What
is the Construction Management at Risk (CM at Risk)
delivery method?
CM at Risk is an alternative
to the traditional design-bid-build method of building
as embodied in Chapter 149. A new statute, M.G.L.
c. 149A, was created by Chapter 193 of the Acts of
2004 that provides the option to cities and towns
(as well as public agencies) to use the CM at Risk
method for building projects valued at $5 million
or more. Under CM at Risk, a public owner prequalifies
and selects a Construction Manager (CM) during the
design phase. The CM provides planning, estimating,
scheduling and other consulting services to the Owner
and Architect during the design phase. When the design
is near completion, the CM and the awarding authority
negotiate a Guaranteed Maximum Price ("GMP")
and schedule. The CM then acts as the general contractor
during the construction of the project and prequalifies
and procures all of the construction trade contractors
that will perform the work. The CM is required to
share all cost information with the public owner so
that an informed public owner will only pay for the
Cost of the Work plus an agreed fee for the CM up
to the GMP.
To use CM at Risk non-exempt public agencies must
receive prior approval from the Office of the Inspector
General and demonstrate that:
-
an authorization from the appropriate
governing body has occurred;
-
the public agency has the capacity,
a plan and procedures to procure and manage the
CM at Risk services and has retained the services
of a qualified owner's project manager;
-
the public agency has procedures
to ensure fairness in competition, evaluation, and
reporting in every stage of the procurement process;
and
-
the project has an estimated construction
value of $5 million or more.
The Office of the Inspector General
has promulgated regulations and procedures to implement
the CM at Risk process. You should regularly check
the IG website at www.mass.gov/ig/
for updated information on the status of the CM at
Risk regulations, procedures, and the implementation
schedule. The exempt agencies are DCAM, the Massachusetts
Port Authority, the Massachusetts Water Resource Authority,
the Massachusetts State Colleges Building Authority,
and the University of Massachusetts Building Authority.
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May
our city or town use the CM at Risk delivery method
to construct our new school?
The Legislature has approved
the CM at Risk delivery method for use on public building
projects starting on January 1, 2005. To opt to use
this delivery method the project must be estimated
to cost $5 million or more and the awarding authority
must receive prior approval from the Office of the
Inspector General. The Office of Inspector General
has developed an "Application to Proceed"
form for completion by awarding authorities seeking
to use the CM at Risk delivery method. You should
regularly check the Office of the Inspector General's
website at www.mass.gov/ig/
for updated information on the CM at Risk regulations,
procedures, Application to Proceed, and the implementation
schedule.
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I have
heard that there is an application process for awarding
authorities to use the CM at Risk and Design Build
delivery methods. What agency do we apply to?
The new law requires an
awarding authority seeking to use either CM at Risk
or Design Build to submit an Application to Proceed
to the Office of the Inspector General providing detailed
information about the project and the awarding authority's
plans and procedures for managing the project. If
the awarding authority meets specific requirements,
the Office of the Inspector General will issue a Notice
to Proceed with the procurement. The Office of the
Inspector General has promulgated regulations and
procedures to implement the CM at Risk and Design
Build processes. You should regularly check the Office
of the Inspector General's website at www.mass.gov/ig/
for updated information on the CM at Risk and Design
Build regulations, guidelines, and the implementation
schedule.
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Will
the team assembled by our town be required by the
application process to demonstrate expertise in the
use of the CM at Risk delivery method?
Yes. In the application
submitted to the Inspector General's Office, you should
be prepared to demonstrate at a minimum that your
CM at Risk team:
-
understands specific aspects of
a two-phased qualifications-based procurement for
a construction management at risk firm as outlined
in the Act;
-
has experience interpreting specific
contract terms and requirements;
-
understands the specific preconstruction
or design phase tasks expected of the CM at Risk
firm;
-
has a plan for how the municipality
will manage the GMP process;
-
understands the concept of "open
book" cost monitoring and has a policy on auditing
project costs at project completion;
-
has a plan for managing the monthly
and final project requisition process;
- has a complete trade and "other subcontractor"
procurement plan that will promote maximum qualified
competition while assuring CM at Risk accountability
for trade contractor work.
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What
are some of the benefits of my city using a CM at
Risk delivery method?
Under CM at risk, a public agency may
benefit by:
-
The ability to prequalify and select
your Construction Manager ("CM") on the
basis of its reputation and record in controlling
costs, meeting deadlines, and satisfying customers.
-
The participation of the CM in design
and phasing decisions so that "unbuildable"
or costly design details or phasing plans may be
avoided and design/drawing inconsistencies may be
limited.
-
The CM's ownership of the construction
budget through early cost estimating leading to
a Guaranteed Maximum Price ("GMP") for
the work.
-
The ability to "fast track"
the start of construction by bidding early trade
contracts which the CM will ultimately incorporate
into the final GMP.
-
The right and responsibility to
monitor and audit the construction costs of the
project to ensure the city pays only the costs of
the work plus the agreed fee to the CM.
-
A spirit of cooperation between
the owner, architect, CM and trade contractors due
to a defined allocation of project responsibilities
and the CM's interest in obtaining strong references
for future work.
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Must
our city or town wait until January 1, 2005 to prepare
to use CM at Risk to construct our new library?
