HomeMy WebLinkAboutCOW 2003-01-13 Item 4A - Discussion - Tri-Association Joint Legislative PackageOriginal Sponsor:
Timeline:
Sponsor's Summary:
ITEM INFORMATION
CAS Number: 03-001 I Original Agenda Date: 12/9/02
Agenda Item Title: Tri- Association Legislative Package
Recommendations:
Sponsor: Reach consensus on approving proposal
Committee: N/A
Administration: Same as sponsor
Cost Impact (if
known'
Fund Source (if known)
1 Meeting Date
1 12/9/02 COW
1/6/03 Regular Meeting
1/13/03
Meeting Date
12/9/02
1/13/03
COUNCIL AGENDA SYNOPSIS
Meeting Date
1/13/03
Council Admin. x
Initials
Prepared by 1 Mayor's eview 1 Cour ril review 1
LL 1
The city and county associations have together written a legislative priorities package
to use this legislative session. More information has been provided here.The Council
can again discuss the proposal, and either support it, or choose not to support it.
RECORD OF COUNCIL ACTION
Action
APPENDICES
Attachments
Memo from J. McFarland dated 12/5/02
AWC, WACO and WSAC Joint Legislative Proposal
Memo from L. Lauterbach dated 1/9/03
Tri- Association proposal with staff comments included
Attachment A from Jim Morrow on Design Build Contracts
ITEM No.
4/ 7/
a
To: City Council
From: Lucy Lauterbach
Date: January 9, 2003
Subject: Tri- Association Joint Legislative Proposal
I have copied the Proposal and inserted comments on specific proposals you expressed concern
about.
!My comments are included in boxes such as this within the document.'
Jim Morrow has included detailed information about design/build in a separate Attachment A
following the document.
In speaking with AWC staff, they asked that cities recognize that this is a very general outline of
a legislative package, and that what will be taken to the Legislature are the general issues raised
here, and not each specific proposal. For example, they wouldn't ask the Public Works Trust
Fund to add in fire trucks if that fund was being completely used for public works projects. It is
only because in past years much of the fund was not being used that the fire truck proposal was
added.
If you can live with the proposals as they are now stated, a consensus approval would be
adequate. All cities and counties in the state are considering these policies now, and it's not
likely every proposal will please every reviewer. The fact that the entire package was agreed
upon not only by the county and city associations, but also on a statewide east and west basis, in
an accomplishment in itself. It's a good start in lifting that Cascade curtain.
Environmental:
Flexibility in Meeting Unfunded Regulatory Mandates: Suspend mandates for environmental
or land use planning updates if state funding is not provided (e.g. Shorelines, GMA). Local
governments need flexibility in meeting unfunded regulatory mandates, such as the stormwater
management requirements, which mandate practices with significant costs to local government.
Local Government Operations:
Efficient Purchasing: Eliminate red tape generated by outmoded purchasing and bid
requirements. Increase competition and cut costs by publishing bid requirements on a central
website.
Market Interest Rates: Reduce interest rates paid by governments (and therefore taxpayers) for
court awards. Currently, awards are set at 12 even when ordinary bank accounts are earning
about 1%.
Updating Building Codes: Adopt building codes used by other states to reduce costs for
training, documentation and building.
Because the Uniform Building Code (UBC) is no longer being updated, the Legislature will need
to adopt a new family of building, mechanical, and plumbing codes. The choice is between the
International Building Code (IBC) and the National Fire Protection Association (NFPA) code.
The IBC is very similar to the UBC version; the NFPA is a different format and quite different.
Independent Audits: Reduce the cost of audits by allowing jurisdictions the flexibility to have
audits competitively bid by private firms.
Binding Interest Arbitration: Mandate that arbitrators use the implicit price deflator for cost of
living adjustments. Amend the binding interest arbitration statutes to require arbitrators to
consider a jurisdiction's ability to pay. Eliminate comparables outside the state for all interest
arbitration.
Capital Projects
Inter -local Cooperation on Construction and Maintenance: Allow local jurisdictions to bid on
each other's projects in order to increase competition and make better use of specialized
equipment and staff.
Public Works Projects: Speed up public works projects by eliminating months of delay caused
by the redundant approval process for Public Works Trust Fund projects.
Alternative Construction Bid Methods: Authorize or expand alternative construction bid
methods, such as design/build or general contractor construction management (GCCM).
ISee Attachment A from Jim Morrow following this Tri Association proposal.'
Cut the Cost of Jail Construction: Allow jail projects to qualify for low interest financing
through the Public Works Trust Fund.
