Contract Audit Report

Transcription

1 Los Angeles Unified School District Office of the Inspector General Contract Audit Unit Contract Audit Report Rate Survey Construction Management Rate Survey CA May 4, 2011

2 May 4, 2011 Mr. Mark Hovatter Procurement Executive Facilities Services Division Los Angeles Unified School District 333 S. Beaudry Avenue, 28th Floor Los Angeles, CA RE: Construction Management Rate Survey Dear Mr. Hovatter: Attached is the final report for our Construction Management Rate Survey. The report includes our labor rate information for the 28 standard construction management positions identified. For the 28 positions, fully burdened labor rates were calculated at the median and 75 th percentile. I appreciate your continued support of our contract audit services. Sincerely, Austin E. Onwualu, CPA, CIG Deputy Inspector General, Contract Audit Jess Womack Inspector General cc: Judith Reece

3 TABLE OF CONTENTS EXECUTIVE SUMMARY... 2 INTRODUCTION... 3 SCOPE AND OBJECTIVE... 3 METHODOLOGY... 4 PRIOR SURVEY COVERAGE... 4 RESULTS OF SURVEY... 5 All Respondents... 7 Private Construction Management Firms... 8 Public Sector Agencies... 9 Comparison of the Three Data Sets Variance between Private and Public Mean REPORT DISTRIBUTION ENGAGEMENT TEAM APPENDIX A: ENR Top-CM-For-Fee Firms APPENDIX B: Detailed Methodology APPENDIX C: Statistical Analysis All Respondents APPENDIX D: Statistical Analysis Private Construction Management Firms APPENDIX E: Statistical Analysis Public Sector Agencies Construction Management Rate Survey Page 1 of 112 CA

4 EXECUTIVE SUMMARY We performed a market rate survey (Survey) for the establishment of standard billing rates for the Construction Program in support of the Los Angeles Unified School District s (LAUSD) Facilities Services Division. The purpose of the Survey was to determine the billing rates currently experienced in Southern California, including Los Angeles and Orange Counties, for firms working as prime consultants and capable of providing qualified personnel with experience in school construction. Based on the results of the survey, we recommend the following fully loaded billing rates at the MEDIAN and 75 th PERCENTILE for each of the construction management positions shown in Exhibit 1. Exhibit 1 Labor Classifications Reviewed Billing Rate at Labor Classification Median Regional Director $221 $245 Senior Project Manager $182 $197 Owners Authorized Representative (OAR) II $159 $173 Owners Authorized Representative (OAR) I $143 $153 Construction Project Engineer $123 $138 Senior Office Engineer $125 $129 Office Engineer $102 $115 Senior Project Estimator $150 $155 Project Estimator $123 $138 Senior Project Scheduler $150 $157 Project Scheduler $120 $125 Expedition Specialist $112 $133 Primavera Support/Junior Developer $103 $138 Construction Claims Manager $170 $199 Program/Project Controls Manager $161 $187 Construction Safety Program Director $131 $164 Safety Specialist $116 $128 Senior Design Manager $165 $190 Design Manager $158 $172 Design QA/QC Specialist $151 $171 Sustainability Support Manager $148 $176 Sustainability Technical Support Manager $125 $158 Director of Small Business Outreach and We-Build Program $143 $156 We-Build Program Coordinator $99 $101 Director of Facilities Technology Services $186 $191 Senior IT Project Manager $168 $210 IT Project Manager $128 $154 IT Business Systems Analyst $111 $125 Billing Rate at 75 th Percentile Construction Management Rate Survey Page 2 of 112 CA

5 The survey and analysis, conducted by Evergreen Solutions, LLC, was intended to provide a baseline of the current market conditions and the corresponding rates that Facilities Contracts can anticipate receiving from interested private entities in response to a LAUSD Request for Proposal (RFP) for construction management services and provide a guide or reference point for Facilities Contracts in its efforts to adequately review the reasonableness and responsiveness of vendor responses to the District s RFPs for such services. It is also intended to provide Facilities Contracts with an analysis that can be relied upon to provide a reasonable range for amounts typically charged and/or paid by vendors and vendees to provide an employee or consultant with specific background, education, and training. The survey and analysis are not intended to create a bright-line or absolute price for any one position which would then invalidate any other priced rate. It is also not intended to act as an absolute predictor of precise rates that Facilities Contracts will receive in response to RFPs or to be used to exclude any specific rate as unacceptable, since extenuating circumstances may exist that would validate the proposed pricing rate. INTRODUCTION The specific objective of the survey was to establish acceptable, all inclusive billing rates for proposals received from interested construction firms in response to RFPs issued by Facilities Contracts. The survey requirement was to indicate the hourly rate the firm would bill or charge LAUSD for the standard 28 construction management firm positions anticipated to render the construction management services described in the RFP. The hourly rates proposed must be inclusive of all cost, expenses, overhead, and profit associated with each position. The pricing analysis contained herein is based upon information obtained through a survey of various construction management firms as well as public sector agencies that are purchasers of these services including the: California Department of Transportation (Caltrans) Metropolitan Transportation Authority (MTA) Los Angeles Community College District (LACCD) The Port of Los Angeles (Port of LA) Los Angeles World Airports (LAX) This survey sought to obtain hourly billing rates, including a breakdown of bare rates, burden, benefits, as well as profit and overhead. SCOPE AND OBJECTIVE The survey was commissioned to assist LAUSD in establishing recognized ranges of fixed billing rates that will be applied to upcoming contract actions for the issuance of its construction management contracts. The survey was intended to gather billing rate information for the 28 standard construction management positions identified. Only firms that provide construction management services in a prime contractor capacity in the Southern California market were considered for purposes of this survey. Firms that provide construction management services as Construction Management Rate Survey Page 3 of 112 CA

