Officials use alternative methods to keep projects on budget

Leaders seek savings on big projects

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New construction projects are popping up every day across the Valley as cities and other public agencies try to meet the needs of one of the nation’s fastest-growing metro areas.

From a future fire station in Surprise to the ongoing streetcar system being built in Tempe, publicly funded infrastructure and facility projects increasingly employ alternative project delivery methods.

The construction manager at risk method (or CM@R to employ the industry jargon) is one of these newer processes.

In Surprise — where voters approved construction of several projects as part of $59.5 million general obligation bond in 2017 — Fire Station 308 is out for bid as a CM@R project worth $7.1 million.

According to Terry Lowe, deputy city manager, Surprise has embraced CM@R to help manage risk to the city for big construction projects.

“While it took some time for the public sector to embrace alternative construction delivery methods, the CM@R delivery method of procuring construction services has become the preferred method,” Mr. Lowe stated. “The main purpose owners choose to utilize alternative delivery methods is to shift some or all of the risks that are inherent in all construction projects. The type of delivery method chosen is based on the amount of risk (and future expense) the owner is willing to assume on a project.”

About CM@R

Also known as construction manager-general contractor (or CM-GC), the CM@R method is just one of several delivery methods typically used in public works construction projects.

The oldest, most-used method is known as design-bid-build, which by its name reveals its three-phase nature.

Customarily, the owner (city or other public entity) contracts with a designer through a bidding process; once the design is complete, they procure a contractor for the project through another bidding process; and then construction commences.

By contrast, CM@R projects have two distinct phases: preconstruction and construction.

During preconstruction, the owner works with the contractor on development and design to ensure the project can be constructed on time and within budget according to desired specifications.

After the design is all or mostly settled, the owner then issues a contract for construction services and the contractor assumes the risk for any costs over the agreed-upon project value.

In the vertical construction market, CM@R comprises about 25% of contracts, while the traditional design-bid-build method comprises 60% and design-build takes a 15% share, according to the Construction Management Association of America.

But while many owner’s still use design-bid-build, the CM@R and design-build methods have been gaining in popularity.

“The recent trend has been an increasing use of CMAR and Design-Build, with a corresponding decline in the use of the Design-Bid-Build method,” the trade advocacy group stated in their publication, “An Owner’s Guide to Project Delivery Methods,” available to download at their website, cmaanet.org.

Design-build projects

Mr. Lowe said the traditional design-bid-build method treats projects more like a commodity purchase; but that development of large-ticket construction projects carries risks — the costs of which are passed onto the city and its constituents.

“The traditional method puts all of the risk on the owner of a project and at the end of the project that risk has a cost and owners have realized that cost of the project is usually significantly more than the original budget,” Mr. Lowe stated. 

Through another newer, alternative deliver method, owners can control costs, but may lose a lot of control over the design process.

With that method — called design-build — the city contracts with a single firm, who completes design and construction for an agreed-upon maximum contract amount.

“Through this method, the owner has the assurance that the cost of the project will not exceed the budget, however the owner will be limited on how the project will be designed and constructed,” Mr. Lowe stated.

But the CM@R method presents something of hybrid between the traditional design-bid-build and design-build methods, ensuring financial less risk while still including more city input into the design, he explained.

“With the contractor as part of the design process, they are able to review the design documents in order to catch flaws that would normally result in change orders during construction,” Mr. Lowe stated. “The contractor is able to make suggestions that may reduce the overall cost of the project. Therefore, once construction begins, the owner can be assured that the actual cost of the project will not exceed the budget.”

Fire Station 308

The new Surprise fire station will encompass 12,000 to 15,000 square feet in a single story to rise on a 3.5-acre site at the southeast corner of Litchfield and Cactus roads, one of the busiest and fastest-growing parts of that community.

The project requires a broad range of expertise and services, including site development, landscaping, civil engineering, lighting, utility services, architectural design, construction management and vertical construction.

When it opens in early 2022, the new fire station will house an engine company, hazmat response team and future ambulance in a single-story, four-bay facility, which includes a fitness room with storage and restrooms, decontamination room, locker rooms, self-contained breathing apparatus room, workshop, hazmat room and office, special storage and resource rooms, two EMS rooms, janitor and electrical room, communications room, 10 dorms, two captains’ rooms, five restrooms, captain’s office, laundry, dining room with patios, public lobby and restrooms, day room, examination room, police report office, conference room, break and workstation area, kitchen and pantry, and mechanical and fire riser rooms.

For such complicated projects, CM@R contractors are responsible for managing their own subcontractors, providing expertise in areas some municipalities may not already have available internally.

Tempe streetcar

In Tempe, Valley Metro has entrusted the new streetcar system to a general contractor using the CM@R method for what is a much, more expensive and more complicated project.

With an estimated total cost exceeding $192 million, the three-mile stretch of streetcar line will have 14 stops and connect neighborhood riders with the light rail at two locations.

“Tempe Streetcar will serve one of the highest transit ridership centers in the region. It will connect riders to neighborhoods, major business centers, and regional events and destinations,” Valley Metro stated at their website, valleymetro.org.

While the new public transit option is set to open in the second quarter of 2022, the project is still in the design phase and Valley Metro continues to work with local stakeholders during the ongoing design phase.

Comprised of residents, property owners and business representatives from the community along the streetcar route, the Community Advisory Board will make recommendations to Valley Metro, holding the contractor accountable and potentially awarding a quarterly incentive for going “above and beyond” the contract requirements.

The panel’s meetings are open to ensure public input into the process at every step.

The next Community Advisory Board meeting is slated for 2-4 p.m. Monday, Dec. 9 at Tempe Transportation Center - Don Cassano Community Room, 200 East Fifth Street, Second Floor, Tempe.

Learn more at valleymetro.org/tempestreetcar.

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