Alternative Project Delivery Mechanisms

The J. K. Spruce Experience

Katherine YatesAssistant General Counsel

Overview

• J.K. Spruce #2 planned as early as 1986. • Authorized to proceed without permit in

2004.• Chose Design-build methodology.• Issued Two Phase RFP.• Two Offerors Responded/Awarded July

2005.• Issued LNTP’s in August 2005 and full

NTP in April 2006.• Provisional acceptance expected no later

than March 2010.

Traditional Process

• Chapter 252 of Local Gov. Code governed procurement activities.

• Design-Bid-Build was only available method.

• Bids advertised, opened and awarded publicly.

• Award based on Lowest responsible bidder.

New Processes

• Chapter 271, Subchapter H added in 2001.

• Authorized “best value” determination.• Five new methods for project delivery:

– Competitive sealed proposals– Design-build– Construction manager-agency– Construction manager-at-risk– Job-order contracting

Design-Build process

• Single entity provides design and construction.

• Two phase procurement process:– Phase One RFQ based on

qualifications, references, past experience.

– Phase Two RFP based on schedule, implementation plan, technical approach, cost.

• Award to best value offeror.

Design-Build Advantages

• Fast-track schedule and construction

• Single point of contact.• Cost savings due to value

engineering.• Less owner administrative burden

during construction phase.• Potential for minimization of

change orders.

Initiation of CPS Energy Process

• Board Resolution selecting “best value” process.

• Engage Owner-Engineer to develop Design Criteria Package.– Functional specification and conceptual layout.– Desired equipment margins.– Quality and performance guarantees.– Transmission access.– Geotechnical and environmental information.

• Engaged the services of a surety consultant• Joint development of RFPP/RFP and evaluation

matrices.• Pre pre-bid meeting held with interested parties.

Phase One-RFPP

• RFPP advertised and sent to attendees.• Pre-bid meeting held with Site visit.• Evaluation criteria:

– Ability to bond penal value of $250 million.– Financial status.– Reputation in industry.– Past experience.– Resumes of proposed project team. – References.

• Two offerors qualified to proceed to Phase Two.

Phase Two

• Offerors given the RFP.• Agreement to reimburse losing entity of

up to $1 million for preparation costs.• Evaluation criteria:

– costs– Implementation plan– Project schedule– Safety record– Workforce and training plans– Costing methodology– Initial Design drawing and schematics

(con’t.) Phase Two

• Interviews conducted to clarify exceptions and technical response.

• Offerors asked to resubmit responses based on discussion and to provide pricing to remove exceptions.

• Signed agreement “fixing” responses for evaluation.

• Evaluation and recommendation of selected offeror.

• Negotiations with selected offeror and award based on reaching satisfactory contract.

Post Award

• Limited Notices to Proceed:– LNTP #1- Early planning and engineering for

procurement of long lead time items.– LNTP #2- Vendor engineering.– LNTP #3- Preparatory site construction work– LNTP #4- Material and Equipment purchase

release– LNTP #5- Controls upgrade

• Full Notice to Proceed upon issuance of permit.

Keys to Success

• Clear and comprehensive Design Criteria package.

• Effective integration of proposed Design-Build Team.

• Full and consistent communication. • Owner involvement.

Commercial Considerations

• Testing and commissioning done by third party.

• Contract price.• Payment and performance bonds.• Construction risks.• Bidding stipend.• Bonus for early completion.• Payment of prevailing wage.• Use of a Local Government Corp.