6 a subcontractor to another firm were not considered or included in the survey. The firms included in the survey represent entities that can provide large numbers of experienced and highly qualified personnel for large building programs. METHODOLOGY The firms contained within the survey were initially chosen based upon their inclusion in the Engineering News Record (ENR) article The Top 100 Construction Management-For-Fee Firms in the U.S (See Appendix A). In total, 44 private sector firms were contacted over an approximate one month period to solicit feedback on the survey. In addition to these private construction management firms, 12 public sector agencies were identified and asked to participate in the survey. Entities were asked to provide the following information related to the 28 position descriptions: Matching Title (Comparable to LAUSD) Education, Experience, Certifications, and License Requirements Reports to (Position) Number Position Supervises Hourly Combined Billing Rate Hourly Bare Billing Rate In-House Rates (Hourly) Profit/Overhead Attributed to this Position (Hourly) Average Actual Salary Rate Increases (Percent and Frequency) Days Annually Accrued (Sick, Vacation, Holidays, Other) Job Duties, Education, and Experience (Comparable to LAUSD) Detailed Description of Benefits Provided To ensure and enhance the reliability and accuracy of results, we used private sector market data from the Economic Research Institute (ERI) to supplement billing rate data collected directly from identified private sector peers. The ERI data represents a single data point for the statistical analysis shown for Private Sector Firms (Appendix D) and All Respondents (Appendix C). After the survey data were collected, descriptive statistics for each job category were calculated using SPSS statistical software. Appendix B provides a list of the survey respondents and further discussion of the procedures performed. PRIOR SURVEY COVERAGE A billing rate survey of construction management professionals was initially performed in Follow-up surveys were completed in 2006 and At no time did the work completed in connection with the billing rate survey include an audit of the construction management firms. Construction Management Rate Survey Page 4 of 112 CA

7 RESULTS OF SURVEY A total of 11 construction management firms provided rate information for the Southern California region. As shown in Exhibit 2, six firms requested anonymity when submitting their responses. Additionally, nine public sector agencies also responded. Exhibit 2 Participating Firms by Sector Private Sector - From 2010 ENR TOP-CM-FOR-FEE FIRMS 1. Anonymous A 7. Bernards, San Fernando, CA 2. Anonymous B 8. Cumming, Los Angeles, CA 3. Anonymous C 9. Heery International Inc., Atlanta, GA 4. Anonymous D 10. Tetra Tech Inc., Pasadena, CA 11. Vanir Construction Management, 5. Anonymous E Sacramento, CA 6. Anonymous F Public Sector 12. Anaheim School District 17. Santa Ana Unified School District 13. California Department of Transportation 18. The Metropolitan Transportation Authority (Caltrans) (MTA) 14. Los Angeles Community College District (LACCD) 19. The Port of Los Angeles (Port of LA) 15. Los Angeles World Airports (LAX) 20. University of California, Los Angeles 16. Riverside Unified School District Survey respondents were asked to provide demographic data related to their organization. Exhibit 3 shows the average reported by all respondents. Exhibit 3 Survey Demographics Demographics Respondent Average Size of Organization (Employees) 2,285 Years of Experience 24 Avg. Project Size (Million $) $27.4 Avg. Project Complexity (Scale of 1-10, 10 = More Complex) 8.9 Several respondents reported multiple job positions that could be classified under one of the 28 job positions contained within the survey template. In addition, three of the 20total respondents provided a range of rates for some or all of the applicable job descriptions, rather than providing a single rate. These survey respondents were from the public sector and provided rates for recent or current construction management contracts. The majority of responses were submitted via . Several firms did not complete the template, preferring to submit an internal document that listed their information. In some Construction Management Rate Survey Page 5 of 112 CA

8 instances the information was incomplete or did not directly correspond to the specific information requested in the survey. Follow-up calls were made to provide further clarification as necessary. Exhibit 4 provides a summary of the methods used by each respondent for conveying their responses. Exhibit 4 Method for Returning Survey Responses Provided Info on Additional Positions Used Respondent Survey Tool Provided Notes Anaheim School District x Anonymous A Anonymous B x x Anonymous C x x Anonymous D x Anonymous E x Used Own Format Anonymous F x x Bernards, San Fernando, CA x x California Department of Transportation "Caltrans" x x Cumming, Los Angeles, CA x x Heery International Inc., Atlanta, Provided Info Via Phone GA x Los Angeles Community College District "LACCD" x x Los Angeles World Airports "LAX" x x Riverside Unified School District x x Santa Ana Unified School District x x Tetra Tech Inc., Pasadena, CA x The Metropolitan Transportation Authority "MTA" x The Port of Los Angeles "Port of LA" x x University of California, Los Angeles x x Vanir Construction Management, Sacramento, CA x x Total x Construction Management Rate Survey Page 6 of 112 CA

