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Construction Manager / General ContractorCM/GC Procurement Case Study

February 2016

Federal Transit AdministrationWendy A. Lee, Regional Counsel, Cambridge, MA

WORLD TRADE CENTER PATH TERMINAL PROJECT

MBTA GREEN LINE EXTENSION PROJECT

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Observations and Lesson Learned

The use of non-traditional contracting methods for major FTA-funded construction projects is on the rise.

• The CM/GC approach is the most innovative but difficult to manage

• Selection of the right Joint Venture, Design, and other consulting teams is critical

• Early involvement of in-house legal counsel

• Requires experienced owner to manage competing interests; significant and continuous involvement of owner

• Need to be willing to terminate agreement if Guaranteed Maximum Price (GMP) not established within the contractual time frame and execute contingency plan

Green Line Extension (GLX)Light Rail Project

• MBTA

• Extend existing light rail service 4.3 miles

• Executed Full Funding Grant Agreement in January 2015

Project Budget - $2.297B

Required Completion Date –June 29, 2022

• Utilized CM/GC procurement strategy

Engaged White Skanska Kiewit, J.V. in August 2014

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Project Background

World Trade Center (WTC) PATH Terminal Project

• Port Authority of NY & NJ

• Rebuild former WTC PATH Terminal

• Executed Construction Agreement in May 2006

Project Budget - $2.501B

Required Completion Date -April 30, 2012

• Utilized CM/GC procurement strategy

Engage Phoenix Constructors J.V. in January 2006 (Fluor, Skanska, Bovis, Granite)

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WTC PATH Terminal ProjectJustification for CM / GC Approach

A single CM/GC approach would:

• Fast-track project delivery that could save between 10-31 months

• Yield cost of between $95-$243 million

• Produce higher quality work

• Provide a single point of responsibility and control of construction activities

• Establish a guaranteed maximum price (GMP) prior to completion of final design

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WTC PATH Terminal ProjectKnown Challenges and Risks

Highly challenging conditions include:• Aggressive Schedule

• Complex Construction Coordination with 16-acres site

• Scope and Quality of Construction

VSC

1 LineSubway

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WTA PATH Terminal ProjectWTC Site

Tower 4

Tower 3Tower 2

FreedomTower

Memorial

Route 9A

Chiller Plant

DeutscheBank

PAC Dey StConnector

Oculus

WTC PATH Terminal ProjectStakeholders

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In September 2008, the PA and CM/GC mutually agreed to terminate the contract

• Design process was delayed due to several factors:

Complexity of the site

Interdependence of each redevelopment project on others

Conflicting and changing demands of multiple stakeholders

Conscious effort by PA to re-examine certain aspects of design to reign in costs and accelerate schedule

• Failure to negotiate a realistic GMP

• Failure to establish comprehensive schedule to meet program milestones

• Market conditions improved thereby softening the construction market

WTC PATH Terminal ProjectProcurement Shift

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WTC PATH Terminal ProjectCost and Schedule Update

Construction Agreement April 25, 2006

Project Budget $2.201B Federal; $2.501B Total 

Required Completion Date April 30, 2012

Revised and Restated Construction Agreement September 18, 2012

Project Budget $2.872B Federal; $3.995B Total

Required Completion Date December 17, 2015

Hurricane Sandy October 26‐29, 2012

Current Completion Date December 31, 20169

WTC PATH Terminal Project

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WTC PATH Terminal Project

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WTC PATH Terminal ProjectExcavation for the Transit Hub

October 2009

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WTC PATH Terminal ProjectSteel Erection Below Grade

May 2012

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WTC PATH Terminal ProjectOculus East Arch Retail Area

August 2012

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WTC PATH Terminal ProjectTransit Hall

August 2012

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WTC PATH Terminal ProjectEast/West Connector

August 2012

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WTC PATH Terminal ProjectTower Cranes in Position to Erect Oculus Steel

May 2013

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WTC PATH Terminal ProjectErection of Oculus Portal Steel

April 2014

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WTC PATH Terminal ProjectOculus Rafter Installation

November 2014

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WTC PATH Terminal ProjectInside the Oculus