Law and Justice
Local Courts: Reduce court costs by allowing jurisdictions to downsize and/or consolidate
courts to recognize changes in local government boundaries, caseload reductions, and/or to permit
economies of scale.
This proposal probably would not affect Tukwila. It would benefit some smaller, more rural
courts, especially in Eastern Washington, but also possibly in East King County.
Publicly Funded Criminal Defense: Improve standards and process for determining when
criminal defendants are entitled to free legal defense.
The process now is for people to fill out a confidential form that includes their income. The
income levels for free legal defense are the same federal guidelines we use for low income.
There is no way to determine if people are telling the truth on the form. As Darlene Heskett said,
there's no way to tell how much a prostitute or drug dealer makes, as they don't leave a paper
trail.
Tort Costs Limitation: Set reasonable limits on tort liability related to the criminal justice
system.
Government is often seen as having "deep pockets" that make them an attractive target for tort
cases with large settlements. A move to set reasonable levels for liability seems a common sense
reform.
Downsizing and Multi jurisdictional Consolidation: Permit local governments to offer early
retirement incentives for LEOFF personnel for downsizing or multi jurisdictional consolidation.
Third Degree Driving While License Suspended: Decriminalize Third Degree DWLS to
unclog criminal courts, warrant systems and jails of thousands of cases for this offense.
Darlene Heskett gave a rough estimate of Tukwila court seeing 30 cases a week of Driving
While License is Suspended (DWLS). She would be happy if it were decriminalized if the
financial penalty for the crime were kept the same or raised.
ELIMINATE STATE COST SHIFTS WITHOUT REVENUE
Election Costs: Require the state to pay its share of even -year election costs.
In 2002, Tukwila spent $6,000 on election costs and $12,000 on voter registration.)
· Jail Medical Costs: The state's failure to fund this expense has cost local taxpayers millions.
Require the state to fund the medical costs in jails.
· Tax Exemption Review: Require a periodic review of current tax exemptions to determine if
they are still in the public interest.
Equalize Impacts of Sentence Reductions: If the state reduces sentences for crimes, reduce the
corresponding sentences that impact jails operated by local governments. Share the cost savings
between state and local govermnents by adjusting the one year cutoff for felony prisoners sent to
state prisons versus county jails, potentially reducing the cost' of incarceration for both state and
local governments.
This affects County jails. The first sentence addresses reviewing penalties for crimes, and wants
the State to look not only at sentences for felons in State prisons, but also crimes that affect those
in County or City jails. The second sentence applies to felons, wl~o often spend their first year in
a County jail before going to a State prison to spend the next three or five years. When the
penalty for a crime is reduced, the County wants part of their year o f housing the felon to be cut,
and not only the State prison time.
i Attachment A!
MEMORANDUM
TO: Mayor Mullet and City Council
FROM: Public Works Directort[~
DATE: January 7, 2003
RE: Design Build Contracts
I wanted to follow up the discussion last night with some further information on
design build contracts. I have attached a couple of information papers that defines a
design build contract and goes on to outline the advantages and disadvantages.
There are definite advantages to the concept:
· City would only work with a single point of contact;
· Hopefully the project would be completed in less time;
· Reduction in claims;
· Warranty of performance improves.
Them can be some very distinct disadvantages or difficulties:
· Defining project scope and cost can be' very difficult;
· Relationship and loyalties among the parties - the designer usually
represents the owner during construction, not any more;
· Designer's standard of care - ordinarily a designer is held
responsible for exercising the degree of skill or care that the
average engineer would employ and does not guarantee a
successful outcome for his services; However a contractor does
warrant that the result of their services will be a succeSsful project,
provided that the design was appropriate.
· No clear methodology for handling change orders - are they
allowed or not?
· Insurance/Bonding Problems
One difficulty that we face is trying to do something new. We are trying to use a
"competitively bid, firm-fixed priced" contract mechanism for some of our transportation
projects, but WSDOT is wedded to using "unit-priced" contracts. There is a big inertia
associated with innovation - See second attachment.
Hope this helps.
Design Build Construction: Advantages and Drawbacks Page 1 of 4
Design Build Construction: Advantages and Drawbacks
Mark C. Friedlander and Kenneth M. Roberts
An important part of the decision to construct a new facility is determining how to have it designed and
built. Traditionally in the United States, an owner would hire an engineer to design the facility and then
circulate the completed plans to several contractors for competitive bidding. Although there are many
variations on this theme, there is a different and better method which is rapidly growing in popularity:
design build construction, in which the same entity both designs and constructs the facility.