9 Findings The following exhibits summarize the statistical findings for each of the 28 job positions. The findings present the mean, median and 25 th and 75 th percentile for each of the job positions, as well as the low and high values reported for each job title. The mean represents the average of all reported hourly rates for a specified job position. The median represents the half way point of results, in which one-half of the respondents are above that rate and one-half are below. The 75 th percentile represents the rate at which 75 percent of the observations are below the rate and 25 percent are equal to or greater than that rate. The 25 th percentile represents the hourly rate at which 25 percent of the observations are below the rate and 75 percent are equal to or greater than that rate. The low value was the lowest reported hourly rate for that position, and the high value is the highest reported hourly rate for that position. The raw data from the statistical analysis can be found in Appendices E-G. Exhibits 5 7 provide details for each of the job positions within the three basic groups: all respondents, private construction management firms, and public sector agencies. In addition, Exhibit 8 provides a comparison of the three data sets (at mean. ALL RESPONDENTS Exhibit 5 provides a summary of responses from the 20 respondents, including 11 private construction management firms and 9 public sector agencies. Additionally, private sector data from the ERI are included as a single data point for the statistical analysis. Exhibit 5 Statistical Summary All Respondents Labor Classification Mean Median P25 P75 Low High Data Points Regional Director $226 $221 $188 $245 $151 $ Senior Project Manager $182 $182 $158 $197 $109 $ Owners Authorized Representative (OAR) II $155 $159 $138 $173 $125 $ Owners Authorized Representative (OAR) I $133 $143 $108 $153 $98 $160 9 Construction Project Engineer $128 $123 $108 $138 $80 $ Senior Office Engineer $120 $125 $105 $129 $81 $ Office Engineer $98 $102 $80 $115 $51 $ Senior Project Estimator $143 $150 $128 $155 $87 $ Project Estimator $122 $123 $107 $138 $70 $ Senior Project Scheduler $147 $150 $129 $157 $87 $ Project Scheduler $118 $120 $113 $125 $70 $ Expedition Specialist $115 $112 $102 $133 $91 $139 8 Primavera Support/Junior Developer $113 $103 $88 $138 $84 $175 9 Construction Claims Manager $178 $170 $156 $199 $139 $ Program/Project Controls Manager $166 $161 $156 $186 $79 $ Construction Management Rate Survey Page 7 of 112 CA

10 Labor Classification Mean Median P25 P75 Low High Data Points Construction Safety Program Director $136 $131 $113 $164 $75 $194 8 Safety Specialist $114 $116 $101 $128 $75 $ Senior Design Manager $163 $165 $132 $190 $87 $ Design Manager $148 $158 $140 $172 $60 $180 9 Design QA/QC Specialist $135 $151 $109 $171 $75 $ Sustainability Support Manager $152 $148 $135 $176 $101 $ Sustainability Technical Support Manager $128 $125 $101 $158 $101 $158 3 Director of Small Business Outreach and We-Build Program $140 $143 $102 $156 $87 $204 7 We-Build Program Coordinator $94 $99 $84 $101 $79 $101 4 Director of Facilities Technology Services $169 $186 $138 $191 $136 $194 5 Senior IT Project Manager $180 $168 $156 $210 $143 $225 7 IT Project Manager $131 $128 $102 $154 $87 $190 9 IT Business Systems Analyst $112 $111 $100 $125 $75 $ PRIVATE CONSTRUCTION MANAGEMENT FIRMS Exhibit 6 provides a summary of responses from 11 private construction management firms. Additionally, private sector data from the ERI are included as a single data point for the statistical analysis. As shown by the total number of data points per job classification, participants did not provide information for all positions. Nearly all participants provided information for the positions of Regional Director, Senior Project Manager, Construction Project Engineer, Office Engineer, Senior Project Estimator and Project Estimator. Exhibit 6 Statistical Summary Private Sector Construction Management Firms Labor Classification Mean Median P25 P75 Low High Data Points Regional Director $223 $230 $202 $244 $185 $ Senior Project Manager $183 $194 $175 $198 $140 $ Owners Authorized Representative (OAR) II $163 $165 $158 $177 $125 $180 7 Owners Authorized Representative (OAR) I $139 $147 $119 $156 $105 $160 6 Construction Project Engineer $124 $124 $109 $130 $80 $ Senior Office Engineer $116 $119 $101 $128 $81 $151 8 Office Engineer $93 $91 $78 $105 $65 $ Senior Project Estimator $147 $150 $133 $156 $110 $ Project Estimator $123 $124 $111 $137 $78 $ Senior Project Scheduler $151 $150 $138 $164 $129 $180 9 Construction Management Rate Survey Page 8 of 112 CA