August 2015

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WTC PATH Terminal ProjectEnclosure is Almost Complete

December 2015

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WTC PATH Terminal ProjectAerial View

January 2016

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MBTA Green Line Extension ProjectProject Area

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MBTA Green Line Extension ProjectJustification for CM / GC Approach

A single CM/GC approach would:

• Allow owner to maintain ownership of the design

• Integrate contractor into design process to improve constructability, reduce changes and minimize schedule risk

• Reduce construction contingency since pricing not established by contractor until risk items are assigned

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MBTA Green Line Extension ProjectJustification for CM / GC Approach

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MBTA Green Line Extension ProjectProject Delivery Method Advantage/Disadvantage Summary

DBB CM‐GC DBProject‐Level Issues Rating1.  Project Size2.  Cost3.  Schedule4.  Schedule Flexibility5.  Risk Management6.  Risk Allocation7.  Sustainability/LEED CertificationAgency‐Level Issues Rating8.  Agency Experience9.  Staffing Required10. Staff Capability11. Agency Goals and Objectives12. Agency Control of Project13. Third‐Party Agreement(s)Public Policy/Regulatory  Issues Rating14. Competition15. DBE Impacts16. Labor Unions17. Federal/State/Local Laws18. FTA/EPA Regulations19. Stakeholder/Community InputLifecylel Issues Rating20. Lifecycle Costs21. MaintainabilityOther Issues Rating22. Construction Claims23. Adversarial Relationships

Most Appropriate Appropriate Least Appropriate

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MBTA Green Line Extension ProjectKnown Challenges and Risks

Massachusetts laws limited use of Construction Management delivery methods to vertical construction

• In 2012, Mass legislature authorized use of CM / GC for the Green Line Extension Project as a pilot project

• Further authorization was provided by the MBTA Board and Massachusetts Office of Inspector General Align

• MBTA had virtually no experience with use of CM /GC for large, complex, horizontal construction project

• Heavy reliance on outside consultants by MBTA project team

• CM/GC required to perform no less than 50% of overall contract value

• No incentive for sharing savings; savings benefited MBTA exclusively

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MBTA Green Line Extension ProjectProject Phasing

Phase 3

Phase 1

Phase 1 Phase 4

Phase 2A

Phase 1

Union Sq

Washington St

Phase 2

Phase 1 – Harvard Street Rail Bridge; Medford Street Rail Bridge; & 21 Water Street Demolition

Phase 2 – Lechmere to Washington Street

Phase 2A – Union Square Branch

Phase 3 – Vehicle Maintenance Facility

Phase 4 – Washington Street to College Avenue

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MBTA Green Line Extension ProjectBaseline vs. Actual/Projected Cost

$0

$500,000,000

$1,000,000,000

$1,500,000,000

$2,000,000,000

$2,500,000,000

$3,000,000,000

Dec-11 May-13 Sep-14 Jan-16 Jun-17 Oct-18 Mar-20 Jul-21 Dec-22

Baseline

Projected 

CM/GC Cancelled

IGMP’s 1‐3, 4a

FFGA Executed

IGMP 4

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MBTA Green Line Extension ProjectProject Redirect

In December 2015, the MBTA terminated its contractual relationship with the CM/GC

• Not financially feasible to proceed with GMP #4 FFGA (60% Design) - $487,306,862 CM/GC - $889,081,221

Established conditions for moving forward with GLX

• Undertaking value engineering and redesign to reduce costs while maintaining functionality

• Developing a re-procurement strategy• Putting in place new project management team• Focusing on other non-federal funding sources

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MBTA Green Line Extension ProjectConceptual Design

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MBTA Green Line Extension ProjectConceptual Design

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MBTA Green Line Extension ProjectConceptual Design

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MBTA Green Line Extension Project

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MBTA Green Line Extension Project

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MBTA Green Line Extension Project

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MBTA Green Line Extension Project

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MBTA Green Line Extension Project

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MBTA Green Line Extension Project

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MBTA Green Line Extension Project

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MBTA Green Line Extension Project

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MBTA Green Line Extension Project