The design build team may be structured in many different ways. The design builder may be a single
firm with both design and construction capacity in-house, or it may be a combination of two or more
firms with complementary abilities. If there are multiple firms, they rn. ay be structured as a joint venture
or with one of the firms prime and the other(s) as subcontractor. The critical aspect is that the owner
contracts with one. entity which has the responsibility for both designing and constructing the facility.
Design build is the fastest growing method of project delivery in the United States and is even more
popular abroad. According to statistics compiled by the Design-Build Institute of America and F.W.
Dodge DATALINE2, from April 1995 to April 1996 the number of design build contracts increased
103% over the previous year. Of a total $212 billion construction market, approximately $37.2 billion
(roughly 18%) was design build. The strongest growth was in the category defined as "Industrial: plants,
refineries, factories and warehouses," in which design build was up more than 300% from the previous
year.
The growth of design build has been fueled by owners who perceive significant advantages resulting
from design build compared to more traditional project delivery methods. These advantages include:
Shortened project delivery, time, Owners perceive the shorter duration of design build projects as
being the most important advantage design build has to offer. When the same entity is both designing
and constructing the facility, procurement and initial construction can commence long prior to
completion of the design. The last months of the design phase overlap the first months of the
procurement/construction phase, resulting in time savings compared to the traditional end-to-end
sequence. This both reduces construction cost and hastens the flow of revenue.
In a traditional project structure, in which the designer and contractor are different entities, it is also
possible to begin procurement and construction prior to completion of the design. This is called fast
tracking. However, fast tracking has largely fallen into disrepute because of the potential for claims and
change order abuses. Contractors often claimed that aspects of the design were completed in an
unanticipated manner, resulting in sizeable extras.
Single t~oint responsibility.. Nearly as important to owners is the broad scope of the design builder's
resp~on~ibility for the project. In traditional construction, problems with the project often result in finger-
pointing, with the designer blaming the contractor and vice versa for problems in the plant's operation.
Often warranties would not be honored and protracted litigation was necessary to obtain remedies
because the designer and the contractor blamed each other for the problems.
In design build projects, the design builder has full responsibility for the outcome of the project, except
for matters for which the owner is responsible. If a plant fails to develop the guaranteed number of
Design Build Construction: Advantages and Drawbacks Page 2 of 4
kilowatt hours, the design builder is generally responsible, even if the parties do not know the reason for
the failure. The designer and constructor are the same entity, so blaming each other does not excuse the
design builder. Whereas in a traditional prOject, an engineer ordinarily does not guarantee the outcome
of his work, in a design build project the engineer's work is subject to and subsumed within the design
builder's warranty.
Minimized claims and changes. One of the laudable consequences of single point responsibility is the
minimization of claims for extras in design build projects. In traditional construction projects, a
contractor is ordinarily entitled to additional compensation arising out of errors, omissions or
ambiguities in the plans and specifications. However, in design build projects, the designer and
contractor are the same entity, and the design builder cannot request extra compensation on account of
its own design mistakes or assumptions.
There may still be change orders on a design build project. If the owner changes its scope or program
requirements or if the deSign builder encounters unanticipated concealed conditions, a change order is
ordinarily appropriate. However, the single largest source of claims and change orders, problems with
the design, is not available in design build projects.
Performance warranties. Another consequence of single point responsibility is that it is possible to
construct detailed overall performance warranties and to render them meaningful with coordinated
liquidated damages clauses. For example, it is common to require the design builder to warrant that the
facility will yield an output of a certain number of kilowatt hours and to link that requirement with a
liquidated damages clause in the event that the output falls short of the warranty. The liquidated
damages could be quantified as the market value, of each lost kilowatt hour, enabling the owner
essentially to guarantee a minimum revenue stream. The ability to structure the design build contract
with such meaningful remedies may be critical t6 project financing.
Overall performance warranties are generally not available in traditional construction projects because
the constructor may blame the designer and vice versa for the failure. Only with design build is a single
entity sufficiently responsible for the project to give such a warranty. However, even in design build
projects, the performance warranty will generally have exclusions for defective feedstock or other issues
for which the owner is contractually responsible.
Packaging other services. Some design builders have taken the concept of single point responsibility a
step further, assuming additional duties in their contracts. It is common for design builders to provide
turnkey services, which often include performance testing and personnel training, so that the facility is
ready to operate when the owner "tums the key." Other design builders offer financing for their projects,
either from a lending source or via ownership and leaseback agreements. In some industries, design
builders establish operating divisions, offering to design, build and operate the facility.
