Budget Retreat/Special Meeting

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Meeting Date: 04/26/2017  
From: Adam Miele, Senior Project Manager

Consideration and Approval of Construction Manager at Risk Construction Services Agreement (CMAR):  CMAR 2017 Street Maintenance Project - GMP #2 - Chip Seal
1) Approve the Construction Manager at Risk Construction Services Agreement (Agreement) with C and E Paving and Grading, LLC in an amount not to exceed $1,603,036.00 for Guaranteed Maximum Price (GMP) # 2 – Chip Seal.
2) Approve Change Order Authority to the City Manager in the amount of $160,303.00 (10% for GMP #2) to cover potential cost associated with unanticipated or additional items of work.
3) Authorize the City Manager to execute the necessary documents.
Executive Summary:
The 2017 Street Maintenance project has been segmented into two phases. These construction phases are divided by the asphalt surface treatment types. The first phase, Phase 1, is comprised of minor concrete repair, utility collar grade adjustments, grinding / milling portions of the surface and repaving. The second phase, Phase 2, is comprised of applying a thin layer of hot asphalt and crushed stone. This thin asphalt surface treatment is commonly referred to as a chip seal.
This project has been developed through the City’s Construction Manager at Risk (CMAR) project delivery method. The CMAR process allows staff to work directly with the selected contractor (contractor selection was made by an open solicitation and evaluated by qualifications) and real-time construction estimates are given throughout the project development process. In working with the contractor, modifications are made to the scope of the project to ensure the overall project is within the allocated budget. The Guaranteed Maximum Price (GMP) developed through this process is typically made at the 60% plan development stage. Included in this GMP is a contingency line item (for both owner and contractor) to take care of bid overages, reasonably inferred items and other project related items that may arise during construction. Because the contractor proposes on these projects at the 60% plan stage, unknown conditions are likely present that necessitate the owner and contractor contingencies. Staff is also including City Manager Change Order Authority in the event that additional pavement preservation work needs to be done.
Approval of this Agreement will allow the City to complete construction of Phase 2 (GMP 2) of the 2017 Street Maintenance Program (Program). Phase 2 will consist of chip sealing on various roadways utilizing monies from the Highway User Revenue Fund (HURF) funding (Street Maintenance Section's annual ongoing and one-time budget). Following the passing of Proposition 406 (Road Repair and Street Safety ballot question in November 2014), the HURF funding has been allocated to chip seals for roadways throughout the city. 
Financial Impact:
Funding for GMP #2 is provided by the annual Street Maintenance Program and is funded in account 040-06-162-3073-6-4443 in FY17.

Contract Definitions per City of Flagstaff CMAR Agreement.

Owners Contingency - A fund to cover cost growth during the project used at the discretion of the Owner usually for costs that result from Owner directed changes or unforeseen Site conditions.  The amount of the Owner’s contingency shall be set solely by the Owner and shall be in addition to the Project costs included in CMAR’s GMP packages.  Use and management of the Owner’s contingency is described in Section 5.3.3.
  • Section 5.3.3 - Owner’s Contingency are funds to be used at the sole discretion of the Owner to cover any increases in Project costs that result from Owner directed changes or unforeseen Site conditions.  Owner’s Contingency shall be added to the GMP amount provided by CMAR, the sum of which shall be the full Contract Price for construction.  At the time that Owner’s Contingency is used the appropriate markups shall be applied.

CMAR's Contingency - A fund to cover cost growth during the Project used at the discretion of CMAR usually for costs that result from Project circumstances.  The amount of CMAR’s Contingency shall be negotiated as a separate line item in each GMP package.  Use and management of CMAR’s Contingency is described in Subsections 5.3.1 and 5.3.2.
  • Section 5.3.1 - CMAR’s Contingency is an amount CMAR may use at its sole discretion for, an increase in the Cost of Work, and may use for increases in General Conditions Costs with written approval of the City.  CMAR’s Contingency is assumed to be a direct Project cost and all applicable markups shall be applied at the time of GMP submission.
  • Section 5.3.2 - When CMAR utilizes CMAR’s Contingency funds, CMAR shall make the appropriate changes to the Schedule of Values with the next regular progress payment request.  CMAR shall deduct the amount of CMAR’s Contingency funds used from CMAR’s Contingency line item and add the same amount to the line item on the Schedule of Values where the funds were used.  If CMAR’s contingency funds are used for a new line item that was not given with the original Schedule of Values, these shall be so indicated.
Policy Impact:
No policy impacts will result from this project.

