Alternative Project Delivery Mechanisms

The J. K. Spruce Experience Katherine Yates Assistant General Counsel

Overview

• J.K. Spruce #2 planned as early as 1986. • Authorized to proceed without permit in 2004.

• Chose Design-build methodology.

• Issued Two Phase RFP.

• Two Offerors Responded/Awarded July 2005.

• Issued LNTP’s in August 2005 and full NTP in April 2006.

• Provisional acceptance expected no later than March 2010.

Traditional Process

• Chapter 252 of Local Gov. Code governed procurement activities.

• Design-Bid-Build was only available method.

• Bids advertised, opened and awarded publicly.

• Award based on Lowest responsible bidder.

New Processes

• Chapter 271, Subchapter H added in 2001.

• Authorized “best value” determination.

• Five new methods for project delivery: – Competitive sealed proposals – Design-build – Construction manager-agency – Construction manager-at-risk – Job-order contracting

Design-Build process

• Single entity provides design and construction.

• Two phase procurement process: – Phase One RFQ based on qualifications, references, past experience.

– Phase Two RFP based on schedule, implementation plan, technical approach, cost.

• Award to best value offeror.

Design-Build Advantages

• Fast-track schedule and construction • Single point of contact.

• Cost savings due to value engineering.

• Less owner administrative burden during construction phase.

• Potential for minimization of change orders.

Initiation of CPS Energy Process

• Board Resolution selecting “best value” process.

• Engage Owner-Engineer to develop Design Criteria Package.

– Functional specification and conceptual layout.

– Desired equipment margins.

– Quality and performance guarantees.

– Transmission access.

– Geotechnical and environmental information.

• Engaged the services of a surety consultant • Joint development of RFPP/RFP and evaluation matrices.

• Pre pre-bid meeting held with interested parties.

Phase One-RFPP

• RFPP advertised and sent to attendees.

• Pre-bid meeting held with Site visit.

• Evaluation criteria: – Ability to bond penal value of $250 million.

– Financial status.

– Reputation in industry.

– Past experience.

– Resumes of proposed project team. – References.

• Two offerors qualified to proceed to Phase Two.

Phase Two

• Offerors given the RFP.

• Agreement to reimburse losing entity of up to $1 million for preparation costs.

• Evaluation criteria: – costs – Implementation plan – Project schedule – Safety record – Workforce and training plans – Costing methodology – Initial Design drawing and schematics

(con’t.) Phase Two

• Interviews conducted to clarify exceptions and technical response.

• Offerors asked to resubmit responses based on discussion and to provide pricing to remove exceptions.

• Signed agreement “fixing” responses for evaluation.

• Evaluation and recommendation of selected offeror.

• Negotiations with selected offeror and award based on reaching satisfactory contract.

Post Award

• Limited Notices to Proceed: – LNTP #1- Early planning and engineering for procurement of long lead time items.

– LNTP #2- Vendor engineering.

– LNTP #3- Preparatory site construction work – LNTP #4- Material and Equipment purchase release – LNTP #5- Controls upgrade • Full Notice to Proceed upon issuance of permit.

Keys to Success

• Clear and comprehensive Design Criteria package.

• Effective integration of proposed Design-Build Team.

• Full and consistent communication. • Owner involvement.

Commercial Considerations

• Testing and commissioning done by third party.

• Contract price.

• Payment and performance bonds.

• Construction risks.

• Bidding stipend.

• Bonus for early completion.

• Payment of prevailing wage.

• Use of a Local Government Corp.