Existing law authorizes the Department of Transportation to engage in a Construction Manager/General Contractor project delivery method (CM/GC method), as specified, for projects for the construction of a highway, bridge, or tunnel. Existing law authorizes the department to use the CM/GC method on up to 12 projects, 10 of which are required to have construction costs greater than $10,000,000. Existing law also authorizes the department to enter into a contract using this method on 12 additional projects, 2 of which are required to be authorized for projects in the County of Riverside, as prescribed.

Existing law requires the department, on at least 16 of the projects delivered by the department utilizing the CM/GC method, to use department employees or consultants under contract with the department to perform all project design and engineering services related to design required for the CM/GC method consistent with specified existing law. Existing law requires the department, on all projects delivered by the department, to use department employees or consultants under contract with the department to perform all construction inspection services required for the CM/GC method consistent with specified existing law. Existing law requires the department to include department resources necessary to perform those services in the departments capital outlay support program for workload purposes in the annual Budget Act. Existing law requires the department to prepare and submit certain related reports to the Legislature.

This bill would remove the cap on the number of projects for which the department is authorized to use the CM/GC method and make conforming changes to existing provisions. The bill would impose the requirement to use department employees or consultants to perform project design and engineering services on at least ²/₃ of the projects delivered by the department utilizing the CM/GC method. The bill would require the department to submit an interim report no later than July 1, 2021, that describes each Construction Manager/General Contractor project approved under these provisions as of January 1, 2021, and that provides specified relevant data with respect to those projects, and a final report to the Legislature no later than July 1, 2025, that provides the same relevant data for projects approved under these provisions as of January 1, 2025. The bill would require both the interim and final reports to include a comprehensive assessment on the effectiveness of the Construction Manager/General Contractor project delivery method relative to project cost and time savings.

Existing law requires specified information provided to the department pursuant to these provisions to be verified under oath.

By expanding the authorization to use the CM/GC method, the bill would expand the scope of the crime of perjury, thus imposing a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Existing law authorizes the Department of Transportation to engage in a Construction Manager/General Contractor project delivery method (CM/GC method), as specified, for projects for the construction of a highway, bridge, or tunnel. Existing law authorizes the department to use the CM/GC method on up to 12 projects, 10 of which are required to have construction costs greater than $10,000,000. Existing law also authorizes the department to enter into a contract using this method on 12 additional projects, 2 of which are required to be authorized for projects in the County of Riverside, as prescribed.

Existing law requires the department, on at least 16 of the projects delivered by the department utilizing the CM/GC method, to use department employees or consultants under contract with the department to perform all project design and engineering services related to design required for the CM/GC method consistent with specified existing law. Existing law requires the department, on all projects delivered by the department, to use department employees or consultants under contract with the department to perform all construction inspection services required for the CM/GC method consistent with specified existing law. Existing law requires the department to include department resources necessary to perform those services in the departments capital outlay support program for workload purposes in the annual Budget Act. Existing law requires the department to prepare and submit certain related reports to the Legislature.

This bill would remove the cap on the number of projects for which the department is authorized to use the CM/GC method and make conforming changes to existing provisions. The bill would impose the requirement to use department employees or consultants to perform project design and engineering services on at least ²/₃ of the projects delivered by the department utilizing the CM/GC method. The bill would require the department to submit an interim report no later than July 1, 2021, that describes each Construction Manager/General Contractor project approved under these provisions as of January 1, 2021, and that provides specified relevant data with respect to those projects, and a final report to the Legislature no later than July 1, 2025, that provides the same relevant data for projects approved under these provisions as of January 1, 2025. The bill would require both the interim and final reports to include a comprehensive assessment on the effectiveness of the Construction Manager/General Contractor project delivery method relative to project cost and time savings.

Existing law requires specified information provided to the department pursuant to these provisions to be verified under oath.

By expanding the authorization to use the CM/GC method, the bill would expand the scope of the crime of perjury, thus imposing a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Existing law authorizes the Department of Transportation to engage in a Construction Manager/General Contractor project delivery method (CM/GC method), as specified, for projects for the construction of a highway, bridge, or tunnel. Existing law authorizes the department to use the CM/GC method on up to 12 projects, 10 of which are required to have construction costs greater than $10,000,000. Existing law also authorizes the department to enter into a contract using this method on 12 additional projects, 2 of which are required to be authorized for projects in the County of Riverside, as prescribed.

Existing law requires the department, on at least 16 of the projects delivered by the department utilizing the CM/GC method, to use department employees or consultants under contract with the department to perform all project design and engineering services related to design required for the CM/GC method consistent with specified existing law. Existing law requires the department, on all projects delivered by the department, to use department employees or consultants under contract with the department to perform all construction inspection services required for the CM/GC method consistent with specified existing law. Existing law requires the department to include department resources necessary to perform those services in the departments capital outlay support program for workload purposes in the annual Budget Act. Existing law requires the department to prepare and submit certain related reports to the Legislature.

This bill would remove the cap on the number of projects for which the department is authorized to use the CM/GC method, eliminate the minimum construction costs limitation, method and make conforming changes to existing provisions. The bill would impose the requirement to use department employees or consultants to perform project design and engineering services on at least ²/₃ of the projects delivered by the department utilizing the CM/GC method. The bill would require the department to submit a report to the Legislature by July 1, 2022, that includes, among other requirements, a comprehensive assessment on the effectiveness of the Construction Manager/General Contractor project delivery method relative to project cost and time savings for all projects approved under these provisions as of January 1, 2022. an interim report no later than July 1, 2021, that describes each Construction Manager/General Contractor project approved under these provisions as of January 1, 2021, and that provides specified relevant data with respect to those projects, and a final report to the Legislature no later than July 1, 2025, that provides the same relevant data for projects approved under these provisions as of January 1, 2025. The bill would require both the interim and final reports to include a comprehensive assessment on the effectiveness of the Construction Manager/General Contractor project delivery method relative to project cost and time savings.

Existing law requires specified information provided to the department pursuant to these provisions to be verified under oath.

By expanding the authorization to use the CM/GC method, the bill would expand the scope of the crime of perjury, thus imposing a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Existing law authorizes the Department of Transportation to engage in a Construction Manager/General Contractor project delivery method (CM/GC method), as specified, for projects for the construction of a highway, bridge, or tunnel. Existing law authorizes the department to use the CM/GC method on up to 12 projects, 10 of which are required to have construction costs greater than $10,000,000. Existing law also authorizes the department to enter into a contract using this method on 12 additional projects, 2 of which are required to be authorized for projects in the County of Riverside, as prescribed.