Continuity between designer and constructor, For some facilities, particularly those involving new
technologies, it is critical ~or both the designer and constructor to understand the technology and related
processes. Plans and specifications can communicate the design concepts, but they do not transfer
expertise from the designer to the contractor. In design build projects, the same entity that had the
expertise to design the project also constructs it.
Even for facilities that do not rely on new technology, there are often communication problems between
the designer and the contractor. Communication difficulties may result in an overly formal or adversarial
approach to the project, usually to the owner's expense and detriment. In a design build project, the
designer and contractor are the same entity, working toward the same goals, unlikely to suffer the same
Design Build Construction: Advantages and Drawbacks Page 3 of 4
kinds of communication problems.
Drawbacks and Obstacles
Experience with design build construction has shown that it suffers from some drawbacks compared to
traditional projects. Also, in some places, there are some obstacles to the use of design build project
delivery methods. These drawbacks and obstacles include:
Loss of checks and balances. In traditional construction, the owner retains the designer during the
construction phase to act as a watchdog to help ensure that the facility is built as designed. The designer
contracts directly with and owes his loyalties to the owner. In design build projects, the designer and
contractor are on the same team and are often, at least technically, adverse to the owner. The degree of
adversarialism may vary with the nature of the contract (lump sum contracts are more adversarial than
reimbursed cost contracts) and may be reduced if the design builder is hoping to do other projects for the
owner.
Nevertheless, the changed incentives may pose problems for an unsophisticated owner. Owners in
design build projects would be well advised either to have experienced engineers in-house or else to
retain an outside consultant for this purpose.
Less owner control. Because the designer is on the contractor's team in a design build project, the
owner may find itself without access to the kind of information that it would have on a traditional
project. Although the design builder may issue regular status reports, the information in them is usually
less useful to an owner than what would ordinarily be provided by an engineer loyal to the owner.
Similarly, the relationship between the designer and contractor may cause plans to be prepared with less
than the traditional degree of detail, which may adversely affect the owner's ability to understand and
control design intent.
This drawback can be overcome by advance planning. The design build contract should specify the
kinds of information and detail that the design builder must supply to the owner. The owner must have
available sufficiently knowledgeable and experienced personnel or consultants to understand and
analyze the information provided by the design builder.
Difficulty obtaining competitive bidding~ Design build projects do not lend themselves easily to
competitive bidding. The design builder is chosen at the commencement of the'Project, and there is
ordinarily little competitive pressure on the contractor. However, to some extent, competitive pressures
can be generated by requiring that each trade contract be competitively bid. And the compensating
advantage to the inability to competitively bid the project as a whole is that a fn'm price and schedule
can be guaranteed far earlier than in traditional construction.
Institutional obstacles. Particularly in some areas in the United States, state and municipal laws and
regulations severely limit or restrict the use of design build. Many states have competitive bidding
requirements for public projects or projects funded with public money. Licensing restrictions for design
professionals and contractors may restrict the types of design build business structures. Insurance and
bonding may be more complicated to arrange in a design build project. However, public laws and
regulations have been changing as the popularity of design build continues to grow, and the insurance
and bonding industries are in the process of developing new products tailored to design build.
The Design Build Contract
Design Build Construction: Advantages and Drawbacks Page 4 of 4
In design build projects, the owner's most important protection is the terms of the design build contract.
This is particularly true in light of the loss of checks and balances. It is beyond the scope of this article
to provide a list of important contract provisions, but owners should carefully consider the following
observations and advice.
Each design builder's standard proposal or contract form always favors the de~lgn builder. The very-
structure of the interactions between the parties is typically designed to favor the design builder. For
example, even seemingly innocuous provisions pertaining to owner approval of the design at various
stages can be used to transfer liability from the design builder to the owner when construction in
accordance with the plans fails to achieve the desired results.
The standard form contract documents prepared by trade organizations (such as the AIA, AGC or
EJCDC) rarely serve owners' purposes without substantial modifications. By their nature, they must be
uniformly applicable and are therefore too generic for many types of projects. Furthermore, they are
usually drafted to favor the trade organization that publishes them.
An owner embarking on a design build project would be well advised to work closely with a lawyer
experienced in projects of that type to prepare a customized design build contract. The contract should
be based in part on information and provisions in the design builder's proposal. However, it should avoid
incorporating the proposal in its entirety and should carefully craft the parties' rights and remedies so
that it reflects their actual assumptions and understandings about the project. Contrary to the practice of
many members of the construction industry, the contract should be treated as the essence and
embodiment of the parties' agreement, not as a collection of boilerplate provisions to be negotiated after
the deal has been made.
