Risky, yes, but perhaps a better way

Five years ago, Rhode Island used what for the state was, at the time, still a relatively novel approach to renovating the terminal at T.F. Green Airport in Warwick and building the new Interlink intermodal station next door.
Known as “construction manager at-risk,” the nontraditional procurement system is now widely used to complete large building projects in both the public and private sectors across the country and helped both airport projects come in on time and under budget.
But even before the T.F. Green projects were completed, legal challenges to the use of construction manager at-risk at the University of Rhode Island had chilled its use.
Lawmakers passed a bill in 2011 allowing construction manager at-risk under certain circumstances, but builders and state agencies described the process laid out by the resulting statute as vague and impractical to actually try.
“Anecdotally, agencies have looked at this and said, ‘We do not know how to do this,’ ” said Michael D. Mitchell, chief of legal services at the R.I. Department of Administration. “I believe there were projects where agencies wanted to use it and didn’t. There have been no requests since the [2011 law] was enacted.”
While traditional public-sector procurement rules require an agency to select a general contractor based on the lowest upfront bid for the entire project, construction manager at-risk allows an agency to select a contractor based on a range of factors and then work collaboratively with it to keep costs down.
Once a builder is selected, it works with the architect and owner to decide how the project should be executed, as well as what its cost ceiling should be.
“It helps the owner to know more about the project early on to make a more informed decisions about it, and then the construction manager executes those decisions,” said Bill Bryan, senior project executive at Gilbane Building Co., which managed the Interlink project. If the project comes in below the maximum price, the owner keeps the savings. If the builder needs to make changes within the agreed scope of work, they pick up the added cost.
Although less appropriate for simple projects, builders say construction manager at-risk produces a much more efficient, cooperative environment for large, complex projects, especially those that take place while a facility is still in use.
“Projects don’t wind up on time and on budget by accident,” said Ron Simoneau, vice president at Shawmut Design and Construction. “This [approach] allows the builder to come on board early to drive the process. It is great for phased projects where how you build is as important as what you are building.”
So this year, the General Assembly passed a bill that became law spelling out in detail when an agency can use the construction manager at-risk method of procurement in the hope it will make it easier to use.
“Even though [construction manager at-risk] is on the books now, the language is vague and there is nothing that says in which circumstances you can or can’t do it,” said Rep. John G. Edwards, D-Tiverton, sponsor of the bill and a project manager at general contractor H.V. Collins Co. in Providence. “Overall, it just cleans it up mechanically so the state can employ this procurement method. I don’t think the state has taken advantage of it like other states have.”
The bill includes 11 factors the state can use to justify using construction manager at-risk instead of the traditional lowest-bid general contractor method of procurement.
They include:
• The size, scope and estimated cost of the project.
• The complexity of the project, including phasing, adjacent structures and demolition.
• Ability to fast-track a project.
• Potential to achieve minority or woman-owned business participation. The bill only applies to nonroadway projects with a cost of $5 million or more. Highway projects using federal dollars are typically governed by federal procurement rules.
Simoneau at Shawmut said people shouldn’t think of construction manager at-risk as no-bid contracting, as individual pieces of each project are competitively bid, just not in the same way as traditional design-bid-build.
For example, if the state were to, say, expand the T.F. Green terminal again using construction manager at-risk, it would hire an independent architect and, around the same time, choose a project manager based mostly on their qualifications, including what they intend to charge for their own services.
Then the architect, state officials and project manager would work together on the design and how it would be executed most efficiently before negotiating a maximum project cost.
Once the design is set, the project manager would seek bids for subcontracts working with the owner, instead of independently, to find the best value.
So which future state projects might be good candidates for construction manager at-risk?
Simoneau said colleges, including many private institutions in Rhode Island, have used construction manager at-risk for a long time, so something like the University of Rhode Island’s new $125 million engineering school, should it be approved by voters, is a good candidate.
The $45 million Garrahy parking garage proposal, however, might not be such a great fit for construction manager at-risk, as new parking garages are relatively straightforward from a construction standpoint, he said.
Mitchell at the Department of Administration said the state was considering using construction manager at-risk for the new Rhode Island Veterans Home in Bristol.
Because of the success with the last two airport projects, R.I. Airport Corporation General Counsel Peter Frazier said RIAC would consider using the method in the future. •

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