A modification of the Missouri Revised Statutes changes the way public entities and construction companies do business. Branco Enterprises Inc. is using the construction-manager-at-risk delivery method for the first time on the construction of El Dorado Springs public school’s K-12 building, which includes a new gym and classrooms, along with some renovations.
“Actually, it’s the first use of this method in southwest Missouri that we know of since the law changed,” said Sean Thouvenot, vice president of Branco Enterprises Inc.
The bidding changes were signed into law a year ago by then-Gov. Jay Nixon, and Thouvenot said it’s still new territory for companies like his as they and public entities are educated on how to operate with the method modifications.
House Bill 2376 took effect Aug. 28, 2016, a month after it was signed. It’s allowed for two new accepted methods of project delivery for public entities: construction-manager-at-risk, like what Branco is using, and design-build.
Thouvenot said the new accepted methods allow public entities to custom-build projects based on exactly who will work with them.
“They can look at bids, and by their own professional judgment, they can tell who brings the best value for the political subdivision for the project,” Thouvenot said.
Before the change, procurement – the purchase of equipment, services, infrastructure works and other goods – was a three-step process for public projects. First, entities selected a firm for design services – an architect or engineer – and then owners chose a contractor through a bidding system, typically selecting the lowest bidder. Finally, work on the project would begin. The method is known as design-bid-build.
Both construction-manager-at-risk and design-build are more modern methods of delivery. CMAR is a method in which the construction manager acts as a consultant to the owner in the development and design phases, but also takes on the risk for construction performance as the equivalent of a general contractor holding all trade subcontracts during the delivery method.
“It opens a lot of doors, especially for a business that’s a real, true general contractor such as us,” Thouvenot said. “We have our own tradesmen on staff, so we can bid on the work packages. We’re not just sitting there, managing the job.”
In addition, Thouvenot said the owner can save a lot of time and money through the CMAR method.
“The owners are getting more bang for their buck,” Thouvenot said. “It makes it a streamlined process. Having the contractor involved – an actual contractor, not a construction manager – up front with the design phase allows the contractor and architect to work together on the best value for the owner.”
The design-build method takes the CMAR method one step further. According to the Design-Build Institute of America, design-build is a method of project delivery in which one entity combines architectural and engineering design services with construction performances under one contract.
Through this method, the designer and the contractor are on the same team, providing unified recommendations. One team addresses changes, and both accept the consequences for problems. According to the Design-Build Institute, in a traditional design-bid-build method, the designer and contractor can easily blame one another for cost overflow and other issues.
Design-build has some restrictions, however, said Springfield Public Schools Director of Construction Bryan Saunders. Noncivil projects – such as buildings, site improvements and other structures – must cost $7 million or more.
It’s good. It covers big projects, but most of our projects are less than that and so we have to go through the traditional design process first, and then bidding, and then awarding a contract,” Saunders said. “So it maybe only helps us with a small percentage of our projects.
Saunders said, though he has not tried out the design-build method, he’s heard from others that it also has the ability to speed up construction and cost owners less, just as the CMAR method can.
“The design-build option is there to take a look at,” he said. “We haven’t entered into that, but there’s certainly some consideration going on.”
SPS may have had the opportunity to utilize the method sooner had its $189 million bond proposal passed in April. Phased in over the course of two years, the bond would have funded construction for several new elementary and middle schools.
Much to learn
A 1999 nationwide delivery system study by construction faculty at Pennsylvania State University compared project delivery methods for 351 various public and private projects ranging in size from 5,000 square feet to 2.5 million square feet. Over and over, the design-build method beat the design-bid-build method. The design-build method showed 6 percent lower unit costs and completed construction 12 percent faster. In addition, the study also compared the design-build method with the CMAR method. The design-build method again had better numbers. It had 4.5 percent lower unit costs and completed construction 7 percent faster.
“We need to, at least for the benefit of the taxpayers, find out if this is something that can help us be able to do things faster, because we’re using our buildings more and more,” Saunders said.
He believes more public projects will begin to use the design-build method. Public entities just need time to educate themselves on how it works.
“It’s very brand new. I think most of the con is it’s foreign to people still,” Saunders said. At least, it’s a new concept to public entities. Missouri private developers already have used design-build for their own projects for 15 years, according to SBJ archives. By 2014, the method accounted for roughly half of nonresidential construction in the U.S. Branco told SBJ in 2016 that it had used all three different methods on private entities.
SPS is ready to consider new ideas, Saunders said, though officials must find out more first.
“As a district, we would certainly be open to that, but there’s some things we’re going to have to sift through,” he said. “We’ll have to educate ourselves more with discussions of teams of architects, engineers and contractors.”
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