11 Labor Classification Mean Median P25 P75 Low High Data Points Project Scheduler $125 $123 $118 $126 $115 $155 9 Expedition Specialist $111 $109 $102 $122 $101 $125 4 Primavera Support/Junior Developer $95 $90 $85 $108 $84 $112 5 Construction Claims Manager $177 $172 $159 $199 $158 $200 6 Program/Project Controls Manager $172 $168 $156 $192 $151 $198 6 Construction Safety Program Director $156 $150 $130 $187 $129 $194 4 Safety Specialist $121 $120 $115 $142 $84 $150 7 Senior Design Manager $183 $186 $169 $199 $135 $215 8 Design Manager $162 $160 $155 $174 $140 $180 7 Design QA/QC Specialist $145 $154 $118 $163 $109 $171 6 Sustainability Support Manager $147 $139 $118 $181 $101 $186 5 Sustainability Technical Support Manager $129 $129 $101 $158 $101 $158 2 Director of Small Business Outreach and We-Build Program $164 $154 $145 $192 $143 $204 4 We-Build Program Coordinator $100 $100 $99 $101 $99 $101 3 Director of Facilities Technology Services $189 $188 $186 $194 $186 $194 3 Senior IT Project Manager $167 $164 $148 $188 $143 $195 4 IT Project Manager $109 $115 $90 $123 $90 $123 3 IT Business Systems Analyst $112 $110 $101 $125 $100 $125 5 PUBLIC SECTOR AGENCIES Exhibit 7 provides a summary of responses from nine public sector agencies. As shown by the total number of data points per job classification, participants did not provide information for all positions, but in some cases provided information for multiple positions that met the criteria for a single position. The positions where multiple submissions occurred included the positions of Project Scheduler, Senior Project Estimator, Project Estimator, Construction Project Engineer, Senior Project Scheduler, Regional Director, Office Engineer, and Senior Project Manager. Exhibit 7 Statistical Summary Public Sector Agencies Labor Classification Mean Median P25 P75 Low High Data Points Regional Director $229 $210 $185 $258 $151 $ Senior Project Manager $181 $170 $155 $191 $109 $ Owners Authorized Representative (OAR) II $145 $145 $130 $161 $125 $165 5 Owners Authorized Representative (OAR) I $119 $110 $98 $150 $98 $150 3 Construction Project Engineer $132 $116 $105 $150 $85 $ Construction Management Rate Survey Page 9 of 112 CA

12 Labor Classification Mean Median P25 P75 Low High Data Points Senior Office Engineer $124 $125 $124 $130 $100 $135 7 Office Engineer $101 $112 $86 $115 $51 $ Senior Project Estimator $140 $147 $125 $156 $87 $ Project Estimator $122 $116 $100 $145 $70 $ Senior Project Scheduler $144 $145 $124 $159 $87 $ Project Scheduler $111 $115 $103 $121 $70 $ Expedition Specialist $119 $123 $96 $138 $91 $139 4 Primavera Support/Junior Developer $135 $138 $102 $166 $91 $175 4 Construction Claims Manager $179 $170 $149 $215 $139 $246 8 Program/Project Controls Manager $160 $159 $136 $184 $79 $242 6 Construction Safety Program Director $117 $119 $83 $149 $75 $155 4 Safety Specialist $104 $102 $88 $123 $75 $129 5 Senior Design Manager $132 $128 $106 $161 $87 $165 5 Design Manager $100 $100 $60 $140 $60 $140 2 Design QA/QC Specialist $123 $112 $79 $174 $75 $175 5 Sustainability Support Manager $155 $150 $142 $178 $125 $185 6 Sustainability Technical Support Manager $125 $125 $125 $125 $125 $125 1 Director of Small Business Outreach and We-Build Program $109 $102 $87 $138 $87 $138 3 We-Build Program Coordinator $79 $79 $79 $79 $79 $79 1 Director of Facilities Technology Services $138 $138 $136 $139 $136 $139 2 Senior IT Project Manager $197 $210 $156 $225 $156 $225 3 IT Project Manager $141 $142 $118 $168 $87 $190 6 IT Business Systems Analyst $112 $112 $91 $135 $75 $139 7 COMPARISON OF THE THREE DATA SETS Exhibit 8 summarizes and compares the mean values for the three statistical groups. As noted in the individual sections, private sector data from the ERI are included as a single data point for the statistical analysis of Private Sector Construction Management Firms and All Respondents. Exhibit 8 Comparison of Hourly Rates for Three Statistical Groups All Respondents Mean Private CM Firms Mean Public Agencies Mean Labor Classification Regional Director $226 $223 $229 Senior Project Manager $182 $183 $181 Owners Authorized Representative (OAR) II $155 $163 $145 Owners Authorized Representative (OAR) I $133 $139 $119 Construction Management Rate Survey Page 10 of 112 CA

13 All Respondents Mean Private CM Firms Mean Public Agencies Mean Labor Classification Construction Project Engineer $128 $124 $132 Senior Office Engineer $120 $116 $124 Office Engineer $98 $93 $101 Senior Project Estimator $143 $147 $140 Project Estimator $122 $123 $122 Senior Project Scheduler $147 $151 $144 Project Scheduler $118 $125 $111 Expedition Specialist $115 $111 $119 Primavera Support/Junior Developer $113 $95 $135 Construction Claims Manager $178 $177 $179 Program/Project Controls Manager $166 $172 $160 Construction Safety Program Director $136 $156 $117 Safety Specialist $114 $121 $104 Senior Design Manager $163 $183 $132 Design Manager $148 $162 $100 Design QA/QC Specialist $135 $145 $123 Sustainability Support Manager $152 $147 $155 Sustainability Technical Support Manager $128 $129 $125 Director of Small Business Outreach and $140 $164 $109 We-Build Program We-Build Program Coordinator $94 $100 $79 Director of Facilities Technology Services $169 $189 $138 Senior IT Project Manager $180 $167 $197 IT Project Manager $131 $109 $141 IT Business Systems Analyst $112 $112 $112 VARIANCE BETWEEN PRIVATE AND PUBLIC MEAN Exhibit 9 shows the differences between the hourly rates reported by the private construction management firms against those reported by the public sector agencies. The greatest variances can be seen in the mean for the positions of Primavera Support/Junior Developer (42.3 percent); Design Manager (-38.4 percent); Director of Small Business Outreach and We-Build Program ( percent); IT Project Manager (29.4 percent); Senior Design Manager (-27.7 percent); Director of Facilities Technology Services (-27.4%); Construction Safety Program Director (-25 percent) and the We-Build Program Coordinator (20.9 percent). However, as shown, the average variance between the two sectors is only 4.7 percent. Construction Management Rate Survey Page 11 of 112 CA

