Many school districts and other public agencies are considering using a special process for capital projects, by engaging the contractor through the construction manager / general contractor (“CM/GC”) method. Use of this procurement method requires several extra steps that are not applicable to the standard bid process. Special care must be taken in its implementation.
Advantages
A key concept behind CM/GC procurement is that the contractor is selected early in the design process, before the scope and price of the project are set. The contractor agrees to participate in development of the design, providing input on such matters as constructability, alternative approaches, and cost estimating, for a set or not-to-exceed fee. When the project scope is established and subcontract bids are available, the price is set through a contract amendment. Because the contractor becomes familiar with the design earlier in the process than through the traditional bid method, its input will provide value in establishing the project parameters, and there may be schedule advantages over use of the traditional process. When guaranteed maximum price contracting is used in conjunction with CM/GC, there is also an opportunity for the agency to realize cost savings if the actual cost of the construction is less than the contracted guaranteed maximum price.
Procurement
Different rules apply to contracting through the CM/GC process than traditional contractor bid procurement. First, exemption from competitive procurement requires the agency to adopt findings justifying the exemption. ORS 279C.335. ORS 279C.337 then provides governing standards for the procurement itself. Among other things, that statute requires the public agency to follow the model contracting rules adopted by the state Attorney General. ORS 279C.337(2)(h). Those rules include detailed standards for when CM/GC contracting is justified, requirements for inclusion in the RFP and construction contract, and the mandatory process for implementation of the contract itself. OAR 137-049-0690. The interplay of the statute and these rules is complex, and has changed over the years. Advance preparation by the agency for compliance with these standards is critical.
Contracting
After the contractor is selected, the agency may, if the procurement documents so state, negotiate the terms of the contract. ORS 279C.405. Early decisions on the contract form and contract terms are critical, to avoid issues after contractor selection has occurred. The contract form may be based either on an industry standard, such as the CM/GC contract form promulgated by the American Institute of Architects, or a form specially developed for the agency. In either case, careful advance review is required to ensure the contract meets the multiple required contracting standards in the statute and rules.
Administration
Agencies anticipating use of CM/GC procurement are required to properly staff the project. Specifically, the Attorney General Rules state “Contracting Agencies shall use this contracting method only with the assistance of legal counsel with substantial experience and necessary expertise in using the CM/GC Method, as well as knowledgeable staff, consultants or both staff and consultants who have a demonstrated capability of managing the CM/GC process in the necessary disciplines of engineering, construction scheduling and cost control, accounting, legal, Public Contracting and project management.” OAR 137-049-0690(1). Careful consideration of the project team will help avoid later problems inherent in participants who have neither experience with or knowledge of the CM/GC process.