To: Honorable Mayor and Members of Town Council
Through: David L. Corliss, Town Manager
From: Daniel Sailer, P.E., Director of Public Works
Aaron Monks, CIP Project Manager
Title
Resolution Approving a Contract with Kraemer North America, LLC, for Construction Management and General Contractor Work for the Crystal Valley Interchange Project
Body
________________________________________________________________________________
Executive Summary
The purpose of this item is to gain approval by Town Council of the Construction Manager/General Contractor (CM/GC) services agreement with Kraemer.
Due to the complexity of this project, staff utilized CDOT’s alternative procurement delivery workshop to assess which method is best suited to complete the design and construction phases of this project. Traditional Design-Bid-Build, Design-Build, and CM/GC methods were considered. The project team identified CM/GC as the preferred delivery method, having the contractor included as part of the design team was deemed to be the most effective way to obtain the project goals.
Town staff posted the Request for Proposal (RFP) for CM/GC services on November 17, 2021. Six (6) qualified contractors submitted proposals. A selection panel, including representatives from the Town, Douglas County, and CDOT reviewed each proposal, utilizing specific criteria and scoring, to invite three of the six contractors to interview and submit a preconstruction fee along with a management price percentage. The three shortlisted contractors were; Kraemer North America, SEMA Construction, and Kiewit Infrastructure. The panel then selected Kraemer based on their total proposal package (proposal, interview, fees) being the best fit for this project to assist with meeting the required project goals.
The preconstruction fee for this service agreement is $450,000, and the current 2022 budget appropriation for this project is adequate for this expenditure. In addition, the agreement sets the management price percentage to be applied to all direct construction costs for this project at 7.0%. This is the overhead, administration, and profit percentage applied to the direct construction costs that make up the total Construction Agreed Price (CAP) for all future construction contracts on this project. Currently in the CM/GC industry, CAP is the preferred terminology for Guaranteed Maximum Price (GMP).
Separate construction contracts will occur with this contractor should the CAP be agreed to by the Town toward the end of the design phase. Town Council will need to approve these separate construction contracts, which will be at or below the CAP at future dates. All individual contracts will be at, or below the CAP.
Notification and Outreach Efforts
The request for proposal for CM/GC services was advertised utilizing the Town’s procurement process. All proposal documents were advertised on the electronic purchasing website (BidNet) that reaches the construction industry.
History of Past Town Council, Boards & Commissions, or Other Discussions
This project has been presented and adopted by Town Council in various forms within several Transportation Master Plan (TMP) updates, which includes the 2017 TMP. The interchange was originally conceptualized in the late 1980’s when the Dawson Ridge subdivisions were approved. Initial FHWA documents were completed in 2004 with the approval of an Environmental Assessment (EA) and Finding of No Significant Impact (FONSI). The project stalled as a result of lack of development on the west side of I-25, and project funding prioritization changes.
In the spring of 2020 the Town applied for a BUILD grant for Design, ROW and Environmental Assessment funding. The Town received notice of award of the $5.4 million grant in late fall of 2020. The Intergovernmental Agreement (IGA) with CDOT was approved at the September 7, 2021 Town Council meeting.
The design services agreement with Jacobs Engineering Group was presented and approved at the June 15, 2021 Town Council meeting.
The Public Works Commission reviewed this item at their March 7, 2022 meeting. The recommendation of the Public Works Commission will be provided at the Town Council meeting.
Discussion
The use of CM/GC provides the best construction service delivery for this complex project. By having the selected contractor be part of the design effort, the design is able to incorporate their construction knowledge into the design. It also increases their understanding of the design package, which assists with minimizing potential change orders during the construction phase. It also allows for a comprehensive understanding of possible construction phasing options to assist with moving into construction at the earliest possible date.
During the design phase, construction packages can emerge as a benefit to the project and meet current project funding. The Town and the CM/GC negotiate a CAP for the construction of the phased package based on the defined scope and schedule. If this price is acceptable to both parties, they execute a contract for construction services, and the construction manager becomes the general contractor.
The selected contractor will have the first opportunity to be awarded all future construction packages. Should any issues arise at not being able to agree to future construction package contracts, the Town has the option of utilizing the traditional open bidding process. This is a rarity, but the Town is protected with this option.
The CM/GC process does not impact the current design schedule. In fact, in most cases, having a contractor assist with conducting constructability reviews, participating in value engineering, risk assessments, providing feedback on costs, assisting with third party coordination (utilities, railroad, etc.), and working with the designers to optimize the cost benefits and the efficiency of the project, including early construction packages can work to accelerate the design schedule. The current schedule is to have preliminary design done by the end of August, 2022. Final design is scheduled to be complete by late spring 2023, and the full construction package by end of June 2023.