This memorandum has been prepared for the general information of clients and friends of the firm. It is
not meant to provide legal advice with respect to any specific matter. Under the Illinois Rules of
Professional Conduct, it may be considered advertising material.
~l Return to the Design Build Articles page
WSDOT Design Build
Innovative Contracting
What is Design Build?
Design-build means contracting with a single entity for performing both design and
construction on an entire project.
In a traditional WSDOT contract, the design process is completed independent of the
construction contract (Design-bid-build). This separation allows WSDOT to minimize
potential impacts to third parties by removing time as a critical component of the
design. Right-of-way environmental permits local agency agreements and utility
agreements are all either very well defined or in place prior to awarding a construction
contract. This process minimizes potential risks but requires a very linear approach
toward completing the project. Possible design improvements during construction can
become costly and time consuming since they are made after the design is 100%
complete and frequently under a very tight contractual timeline.
The attractiveness of design-build lies mainly in the promise of innovation stemming
from the designer/builder collaboration. If the process is applied to the right project
with the right controls in place the public gets a quality product in a shorter time.
Timelines
Traditional
Designers design the project
Builders build according to the design
Design improvements during construction can become costly and time consuming
Design-Build
Initial design takes place with feedback from builder partner
Design proceeds and construction begins
Feedback continues as design and then construction are completed
Design-Builder for Transportation Projects
As a result of recent pressures both public and private public agencies have
begun
experimenting with contracting methods that reduce the total project completion
timeline. Design-build is being used by state transportation agencies around the
country and has been successful for many years in Europe on some types of
transportation projects. It is widely used int his country and in Europe on plant and
facility construction projects.
The 1998 Washington State Legislature authorized a test of design-build for
transportation facilities. WSDOT is testing the design-build process on the SR 500.
Thurston Way Interchange project.
Design-build is one delivery method in WSDOT's toolbox and is not intended to replace
the standard design-bid-build method. On projects where completion time is extremely
important, design-build may be a viable alternative.
WSDOT Design-Build Program
Enabling Legislation
WSDOT's current design-build legislation is contained in the following RCW's:
RCW 47.20.780
RCW 47.20.785
The 2001 Washington State Legislature passed legislation that expanded WSDOT's
design-build authority. The minimum project size for design-build is set at $10 million.
The process will be revisited by April 2008.
The following RCW specifies how certain aspects of the design-build pilot projects must
be conducted:
RCW 39.10.051
WSDOT Design -Build
Back to the top
Design-Build Prolect Criteria
Prolect Criteria
Funding
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WSDOT Design -Build Page 5 of 7
Opportunities
Given the combination of designer's and contractors workforce, opportunities for
acceleration or innovation exist that could produce either a faster final project delivery
or a superior final project.
Back to the too
WSDOT Pilot Project Overview
The 1998 Washington State Legislature directed WSDOT to develop a design -build
process and construct two design -build pilot projects. WSDOT interviewed
transportation agencies nationwide in order to identify current design -build best
practices. The resulting Guidebook for_Desian -Build Highway Project Development was
used by WSDOT to develop the pilot projects.
Due to subsequent funding variations, WSDOT was able to proceed with only one
design -build project. WSDOT is currently in the process of evaluating design -build as a
contracting tool on the SR 500 Thurston Way Interchange in Vancouver, Washington.
In developing the pilot project, WSDOT made a commitment to provide a fair analysis
of the design -build process. The University of Colorado Boulder was contracted to
evaluate the process. Through a series of interviews, both inside and outside of
WSDOT, the University of Colorado Boulder contacted as many individuals involved
with the process as possible. The study has produced two interim reports. A final report
will be completed by the winter of 2002.
The first interim report focused on WSDOT's Request for Qualifications (RFQ) /Request
for Proposal (RFP) process. Companies that expressed an interest but did not submit a
statement of qualifications were contacted, as were all companies that submitted
statements of qualifications. Immediately following the analysis of the Best and Final
Proposals, both WSDOT personnel and design builder personnel were interviewed to
obtain their impressions of the process.
The second interim report focused on day -to -day contract administration. Design
builder personnel and WSDOT project personnel were interviewed to determine how
the design -build process was working.
The final report will also include interviews with personnel involved with the process.
The time required and costs for a design -build delivery will be compared to a standard
design- bid -build project. This final report will be completed by the winter of 2002.
In addition to this outside study, WSDOT has tracked all issues as they have arisen on
the project. A WSDOT -only technical team reviews these issues to determine whether
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