Presented at Oak Harbor City Council meeting on April 5, 2016.

1. Clean Water Facility
Hoffman Construction
Guaranteed Maximum Price #7
Deep Concrete Work
4/5/2016
City Council Meeting

2. Tonight’s Topics
4/5/2016City Council Meeting 2
• Reminder of GCCM decision process
• Overview of GMP #7
• Definition of “Heavy Civil” and reasoning for self-performed work
• Third party validation process for GMP #7 cost
• Recommended action

3. Why GC/CM?
4/5/2016City Council Meeting 3
• Why GC/CM?
• Allows the City to identify project risks early in the project
• Added value by including contractor feedback early
• Allows the project to be constructed quicker than design-bid-build
• Selection based on fee, in addition to other factors
• Hoffman was low bid at 4.28% which includes bonds & insurance (±2%)
• Actual profit to manage project = ±2.28%

4. • GMP#7 includes the following
• GE/Zenon (GMP#1) contract revisions
• Sheet pile change of conditions (shattering erratic rocks)
• Allowances
• water testing
• crack repair
• mechanical detailing
• Emergency repair to RBC surge tank (not charged to project)
• Deep concrete work for MBR & aeration structures
GMP #7 Overview
4/5/2016City Council Meeting 4
Needed whether
we bid or
negotiate the
concrete work

5. GMP #7 Summary
4/5/2016City Council Meeting 5
Category Amount
Direct Costs $ 6,239,185
Negotiated Support Services $ 1,697,069
Risk Contingency (3.5%) per RCW 39.10 $ 277,769
Owner Contingency (2.0%) $ 158,752
Specified General Conditions $ 599,200
GCCM Fee (4.28%) $ 384,400
GMP Total (w/o sales tax) $9,355,968
Sales Tax $813,969
GMP Total (w/o sales tax) $10,169,937

6. Cost Item Amount
Deep Concrete Work $5,444,830
GE/Zenon Changes $42,278
Sheet Pile Change of
Conditions
$76,942
Allowances $225,000
Emergency repair $45,000
Other site work $405,135
Total Direct Costs $6,239,185
Direct Costs
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Negotiated
“Heavy Civil”

7. Why use “Heavy Civil”?
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• Greater control of the schedule
• Fewer change orders
• Reduction in management costs
• Larger number of knowns vs. unknowns in the concrete work
• Increased ability to find cost savings
• Already value engineered -$100k
• Greater savings possible if schedule and manpower can be reduced
• Ability to make changes on the fly as the plans are finished

8. Deep Concrete Work
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• “Heavy Civil” per RCW 39.10 (Negotiated Work)
• Cost plus
• Known Elements
• Concrete cost and quantity (validated cost per yard)
• Rebar cost (bid)
• Good estimate of manpower (resource loaded schedule)
• Managed Elements
• Manpower & Schedule

9. Deep Concrete Work
Validation of Negotiated Work
4/5/2016City Council Meeting 9
• Cost must be independently validated per RCW 39.10.350(5)
• Cost Negotiation
• Staff
• Cost Validation
• KBA Cost Validation Letter (Attachment C)
• Reviewed by OAC
• Cost Accounting
• System in place to monitor resource loaded schedule
• Daily, weekly and monthly project tracking

10. Why is there a “Heavy Civil” fee?
4/5/2016City Council Meeting 10
• Hoffman is assuming greater risk
• If the concrete work were bid, the fee would be included in the bid
• If we were bidding, any efficiencies wouldn’t be transparent
• If we cut a month off the schedule, the City wouldn’t see the benefit.

11. Is the “Heavy Civil” fee reasonable?
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• Data on other recent “Heavy Civil” Bids - Hoffman

12. Negotiated Work Profit
4/5/2016City Council Meeting 12

13. Is the “Heavy Civil” fee reasonable?
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• Data on other recent “Heavy Civil” Bids - Hoffman
• What about the industry publications? – OAC

14. 4/5/2016City Council Meeting 14

15. Is the “Heavy Civil” fee reasonable?
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• Data on other recent “Heavy Civil” Bids - Hoffman
• What about the industry publications? – OAC
• How does WSDOT look at this type of work? - KBA

16. • Percentages for overhead, general company overhead, profit,
bonding, insurance, B&O tax and any other costs incurred
(WSDOT 1-09.6)
• Labor = 29%
• Materials = 21%
• Equipment = 21%
• Services = 21%
• Subcontractor markup = 7% for amounts greater than $100,000
WSDOT Force Account
4/5/2016City Council Meeting 16

17. Is the “Heavy Civil” fee reasonable?
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• Data on other recent “Heavy Civil” Bids - Hoffman
• What about the industry publications? – OAC
• How does WSDOT look at this type of work? – KBA
• How do “Heavy Civil” and Bid work compare? - Staff

18. “Heavy Civil” vs. Bid
“Heavy Civil”
Direct Cost $ 4,427,156
GC's $ 614,354
Insurance and bonds 0% $ -
Profit 8% $ 403,321
Subtotal $ 5,444,830
GC/CM Fee 4.28% $ 233,039
Total $ 5,677,869
Bid (5% profit)
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Direct Cost $ 4,341,510
GC's $ 700,000
Insurance and bonds 2% $ 100,830
Profit 5% $ 252,075
Subtotal $ 5,394,415
GC/CM Fee 4.28% $ 230,881
Total $ 5,625,296

19. “Heavy Civil” vs. Bid
“Heavy Civil”
Direct Cost $ 4,427,156
GC's $ 614,354
Insurance and bonds 0% $ -
Profit 8% $ 403,321
Subtotal $ 5,444,830
GC/CM Fee 4.28% $ 233,039
Total $ 5,677,869
Bid (10% profit)
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Direct Cost $ 4,341,510
GC's $ 700,000
Insurance and bonds 2% $ 100,830
Profit 10% $ 504,151
Subtotal $ 5,646,491
GC/CM Fee 4.28% $ 241,670
Total $ 5,888,161

20. Hoffman Contract Summary
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Service
Contract Amount
w/o Sales Tax
Preconstruction $ 790,050
GMP#1 - MBR/UV $ 2,553,317
GMP#2 - Outfall $ 1,991,249
GMP#3 - Site Prep A $ 836,130
GMP#4 - Site Prep B $ 5,109,549
GMP#5 - Solids Dryer $ 2,028,222
GMP#7 - Site Prep C $ 3,966,503
GMP#7 – Deep Concrete $ 9,355,968
Total $ 26,630,988

21. • Authorize the Mayor to sign AIA Document A133 – 2009 Exhibit A
(GMP #7) in the amount of $9,355,968 plus Sales Tax ($813,969)
with Hoffman Construction for Deep Concrete Work at Area 30 &
Misc. Changes.
Recommended Action
4/5/2016City Council Meeting 21

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