14 Exhibit 9 Comparison of Hourly Rates for Individual Sector Data Sets Private CM Firms Mean Public Agencies Mean Labor Classification Variance Percent Regional Director $223 $229 $6 2.7% Senior Project Manager $183 $181 -$2-1.0% Owners Authorized Representative (OAR) II $163 $145 -$ % Owners Authorized Representative (OAR) I $139 $119 -$ % Construction Project Engineer $124 $132 $8 6.7% Senior Office Engineer $116 $124 $8 6.8% Office Engineer $93 $101 $9 9.3% Senior Project Estimator $147 $140 -$7-4.5% Project Estimator $123 $122 $0-0.3% Senior Project Scheduler $151 $144 -$7-4.6% Project Scheduler $125 $111 -$ % Expedition Specialist $111 $119 $8 7.3% Primavera Support/Junior Developer $95 $135 $ % Construction Claims Manager $177 $179 $2 1.4% Program/Project Controls Manager $172 $160 -$12-7.2% Construction Safety Program Director $156 $117 -$ % Safety Specialist $121 $104 -$ % Senior Design Manager $183 $132 -$ % Design Manager $162 $100 -$ % Design QA/QC Specialist $145 $123 -$ % Sustainability Support Manager $147 $155 $8 5.3% Sustainability Technical Support Manager $129 $125 -$4-3.3% Director of Small Business Outreach and $164 $109 -$ % We-Build Program We-Build Program Coordinator $100 $79 -$ % Director of Facilities Technology Services $189 $138 -$ % Senior IT Project Manager $167 $197 $ % IT Project Manager $109 $141 $ % IT Business Systems Analyst $112 $112 $0-0.2% Average $144 $135 -$9-4.7% Annual Rate Increases The survey asked the participants to provide the historical rate increase and the projected rate increase for each job position. Exhibit 10 provides the average historical and projected rate increases across all job positions for the entities which responded. Exhibit 10 shows the average Construction Management Rate Survey Page 12 of 112 CA

15 historical rate increases were 3.3 percent, and the average projected annual rate increase is expected to be slightly higher, at 3.8 percent. Additional Data Exhibit 10 Historical and Projected Annual Rate Increases Respondent Historical Projected Anonymous B 2% 2% Bernards, San Fernando, CA na 1% Cumming, Los Angeles, CA na 5% Heery International Inc., Atlanta, GA 3% 3% Tetra Tech Inc., Pasadena, CA 3.5% 3.5% The Metropolitan Transportation Authority "MTA" 3% na Vanir Construction Management, Sacramento, CA 5% 8% Average 3.3% 3.8% As shown in Exhibit 4, 10 participants provided information for positions outside the scope of the Survey. These additional positions were excluded from the survey results. In addition to the combined hourly rates, the survey also asked respondents to provide: Education, Experience, Certifications, and License Requirements Reports to (Position) Number Position Supervises Hourly Bare Billing Rate In-House Rate (Public Sector Only) Profit/Overhead Average Actual Salary Rate Increases (Historical and Projected) Days Annually Accrued (Sick, Vacation, Holidays, Other) Job Duties, Education, and Experience (Comparable to LAUSD) Detailed Description of Benefits Provided For those respondents providing information in these categories, the data varied widely. The data received did not contain sufficient information to perform further analysis. REPORT DISTRIBUTION This survey is solely for the use of Facilities Contracts. The survey may not be released to any department outside of LAUSD or any internal department without the approval of the Office of the Inspector General. Construction Management Rate Survey Page 13 of 112 CA

16 ENGAGEMENT TEAM This survey was conducted by: Evergreen Solutions, LLC 2852 Remington Green Circle, Suite 101 Tallahassee, Florida Construction Management Rate Survey Page 14 of 112 CA