The Public Works Department successfully utilized this CM/GC method on the Town’s largest transportation project in its history: the North Meadows Extension. The Town was one of the first local jurisdictions in the state to utilize this method for a transportation project. The insights and staff knowledge gained from that experience will greatly assist with the implementation of CM/GC on this important regional priority project.
CDOT has developed an Innovative Contracting Advisory Committee that consists of members from the contracting, consulting, university, and government communities to garner input on alternative procurement methods, like CM/GC, and to develop selection procedures. The project team utilized CDOT’s developed process for requesting and reviewing proposals for CM/GC services on this project.
CDOT’s process is extremely thorough and well developed. The process is transparent to the contracting community to assist them with understanding all elements of the approval process. In addition, proposal requirements are detailed to gain a full understanding of interested contractors’ qualifications.
The selection process is separated into two stages. The first stage is to advertise the CMGC services RFP, conduct a pre-proposal meeting, and then receive the proposals. Review of these proposals is strictly qualifications-based, with no fee information provided. Proposals are reviewed based on each firm’s personnel experience, understanding of the project goals and challenges, and their abilities to meet these goals and challenges.
The second stage involves interviewing a reduced list (short list) of these contractors to gain additional insight into the firm’s approach and team collaboration. After their interview, the firm is required to submit their preconstruction services fee along with their management price percentage. Final contractor selection is based on the combined two stages scoring, inclusive of fees, achieved through consensus of the review panel. The review panel included the Town Engineering Manager, Town Project Manager, Douglas County representative, two members from CDOT, and one from FHWA as an observer of the process.
Six qualified contractors submitted proposals. The firms included:
• American Civil Contractors
• Flatiron
• Kiewit Infrastructure
• Kraemer North America
• SEMA Construction
• RL Wadsworth
All are extremely reputable firms that have completed large transportation projects within Colorado as well as outside of the state. The selection panel shortlisted three of these six contractors for interviews. Those three were; SEMA, Kraemer, and Kiewit. Based on the combined review of the proposals, interview, and proposed fees, the selection panel identified Kraemer as the firm that brings the best qualifications to this project to meet the project goals.
Kraemer was founded in 1911, and has a long history of experience building complex transportation projects across the country, with roots right here in Castle Rock. Kraemer established a regional office in 1984 in Colorado, and moved to Castle Rock in 1995. Kraemer has constructed several major projects for the Town, the Railroad bridge component of the Southwest Arterial Connection Road, and the North Meadows Extension projects.
Kraemer is experienced in the successful delivery of CM/GC contracts including the recent CDOT I-25 GAP project which utilized this method. They have demonstrated proven performance of completing projects on or ahead of schedule, within budget, and achieving project goals while maintaining the highest standards of quality and safety. Their project team is made up of experienced personnel, and they are committed to ensuring this project meets all of the project goals, as they are a proud member of the Castle Rock Community. Kraemer has done quality work on past Town projects, including the CM/GC on the North Meadows Extension, and are very qualified for delivering the Crystal Valley Interchange project.
Budget Impact
The agreed upon preconstruction fee with Kraemer is $450,000. This amount is under the estimated amount, and adequate funds within the 2022 appropriated project budget account (135-3175-431.78-41) exist to cover this expenditure. To cover any contingency during preconstruction, the total encumbrance for preconstruction work is recommended to be $495,000 ($450,000 plus 10% contingency of $45,000).
The management price percentage being approved with this agreement is 7.0000%. This percentage will be applied to future construction contracts on this project with this contractor upon approval of a CAP. This percentage is applied to direct construction costs to cover overhead, administration, and profit. The total direct construction costs and this management price percentage make up the CAP. These contracts will be approved separately by Town Council at future dates. This percentage does not directly impact the cost of the preconstruction services covered with this agreement. The Town Attorney’s office has reviewed and concurs with the attached agreement language.
As part of the CM/GC process, the contractor will work closely with the Town and design firm to determine construction packages that will benefit the project and utilize the current project funding. An initial thought on a potential early construction package would be the relocation of the East Frontage Road. CM/GC will be able to provide guidance on how the 2022 preconstruction budget of $13,600,000 can be spent effectively to benefit the constructability of the entire project.
To meet the current design schedule of providing a full project construction package in June of 2023, the Town will need full funding for the current estimated construction cost of $62,000,000.
Staff Recommendation
Based on Kraemer’s excellent qualifications and overall top scoring the Public Works Commission and staff recommends that Town Council approve this agreement as introduced by title.
Proposed Motion
“I move to approve the Resolution as introduced by title.”
Attachments
Resolution
Agreement