MWH Constructors is currently the construction-manager-at-risk (CMAR) on Pima County’s Ina Road Wastewater Reclamation Facility (WRF) Project in Tucson, Arizona. Preconstruction began in April 2008 on this USD 227M project designed to expand and upgrade the treatment facility from 37.5 to 50Mg/day as part of Pima County’s Regional Optimization Master Plan. The Ina Road Project is on track to be completed by October 2013.
During the course of the project to date, the relationship between the CMAR and Pima County has evolved. Based on their experience, project leaders for Pima County and MWH (Blair Lavoie of MWH, Jackson Jenkins with the Regional Wastewater Reclamation Department of Pima County and Michael Gritzuk, former director of the Regional Wastewater Reclamation Department) outline at least four major phases in a typical heavy infrastructure CMAR project from selection through the various guaranteed maximum price (GMP) phases.
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During each phase, described below, the working relationship shifts in direct correlation to how well the CMAR and the owner both understand and support the CMAR process.
1. Preconstruction contract
After procurement has been completed and the CMAR has been selected, negotiations occur and a contract is signed for preconstruction services. Prior to, or in conjunction with this phase, the owner has retained the design professional to design the project. The CMAR is given a notice to proceed and the project—long-awaited in many cases—begins. The project is finally a reality, leading to a congenial start to the relationship between the CMAR and the owner.
2. The first cost estimate submission – 30 per cent design
The second phase begins when the CMAR provides the first cost estimate to the owner. Up to this time, the designer has been working to provide the owner with plans for a new or expanded facility that has all the bells and whistles the owner has requested. The typical owner has a laundry list of many wants and desires that it provides to the designer. When the CMAR steps in and provides the first cost estimate, the owner may realize the design meets the request but the price exceeds the actual budget. At this point, the relationship between the owner and the CMAR may start to change, as the two parties must address the gap between the project design requested and estimated costs. As much as the CMAR wants to get off to a good start with the owner, the conversation could become adversarial as each party focuses on achieving outcomes that are viable and mutually satisfactory.
3. Developing the GMP
The third phase involves final budgeting, compliance with local bid procurement laws and development of the GMP for components of the project, as design proceeds on other components of the project. At these points, the relationship between the CMAR and the owner may become strained. There might be increased stress from the sheer dollar amount of the contract, or difficulties may arise because some participants do not fully understand the CMAR project delivery method. For example, if owners are only used to seeing a lump sum number and have never been in an open-book negotiation, they might have trouble understanding some of the detailed cost information presented. They might even question the individual expenses they cannot relate to, like relocation for a project manager or salary burden costs.
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By GlobalDataTypically, the CMAR has an acceptable number of bids from its subcontractors, which provides a fairly accurate estimate of the cost of work, but there are other line items—such as fee, contingency and some amount of reasonably anticipated design that still needs to be done—that undergo extensive negotiations. This can be challenging for the relationship between the CMAR and owner.
4. Realizing success
At each GMP component, the project continues into its fourth phase. The CMAR and the owner start reaping the benefits of having already negotiated most of the contingencies. This helps both parties focus on the work at hand, leading to more productive conversations and positive relationships. Each successive negotiated GMP gives each party more comfort for a successful project completion.
On the Pima County Ina Road WRF Project, the owner and the CMAR implemented five ideas that resulted in more effective negotiation processes. Their ideas are described below:
Engaging a third-party facilitator
Pima County engaged FMI as a third party facilitator during joint sessions between Pima County and MWH. FMI is an experienced consultant having served as facilitator on more than USD 50bn of construction in the US and overseas. FMI helped both the CMAR and the owner understand each of the phases discussed above and worked with the parties to encourage open and honest dialogue. Most importantly, the third-party facilitator kept everyone at the table until decisions could be made.
“Having a third-party facilitator enabled the discussions to continue, even when it looked like they were breaking down. It turned out to be one of the most helpful actions we could have taken,” says Gritzuk.