Existing law requires the department, on at least 16 of the projects delivered by the department utilizing the CM/GC method, to use department employees or consultants under contract with the department to perform all project design and engineering services related to design required for the CM/GC method consistent with specified existing law. Existing law requires the department, on all projects delivered by the department, to use department employees or consultants under contract with the department to perform all construction inspection services required for the CM/GC method consistent with specified existing law. Existing law requires the department to include department resources necessary to perform those services in the departments capital outlay support program for workload purposes in the annual Budget Act. Existing law requires the department to prepare and submit certain related reports to the Legislature.

This bill would remove the cap on the number of projects for which the department is authorized to use the CM/GC method, eliminate the minimum construction costs limitation, and make conforming changes to existing provisions. The bill would impose the requirement to use department employees or consultants to perform project design and engineering services on at least²/₃ least ²/₃ of the projects delivered by the department utilizing the CM/GC method. The bill would require the department to submit a report to the Legislature by July 1, 2022, that includes, among other requirements, a comprehensive assessment on the effectiveness of the Construction Manager/General Contractor project delivery method relative to project cost and time savings for all projects approved under these provisions as of January 1, 2022.

Existing law requires specified information provided to the department pursuant to these provisions to be verified under oath.

By expanding the authorization to use the CM/GC method, the bill would expand the scope of the crime of perjury, thus imposing a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Existing law authorizes the Department of Transportation to engage in a Construction Manager/General Contractor project delivery method (CM/GC method), as specified, for projects for the construction of a highway, bridge, or tunnel. Existing law authorizes the department to use the CM/GC method on up to 12 projects, 10 of which are required to have construction costs greater than $10,000,000. Existing law also authorizes the department to enter into a contract using this method on 12 additional projects, 2 of which are required to be authorized for projects in the County of Riverside, as prescribed.

Existing law requires the department, on at least 16 of the projects delivered by the department utilizing the CM/GC method, to use department employees or consultants under contract with the department to perform all project design and engineering services related to design required for the CM/GC method consistent with specified existing law. Existing law requires the department, on all projects delivered by the department, to use department employees or consultants under contract with the department to perform all construction inspection services required for the CM/GC method consistent with specified existing law. Existing law requires the department to include department resources necessary to perform those services in the departments capital outlay support program for workload purposes in the annual Budget Act. Existing law requires the department to prepare and submit certain related reports to the Legislature.

This bill would remove the cap on the number of projects for which the department is authorized to use the CM/GC method, eliminate the minimum construction costs limitation, and make conforming changes to existing provisions. The bill would impose the requirement to use department employees or consultants to perform project design and engineering services on at least 2/3²/₃ of the projects delivered by the department utilizing the CM/GC method. The bill would delete the existing report requirements. require the department to submit a report to the Legislature by July 1, 2022, that includes, among other requirements, a comprehensive assessment on the effectiveness of the Construction Manager/General Contractor project delivery method relative to project cost and time savings for all projects approved under these provisions as of January 1, 2022.

Existing law requires specified information provided to the department pursuant to these provisions to be verified under oath.

By expanding the authorization to use the CM/GC method, the bill would expand the scope of the crime of perjury, thus imposing a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Existing law authorizes the Department of Transportation to engage in a Construction Manager/General Contractor project delivery method (CM/GC method), as specified, for projects for the construction of a highway, bridge, or tunnel. Existing law authorizes the department to use the CM/GC method on up to 12 projects, 10 of which are required to have construction costs greater than $10,000,000. Existing law also authorizes the department to enter into a contract using this method on 12 additional projects, 2 of which are required to be authorized for projects in the County of Riverside, as prescribed.

Existing law requires the department, on at least 16 of the projects delivered by the department utilizing the CM/GC method, to use department employees or consultants under contract with the department to perform all project design and engineering services related to design required for the CM/GC method consistent with specified existing law. Existing law requires the department, on all projects delivered by the department, to use department employees or consultants under contract with the department to perform all construction inspection services required for the CM/GC method consistent with specified existing law. Existing law requires the department to include department resources necessary to perform those services in the departments capital outlay support program for workload purposes in the annual Budget Act. Existing law requires the department to prepare and submit certain related reports to the Legislature.

This bill would remove the cap on the number of projects for which the department is authorized to use the CM/GC method, eliminate the minimum construction costs limitation, and make conforming changes to existing provisions. The bill would delete impose the requirements requirement to use department employees or consultants to perform specified services. project design and engineering services on at least 2/3 of the projects delivered by the department utilizing the CM/GC method. The bill would delete the existing report requirements.

Existing law requires specified information provided to the department pursuant to these provisions to be verified under oath.

By expanding the authorization to use the CM/GC method, the bill would expand the scope of the crime of perjury, thus imposing a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Existing law authorizes the Department of Transportation to engage in a Construction Manager/General Contractor project delivery method (CM/GC method), as specified, for projects for the construction of a highway, bridge, or tunnel. Existing law authorizes the department to use the CM/GC method on up to 12 projects, 10 of which are required to have construction costs greater than $10,000,000. Existing law also authorizes the department to enter into a contract using this method on 12 additional projects, 2 of which are required to be authorized for projects in the County of Riverside, as prescribed.

Existing law requires the department, on at least 16 of the projects delivered by the department utilizing the CM/GC method, to use department employees or consultants under contract with the department to perform all project design and engineering services related to design required for the CM/GC method consistent with specified existing law. Existing law requires the department, on all projects delivered by the department, to use department employees or consultants under contract with the department to perform all construction inspection services required for the CM/GC method consistent with specified existing law. Existing law requires the department to include department resources necessary to perform those services in the departments capital outlay support program for workload purposes in the annual Budget Act. Existing law requires the department to prepare and submit certain related reports to the Legislature.

This bill would remove the cap on the number of projects for which the department is authorized to use the CM/GC method, eliminate the minimum construction costs limitation, and make conforming changes to existing provisions. The bill would delete the requirements to use department employees or consultants to perform specified services. The bill would delete the existing report requirements.

Existing law requires specified information provided to the department pursuant to these provisions to be verified under oath.

