $ $ Real Estate Taxes $ $ Programming Fees $ $ Appraisal Fees $ $ Preconstruction CM Fees and Reimbursables $ $ Hazardous Materials Surveys $ $ Architectural Fees and Reimbursables $ $ Geotechnical Investigations $ $ Acoustical Consultant $ $ Environmental Impact $ $ Laboratory Consultant $ $ Historic Preservation Research $ $ Structural Consultant $ $ Demolition (Construction Cost) $ $ Mechanical/Electrical Consultant $ $ Clearing and Grubbing (Construction Cost) $ $ Kitchen Consultant $ $ Asbestos Abatement $ $ Special Inspections $ $ Hazardous Waste Removal $ $ Soil and Material Testing $ $ Testing & Balancing $ $ Asbestos Monitoring $ $

9 Budget Development Checklist COST COST COST COST PROJECT BUDGET OTHER BUDGETS PROJECT BUDGET OTHER BUDGETS CONSTRUCTION COSTS GENERAL CONDITIONS (cont.) Sitework $ $ Temporary Water $ $ Foundations $ $ Temporary Gas $ $ Floor System $ $ Temporary Sewer $ $ Columns $ $ Temporary Office $ $ Roof System $ $ Building Layout $ $ Exterior Wall $ $ Exterior Glazing $ $ Interior Wall $ $ OCCUPANCY COSTS Doors $ $ Specialties $ $ Movable Fixtures, Furnishings and Equip. $ $ Equipment $ $ Artwork $ $ Conveying Systems $ $ Relocation/Moving $ $ Plumbing $ $ Technology $ $ Fire Protection $ $ Occupancy Permit $ $ Heating, Ventilating & Air Conditioning $ $ Open House/Dedication $ $ Electrical $ $ Final Cleaning $ $ General Conditions, Overhead and Profit $ $ Signs $ $ Management Fees $ $ Keying $ $ Design Contingency $ $ Phone System $ $ Escalation $ $ Custodial Equipment $ $ Construction Contingency $ $ GENERAL CONDITIONS NOTES: 1. Indicate cost or budget amount for each applicable item. Job Sign $ $ 2. If the cost or budget amount is not known but the item is applicable indicate with Site Fence $ $ a star. Temporary Roads $ $ 3. If an item is not applicable indicate with NA or a dash. Temporary Heat $ $ Temporary Electric $ $ Construction Process On-Site Staffing Quality Control CPM Scheduling Financial Status Reports Payment Control Change Order Control Warranty and Long Term Support Dick Hierstein [email protected] Larry Gleason [email protected]