17 APPENDIX A 2010 ENR TOP-CM-FOR-FEE FIRMS Construction Management Rate Survey Page 15 of 112 CA

18 Firm APPENDIX A 2010 ENR TOP-CM-FOR-FEE FIRMS Firm Type* Firm Firm Type* AECOM Technology Corp., Los Angeles, Calif. D Caribbean Project Management, San Juan, P.R. CM Cumming, Los Angeles, Calif. CM CDM, Cambridge, Mass. EC Psomas, Los Angeles, Calif. D CH2M HILL, Englewood, Colo. EAC Bechtel, San Francisco, Calif. EC Conestoga-Rovers & Assoc., Niagara Falls, N.Y. ENV Jacobs, Pasadena, Calif. EAC CSA Group, San Juan, P.R. D URS Corp., San Francisco, Calif. EAC Danis Building Construction Co., Miamisburg, Ohio C Parsons, Pasadena, Calif. EC dck Worldwide LLC, Pittsburgh, Pa. C CB Richard Ellis, El Segundo, Calif. CM Delon Hampton & Associates, Washington, D.C. D Tetra Tech Inc., Pasadena, Calif. D Faithful+Gould, New York, N.Y. CM Vanir Construction Management, Sacramento, Calif. CM Gilbane Building Co., Providence, R.I. C Harris & Associates Inc., Concord, Calif. D GREYHAWK, Woodbury, N.Y. CM Gafcon Inc., San Diego, Calif. CM Hatch Mott MacDonald, Millburn, N.J. D Nolte Associates Inc., Sacramento, Calif. D HDR, Omaha, Neb. D gkkworks, Irvine, Calif. D Heery International Inc., Atlanta, Ga. D Owen Group Inc., Irvine, Calif. D Hill International Inc., Marlton, N.J. CM Seville Construction Services Inc., Pasadena, Calif. CM Hoar Construction LLC, Birmingham, Ala. C SGI Construction Management, Pasadena, Calif. CM J. M. Waller Associates Inc., Fairfax, Va. CM Bernards, San Fernando, Calif. C Jones Lang LaSalle, Chicago, Ill. CM O Connor Construction Mgmt. Inc., Irvine, Calif. CM Kraus-Anderson Construction Co., Minneapolis, Minn. C ProWest Constructors, Wildomar, Calif. CM LPCiminelli Inc., Buffalo, N.Y. C Vali Cooper and Associates Inc., Pt. Richmond, Calif. CM M.B. Kahn Construction Co. Inc., Columbia, S.C. C Jacobs Associates, San Francisco, Calif. D McCarthy Holdings Inc., St. Louis, Mo. C Balfour Beatty US, Dallas, Texas C McCormick Taylor Inc., Philadelphia, Pa. D Broaddus & Associates, Austin, Texas CM McDonough Associates Inc., Chicago, Ill. D Construction Management Rate Survey Page 16 of 112 CA

19 Firm Firm Type* Firm Firm Type* Fluor Corp., Irving, Texas EC McDonough Bolyard Peck Inc., Fairfax, Va. CM KBR, Houston, Texas EC McKissack & McKissack, Washington, DC D Lea+Elliott Inc., Grand Prairie, Texas CM Metric Engineering Group Inc., Miami, Fla. D Mustang Engineering, Houston, Texas EC Michael Baker Corp., Moon Twp., Pa. D S&B Engineers and Constructors, Houston, Texas EC On-Board Engineering Corp., East Windsor, N.J. D Willbros Group Inc., Houston, Texas EC Parsons Brinckerhoff Inc., New York, N.Y. EAC WorleyParsons Group Inc., Houston, Texas EC Pirtle Construction Co., Davie, Fla. C Carollo Engineers PC, Phoenix, Ariz. D Plaza Construction Corp., New York, N.Y. C Chanen Construction Co. Inc., Phoenix, Ariz. C PMA Consultants LLC, Detroit, Mich. CM Kitchell Corp., Phoenix, Ariz. C Quandel Enterprises Inc., Harrisburg, Pa. C Alberici Corp., St. Louis, Mo. C R.W. Armstrong & Associates Inc., Indianapolis, Ind. D Alpha Corp., Dulles, Va. D Reynolds Smith and Hills Inc., Jacksonville, Fla. D Arcadis/Malcolm Pirnie, Highlands Ranch, Colo. D Rise International LLC, Chicago, Ill. CM ATCS PLC, Dulles, Va. D Savin Engineers PC, Pleasantville, N.Y. D Barton Malow Co., Southfield, Mich. C Science Applications International Corp., McLean, Va. EC Shiel Sexton Co. Inc., Indianapolis, Ind. Black & Veatch, Overland Park, Kan. EC EC Boswell Engineering, S. Hackensack, N.J. D Skanska USA, New York, N.Y. EC Bovis Lend Lease, New York, N.Y. C SSOE Group, Toledo, Ohio D Burns & McDonnell, Kansas City, Mo. EC Tectonic Engineering & Surveying, Mountainville, N.Y. D Butz Enterprises Inc., Allentown, Pa. EC The Flintco Cos. Inc., Tulsa, Okla. C Campus Construction MGMT. Group, Pittsford, N.Y. CM The LiRo Group, Syosset, N.Y. D Construction Management Rate Survey Page 17 of 112 CA

20 Firm Firm Type* Firm Firm Type* The Morganti Group Inc., Danbury, Conn. C Tishman Construction Corp., New York, N.Y. CM The PBSJ Corp., Tampa, Fla. D U.S. COST, Atlanta, Ga. CM The Shaw Group Inc., Baton Rouge, La. EC Urban Engineers Inc., Philadelphia, Pa. D The Skillman Corp., Indianapolis, Ind. CM Versar Inc., Springfield, Va. EC The Turner Corp., New York, N.Y. EC Vertex Engineering Services Inc., Weymouth, Mass. CM * Legend: C = Contractor; CM = Construction Management Firm; D = Design Firm, EC = Engineer-Contractor; EAC = Engineer-Architect-Contractor; ENV = Environmental Firm. Source: Construction Management Rate Survey Page 18 of 112 CA