No. There are numerous
steps that your town can take to assemble a qualified
team to prepare for use of CM at Risk in advance of
the January 1, 2005 implementation date. For example,
you may:
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What
are some of the similarities and differences between
the CM at Risk delivery method versus the traditional
design-bid-build method?
The primary similarities
and differences between CM at Risk and design-bid-build
are as follows:
-
CM at Risk and design-bid-build
require similar designer selection processes, however,
the CM at Risk firm should be chosen early in the
design process, unlike the design-bid-build method.
This allows an opportunity for the CM to provide
pre-construction services that may be beneficial
to the awarding authority, such as early cost estimates,
project planning and scheduling, value engineering
and constructability studies, developing construction
phasing strategies, determining filed sub-bid scopes
of work, and assisting in prequalifying filed sub-bidders.
-
Both the CM at Risk method and the
design-bid-build method require an owner's project
manager for projects with estimated construction
costs of $1.5 million or more.
-
Both the CM at Risk alternative
and the traditional design-bid-build method require
the use of the new Prequalification process.
For design-bid-build projects, prequalification
is required where the estimated construction
costs are $10 million or more and optional,
at the discretion of the awarding authority, where
the estimated construction costs are less than $10
million, but not less than $100,000. By contrast,
prequalification is mandatory on all CM at
Risk projects, regardless of the size (i.e. not
just projects with estimated costs of $10 million
or more). The prequalification process for CM at
Risk, however, requires the submission of separate
technical and price components from qualified firms
and permits consideration of non-price components
in the selection of a construction manager.
-
Both methods require a filed sub-bid
process. For design-bid-build projects, prequalification
of sub-bidders is required where the estimated construction
costs are $10 million or more and optional at the
discretion of the awarding authority where the estimated
construction costs are less than $10 million but
not less than $100,000. Under the design-bid-build
method usually the contractor selects a sub-bidder
from a list of filed sub-bidders developed by the
awarding authority. In the context of CM at Risk,
filed sub-bid category subcontractors are referred
to as "Trade Contractors". Trade Contractors
on all CM projects must be prequalfied to bid, regardless
of the estimated construction cost (i.e. not just
projects with estimated costs of $10 million or
more). Under the CM at Risk process, the contractor
selects the lowest sub-bidder from a list of prequalified
sub-bidders and may have the option to negotiate
the price if fewer than 3 bids are received.
-
Under CM at Risk, the CM firm negotiates
a guaranteed maximum price ("GMP") with
the awarding authority, which price includes the
fee for the CM services, the cost of the work, general
conditions and contingency funds for the project.
The CM firm may be responsible for costs that exceed
the GMP.
-
Under the CM at Risk method, there
may be an opportunity for bidding early item work
packages prior to the completion of the final design,
thus accelerating the overall schedule for the project.
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Will
there be educational materials available to educate
public officials about the use of CM at Risk and Design
Build?
Yes. Training and materials
are available through the Office of the Inspector
General's MCPPO program. The Office of the Inspector
General is providing a one-day course on each delivery
method for procurement officials and others. Please
check the Office of the Inspector General's website
at www.mass.gov/ig/
for additional information regarding training opportunities.
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What
is the Design Build delivery method available under
the new law?
The Design Build delivery
method is an alternative method of contracting available
for public works and road construction projects in
which a single contract is used for both design and
construction services. A new statute, M.G.L. c. 149A,
was created by Chapter 193 of the Acts of 2004 that
provides the option to public agencies to use the
Design Build method for public works projects estimated
to be $5 million or more. To use Design Build non-exempt
awarding authorities must receive prior approval from
the Office of Inspector General and demonstrate that:
-
an authorization from the appropriate
governing body has occurred;
-
the public agency has the capacity
and a plan and procedures in place to effectively
procure and manage a design-build firm;
-
the public agency has procedures
to ensure fairness in competition, evaluation, and
reporting; and
-
the project has an estimated construction
value of $5 million or more.
The Office of the Inspector General
has promulgated regulations and procedures to implement
the Design Build process. You should regularly check
the IG website at www.mass.gov/ig/
for information on the Design Build regulations, procedures,
and the implementation schedule. The exempt agencies
are the Massachusetts Highway Department, the Massachusetts
Port Authority, and the Massachusetts Water Resources
Authority.
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In
what instances may our city or town use the new Design
Build delivery method?
The Legislature has approved
the Design Build delivery method for use by awarding
authorities for public works (not building projects)
estimated to cost $5 million or more if the awarding
authority has received approval from the Office of
the Inspector General. The effective date for the
use of the Design Build delivery method is January
1, 2005.
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How
do I receive approval to use Design Build from the
Office of the Inspector General?
The new law requires an
awarding authority seeking to use design build to
submit an application to the Inspector General's Office
providing detailed information about the project and
the awarding authority's plans and procedures for
managing the project. If the awarding authority meets
specific requirements, the Inspector General will
issue a Notice to Proceed with the design build procurement.
The Office of the Inspector General
has promulgated regulations and procedures to implement
the design build process. You should regularly check
the IG website at www.mass.gov/ig/
for updated information on the design build regulations,
guidelines, and the implementation schedule.
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