Establishing an estimate reconciliation process
Another effective step in the Ina Road WRF Project was an estimate reconciliation process at the 30 per cent, 60 per cent and 95 per cent design phases. The owner’s contracts with both the designer and the CMAR required them to provide independent cost estimates to the owner during preconstruction. The CMAR, the designer and the owner then discussed these estimates. At this point, the really tough questions were asked, such as ‘what happens when you have a sole source?’ and ‘what if there is an aspect to the design that makes construction difficult?’ Once the estimates were revealed, each party began to justify their own estimates, which set up a new period of discussions. A “bridging document” was developed that incorporated the reconciliation of the two estimates, line item by line item. After lengthy, honest discussions, typically taking place over one to two weeks, the estimates were reconciled. “The bridging document provided an easy way to accurately record all of the decisions that were being made. In the heat of things, it served as an independent document that no one questioned,” Lavoie says. This process continues to be used on all change orders on the Ina Road WRF Project.
Understanding the CMAR delivery method
One of the keys to a successful CMAR project is making sure all parties involved understand CMAR. During the negotiations and sales process on the Ina Road WRF Project, the senior management at Pima County understood what CMAR was and were true CMAR advocates; however, as the project moved into construction, some people on the jobsite didn’t have this same understanding. Jenkins says, “the County [Pima] did their homework and learned about CMAR before we ever embarked on this project. We were convinced it was the best way to go, but everyone doesn’t fully understand the benefits of the process and that has caused a few issues.” It’s not uncommon for people who have only worked on traditional design-bid-build projects to find themselves working on a CMAR project. A degree of educating that workforce needs to take place in the beginning to avoid misunderstandings during construction.
“There are no secrets with an open book project delivery method. During the preconstruction period, everyone understands the cost and schedule the CMAR will deliver. Pima County knows where every dollar of rate payer money is going,” Lavoie says. Additionally, by using the CMAR delivery method on the Ina Road WRF Project, the CMAR was able to create more than 1,000 local jobs in the Tucson marketplace. Had one contractor come in and performed all of the work, these jobs might not have been created for the citizens of Tucson and Pima County—another huge advantage of CMAR in today’s world of unemployed construction professionals. Jenkins adds, “Helping create jobs in today’s economy is a priority goal for Pima County. The CMAR delivery method helped us to achieve this goal.”
Advantages of the joint, open book sessions
Throughout the process of justification and negotiation that took place on the Ina Road WRF Project during GMP negotiations, everyone continually thought about creative ways to save money. Having the designer, contractor and owner in the same room created a sense of shared purpose and creativity. Two of those resulting ideas saved the job about USD 10M.
First, Lavoie and Gritzuk were discussing how to obtain better price certainty on the Ina Road project, and they came up with the idea of commodity purchasing. Instead of waiting to purchase the rebar and concrete, they developed a plan to lock down the prices on those commodities during preconstruction when costs were significantly lower—an idea that later saved Pima County over USD 2M. The second idea was performing several projects earlier than typical during preconstruction, which the CMAR refers to as ‘early out’ projects or ‘early outs’. In one of the joint sessions, the team collectively came up with a list of early out projects – civil site work, early installation of a gravity belt thickener and other small jobs that could be done early, which ended up shaving six months off the schedule. “Having the owner, CMAR and the design firm work together on VE was an excellent method to identify and implement real savings,” Jenkins says.
Resolving disputes at the lowest level not the highest
At the beginning of heavy construction, the owner and the CMAR jointly evaluated the dispute resolution process and determined that a dispute should be resolved at the lowest level possible and should not be escalated to the executive level unless it was extremely serious. It was stressed that the jobsite needed to take ownership of issues, conflicts and disagreements whenever possible. Pima County formed a high-level team of decision makers in order to resolve disputes in the field. This team consisted of a key member from the owner’s staff, the CMAR staff and the construction project manager staff.
By understanding the four phases of a typical CMAR project and collaborating on ideas for process improvements, MWH and Pima County officials helped create a positive working relationship that’s keeping a vital project on track and on budget for the people of Pima County. Their experience can help other CMARs and owners navigate the same waters.
From left to right, Blair Lavoie of MWH Constructors, Michael Gritzuk, the former director of the wastewater department at Pima County, and current director, Jackson Jenkins, at the Ina Road project site in Tucson, Pima County, Arizona MWH Constructors is currently the CMAR on the largest water and wastewater infrastructure projects in Texas and Arizona. Pictured is the 130m deep, 7.8m-diameter raw water access shaft] on the City of Austin’s Water Treatment Plant Number Four Aerial view of the worksite