21 APPENDIX B DETAILED METHODOLOGY Construction Management Rate Survey Page 19 of 112 CA

22 APPENDIX B DETAILED METHODOLOGY Selection of Firms All firms listed in the Engineering News Record (ENR) article The Top 100 Construction Management-For-Fee Firms in the U.S were considered for participation in the Survey. ENR is a technical publication that provides business and technical news and research to members of the construction community, including an annual list of the 100 top construction management firms (See Appendix A). In total, 44 private firms were contacted regarding participation in the Survey. In addition to these private construction management firms, 12 public sector agencies were identified and asked to participate in the survey. A list of firms was compiled and then reduced to include only companies that confirmed they had business activity in Southern California, including Los Angeles and Orange counties. Exhibits B-1a and B-1b present a complete list of the 56 entities that were asked to participate in the Survey. Exhibit B-1a Firms Surveyed by Sector Private Sector - From 2010 ENR TOP-CM-FOR-FEE FIRMS AECOM Technology Corp., Los Angeles, CA Gilbane Building Co., Providence, RI Psomas, Los Angeles, CA Heery International Inc., Atlanta, GA Bechtel, San Francisco, CA Hill International Inc., Marlton, NJ Jacobs, Pasadena, CA Jones Lang LaSalle, Chicago, IL URS Corp., San Francisco, CA Tishman Construction Corp., New York, NY Vanir Construction Management, Sacramento, CA Bovis Lend Lease, New York, NY Delon Hampton & Associates, Washington, Gafcon Inc., San Diego, CA D.C. Nolte Associates Inc., Sacramento, CA Faithful+Gould, New York, NY SGI Construction Management, Pasadena, CA HDR, Omaha, NE Bernards, San Fernando, CA McCormick Taylor Inc., Philadelphia, PA O Connor Construction Mgmt. Inc., Irvine, CA R.W. Armstrong & Associates Inc., Indianapolis, IN Vali Cooper and Associates Inc., Pt. Richmond, CA U.S. COST, Atlanta, Ga. Jacobs Associates, San Francisco, CA Cumming, Los Angeles, CA Balfour Beatty US, Dallas, TX(Contact California Office) Parsons, Pasadena, CA Broaddus & Associates, Austin, TX CB Richard Ellis, El Segundo, CA KBR, Houston, TX Tetra Tech Inc., Pasadena, CA Mustang Engineering, Houston, TX Harris & Associates Inc., Concord, CA Willbros Group Inc., Houston, TX gkkworks, Irvine, CA WorleyParsons Group Inc., Houston, TX Owen Group Inc., Irvine, CA Construction Management Rate Survey Page 20 of 112 CA

23 Chanen Construction Co. Inc., Phoenix, AZ Kitchell Corp., Phoenix, AZ Campus Construction MGMT. Group, Pittsford, NY Seville Construction Services Inc., Pasadena, CA ProWest Constructors, Wildomar, CA Carollo Engineers PC, Phoenix, AZ Construction Management Rate Survey Page 21 of 112 CA

24 Exhibit B-1b Firms Surveyed by Sector Public Sector California Department of Transportation "Caltrans" Riverside Unified School District The Port of Los Angeles "Port of LA" Long Beach Unified School District The Metropolitan Transportation Authority "MTA" Los Angeles Community College District "LACCD" Los Angeles World Airports "LAX" University of Southern California Anaheim School District California State University Santa Ana Unified School District University of California, Los Angeles There was no data obtained from individual site users, placement agencies, or job postings; sources that could sometimes be characterized by compensation analysts or human resources professionals as unreliable. All entities were informed that the Survey was being prepared at the request of LAUSD and data would be used to assemble billing rate comparisons for specific construction related positions. Survey Questionnaire Each entity was asked to provide the following information related to the 28 position descriptions: Matching Title (Comparable to LAUSD) Education, Experience, Certifications, and License Requirements Reports to (Position) Number Position Supervises Hourly Combined Billing Rate Hourly Bare Billing Rate In-House Rates (Hourly) Profit/Overhead Attributed to this position (hourly) Average Actual Salary Rate Increases (Percent and Frequency) Days Annually Accrued (Sick, Vacation, Holidays, Other) Job Duties, Education, and Experience (Comparable to LAUSD) Detailed Description of Benefits Provided In addition, each entity was provided a blank page to add Other Commonly Used Positions not included in the 28 job positions provided. Participants were instructed to duplicate this page as necessary. Participants were given the option of responding anonymously. In contacting all entities, multiple contacts were required to determine the most appropriate person to respond to the questionnaire. We used a four-fold method of communicating with participants. Staff notified the target entities via phone that the Survey was being sent or made Construction Management Rate Survey Page 22 of 112 CA