By expanding the authorization to use the CM/GC method, the bill would expand the scope of the crime of perjury, thus imposing a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

 UNFINISHED BUSINESS  

Bill No: SB 1262

Author: Beall

:

Vote:

SENATE TRANS. & HOUSING COMMITTEE: 11-0, 4/24/18

AYES: Beall, Cannella, Allen, Dodd, Gaines, Galgiani, McGuire, Roth, Skinner, Vidak, Wiener

NO VOTE RECORDED: Morrell, Wieckowski

SENATE APPROPRIATIONS COMMITTEE: 6-0, 5/7/18

AYES: Lara, Bates, Beall, Bradford, Hill, Wiener

NO VOTE RECORDED: Nielsen

SENATE FLOOR: 38-0, 5/21/18

AYES: Allen, Anderson, Atkins, Bates, Beall, Berryhill, Bradford, Cannella, Dodd, Fuller, Gaines, Galgiani, Glazer, Hernandez, Hertzberg, Hill, Hueso, Jackson, Lara, Leyva, McGuire, Mitchell, Monning, Moorlach, Morrell, Newman, Nguyen, Nielsen, Pan, Portantino, Roth, Skinner, Stern, Stone, Vidak, Wieckowski, Wiener, Wilk

NO VOTE RECORDED: De León

ASSEMBLY FLOOR: 75-0, 8/23/18 (Consent) - See last page for vote

SUBJECT:

SOURCE: California Department of Transportation

DIGEST:

This bill makes various changes to Construction Manager/General Contractor (CM/GC) requirements administered by the California Department of Transportation (Caltrans) for state highway projects.

Assembly Amendments

add findings and declarations relative to the CM/GC project delivery method, changes reporting requirements to include an interim report to be completed by Caltrans, and establishes a cost threshold of $10 million for all CM/GC projects approved by Caltrans.

ANALYSIS:

Existing law:

1. Authorizes Caltrans to use CM/GC for highway, bridge, or tunnel projects as specified.
2. Authorizes Caltrans to use CM/GC on up to 24 projects with at least 10 of the 24 projects having a cost greater than $10 million.
3. Requires that on at least 16 of the 24 CM/GC projects, Caltrans must use department employees or consultants under contract with Caltrans to perform all project design and engineering services related to the project.
4. Requires all CM/GC projects administered by Caltrans to use department employees or consultants under contract with Caltrans to perform all construction inspection services, as specified.
5. Requires Caltrans to prepare and submit to the Legislature an annual report related to CM/GC project delivery.
6. Sets forth provisions governing the process for procuring CM/GC services and requires Caltrans and CM/GC applicants to follow specific requirements.

This bill:

1. Removes the cap on the number of CM/GC projects currently authorized in existing law.
2. Requires Caltrans to use department employees or consultants under contract with Caltrans to perform project design and engineering services on two-thirds of the CM/GC projects approved by Caltrans.
3. Requires Caltrans to submit an interim report to the Legislature no later January 1, 2021, and a final report by than July 1, 2025, that identifies all the approved CM/GC projects and provides an overall assessment of project cost and time savings.
4. Makes necessary conforming changes.

Comments

1. Purpose. According to the author, “Last year the Legislature took a pragmatic and common sense approach to invest in the state’s infrastructure needs through the Road Repair and Accountability Act of 2017 [Senate Bill (SB) 1 Beall]. As the State begins to deliver projects with SB 1 funds, it makes sense to utilize every available tool to cut costs and expedite completion of projects. Roads and bridges across the state are in disrepair because of a massive backlog on infrastructure projects estimated to be upwards of $130 billion. It is important that the state is granted maximum flexibility to achieve savings on some of California’s largest infrastructure projects. SB 1262 offers such flexibility to Caltrans, by granting the permanent authority to use the construction manager/general contractor (CM/GC) project delivery method which has been proven to save money and shorten project timelines, meaning taxpayer dollars can go further and Californians are able to utilize infrastructure repairs more quickly. Given the demonstrated efficiencies offered by the CM/GC approach, the Legislature would be well served in granting Caltrans expanded authority to utilize the CM/GC project delivery model. Conversely, particularly in light of the rising workload that the implementation of SB 1 will entail, failure to grant this authority would represent a failure of legislative stewardship of literally billions of dollars of taxpayer dollars over the course of the coming decade.”
2. Prior authorization. AB 2498 (Gordon, Chapter 752, Statutes of 2012) authorized Caltrans to use CM/GC on no more than six projects, at least five of which must have construction costs greater than $10 million. At that time, the author introduced AB 2498 to authorize Caltrans to use CM/GC to start evaluating the effectiveness of this emerging project-delivery method that combined the best of both design-bid-build and design-build. To date, all six authorized slots have been granted and the projects are moving forward to completion.

AB 2126 (Mullin, Chapter 750, Statutes of 2016) subsequently doubled the number of CM/GC projects Caltrans was authorized to carry out while preserving all the design, engineering, inspection, and reporting requirements established in AB 2498. Additionally, last year the Legislature passed and the Governor signed AB 115 (Committee on Budget, Chapter 20, Statues of 2017) which authorized Caltrans to execute an additional 12 CM/GC projects.

1. Current CM/GC Projects. According to Caltrans’ most recent Annual CM/GC Progress Report (July 2017), it noted that by the end of 2017, all the available CM/GC slots would be filled with candidate projects. The report further noted that nine projects are now moving forward through the project delivery phase with two having advanced through the completion of their initial construction contracts (Fresno 99 Realignment project and Ferguson Slide Restoration project). As a result, both projects were completed on time and under construction budget allocations. Furthermore, the report highlighted that Caltrans experienced reductions in the amount of unanticipated change orders for the two projects. There were several minor challenges associated with the projects related to administrative processes, however, nothing relative to actual project delivery.

The Federal Highway Administration identifies approximately 20 states that currently allow full or partial CM/GC authority for highway projects. With Caltrans’ report clearly indicating the demand for CM/GC eligible projects is evident and the potential for continued project cost and time savings, this bill provides the state with the opportunity to continue to lead the way in offering innovative cost-saving tools aimed to improve California’s transportation system.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

According to the Assembly Appropriations Committee:

1. Minor administrative costs for Caltrans to continue to use CM/GC contracting and prepare the required reports.
2. Potentially significant project savings, up to the millions of dollars annually, to the extent that CM/GC contracting reduces the overall cost of Caltrans projects. Actual savings will depend on the effectiveness of CM/GC contracting compared to alternatives and the total number of projects Caltrans procures with the CM/GC method.

SUPPORT: (Verified 8/23/18)

California Department of Transportation (source)

Associated General Contractors

Riverside Transportation Commission

San Bernardino Transportation Authority

OPPOSITION: (Verified 8/23/18)

None received

ASSEMBLY FLOOR: 75-0, 8/23/18

AYES: Acosta, Aguiar-Curry, Arambula, Baker, Berman, Bigelow, Bloom, Bonta, Brough, Burke, Caballero, Calderon, Carrillo, Cervantes, Chau, Chávez, Chen, Chiu, Choi, Chu, Cooley, Cooper, Dahle, Daly, Eggman, Flora, Fong, Frazier, Friedman, Gabriel, Gallagher, Cristina Garcia, Eduardo Garcia, Gipson, Gloria, Gonzalez Fletcher, Gray, Grayson, Harper, Holden, Irwin, Jones-Sawyer, Kalra, Kamlager-Dove, Kiley, Lackey, Levine, Limón, Maienschein, Mathis, Mayes, Medina, Melendez, Mullin, Muratsuchi, Nazarian, Obernolte, O'Donnell, Patterson, Quirk, Quirk-Silva, Reyes, Rivas, Rodriguez, Rubio, Salas, Santiago, Steinorth, Mark Stone, Ting, Voepel, Waldron, Weber, Wood, Rendon

NO VOTE RECORDED: Travis Allen, Cunningham, Low, McCarty, Thurmond

Prepared by:

8/23/18 17:21:02

**** END ****

Date of Hearing: August 15, 2018

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez Fletcher, Chair

SBPCA Bill Id:SB 1262

Author:(Beall) – As Amended Ver:August 6, 2018

Urgency: No State Mandated Local Program: Yes Reimbursable: No

SUMMARY:

This bill eliminates the restriction on the number of projects the California Department of Transportation (Caltrans) can procure through the construction manager/general contractor (CM/GC) procurement method for projects costing more than $10 million. This bill also requires Caltrans to report to the Legislature on the outcomes of using CM/GC by July 1, 2021, and July 1, 2025.

FISCAL EFFECT:

1. Minor administrative costs for Caltrans to continue to use CM/GC contracting and prepare the required reports.
2. Potentially significant project savings, up to the millions of dollars annually, to the extent that CM/GC contracting reduces the overall cost of Caltrans projects. Actual savings will depend on the effectiveness of CM/GC contracting compared to alternatives and the total number of projects Caltrans procures with the CM/GC method.

COMMENTS:

1. Background. In 2012, AB 2498 (Gordon), Chapter 752, Statutes of 2012, authorized Caltrans to implement a pilot program providing Caltrans the use of CM/GC to procure construction contractors for six projects, at least five of which had construction costs greater than $10 million. Based on Caltrans’ reports of success, the Legislature passed and Governor Brown signed into law AB 2126 (Mullin), Chapter 750, Statutes of 2016, subsequently doubling the number of CM/GC projects Caltrans was authorized to carry out. Additionally, last year the Legislature passed and the governor signed AB 115 (Committee on Budget), Chapter 20, Statues of 2017, which authorized Caltrans to procure an additional 12 projects using CM/GC.
2. Purpose. Based on the reported success of using CM/GC for some projects and the potential for significant project cost savings, Caltrans is sponsoring this bill to make CM/GC authority permanent.

Analysis Prepared by: Jessica Peters / APPR. / (916) 319-2081

Date of Hearing: June 25, 2018

ASSEMBLY COMMITTEE ON TRANSPORTATION

Jim Frazier, Chair

SBPCA Bill Id:SB 1262

Author:(Beall) – As Amended Ver:June 21, 2018

SENATE VOTE: 38-0

SUBJECT: Construction Manager/General Contractor project delivery method: Department of Transportation

SUMMARY: Eliminates the restriction on the number of projects the California Department of Transportation (Caltrans) can procure through the construction manager/general contractor procurement method (CM/GC). Specifically, this bill:

1. Transitions Caltrans from conducting a pilot program testing the utilization of CM/GC through a limited number of projects to fully authorizing Caltrans to utilize CM/GC whenever it determines its use to be appropriate.
2. Requires Caltrans to use its employees or consultants under contract with Caltrans to perform all project design and engineering services for at least two-thirds of the projects with which it procures using CM/GC.
3. Recasts Caltrans reporting requirements related to its use of CM/GC to reflect the ongoing nature of the new authority.

EXISTING LAW:

1. Authorizes Caltrans to use CM/GC to procure contractors for construction of up to 24 projects with at least 10 of the 24 projects having a cost greater than $10 million.
2. Requires Caltrans to use its employees or consultants under contract with Caltrans to perform all project design and engineering services for at least 16 of the 24 projects with which it procures using CM/GC.
3. Requires all CM/GC projects administered by Caltrans to use its employees or consultants under contract with Caltrans to perform all construction inspection services, as specified.
4. Requires Caltrans to prepare and submit to the Legislature an annual report related to Caltrans’ experience in utilizing CM/GC.
5. Sets forth provisions governing the process for procuring CM/GC services and requires Caltrans and CM/GC applicants to follow specific requirements.

FISCAL EFFECT: Unknown

COMMENTS: For decades, the traditional process for procuring contracts for the construction of public works projects has been the design-bid-build process. This process relies on the public entity (like Caltrans): 1) preparing, or causing to be prepared, a package of complete project design specifications and estimates; 2) putting the complete package out to bid for construction; and 3) awarding the construction contract to the lowest responsible bidder. The design-bid-build process was developed to protect taxpayers from extravagance, corruption, and other improper practices by public officials as well as to secure a fair and reasonable price for public works construction by injecting competition amongst bidders into the process.

Although design-bid-build generally results in the lowest cost construction contract, it is not without its drawbacks, including:

1. Projects generally take longer to complete because designs must be entirely completed, permits obtained, and right-of-way acquired before the construction contract can be awarded.
2. Designs prepared for a competitive low-bid procurement are developed to allow for a broad range of construction approaches. As a result, low-bid designs do not always equate to the most efficient designs possible, depending on a particular contractor's strengths or capabilities.
3. Because the project designer does not have the benefit of consulting with the entity that will ultimately be responsible for construction of the project, there may be significant issues that the designer does not anticipate, particularly issues related to the challenges of construction. This can result in change orders that ultimately drive up the price of the contract.
4. Low-bid is not always the least expensive option, once change orders and contractor claims are factored into the overall project costs.

In 2012, AB 2498 (Gordon), Chapter 752, Statutes of 2012, authorized Caltrans to implement a pilot program providing Caltrans the use of CM/GC to procure construction contractors for no more than six projects, at least five of which with construction costs greater than $10 million. CM/GC was, at the time, an emerging project delivery method that allowed Caltrans to engage a design and construction management consultant (or construction manager) to act as its consultant during the pre-construction phase and also as the general contractor during construction. During the design phase, the construction manager acts in an advisory role, providing constructability reviews, value engineering suggestions, construction estimates, and other construction-related recommendations. Later, Caltrans and the construction manager can agree that the project design has progressed to a sufficient enough point that construction may begin. The two parties then work out mutually agreeable terms and conditions for the construction contract, and, if all goes well, the construction manager becomes the general contractor and construction on the project commences, often before design is entirely complete.

The CM/GC process provides continuity and collaboration between the design and construction phases of the project. Construction managers have an incentive to provide input during the design phase that will enhance ease of construction later because they know that they will have the opportunity to become the general contractor for the project. Furthermore, CM/GC promises to save project delivery time, provide earlier cost certainty, and transfer risks from Caltrans to the contractor. Additionally, CM/GC allows Caltrans to design the project to compliment the CM/GC's strengths and capabilities, thereby avoiding the need to over-design the project to provide maximum competitiveness in a low-bid procurement.

Studies suggest that there are potential drawbacks of using CM/GC contracts, however. According to guidance published by the City of Seattle, for example, utilization of CM/GC does carry risks, including:

1. The contracts are often difficult and complex.
2. The procurement process takes longer and consumes greater project staff time than traditional design-bid-build contracts.
3. Project teams face steep learning curves.
4. Successful construction cost negotiations require experienced staff.

Other literature on the use of CM/GC contracts is generally consistent with Seattle's guidance regarding concerns for associated risks and cautions that CM/GC is not appropriate for every project. However, the same literature suggests that, if carefully implemented, CM/GC has the potential to significantly improve project delivery.

Following implementation of AB 2498, Caltrans reported to the Legislature significant initial success in utilizing CM/GC for the limited number of projects it was authorized to use. In light of that reported success, the Legislature passed and Governor Brown signed into law AB 2126 (Mullin), Chapter 750, Statutes of 2016, subsequently doubling the number of CM/GC projects Caltrans was authorized to carry out while preserving all the design, engineering, inspection, and reporting requirements established in AB 2498. Additionally, last year the Legislature passed and the Governor signed AB 115 (Committee on Budget), Chapter 20, Statues of 2017, which authorized Caltrans to execute an additional 12 CM/GC projects.

According to the author, “Last year the Legislature took a pragmatic and common sense approach to invest in the state’s infrastructure needs through the Road Repair and Accountability Act of 2017 [SB 1 (Beall), Chapter 5, Statutes of 2017]. As the State begins to deliver projects with SB 1 funds, it makes sense to utilize every available tool to cut costs and expedite completion of projects. Roads and bridges across the state are in disrepair because of a massive backlog on infrastructure projects estimated to be upwards of $130 billion. It is important that the state is granted maximum flexibility to achieve savings on some of California’s largest infrastructure projects. SB 1262 offers such flexibility to Caltrans, by granting the permanent authority to use CM/GC which has been proven to save money and shorten project timelines, meaning taxpayer dollars can go further and Californians are able to utilize infrastructure repairs more quickly. Given the demonstrated efficiencies offered by the CM/GC approach, the Legislature would be well served in granting Caltrans expanded authority to utilize the CM/GC project delivery model. Conversely, particularly in light of the rising workload that the implementation of SB 1 will entail, failure to grant this authority would represent a failure of legislative stewardship of literally billions of dollars of taxpayer dollars over the course of the coming decade.”

Committee Comment: Caltrans anticipates that it will realize substantial savings through the use of CM/GC on construction projects. Since no projects have been completed, however, Caltrans has not formally reported on the differences between initial cost estimates and actual costs, estimated and actual dates of completion, the reason for any differences, and the number and dollar value of any change orders for all projects completed using CM/GC. Absent this data, the Legislature has not been informed about whether CM/GC results in lower costs and accelerated project delivery compared to the design-bid-build method. The Committee may wish to consider whether it is prudent to provide unlimited CM/GC authority until the Legislature has adequate data to effectively evaluate the pilot program.

Previous Legislation: AB 115 (Committee on Budget), Chapter 20, Statues of 2017, expands Caltrans authority to utilize CM/GC from 12 to up to 24 projects.

AB 2126 (Mullin), Chapter 750, Statutes of 2016, expanded Caltrans authority to utilize CM/GC from 6 to up to 12 projects.

AB 2498 (Gordon), Chapter 752, Statutes of 2012, authorized Caltrans to implement a pilot program to utilize CM/GC for up to 6 projects.

REGISTERED SUPPORT / OPPOSITION:

Support

California Department of Transportation (Sponsor)

AAA Northern California, Nevada& Utah

Automobile Club of Southern California

San Bernardino County Transportation Authority

Opposition

None on file

Analysis Prepared by: Eric Thronson / TRANS. / (916) 319-2093

 THIRD READING  

Bill No: SB 1262

Author:

:

Vote:

SENATE TRANS. & HOUSING COMMITTEE: 11-0, 4/24/18

AYES: Beall, Cannella, Allen, Dodd, Gaines, Galgiani, McGuire, Roth, Skinner, Vidak, Wiener

NO VOTE RECORDED: Morrell, Wieckowski

SENATE APPROPRIATIONS COMMITTEE: 6-0, 5/7/18

AYES: Lara, Bates, Beall, Bradford, Hill, Wiener

NO VOTE RECORDED: Nielsen

SUBJECT:

SOURCE: California Department of Transportation

DIGEST:

This bill makes various changes to Construction Manager/General Contractor (CM/GC) requirements administered by the California Department of Transportation (Caltrans) for state highway projects.

ANALYSIS:

Existing law:

1. Authorizes Caltrans to use CM/GC for highway, bridge, or tunnel projects as specified.
2. Authorizes Caltrans to use CM/GC on up to 24 projects with at least 10 of the 24 projects having a cost greater than $10 million.
3. Requires that on at least 16 of the 24 CM/GC projects, Caltrans must use department employees or consultants under contract with Caltrans to perform

all project design and engineering services related to the project.

1. Requires all CM/GC projects administered by Caltrans to use department employees or consultants under contract with Caltrans to perform all construction inspection services, as specified.
2. Requires Caltrans to prepare and submit to the Legislature an annual report related to CM/GC project delivery.
3. Sets forth provisions governing the process for procuring CM/GC services and requires Caltrans and CM/GC applicants to follow specific requirements.

This bill:

1. Removes the cap on the number of CM/GC projects currently authorized in existing law.
2. Eliminates, further, the abovementioned project cost threshold requirements for CM/GC projects.
3. Requires Caltrans to use department employees or consultants under contract with Caltrans to perform project design and engineering services on two-thirds of the CM/GC projects approved by Caltrans.
4. Requires Caltrans to submit a report to the Legislature no later than July 1, 2022, that identifies all the approved CM/GC projects and provides an overall assessment of project cost and time savings.
5. Makes necessary conforming changes.

Background

Traditionally, state and local entities develop and construct transportation projects with a process known as the design-bid-build (DBB) delivery method. This method requires the public agency to fully design a project and then ask general contractors to bid on the construction contract based on the agency’s design. For decades, state and local agencies have used the DBB procurement method for transportation projects.

DBB reduces the risk for the construction contractor because the state or local agency has a completed design, procured right-of-way, and achieved environmental clearance before letting the contract. Under DBB, the project designer (whether consultants or employees of a public entity) has sole ownership of the project design and does not have the benefit of consultation with the contractor that will ultimately be responsible for construction of the project. Thus, there may be significant construction issues that the designer does not anticipate which can result in change orders later in the process. This can drive up the project cost and shift all the risk to the agency commissioning the project. Moreover, because all design, permits, right-of-way acquisition, etc., must occur prior to contract award under DBB, the opportunity to save time by fast-tracking certain elements of a project while work continues on other elements is lost.

The CM/GC project-delivery method, on the other hand, allows an agency to engage a construction manager during the design process to provide assistance to the design team, which can ultimately lead to a more constructible project. When the design is nearly complete, the agency and the construction manager negotiate a guaranteed maximum price for the construction of the project based on the defined scope and schedule. If this price is acceptable to both parties, they execute a contract for construction services, and the construction manager becomes the general contractor. Studies have suggested CM/GC often leads to less costly or more expediently delivered projects because of the construction manager’s involvement in the design process.

The CM/GC process is meant to provide continuity and collaboration between the design and construction phases of the project. Construction managers have an incentive to provide input during the design phase that will enhance constructability of the project later, because they know that they will have the opportunity to become the general contractor for the project. Furthermore, CM/GC promises to save project delivery time, provide earlier cost certainty, transfer some risks from the public agency to the contractor, and ensure project constructability. Finally, CM/GC allows each agency to design the project to complement the general contractor’s strengths and capabilities, thereby providing maximum competitiveness in a low-bid procurement.

Comments

1. Purpose. According to the author, “Last year the Legislature took a pragmatic and common sense approach to invest in the state’s infrastructure needs through the Road Repair and Accountability Act of 2017 [Senate Bill (SB) 1 Beall]. As the State begins to deliver projects with SB 1 funds, it makes sense to utilize every available tool to cut costs and expedite completion of projects. Roads and bridges across the state are in disrepair because of a massive backlog on infrastructure projects estimated to be upwards of $130 billion. It is important that the state is granted maximum flexibility to achieve savings on some of California’s largest infrastructure projects. SB 1262 offers such flexibility to Caltrans, by granting the permanent authority to use the construction manager/general contractor (CM/GC) project delivery method which has been proven to save money and shorten project timelines, meaning taxpayer dollars can go further and Californians are able to utilize infrastructure repairs more quickly. Given the demonstrated efficiencies offered by the CM/GC approach, the Legislature would be well served in granting Caltrans expanded authority to utilize the CM/GC project delivery model. Conversely, particularly in light of the rising workload that the implementation of SB 1 will entail, failure to grant this authority would represent a failure of legislative stewardship of literally billions of dollars of taxpayer dollars over the course of the coming decade.”
2. Prior authorization. AB 2498 (Gordon, Chapter 752, Statutes of 2012) authorized Caltrans to use CM/GC on no more than six projects, at least five of which must have construction costs greater than $10 million. At that time, the author introduced AB 2498 to authorize Caltrans to use CM/GC to start evaluating the effectiveness of this emerging project-delivery method that combined the best of both design-bid-build and design-build. To date, all six authorized slots have been granted and the projects are moving forward to completion.

AB 2126 (Mullin, Chapter 750, Statutes of 2016) subsequently doubled the number of CM/GC projects that Caltrans was authorized to carry out while preserving all the design, engineering, inspection, and reporting requirements established in AB 2498. Additionally, last year, the Legislature passed and the Governor signed AB 115 (Committee on Budget, Chapter 20, Statutes of 2017) which authorized Caltrans to execute an additional 12 CM/GC projects.

1. Current CM/GC Projects. According to Caltrans’ most recent Annual CM/GC Progress Report (July 2017), it noted that by the end of 2017, all the available CM/GC slots would be filled with candidate projects. The report further noted that nine projects are now moving forward through the project delivery phase with two having advanced through the completion of their initial construction contracts (Fresno 99 Realignment project and Ferguson Slide Restoration project). As a result, both projects were completed on time and under construction budget allocations. Furthermore, the report highlighted that Caltrans experienced reductions in the amount of unanticipated change orders for the two projects. There were several minor challenges associated with the projects related to administrative processes, however, nothing relative to actual project delivery.

The Federal Highway administration identifies approximately 20 states that currently allow full or partial CM/GC authority for highway projects. With Caltrans’ report clearly indicating the demand for CM/GC eligible projects is evident and the potential for continued project cost and time savings, this bill provides the state with the opportunity to continue to lead the way in offering innovative cost-saving tools aimed to improve California’s transportation system.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

According to the Senate Appropriations Committee:

“Unknown project costs or savings related to Caltrans’ expanded authority to use an alternative project delivery method (State Highway Account, Road Maintenance and Rehabilitation Account, and federal funds). Caltrans anticipates significant long term savings, based on the experience of other states, local entities, and early feedback related to the current CMGC authority. Staff notes, however, that currently authorized CMGC projects have not been fully completed or evaluated for cost efficiency.

“In addition, since a contract for preconstruction and construction services for CMGC is a negotiated process with the most qualified construction manager, rather than a traditional “lowest responsible bidder” process, it is difficult to determine whether the negotiated price would be lower or higher than project delivery costs through a traditional design-bid-build process. It is expected that use of the CMGC method minimizes change orders, which is currently a significant factor in unexpected cost escalation on Caltrans projects.”

SUPPORT: (Verified 5/9/18)

California Department of Transportation (source)

AAA Northern California, Nevada, and Utah

Automobile Club of Southern California

San Bernardino County Transportation Authority

OPPOSITION: (Verified 5/9/18)

None received

Prepared by:

5/9/18 13:23:49

**** END ****

SENATE COMMITTEE ON

Senator Ricardo Lara, Chair

2017 - 2018 Regular Session

SB 1262 (Newman) - Construction Manager/General Contractor project delivery method: Department of Transportation

This bill may meet the criteria for referral to the Suspense File.

Bill Summary:

SB 1262 would expand the authority for the Department of Transportation (Caltrans) to use the Construction Manager/General Contractor (CMGC) procurement method. Specifically, the bill would eliminate the cap on the number of projects that may be constructed using CMGC, and the requirement that ten of the CMGC have a construction cost of over $10 million, as specified.

Fiscal Impact:

Unknown project costs or savings related to Caltrans’ expanded authority to use an alternative project delivery method (State Highway Account, Road Maintenance and Rehabilitation Account, and federal funds). Caltrans anticipates significant long term savings, based on the experience of other states, local entities, and early feedback related to the current CMGC authority. Staff notes, however, that currently authorized CMGC projects have not been fully completed or evaluated for cost efficiency. (see staff comments)

In addition, since a contract for preconstruction and construction services for CMGC is a negotiated process with the most qualified construction manager, rather than a traditional “lowest responsible bidder” process, it is difficult to determine whether the negotiated price would be lower or higher than project delivery costs through a traditional design-bid-build process. It is expected that use of the CMGC method minimizes change orders, which is currently a significant factor in unexpected cost escalation on Caltrans projects.

Background:

The traditional project delivery process is the design-bid-build method, whereby complete plans and specifications are prepared prior to the advertising, bidding, and awarding of any construction contracts. The agency awards the contract to the lowest responsible bidder. Although this method is structured to ensure a project is built for the lowest cost, oftentimes project costs escalate dramatically as change orders are necessary to address unforeseen problems encountered during the construction phase. In addition, the bulk of project risk remains with the sponsoring agency.

In recent years, public agencies have adopted alternative project delivery methods, including design-build, design-sequencing, and CMGC. The principle reasons for using alternate methods are to shift construction risk from the agency/owner to the project contractor, minimize change order and cost escalation, and to expedite project completion.

The CMGC project delivery method allows an agency to engage a construction manager during the design process to provide assistance to the design team, including advice regarding scheduling, pricing, phasing, and other input that helps the owner design a more constructible project. The agency selects the construction manager on the basis of qualifications, past experience, or a best-value basis. According to the Federal Highway Administration, when design reaches approximately 60 to 90 percent completion, the agency and the construction manager negotiate a guaranteed maximum price for the construction of the project based on the defined scope and schedule. If this price is acceptable to both parties, a contract is executed for construction services, and the construction manager becomes the general contractor. The benefits of this procurement method are that the public agency does not sacrifice control over the design of the project and the contractor is familiar with the project design during the construction phase, resulting in fewer change orders and disputes over design issues.

Existing law authorizes Caltrans to use the CMGC method on no more than 24 projects, 10 of which must have construction costs of over $10 million. On at least 16 of the projects, Caltrans must use Caltrans employees or consultants under contract with the department for project design and engineering services. In addition, Caltrans must use its own employees or consultants to perform all construction inspection services. The existing CMGC authorization requires annual reports that provide data on the stage of completion, the district, costs, description, status, and estimated time to completion. Once projects are completed, the annual reports must also include information on the differences between initial cost estimates and actual costs, estimated and actual dates of completion, the reason for any differences, and the number and dollar value of any change orders for all projects completed using CMGC. Caltrans has identified candidate projects for all of the project slots authorized in current law.

Proposed Law:

SB 1262 would authorize Caltrans to use the CMGC procurement method for any project, without restrictions on project costs. Specifically, this bill would:

• Remove the cap on the number of CMGC projects currently authorized in existing law, and eliminate the requirement that ten projects have a construction cost that is greater than $10 million.
• Require Caltrans to use department employees or consultants under contract with Caltrans to perform project design and engineering services on two-thirds of the CMGC projects delivered by Caltrans.
• Delete a requirement that Caltrans submit annual status reports for ongoing CMGC projects, as well as a requirement that Caltrans submit a report to the Legislature after any projects are completed that provides information on the differences between initial cost estimates and actual costs, estimated and actual dates of completion, the reason for any differences, and the number and dollar value of any change orders for all projects completed using CMGC.
• Require Caltrans to instead submit a single report to the Legislature no later than July 1, 2022 that identifies all the approved CMGC projects and provides a comprehensive assessment of the effectiveness of the GMGC project delivery method relative to project cost and time savings.

Related Legislation:

AB 2498 (Gordon), Chap. 752/2012, authorized Caltrans to use CMGC on up to six projects, five of which must have costs of at least $10 million.

AB 2126 (Mullin), Chap. 750/2016, expanded the number of projects that may be constructed using CMGC from six to12, and required 10 of the 12 projects to have costs of at least $10 million, as specified.

AB 115 (Committee on Budget), Chap. 20/2017, authorized Caltrans to use CMGC for an additional 12 projects, in recognition of the additional transportation funds made available by the Road Repair and Accountability Act of 2017, and to accelerate delivery of projects funded by that measure.

Staff Comments:

The Legislature has generally taken a measured approach to authorizing the use of new project delivery methods. This usually involves some limited authorization initially, either through a fixed number of projects or period of time, which provides the opportunity for evaluation through data collection and analysis. Caltrans has identified project candidates for all of the project slots authorized in current law. The most recent CMGC report indicates that Caltrans has selected nine projects and construction managers for six projects, with estimated costs ranging from $52 million to $606 million, and estimated completion dates from March 2018 through the Summer of 2024. As of the report issuance, contracts had been awarded for parts of four of the projects and are under construction, while the others are in the preconstruction or environmental phase.

Four construction packages have been completed on three projects to date (related to the San Francisco/Oakland Bay Bridge Foundation Removal, SR 99 Realignment, and Ferguson Slide Restoration). Based on the completion of these initial construction contracts, Caltrans reports that the contracts were completed on time and under the construction budget allocations. The report also notes that Caltrans experienced reductions in unanticipated change orders and there have been no claims to date on these projects.

Caltrans anticipates it will realize substantial savings through the use of CMGC on construction projects. Since no projects have been completed, however, Caltrans has not formally reported on the differences between initial cost estimates and actual costs, estimated and actual dates of completion, the reason for any differences, and the number and dollar value of any change orders for all projects completed using CMGC. Absent this data, the Legislature has not been informed about whether total projects costs will be higher or lower than estimated costs, whether CMGC results in accelerated project delivery, or whether CMGC project delivery costs would be lower than project costs under the design-bid-build method. The Committee may wish to consider whether it is prudent to provide unlimited CMGC authority until the Legislature has adequate data to effectively evaluate the pilot program.

-- END --

SENATE COMMITTEE ON TRANSPORTATION AND HOUSING

Senator Jim Beall, Chair

2017 - 2018 Regular

Bill No: Hearing Date: 4/24/2018

SUBJECT:

DIGEST: This bill makes various changes to Construction Manager/General Contractor (CM/GC) requirements administered by the State Department of Transportation (Caltrans) for state highway projects.

ANALYSIS:

Traditionally, state and local entities develop and construct transportation projects with a process known as the design-bid-build (DBB) delivery method. This method requires the public agency to fully design a project and then ask general contractors to bid on the construction contract based on the agency’s design. For decades, state and local agencies have used the DBB procurement method for transportation projects.

DBB reduces the risk for the construction contractor because the state or local agency has a completed design, procured right-of-way, and achieved environmental clearance before letting the contract. Under DBB, the project designer (whether consultants or employees of a public entity) has sole ownership of the project design and does not have the benefit of consultation with the contractor that will ultimately be responsible for construction of the project. Thus, there may be significant construction issues that the designer does not anticipate which can result in change orders later in the process. This can drive up the project cost and shift all the risk to the agency commissioning the project. Moreover, because all design, permits, right-of-way acquisition, etc., must occur prior to contract award under DBB, the opportunity to save time by fast-tracking certain elements of a project while work continues on other elements is lost.

The CM/GC project-delivery method, on the other hand, allows an agency to engage a construction manager during the design process to provide assistance to the design team, which can ultimately lead to a more constructible project. When the design is nearly complete, the agency and the construction manager negotiate a guaranteed maximum price for the construction of the project based on the defined scope and schedule. If this price is acceptable to both parties, they execute a contract for construction services, and the construction manager becomes the general contractor. Studies have suggested CM/GC often leads to less costly or more expediently delivered projects because of the construction manager’s involvement in the design process.

The CM/GC process is meant to provide continuity and collaboration between the design and construction phases of the project. Construction managers have an incentive to provide input during the design phase that will enhance constructability of the project later, because they know that they will have the opportunity to become the general contractor for the project. Furthermore, CM/GC promises to save project delivery time, provide earlier cost certainty, transfer some risks from the public agency to the contractor, and ensure project constructability. Finally, CM/GC allows each agency to design the project to complement the general contractor’s strengths and capabilities, thereby providing maximum competitiveness in a low-bid procurement.

Existing law:

1. Authorizes Caltrans to use CM/GC for highway, bridge, or tunnel projects as specified.
2. Authorizes Caltrans to use CM/GC on up to 24 projects with at least 10 of the 24 projects having a cost greater than $10 million.
3. Requires that on at least 16 of the 24 CM/GC projects, Caltrans must use department employees or consultants under contract with Caltrans to perform all project design and engineering services related to the project.
4. Requires all CM/GC projects administered by Caltrans to use department employees or consultants under contract with Caltrans to perform all construction inspection services, as specified.
5. Requires Caltrans to prepare and submit to the Legislature an annual report related to CM/GC project delivery.
6. Sets forth provisions governing the process for procuring CM/GC services and requires Caltrans and CM/GC applicants to follow specific requirements.

This bill:

1. Removes the cap on the number of CM/GC projects currently authorized in existing law.
2. Further eliminates the abovementioned project cost threshold requirements for CM/GC projects.
3. Requires Caltrans to use department employees or consultants under contract with Caltrans to perform project design and engineering services on two-thirds of the CM/GC projects approved by Caltrans.
4. Requires Caltrans to submit a report to the Legislature no later than July 1, 2022 that identifies all the approved CM/GC projects and provides an overall assessment of project cost and time savings.
5. Makes necessary conforming changes.

COMMENTS

1. Purpose. According to the author, “Last year the Legislature took a pragmatic and common sense approach to invest in the state’s infrastructure needs through the Road Repair and Accountability Act of 2017 [Senate Bill (SB) 1 Beall]. As the State begins to deliver projects with SB 1 funds, it makes sense to utilize every available tool to cut costs and expedite completion of projects. Roads and bridges across the state are in disrepair because of a massive backlog on infrastructure projects estimated to be upwards of $130 billion. It is important that the state is granted maximum flexibility to achieve savings on some of California’s largest infrastructure projects. SB 1262 offers such flexibility to Caltrans, by granting the permanent authority to use the construction manager/general contractor (CM/GC) project delivery method which has been proven to save money and shorten project timelines, meaning taxpayer dollars can go further and Californians are able to utilize infrastructure repairs more quickly. Given the demonstrated efficiencies offered by the CM/GC approach, the Legislature would be well served in granting Caltrans expanded authority to utilize the CM/GC project delivery model. Conversely, particularly in light of the rising workload that the implementation of SB 1 will entail, failure to grant this authority would represent a failure of legislative stewardship of literally billions of dollars of taxpayer dollars over the course of the coming decade.”
2. Prior authorization. AB 2498 (Gordon, Chapter 752, Statutes of 2012) authorized Caltrans to use CM/GC on no more than six projects, at least five of which must have construction costs greater than $10 million. At that time, the author introduced AB 2498 to authorize Caltrans to use CM/GC to start evaluating the effectiveness of this emerging project-delivery method that combined the best of both design-bid-build and design-build. To date, all six authorized slots have been granted and the projects are moving forward to completion.

AB 2126 (Mullin, Chapter 750, Statutes of 2016) subsequently doubled the number of CM/GC projects Caltrans was authorized to carry out while preserving all the design, engineering, inspection, and reporting requirements established in AB 2498. Additionally, last year the Legislature passed and the Governor signed AB 115 (Committee on Budget, Chapter 20, Statues of 2017) which authorized Caltrans to execute an additional 12 CM/GC projects.

1. Current CM/GC Projects. According to Caltrans’ most recent Annual CM/GC Progress Report (July 2017), it noted that by the end of 2017, all the available CM/GC slots would be filled with candidate projects. The report further noted that nine projects are now moving forward through the project delivery phase with two having advanced through the completion of their initial construction contracts (Fresno 99 Realignment project and Ferguson Slide Restoration project). As a result, both projects were completed on time and under construction budget allocations. Furthermore, the report highlighted that Caltrans experienced reductions in the amount of unanticipated change orders for the two projects. There were several minor challenges associated with the projects related to administrative processes, however, nothing relative to actual project delivery.

The Federal Highway administration identifies approximately 20 states that currently allow full or partial CM/GC authority for highway projects. With Caltrans’ report clearly indicating the demand for CM/GC eligible projects is evident and the potential for continued project cost and time savings, this bill provides the state with the opportunity to continue to lead the way in offering innovative cost-saving tools aimed to improve California’s transportation system.

Related Legislation:

AB 115 (Committee on Budget, Chapter 20, Statues of 2017) — authorized Caltrans to execute an additional 12 CM/GC projects, as specified.

AB 2126 (Mullin, Chapter 750, Statutes of 2016) — authorized six more CM/GC projects for Caltrans with similar provisions as specified in AB 2498 (see below).

AB 2498 (Gordon, Chapter 752, Statutes of 2012) — authorized Caltrans to use CM/GC on no more than six projects, at least five of which must have construction costs greater than $10 million, as specified.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: Yes

POSITIONS: (Communicated to the committee before noon on Wednesday,

April 18, 2017.)

SUPPORT:

Caltrans (sponsor)

AAA Northern California, Nevada, and Utah

Automobile Club of Southern California

San Bernardino County Transportation Authority

OPPOSITION:

None received.

-- END --