construction What is “construction” defined as or include?  Building?  Altering ?  Repairing?  Demolishing?  Public Improvements?

What does “construction” NOT include?  Routine operation  Routine repair  Routine maintenance

Major Types of Construction Solicitations or Construction Contracts (allowed under A.R.S., Title 34):  Design-Build  Design-Bid-Build  Job-Order-Contracting  Construction Manager at Risk  Simplified Construction (A.R.S )

 Design-Build  Single contract for design and construction  Separate contracts can be used  Preconstruction services  Construction services  Basis of Award: Demonstrated competence and qualifications

 Design-Build cont.  Advantages Faster Delivery Cost Savings Better Quality Singular Responsibility Decreased Administrative Responsibility Reduced Risk Reduced Litigation Claims

 Design-Build cont.  Disadvantage Loss of Checks and Balances ( An “outside” A/E is NOT acting as the contractor watch dog for your agency ) D-B most useful for: 1. Time sensitive projects 2. Projects with specialized, technically complex scopes of work

 Design-Bid-Build (“similar” to Invitation for Bid)  Sequential Award (Two Separate Contracts)  Design Contract  Construction Contract  Design and Construction are non-concurrent  D-B-B contracts do not include:  Finance Services (financing for construction services)  Maintenance Services  Operation Services  Good choice for simple projects with small number of change orders

 Design-Bid-Build cont.  Advantages Checks and Balances are present Familiarity to construction firms Scope/stages of work more easily defined Owner has greater degree of control  Disadvantages “Team” environment lacking Finger pointing Linear schedule – Slowest method

 Job Order Contracting Invented by COL Mellon (U.S. Army) for NATO for routine maintenance and alteration of U.S. Army facilities in Europe  IDIQ contract  Multiple contracts for multiple years (5 years max)  Incorporates a “Unit Price Book” (Ex. RS Means or equiv.) and coefficient markup for line items in Unit Price Book  Basis of Award: Most Qualified Firm(s)

 Job Order Contracting cont.  Advantages Fast, responsive and time savings Simplicity (for repetitive types of work) Longer term relationships with contractor  Disadvantages Potential reduces contracting opportunities for other contractors Learning curve implementing JOC Limited to projects less than $1,000,000 Possibly more expensive than other alternatives

 Construction Manager at Risk (CMAR)  Sequential Award (Two separate Contracts)  Design Contract  Construction Contract (Pre-Construction Phase/Construction Phase)  Design and Construction can be concurrent  Construction Manager is brought in early during the design phase and proposes GMP near the end of the Design Development Phase(s)  Used for large, time sensitive, requiring extensive management, multi-trade, technically complex projects  Basis of Award: Contractors demonstrated competence and qualifications

 Construction Manager at Risk cont.  Advantages Increased speed (Contractor(s) is/are chosen before design is 100% complete) Contractor is selected based on demonstrated qualifications Contractor and A/E work as a team Separation of duties between contractor and A/E Greater/enhanced transparency (bids are open to inspection)

 Construction Manager at Risk cont.  Disadvantages Difficult to know if lowest bid is achieved (compared to D-B-B process) CMAR jobs tend to cost more

 Simplified Construction  Authorized by:  A.R.S ($100k or less)  A.R.S ($150k or less) – State Board of Education/School  Restricted, if “practicable” to small businesses  Pursuant to rules adopted by “director”  Maricopa County requires 3 written quotes  Vendor list is maintained of “persons” who are interested with additions permitted throughout year  Think of D-B-B and Request for Quotation (for goods/services)

 Bonds  Three types of Construction Bonds:  Bid Bond - Guarantees the contractor will honor its bid and will sign all contract documents if awarded the bid.  Performance Bond - Guarantees the contractor will complete the contract according to its terms including price and time.  Payment Bond - Guarantees the subcontractors and suppliers will be paid monies that that are due from the contractor.

 Bond Submittals  Bonds can be submitted as a Surety Bond or  In the form of a certified check or cashiers check in the amount(s) required.

 Bond Ratings  What type of rating should your agency specify and why?  Bond Rating/Financial Strength: (A.M. Best Ratings) SecureVulnerable A++, A+ (Superior)B, B- (Fair) A, A- (Excellent)C++, C+ (Marginal) B++, B+ (Good)C, C- (Week) D (Poor) E (Under Regulatory Supervision) F (In Liquidation) S (Suspended)

 BOND SAMPLE LANGUAGE: All Insurers and Sureties shall have at the time of submission of the proposal an A.M. Best’s Key Rating Guide of “A-” or better as currently listed in the most recent Best Key Guide, published by the A.M. Best Company, payable without condition to the Owner.

Construction Bond Matrix Design Services Design/ Build Design-Bid- Build (low bid) Risk Bid BondNone 10% (Budget for Construction) A.R.S % (Contractors Bid) A.R.S % (1 st years Construction Budget) A.R.S None Performance Bond None 100% (Construction contract amount) A.R.S % (Construction contract amount) A.R.S % (Construction contract amount) A.R.S Payment BondNone 100% (Construction contract amount) A.R.S % (Construction contract amount) A.R.S % (Construction contract amount) A.R.S % (Construction contract amount) A.R.S