By approving this Agreement, improvements to the City’s existing infrastructure will improve the health, welfare and safety of the residents of Flagstaff.
Connection to Council Goal, Regional Plan and/or TeamFlagstaff Strategic Plan:
Transportation and Other Public Infrastructure – Approval of this Agreement will preserve and improve the City's roadway assets.
Regional Plan goals that apply include:
 Goal LU.7. Provide for public services and infrastructure.
 Goal LU.10. Increase the proportion of urban neighborhoods to achieve walkable, compact growth.
 Goal T.1. Improve mobility and access throughout the region.
 Goal T.2. Improve transportation safety and efficiency for all modes.
 Goal T.8. Establish a functional, safe, and aesthetic hierarchy of roads and streets.
Has There Been Previous Council Decision on This:
  • In January 2016, Council approved the design phase services contract with Plateau Engineering, Inc.
  •  In April 2016, Council approved the construction of a multiple phased roadway project (2016 Street Maintenance Project) with the same contractor for this Agreement, C and E Paving and Grading, LLC.
  • In March 2015, Council approved the construction of a multiple phased roadway project (2015 Street Maintenance Project) with the same contractor for this Agreement, C and E Paving and Grading, LLC.
Options and Alternatives:
  1. Approve the CMAR Construction Phase 2 (GMP #2) Services Agreement as presented.
  2. Reject the CMAR Construction Phase 2 (GMP #2) Services Agreement and direct Staff to pursue traditional design-bid-build project delivery. This would negatively delay progress on the project by three to five months.
  3. Reject the CMAR construction Phase 2 (GMP #2) and defer all street maintenance until 2018.
The City has established an annual Street Maintenance Program (Program) to maintain existing streets.  This year, the Program will provide three major services: non-structural upgrades by overlay, Americans with Disabilities Act (ADA) compliance, and chip sealing. 

Improvements to the City’s streets are selected after evaluation of the street condition using pavement management software owned by the City.  One half of the City street pavements are evaluated and ranked each year.  Each street pavement segment is assigned an overall condition index (OCI) based on the type and severity of the distress observed.  A pavement that has no distress is given OCI of 100.  Each pavement distress such as cracking or roughness reduces the street’s OCI.  The street pavements are ranked by OCIs and the pavements exhibiting the most severe distress are programmed for replacement. OCIs that score within the middle range receive resurfacing with asphaltic concrete overlays as budget allows. Roadways with a higher OCI will receive a chip seal that provides a cost effective pavement preservation treatment to maintain newer pavements in a good condition.

In recent years, the Arizona State Legislature has authorized the use of Alternative Project Delivery Methods (APDM) in lieu of the traditional Design-Bid-Build method of project delivery.  These alternative methods, including CMAR, allow a contracting agency the opportunity to select a construction team utilizing a Qualifications Based Selection process to procure construction services from a firm deemed most qualified to perform the work.  The enabling legislation also allows for provision of multiple GMPs under a single procurement.   

On August 31, 2014, a Request for Statements of Qualifications for CMAR services was published in the Arizona Daily Sun and posted on the City’s Purchasing web site.  On September 23, 2014, the City received five Statements of Qualifications from firms wishing to provide CMAR services for the project.  A selection committee of five members independently reviewed and evaluated those statements in accordance with guidelines established by the enabling legislation.  Based on numerical evaluation of the statements received, the firm of C and E Paving and Grading, LLC, received the highest ranking and was deemed the most qualified among those submitting proposals to provide the desired design phase services. 

On November 18, 2014, Council approved an award of the CMAR Design Phase Services Contract for the 2015, 2016 and 2017 programs to C and E Paving & Grading, LLC in the amount of $112,821.00.  Design Phase Services including program and budget evaluation, project scheduling, design document reviews, constructability reviews, detailed cost estimating, and preparation of final construction documents have now been completed.  Based upon the Design Phase Services, C and E Paving & Grading, LLC, has provided GMPs to complete construction of the annual Program.  The GMP includes costs for construction, a CMAR contingency, owners contingency, construction fee, costs for General Conditions including bonds and insurance, and sales taxes.
Key Considerations:
The goal of the Program is to use the available funds in the most efficient manner to lengthen the service life of the City street pavements and avoid costly pavement reconstruction. Chip seal work provides a cost effective pavement preservation treatment to maintain newer pavements in a good condition.
Expanded Financial Considerations:
Funding for the pavement preservation portion of the Program GMP #2 is provided by the budget in FY 2016/2017. The Agreement includes an owner’s contingency of $50,000.00 and a contractor’s contingency of $50,000.00 (to be authorized by the owner) to cover the potential cost of unanticipated or additional work which may be required during construction.

Community Benefits and Considerations:
The Program provides surface treatments as required to preserve and maintain pavement condition on the 664 lane miles of asphalt City streets.  The ADA improvements provide improved access for disabled citizens and visitors along existing streets and provide compliance with Federal requirements.
Previous Councils have approved programs in the 2015 and 2016 fiscal years which were a great success. These programs utilized 2014 voter approved sales tax funds (59 streets or 45 lane miles of overlay and 1 street or 1.2 miles of repaving). In addition to the sales tax funds, HURF funds were utilized (267 streets or 178 lane miles in chip sealing).

Use of the CMAR method of project delivery will eliminate the need for an advertisement/bid/award process and will cut approximately two months off the project development schedule.  In addition, value engineering, constructability reviews and design input conducted as part of this service agreement have the potential to realize significant construction cost savings over the traditional design-bid-build delivery method.
Community Involvement:
Inform - The Public Works Division will prepare weekly news releases to be distributed to the local media outlets describing the location of the street construction and any traffic restrictions planned for the week.  The contractor will distribute written notices to all the adjacent businesses and residents in advance of the construction.
Expanded Options and Alternatives:
  1. Approve the CMAR Construction Phase 2 (GMP #2) Services Agreement.
  2. Reject approval of the CMAR Construction Phase 2 (GMP #2) Services Agreement and direct staff to pursue traditional design-bid-build project delivery.  This would effectively delay progress on the project by three to five months.
  3. Reject the CMAR construction Phase 2 (GMP #2) and defer all street maintenance until 2018.

CMAR Contract
GMP Summary


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