25 available, confirmed receipt, and encouraged participation. Once the data were received, they were validated and summarized. The majority of responses were submitted via . Several firms did not complete the template, preferring to submit an internal document that listed their information (See Exhibit 4 for additional detail). In some instances the information was incomplete, or did not directly correspond to the specific information requested in the Survey. Follow-up calls were made to provide further clarification as necessary. Several respondents reported multiple job positions that could be classified under one of the 28 job positions contained within the survey template. In addition, 3 of the 20 total respondents provided a range of rates for some or all of the applicable job descriptions, rather than providing a single rate. These survey respondents were from the public sector and provided rates for recent or current construction management contracts. Data Preparation After all responses were received, the following steps were taken to ensure consistency across all entities and prepare the data for statistical analysis. Benchmarking of Construction Professional Functionality: Some respondents reported more than one job description that could be classified under one of the 28 positions contained in the template. To develop a consistent rate of compensation and to ensure that each of the 28 positions were categorized by actual duties performed, and not merely by position title, the titles used by the respondents were grouped under an applicable position and treated as a range of rates. This step was designed to eliminate the ambiguity created by the wide range of titles and job descriptions used by the construction industry. Hourly Rate Ranges: When a respondent provided a range of rates for a position, a low and high value were used in the statistical analysis as opposed to a single value or data point; that is, each of the values was treated as a separate observation. When a respondent provided data by project, where each project represented a negotiated market rate for construction management services, each was used as a separate data point in the statistical analysis for a particular reported position. Use of Private Sector Market Data In addition to billing rate data collected directly from identified private sector peers, we used private sector market data from the ERI to supplement findings. ERI s software program reports competitive compensation data for over 5,800 jobs, which is derived from millions of data points gathered from digitized public records from the U.S. Securities and Exchange Commission and U.S. Internal Revenue Service (IRS) returns. The data from these sources were pulled specifically from the Southern California area and were tailored for the experience and educational levels specified for each job in the job descriptions provided by the LAUSD. Data Construction Management Rate Survey Page 23 of 112 CA

26 were further adjusted to reflect the inclusion of all expenses, including benefits, overhead, etc. as well as project size based on contract dollar amount. ERI data are typically used in market studies to ensure and enhance the reliability, validity, and accuracy of results. Exhibit B-2 compares the ERI data point for each position to the average amongst surveyed private sector peers. As can be seen, the ERI data is on average three percent higher than the private sector data collected with the survey tool. Exhibit B-2 Comparison of Private Sector Averages and Private Sector Market (ERI) Data Labor Classification Private Sector Peer Average Private Sector Market Data (ERI) % Variance Regional Director $221 $246 10% Senior Project Manager $182 $194 6% Owners Authorized Representative (OAR) II $163 na na Owners Authorized Representative (OAR) I $139 na na Construction Project Engineer $124 $123-1% Senior Office Engineer $115 $124 7% Office Engineer $92 $103 11% Senior Project Estimator $147 $148 1% Project Estimator $122 $131 7% Senior Project Scheduler $151 $150-1% Project Scheduler $126 $121-4% Expedition Specialist $111 na na Primavera Support/Junior Developer $91 $112 19% Construction Claims Manager $177 $174-2% Program/Project Controls Manager $172 $176 2% Construction Safety Program Director $152 $166 9% Safety Specialist $122 $120-2% Senior Design Manager $182 $187 2% Design Manager $161 $170 5% Design QA/QC Specialist $150 $121-24% Sustainability Support Manager $150 $139-8% Sustainability Technical Support Manager $129 na na Director of Small Business Outreach and We-Build Program $150 $204 26% We-Build Program Coordinator $101 $99-2% Director of Facilities Technology Services $190 $188-1% Senior IT Project Manager $166 $168 1% IT Project Manager $109 na na Construction Management Rate Survey Page 24 of 112 CA

27 Labor Classification Private Sector Peer Average Private Sector Market Data (ERI) % Variance IT Business Systems Analyst $113 $110-3% Average 3% The ERI data represents a single data point for the statistical analysis of Private Sector Firms (Appendix D) and All Respondents (Appendix C). Statistical Analysis From these data, we used SPSS statistical software to build a total compensation profile of the marketplace for each position and provide billing rate recommendations to place LAUSD construction contractors competitively within the total compensation market. Emphasis in this analysis was placed on determining structural design within the market and an analysis of range widths, including: Fully loaded billing rates at the mean and median Fully loaded billing rates at 25 and 75 percentile High and low billing rates The billing rate responses from private construction management firms and public agencies were further analyzed, compared, and reported. Appendix C provides descriptive statistics and summary information by position of the mean billing rate, median billing rate, billing rate at the 25th percentile, billing rate at the 75th percentile, the low billing rate, and the high billing rate, as well as the number of data points available for that specific position. Analyses included the following: Total for all Respondents Total for Private Construction Management Firms, Only Total for Public Sector Agencies, Only Comparison of the Three Data Sets (at mean) Variance (number and percent) between Private and Public Mean Once the data was compiled and analyzed, billing rate recommendations were formulated to place LAUSD construction contractors competitively within the total compensation market. Construction Management Rate Survey Page 25 of 112 CA

28 APPENDIX C STATISTICAL ANALYSIS ALL RESPONDENTS Construction Management Rate Survey Page 26 of 112 CA

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57 APPENDIX D STATISTICAL ANALYSIS PRIVATE CONSTRUCTION MANAGEMENT FIRMS Construction Management Rate Survey Page 55 of 112 CA

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115 Know about fraud, waste or abuse? Tell us about it. Maybe you are a School District Call the Hotline: employee, or maybe you are a private citizen. Either way, you (213) are a taxpayer. or LAUSD-OIG Maybe you know something about fraud, or waste, or some Write to us: other type of abuse in the School District. Fraud Hotline Center 333 S. Beaudry Ave., 12 th Fl. The Office of the Inspector General Los Angeles, CA has a hotline for you to call. You can also write to us. If you wish, we will keep your identity confidential. You can remain anonymous, if you prefer. And you are protected by law from reprisal by your employer. Website: