Okay, it's nine o'clock, so we do have a quorum, so we're called to order the Public Utilities
Board for the City of Denton for Monday, September 23rd, 2024.
The first item is presentations from members of the public.
I take it no one signed up, Cassie?
No?
All right.
We'll move on to the consent agenda.
Does any board member wish to pull either item A or B?
Okay, seeing none, do we have a motion to approve items A and B?
Second.
Okay, Mr. Reiner's moved, Mr. Taylor seconded.
All in favor say aye.
Aye.
Opposed?
Carries.
The next item is consideration of the approval of the September 9th, 2024 minutes.
Were there any changes and corrections?
Do we have a motion to approve?
Second.
Mr. Pluck moves.
Do we have a second?
Yes.
Mr. Nukwist, all in favor say aye.
Aye.
Opposed?
Carries.
Approval of the August 26th, I'm hoping everybody was able to read them this time, since last
time we were not.
Approval.
Thank you.
All right.
Mr. Taylor, Mr. Reiner, all in favor say aye.
Aye.
Carries.
Receive a report and hold a discussion, give staff direction regarding the 2025 meeting
schedule.
I see we're changing one month from the different normal second and fourth.
It's two months, right?
Two months.
Are there any issues with the approval of the schedule?
All right.
Do we have a motion to approve?
No.
Mr. Nukwist, do we have a second?
Second.
Okay.
Devin Taylor seconds.
All in favor say aye.
Aye.
Opposed?
Carries.
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Aye.
Carries.
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So we just wanted to provide some information on construction manager at risk so we've been using this alternative delivery method quite a bit on the capital project side predominantly on vertical construction so buildings some treatment plant work but over the last couple years we've also got into
Seymour on the horizontal side so typically you'll see it in other cities on large arterials or major drainage projects that require extensive coordination then was one of the first to do it with residential street rehab packages so large volumes of residential
street rehab utilizing the CM at risk methodology.
So just briefly what we're going to cover today. So first we're going to go through what's a Seymour and some best practices on when to use Seymour because obviously every project is not a great fit.
We're going to go through the Seymour selection process so the actual steps that capital projects takes to bring on a Seymour and get to a successful contract.
We're going to look at what a Seymour does during pre-construction those key critical roles and then what they do in construction and then again we'll have time for questions. If you have any specific questions please feel free to ask as I work through the presentation as well.
So what and why is a Seymour so Seymour is a construction manager who's hired to oversee the project from design to close out so essentially they're acting as a consultant to the owner in pre-construction, providing some very valuable services that we're going to cover here on a slide just in a second.
Again our current contracts are set up in a two step process so when we come to you guys for the first contract that's for pre-construction services, then we get to a guaranteed maximum price and we bring forward the second contract, which is for the construction phase services.
Key things for why we choose Seymour. Collaboration. A lot of these projects that we're doing requires extensive coordination, planning, and I tell my team all the time, if you have a cost estimator that could get within 5% of cost during COVID, pay them all the money in the world because inflation escalation was nuts and trying to keep up with actual costs was very challenging.
Risk management. Identify project risks, allocate risks where it costs the least to effectively manage it, and hold the risk where it's quantifiable. So a lot of times, governmental entities will push all the risk in the contract to the contractor.
That drives up cost, that can add time, that can add uncertainty. One thing that Seymour at Risk allows us to do is talk about those risk factors and be able to assign a dollar value, and more importantly, assign who's going to manage that risk.
Does it make sense for the owner to hold it and keep the money on this side, or does it make sense for the contractor to take on that risk?
Again, a lot of different factors that in a traditional design, bid, build methodology, you wouldn't necessarily be able to have those conversations with the contractor. And then again, yes, sir.
The construction manager, is this an in-house or is this someone from outside? So this is a third party. So it's similar to a general contractor. Again, on some forms of it, we see them with the capabilities to self-perform work.
But ultimately, you want to hire a builder. You want to hire somebody that knows how to construct the project that you're doing, because again, once we get in those pre-construction processes, that's where you provide value, is knowing and having somebody who can construct the project.
You don't see a lot of design consultants being seen at risks or getting away from that. Again, if you do that, that kind of gets more into a design, build realm, or you can go the traditional design, bid, build, because you're going to get that same collaboration from the architect side.
And really what we're looking for is that construction input, that valuable construction input.
So with that in mind, especially when you think of architect and such, is this construction manager paid by a percentage of whatever the entire project, or is it an hourly rate, or are you going to get there and I'm ahead of the game?
You're one slide ahead of me. I'm just about to get there.
I saw cost and I immediately went at it.
No, absolutely.
I will wait for that.
Perfect. So the last thing is cost certainty. So as we work through any CM at risk, we have open book cost modeling and estimating that's happening. So we're getting accurate pricing for what that guaranteed maximum price is going to be as we work through the design process.
So you may think, how's that possible at 30% design? Our pre-construction contract reads that when we get a cost estimate, it is for the fully functional facility. So that's where we want that builder mindset of, hey, we may not have everything designed out.
We may not have the full electrical, just the schematic, but they need to be a good enough builder to understand this is what's missing in the white spaces and be able to provide us this is where you're trending cost-wise to get to that GMP.
Yes, sir.
I've seen the password general contractors have kind of switched their business more to a construction manager type model. But yet they're still a general contractor in a way. I think it's for legal reasons. They tend to kind of change the way it looks. Is this construction manager somebody completely third party in between us and say another general contractor or the subs or are they related somehow to AGC or subs?
So it can be both. Typically, they're a third party. They can self-perform some of the work as you go through. Otherwise, they're publicly bidding. We'll get to that and managing the subcontractors. So again, independent relationship where the owner has a contractual relationship with the construction manager at risk and a contractual relationship with the architect or engineer.
So different from design build design build. That's all kind of one streamline this. The owner has control of both and then under that construction manager, you'll have subcontractors and other third parties. Great questions.
So quickly, just when to use a CMAR project. Obviously, not every project fits. So generally, you want projects greater than 10 million dollars. The reason that is CMAR processes for estimating scheduling that costs money. So there is a cost associated with that. Typically, we see between half a percent and one and a half percent for the pre-construction services for that total construction cost.
So Mr. Rainer, that's what I think you were kind of alluding to was the cost associated with it. So for those pre-construction services, we are paying a cost. That's why for smaller projects, it doesn't necessarily make sense. You may not get the value out of that.
Projects that have extensive stakeholder coordination. So again, we're using CMAR for Oakland. In Oakland, we're going to move every franchise utility to put in the size of boxes we need to carry the drainage. That is extensive coordination for where things go, including our own utilities.
That's great to have a construction manager on board to say, yes, we can build it this way. Yes, this will work. Or no, it won't. And we can get around a future change order for not having something that's constructable.
Quick schedules. So during the process of design, we'll go through many schedule revisions. Having the contractor on board providing schedule updates or hey, this is the sequencing for how we will construct this is much better than the traditional design bid build to where we put the project out to bid and at pre-con, the contractor brings you the first schedule and you have, I don't know, maybe two weeks to go through and say, hey, does this make sense? Does this work? Can we shut down this many streets?
Again, having that collaboration through the CM at Risk process is a huge benefit. Budget certainty. We talked about that a little bit already. Projects where the owner lacks experience. So having a person in the CM at Risk in design meetings to be able to ask technical questions on vertical builds, on horizontal builds, on plant work can be a huge benefit.
Again, treatment plants, for example, are not something that we build and work on all the time. So being able to have an actual construction manager reviewing plans, making recommendations for alternative systems to make construction more efficient is a huge benefit to city staff, again, at a small cost for pre-construction services.
And then again, high-risk projects or complex projects, CM at Risk definitely makes sense.
So a little bit about the selection process. So CMAR is governed by Chapter 2269, subchapter F of the Texas Government Code. So that's what gives us the option to use CMAR.
Denton has a extra process to that, to where we actually submit to our CFO, Jessica, for approval to be able to use the CMAR process. So there's a lot of thought that goes into the planning of this, and we make sure that all parties are on board from procurement to finance before we move into a CMAR process.
Subchapter F allows for two processes. It's either a one-step process or a two-step process. We've done them both here at the city, and I'll explain why we use the one-step process now. So for the two-step process, we basically put out an RFQ and short list a bunch of firms.
From that point, we then submit out the RFP, the request for proposal, where we get the costs. The one-step process, we issue the RFP with the qualifications component attached to it. Basically, that just saves us time.
So when you do the two-step process, you're requesting just part of the information, and the one-step process, you're getting all the information. So it's still qualifications based. We get the cost component. We just don't have to advertise for an additional 30 days and go through that short listing process.
So again, once we get that one-step process completed, we bring the contractors in. Our solicitation generally says up to three contractors, and we'll hold two-hour interviews. During those interviews, they bring in their project team, key personnel, that we go through and ask all those hard questions about, "Tell me about this experience that you have. Tell me about your firm's knowledge of the CMAR process. Tell me about what your firm believes in pre-construction."
Again, you'll see a lot of varying thought processes from those different firms as we go through the interview selection. And then it's best value selection. So we will work with the top-rank firm to negotiate a successful pre-construction process or contract. That's the first piece of it. If we can't reach a successful contract, then we'll cease negotiations formally in writing and move to number two.
On this slide, I just have a few questions. The state law allowing these two processes, is that specifically for CMAR or is that for all kind of design construction work?
So these are specifically to CMAR. So subchapter F covers specifically CMAR. In 2269, you have all the other delivery methods, so CSP design build, progressive design build, and then it gives those requirements as well for how you can solicit contractors.
Okay. Thank you.
Yes, sir.
So on the qualification, up to five firms, this would be, I would think, a rather broad, experienced type of company in that more than just residential streets, it might involve other items that create a specialty that some people don't have. So is that part of the process that you're looking at?
Is this total turnkey for just about anything short of a nuclear plant?
Yes, sir. Yep. So you'll see it again, it will be specific to the trade. So on plant work, we're not going to see the same contractors that we do on the horizontal side or on the vertical construction side.
There are some companies that can do it all, like Sunt Construction that we currently have working on a horizontal CMAR does plant work as well. They're doing a vertical CMAR for us, and they have a sister company that does building work.
So again, you'll have some companies that can cover the full gamut, a lot of them will cover either vertical construction or horizontal construction. And so if I may ask then, some of these companies have both processes, the CMAR as well as the regular construction, all under one roof, as it were.
Yep. And even though if that's the case, then are we talking about two different qualifications for the bidding process?
Yes. So what we're talking about here is just bringing on the construction manager at risk for their consulting services. In two slides, when we get to pre-construction, we're going to talk about the solicitation process for if they want to bid on work for the construction, or if they're going to bring on subcontractors.
And one other question, can you define for me who is the owner?
We are the owner. City of Denton is the owner.
That's what I want to make sure it was.
Yes, sir.
So this is some sample evaluation criteria that we use on some of our horizontal CMAR projects.
So again, qualifications and experience of the firm, we see large firms. So you see your Suns, your Archer Westerns, your McCarthy's, big dollar firms with multi-billion dollar bonding capacities. All of those firms are qualified. They all have great marketing teams. Things that we specifically look for in Denton is the proposed project team.
We want these large firms, A-teams, coming and working in Denton. A lot of times firms will put out, hey, this is my A-team. And then when you actually execute the contract, you may not get the A-team because the A-team is somewhere else.
We contractually hold those firms responsible to bring that A-team or whoever they're saying to make sure we're getting what we want in the contract.
So again, I coach my team all the time. Look at those team members. You're going to see a lot of marketing fluff in there. They all have great marketing teams. Look at the people, the personnel. That's who you're going to be working with. That's what we want to focus on.
They'll also provide relevant project experience. Again, we see firms that provide billion dollar projects in Arizona, in Florida, and all of these other places that look great.
Wow, they have great capabilities. It wasn't with this project team. It wasn't with other people. So myself and our director, Trevor Crane, meet with the contractors once a year and we do an open house and say, hey, provide to us projects that are relevant to the team you're proposing.
We want to be able to pick folks and teams that we know can provide the work. We understand y'all are massive firms, but again, there's value and importance of structuring it to where we're seeing qualifications and experience of the actual proposed team and not just of a multi-billion dollar firm.
Project specific delivery approach. This highlights different areas to ensure that the contractors are actually looking at the project. So in this section, you'll see some generalities. A lot of firms that go the extra mile and say, hey, we've already identified this risk, this risk, this coordination.
For Oakland, for instance, one of our proposers had a long section on coordination with TWU and a long history of working with TWU and contacts and how they did it. So again, those are great instances to where we can award higher points because they went the extra mile.
Pre-construction phase services approach. We're going to get into that next. So ultimately, this is detailing out their company or firm's processes for going through the pre-construction process. So cost modeling, scheduling, construction management plan, quality plan, they give specifics for how they like to do that process.
Quality assurance and quality control. This covers both pre-construction phase and the construction phase and their processes that they'll use. We have a safety questionnaire and ask for them to provide specifics from their program, their safety program or anything that's job specific.
So for instance, on Oakland, again, I keep using it. We had firms that talked about student safety, how they're going to fence off during construction, how they're going to keep separate construction activities from the students crossing the roadway or getting them safely to crosswalks.
These are things that, again, in a typical design bid bill process, contractors probably aren't thinking about that when they're estimating a project, but we're able to have those conversations as soon as in the interviews to bring them on as a construction partner.
And then lastly, because we do that one step process, we get the cost proposal. The cost only makes up 20%. So again, it's still heavily qualifications based, but five points for that pre-construction fee. Again, that's a lump sum fee for all the pre-construction services.
And then 10 points for the construction fee. The construction fee is a percent based off of the total cost of the work. So we get that upfront at the very beginning. They get awarded 10 points for it. The construction fee varies by project or by the type of seam at risk delivery you're using.
So on a horizontal project, we see anywhere from five and a half to seven percent. On a plant project, you may see something a little bit more because of just the specialty of the folks doing that work. On a vertical build, we see stuff as low as 1.95% to 3%.
So again, varying spectrum dependent upon the type of the work that you're doing. Question, please. What's our general practice on the retainage in not only their subcontracts, but also the CMARS contract?
Yeah. So our contract lays out that we retain 5% all the way through the project. And then once they provide all the documentation, which purchasing requires four different pieces or different affidavits from subcontractors completion, we'll then release retainage at the very end.
And who does progress inspections and things like that to try to line up the draws and releasing the retainage and things like that?
So we have third party inspectors. We also have in-house inspectors. So kind of for the pay application process, the contractor will put together the pay application. They'll submit it to our inspections. Our inspections will verify, yes, you completed this scope of work, this scope of work.
No, this is nonconforming work. So we're rejecting payment on that till you get it. Then it comes to our CIP group and it's kind of administratively processed for payment.
When you're doing the evaluation, do you look at their qualifications completely separate from the cost?
Yes. So procurement holds cost until we get through the qualifications. The only time that we would be able to see cost is in the public bid opening that's open to the general public.
Otherwise, they keep that from the evaluators until the very end. Once we do our qualification stuff, they show the total combined points and that's how we establish who comes in for interviews.
Thank you. Great question.
On the pre-construction fee and the construction fee, are those combined to equate to that one to one and a half percent cost?
They are not. So the pre-construction fee is where I was talking about half to one and a half percent.
One to one and a half. That's the pre-construction. Correct.
And then the CMA -- yes, him. On the construction fee, that could be a totally different percentage. Does that fall under the general contractor then? That is correct. So that entity is more or less removed -- come with me and then you can correct it.
They're a hundred percent. So they're getting the 1.1.5 and the pre-construction, that's picking everybody and making sure everything is enough supplies and such.
Then what is their fee compared to the -- their fee is separate from the contractor's fee than doing the work. Is that correct?
That is correct. So we still require the CMAR to publicly bid all portions of the work. They could lose a hundred percent of those bids and not perform anything. The only thing that they would get then is their construction fee.
The pre-construction fee? The construction fee. So the pre-construction fee is what they get for estimating, scheduling, attending meetings, doing constructability reviews, design reviews, everything during the pre-construction process.
So this construction fee is written into that pre-construction contract and so it's decided up front. Once we move to construction, for instance, let's say we're doing a utility project and the utility cost comes in at $3 million and the CM at risk construction fee is one percent, they're going to get an additional one percent on top of the $3 million to manage all of the work.
Does that help? Oh, yeah. Okay. And so -- and just to clarify also, the pre-construction fee, that's not a percentage. That's just -- that's like a design fee, like for $150,000 we can do this pre-construction effort or whatever.
Correct. So it is a lump sum, but in our RFQ portion, we do require them to provide justification and it's negotiated before we get into the contract. So we're asking how many hours of estimating are you putting in? How many hours of schedule work are you putting in?
I can show you a very detailed breakout of a level of effort to get to that construction fee with rates and then again, we negotiate that before we get into the pre-construction process.
And how often does the CMAR not also win some of the construction portion?
So it varies. We've had -- on our first horizontal project, I believe they won two of seven packages. On the vertical side, it's very common for them not to perform any -- self-perform any work. They have capabilities to supplement if a contractor defaults or falls behind.
But again, it just depends. It varies from one side to the next.
And then the at-risk portion, what are they at risk of? So again, it's more about managing risk.
In our typical contracts, again, we push all the risk onto the contractors and with that comes a cost. The CM at risk is basically identifying what risks are here, how do we quantify or put a dollar value to that risk, and then who's best to manage it.
Because again, the city is liable for 100% of costs that we push into a contract that may not ever happen. This process allows to where if the risk doesn't come true and it's in allowance or contingency, that money reverts back to the city and we're just not out that fund.
So again, it's a common misconception of we're not just pushing risk into the CM at risk. We're identifying risk, we're quantifying them, and then we're understanding where does that risk best live so the city's being a good steward of money.
And in construction phase, if some firm other than the CMAR wins a portion of the contract, they sign a contract with the CMAR or with the city?
Yep, with the CMAR. So again, go ahead.
So then, and if there were some problem with the kind of subcontractor in that case, is the CMAR at risk or? 100%. So once we lock them into a guaranteed maximum price, say a subcontractor defaults.
The subcontractor that they bring in to finish the work is more expensive. The city does not process a change order to raise that cost. They're still responsible for building that work up to the guaranteed maximum price.
Okay, so CMAR says guaranteed maximum 3 million. Bidder comes in says I'll do it for two. Bidder goes bankrupt.
The price is three, the maximum price is three? Correct. Okay, thank you. Yep. And so again, on the horizontal side it's very common for us to bid projects prior to putting in a guaranteed maximum price.
On the vertical side, they may not put out the AV package or some of the FF&E stuff prior to providing the GMP. We call that buyout savings.
So the CMAR is going to put a cost of, hey, in our best judgment as a builder, it's a million dollars. If the cost comes in at $750,000, the city pays $750,000 and that $250,000 reverts back to the city.
So in a typical unit price bid contract, if the contractor bids a million, the city pays a million. You don't get back the $250,000. So again, this is giving us more fiscal transparency to see actual costs and then we pay the construction fee on top of that to manage it.
So if I could just, because I was writing and it makes no sense now, the project is, the CMAR is based on projects less than $10 million or greater than $10 million.
So typically it's greater than $10 million. Then who's handling it if it's less than $10 million? So we'll use a typical design bid build or a competitive sealed proposal process.
Okay. Yep. All right. Any other? Yes, sir. At which point, let's say we identify our top firm. Before or after that point, do we see a list of their subcontractors?
And let's just say we do get with somebody and say, hey, listen, you're our top firm. We move into negotiation. However, despite even being the top firm, perhaps they have a sub that we have a bad experience with.
Where do we know that so we can, do we know that ahead of time before we go through the ranking criteria and choose the top firm or after or like, is it a simple budget they bring us the first time and then it gets a lot more detailed? How's that work?
Yep. So a lot of good things there. So the first part of your question, it's generally after we engage with a CM at risk that we'll start seeing subcontractors. So again, these builders are going out to the public market and 2269 requires them to still bid every portion of the work.
That's not a general condition or general requirement of the contract. So they're working closely with a handful of preferred subcontractors to get costing information to make sure they're putting the actual GMP number where it needs to be.
The city absolutely can provide input and we go through a pre qualification process during pre construction. So again, part of the evaluations for a subcontractor is you need to be pre qualified with the CM at risk that gives them access to financials, safeties, qualification and experience.
They put that into a subcontractor plan. We review that with them and then it's publicly bid. So again, 2269 allows for essentially competitive sealed proposals of subcontractors.
The CMAR is going to make a recommendation for we think you should use subcontractor X. The city then has the option to say yes, we concur with that, move forward with that or no, you go with this. And if it's a higher cost, the city essentially just covers the cost difference between the two.
Does that kind of, did I cover everything? Okay.
Any other questions before we get into pre construction services?
All right. So pre construction services, again, we've taught cost modeling, cost estimating, schedule of values. Again, we'll get kind of high level cost estimates, but it's still for the fully functional facility.
So they'll preface that with qualifications and assumptions. So it'll say, here's 30% plans, here's all the costs we can see, but the number is greater than what we can see.
So here's all the clarifications and assumptions for how we got to this. We're assuming this linear footage of electrical, this switch gear, this component, this HVAC system, this whatever, and typically it's pages and pages of how they got to the number they got to.
That provides great benefit for the city and the design engineer to say, hold on, this cost looks way out of line from what we were thinking. Do we need to clear up the design? Do we need to look at an alternative system?
Do we need to do something different? Is what we're designing not efficiently constructable? What is driving that cost? That's where owner input and collaboration from the capital projects team or whoever's managing it really gets the value out of it.
Again, I want to put a lot of emphasis. If the owner does not engage and get the value out of CMAR, then you just need to do a design, bid, build project. Don't use it. There's a cost. It takes active owner engagement.
And again, capital project staff, utility staff, anybody who's using this facilities, we are an active, engaged owner that is ringing every dollar we can out of this process.
Again, cost modeling, the contract set up in those two kind of pieces that I talked about, either lump sum work packages that are bid out and incorporated into the GMP or actual cost plus fee.
So our contract structure to where we can go either way with it, dependent upon the type of project. Scheduling. So again, we talked about this a little bit.
One thing I'm super big on is construction efficiency. So being able to get more work done and less time to provide less impact to residents or to meet a timeline is one thing that I'm super interested in.
So again, on one of our projects, Southeast didn't package B, we face construction to where at any one time we had almost seven crews operating and we did 50 street segments over $22 million of work in 18 months in residential rehab, which is almost crazy to think about.
Nearly a million plus dollar burn rate in residential street reconstruction. But again, without having the opportunity to have the contractor on board to say, I trust you to manage this many crews with this many streets tore up and engage with the public and keep the traveling public moving.
We typically wouldn't do that in a normal design, but build contract. Yes, sir. On scheduling door contracts generally provide for some kind of bonus for completing either phases of the project ahead of time, saving us money then, but also sharing that back to incent.
Move on. So we do have incentive clauses. We typically don't use them again because the incentive is get done early and come back and bid more work with Denton and you'll continue having good success with Denton.
And again, we're trying to maximize dollars to the public so continuing to put those forwards into the next project.
Great question though.
We also have construction management plans so those include safety plans logistic plans subsurface investigations permitting and quality control procedures construct ability reviews are huge, being able to get feedback from a contractor that builds things about is this constructible, or more importantly, is this efficiently constructible is big time.
So we get a lot of plans in or a lot of comments back from our spec book, our spec book is 1000 page document that basically explains how the city didn't want you to build something.
Many times we'll get comments back that did you realize this one note in your spec book requires hand work, and that's a cost of $150,000 if we do it this way, or you can eliminate that we can do it by machine and save you that cost and provide a savings on the other side.
So we get a lot of valuable input for our documents for our engineers or architects about the actual efficiency to be able to construct something bit ability reviews is to make sure that it's to the design intent, and that when we send it out to the subcontractors, it's very clear.
This is a little bit different than a construct ability review. If a subcontractor doesn't know what the designer is intending. Typically they don't ask questions, they just add costs to cover themselves.
This provides that the CM at risk is looking at it through a bitters eyes to make sure that the intent of what is on the paper is what we're going to get a price for value engineering and alternatives analysis again this is helps us to stay within scope.
This is a lot during coven to combat pricing influx.
So again on the vertical side, it could be changing from one H fact system to a different H fact system that's harder to get lead times is a crazy thing still. I mean some generators and stuff are 60 weeks.
I don't want to say it like that it's like no that's a year, tell me it's a year, not 60 weeks, and the project may be 360 days so being able to get that order during the design process through an early GMP saves the city time and money.
Project bidding and evaluation. So this is a common misconception that CM at risk can just select whoever and do whatever they want to bring subcontractors on the city of Denton holds them to the exact same procurement requirements
that we hold our own projects. So our procurement team reviews, the solicitations, they have to publicly bid in our local newspaper, they bring bids to the city of Denton on bid day and we open them together.
They provide a report that says we're going with this subcontractor this subcontractor this contractor, and why, and then again there's open dialogue and discussion to make sure yes this is providing the best value for the project, or no, you're not going to self perform that work
because you're $2 million higher, and this guy can do it and there's nothing wrong with his qualifications.
So if you have those conversations and engage with the CM at risk. Again, you get out of it what you put into it as an owner. And then lastly the submission of a GMP.
So if a GMP is not reached, the city can totally elect to pay them the pre construction fee, and then we just bid the project ourselves. So that's where that two step contract comes in we pay them for pre construction services.
We pay all along we can't get them down. The city thinks they're savings for us to do it. We do not have to execute the construction phase contract, we terminate pre construction services, we thank them for the job that they did.
And then we put it out ourselves through our procurement team. So again there's always that safety net at the end to where if we're not happy with the product received, we're out half a percent or a percent and a half, and we bid the project ourselves.
Questions about pre con before we get into the last slide. Yes, sir.
So, let's talk about a project that has multiple streets involved. Yep.
And you may have water you may have sir you may have all the different arteries going through.
All those combined into one project, or is there a situation where you may have, you have different construction going on because of the different needs. Does that seem are then cover all of that or do we get a separate one for each one of even though
it's one project name. There's multiple entities in there. Does the owner view that as still just one project.
Yes. So when we scope it together. We're looking at everything that you said utilities sidewalk paving. So the the GMP for one street segment may have six different subcontractors that work on it, but it's underneath one seem seem at risk.
What gets different is how you put the packages together. You can say hey we just want a utility package to bid to utility providers, so they go out and they bid all of that.
If you only have a small piece of sidewalk utility contractors can bid sidewalk work, they can do concrete work.
So we may say hey we're going to include it in the utility package in in the street package and see where we get better pricing to perform the work, you have a lot of different options to where you can put together essentially packages whether that's a group of streets
on the vertical side you see it a lot by trade for what's going to happen.
I would think it's very specific on plant work to it's going to be by those specific trades is how your work packages are going to be set up under that one project.
So the multiple work packages but still just the one project that's the one check we're writing for, as it were. Yep. So the seem at risk is compiling all of that putting it into one pay application.
And that's what we're reviewing and approving and paying interesting question on if we have a contractor for whatever reason goes belly up.
And so then we have to go through the process again. I'm assuming or at least somebody's got to pick up the pieces to run with it because the same a CMAR then obviously gets involved with that.
Am I right. Absolutely. So you're talking about for a subcontractor. Yeah. Yep. So that's a explicitly covered underneath the law of under subchapter F and it says the CM at risk can either supplement they can step in and self perform that work if they have those capabilities,
or they find another subcontractor immediately. We are not entitled to give them an extension of time and extension of cost, anything that is part of the at risk of choose your subcontractor as well.
So in some parts of the city we would call that a turnkey kind of situation then. Absolutely.
The same at risk is 100% turnkey for a project, unless it's explicitly called out for owner provided or city it didn't handles that. It is all turnkey. Great questions.
You keep mentioning half a percent to one and a half percent. That's a significant price variance I know when you look at it from the percentage point it isn't but it's 300% more expensive as one and a half as opposed to half a percent what is typical.
And what are we expecting. Yep. So great question. So it's going to depend on the project and the size neighborhood two and six is a $80 million horizontal Seymour that we are doing 120 plus street segments through UNT three and a half years.
I think pre construction fee was 500,000.
So we're paying half a million bucks for all the pre construction services. I don't know what that equates to less than 1% maybe near the half fish percent on a treatment plant side to where you have a smaller project but is requiring specific expertise,
you may get it up closer to where it's 500,000 on a $40 million job. And so you're, you're 1% plus, just because of the specific needs of the project.
So again, it varies on horizontal stuff.
Most contractors are living in that, I would say half percent to 1% on the vertical construction side especially buildings, some contractors will say, we'll give you our pre con services for free, assuming we're going to win portions of the work.
I don't want you to feel like you have to hide things later on in bids, or anywhere else. So, again, that's just being an active owner and having those tough, tough conversations up front.
Is the pre construction fee phased out at all say we get into that, and it breaks down, this just doesn't go to work between us, we're gonna have to go for some of that.
Is that phased in costs that we don't have to incur the whole one and a half percent even though broke down somewhere along the way or. So, so it is similar to a professional service so our pre construction contract gets to the point to where, until they
guarantee maximum price we essentially hold retainage 5% out. But as they go through performing pre construction services if we're anticipating an 18 month pre con process, we'll do it one of two ways we'll either say okay you're 200,000 pre construction
bill monthly, if we terminate before that point. Yeah, it's contracts terminated. Here's payment for the remainder of the work that you completed. The rest comes back to the city. Once they submit a GMP, whether it's approved or not, will release that last 5%, and then
ultimately that will close the pre construction contract, and we'll move into the second part the construction contract. Great question.
Sorry, I know this is a lot of information. So construction services, everything in construction we basically want to see implementation of what we did in pre construction, a bad sign of a seamar is if you get to construction and they
immediately say, hold on we want to change the whole schedule, or hold on we want to do something else. We didn't do the pre construction process right if that happens.
Knock on wood, we haven't had that happen yet. But I've heard horror stories so implementing the plans developed during pre construction, they manage all subcontractors and self perform work so again on a project like neighborhood two and six.
We have six full time seamar staff that are managing overseeing work schedule coordination doing logistics doing quality checks, safety checks, all on, not necessarily the owners behalf but on the projects behalf to make sure we're getting what we're paying for.
They coordinate and update all those schedule activities so we typically have bi weekly meetings or weekly meetings, where we're talking schedule we're talking costs we're talking production we're seeing how we can make things better.
All of those different things, they lead that public engagement effort in construction they monitor quality control. One thing unique to plants or vertical is commissioning support. So as we go through if we build a building and we commission the HVAC system.
They're bringing on a third party to make sure it's installed properly. They're doing checks and balance testing they're doing all those different things to make sure the systems working efficiently and properly.
On the plant side same thing. A lot of times they're going in and working in existing treatment plants and they're bringing new processes into increase treatment capacity. They need to make sure that's operating to the full intent of what water wastewater
and the design. The designer has in mind. So again that commissioning support. You'll also see testing and startup leadership and then again manufacturers O&M training so they're responsible for training city staff on running the HVAC system or running the
plant components as we go through that process. So again a lot of construction is implementation oversight and making sure we're staying on time on budget as we work through the process.
That is the end. So again sorry for all the information. Any other questions or questions intrigued on you said there one project you may have had six.
Six different CMRs or six different departments under the one CMR. Yeah we could have six different subcontractors working on for instance one street segment. If we're doing street lighting concrete flatwork removals.
They're all under the one CMR. That's absolutely correct. Yep. Good. And they get paid by that one particular CMR because it's all part of them right. Correct. Yep. City has one point of contact.
So it's all part of the CMR. Right. Thank you. I think sometimes the perception is if you're going this route you're not really doing bids. You know it. But that that is not the case. That is not the case.
Yeah. Yeah. And I'm doing even more work. Yeah. Our contracts even structured that we require a minimum of three bids. So if they're self performing we also require them to submit their self performed bid a day before.
So we make sure that everything on theirs they're not seeing pricing and then submitting a bid. They submit it 24 hours before and then they collect bids the next day. That is actually a step that the city didn't does above and beyond what the statute says.
Do you ever ever have a situation where you may have two projects that for whatever reason might collide into each other. Absolutely. And so you have competition or maybe a little bit of a spat. Does one particular project.
Is it your decision that one particular project may take precedence over the other. And if that's the case then do those particular directors and the CMR for that one project.
Does it in a sense overlap everybody or do you just try. How do you keep the children separated.
It's a lot of hard work and a lot of hard conversations. Yeah. So we just recently ran into this 2023 bond. We got three vertical projects that immediately went out along with our service center to vertical buildings.
I think on the majority of those we received nine to twelve CMR bids on each one. I would bet 75 percent of them were the same companies across different project teams in some instances.
Same companies. That's where with my leadership Trevor and then the other department directors they sit on the evaluation panels for this.
I don't want to say it's kind of first come first serve but it is depending upon where they are in the selection process depends on what firm may get taken what a team may get taken from that firm.
And then the rest are looking at the remainder of them. So again it's these solicitations require a lot of front end work to be able to put it out to answer questions to put together the interviews.
So we don't overlap them a whole lot but to say they're not one week and then the next week we're picking a different one in the next week we're picking a different one would not be an understatement.
And once one of these projects is complete does the city go back and evaluate how it went what absolutely went well what things could be improved.
100 percent. So one thing that's unique to the city of Denton is we do a partnering workshop. So as soon as we bring on the CM at risk we come in and we do a half day or full day work session to build collaboration to talk about the project with all parties of the team.
Capital projects architect engineer Seymour they're bringing in all the key personnel. One of the things that I like doing during that process is we'll do risks and opportunities we'll write up we'll fill up a white board as big as the screen in about 10 minutes full of risks that everybody sees.
I'll take a picture of it and our lessons learned debrief at the end of the project. I'll pull that picture back out and say how did the team do what did we see in the early process. What did we miss what subcontractors did we struggle with.
Is there something in our contract that we need to beef up to make sure the intense coming through correctly or in our specification.
So absolutely we do those lessons learned debrief. We revise our contracts we do a lot of in self reflection in house as well to make sure we're getting the best out of this process.
Because again if you're not an active owner you're not fully engaged. Don't do Seymour.
You're going to pay more costs and get none of the benefit out.
Thank you. Other questions. All right. Thank you very much. Thank you all so much.
You didn't mess up our record. I did apologize.
But it was all good. Thank you. All right. It is nine fifty one. Do we have a motion to adjourn.
No. Okay. We're adjourned.