High-level program and project standards
While all of the above was evolving, we worked to identify resources and develop scope-of-work definitions.
My first order of business was to reorganize to create a strong internal team, which took nearly six months. By instituting a matrix system, we were able to create leadership management positions within disciplines from planning to design and environmental to right of way as well as contracting, finance, and labor relations. This matrix allowed engineers and others to move into higher positions for the life of the program or projects they were assigned. Afterward, these individuals will retreat to their former positions or use their newly learned skills in management positions with our wastewater or other capital programs.
We also decided to split the projects into two programs: local (in the City and County of San Francisco) and regional (outside San Francisco).
Local: 40 projects, including five reservoirs, 21 pump stations, seven valve and pipeline, five water supply, and two support programs with a budget of $360 million. We quickly moved these to the top of the schedule to take advantage of in-house engineering expertise and, because they were being built within current facility footprints, they didn't require intensive environmental reporting.
That left 46 projects for the six other counties — Alameda, San Joaquin, San Mateo, Santa Cruz, Stanislaus, and Tuolomne — as part of the regional effort to build new tunnels and pipelines along the Hetch Hetchy aqueduct, seismically retrofit reservoirs, upgrade and replace tanks and pump stations, and make technical and equipment upgrades to treatment facilities. These larger regional projects have an approved budget of $4.5 billion.
We also utilized a cadre of consultants to help employees, who are directing all aspects of this mega-program, develop program management, program controls, and other aspects of construction management. These partners were selected through a formal request-for-proposal process at the program and regional levels and, in some cases, for specific projects.
While we were getting our internal house in order, we also had to address the perception that working with City Hall is arduous and create a level playing field to attract more bidders. Working with the San Francisco Attorney's Office, we laid the groundwork for a process that's encouraging more qualified bidders to compete for large capital projects. Among the first things we did was to develop:
Mandatory prequalification for local and regional projects.
Alternative contract delivery methods for projects with renewable-energy components, including hydropower generator rewind projects and solar panel installations on city building rooftops. A CM/GC (construction manager at risk) contract, for example, is being used to build our LEED-certified headquarters.
Performance- and incentive-based contracts. For example, the Tesla Disinfection Facility design/build contract includes a value-engineering change proposal (VECP) clause that allows the contractor to propose changes to the contract design and/or specifications that would reduce project cost and/or provide greater value. If accepted, the resulting cost savings are shared with the contractor.
A local business enterprise program that allows firms throughout the region with average gross annual receipts in the prior three fiscal years of less than $14 million to be certified by the San Francisco Human Rights Commission for construction-contracting benefits. Their participation provides a bid discount on projects less than $10 million.
Dispute resolution advisors and three-member dispute review boards. An advisor is required on contracts worth $2 million to $10 million. For contracts of $10 million to $20 million, an advisor is also mandatory but a review board is optional. A board is required for contracts worth $20 million or more.
A project labor agreement that settles disputes and grievances without strikes or lockouts.
An online invoicing system that pays construction companies within 15 days and professional service firms within 30 days. Project managers from both the commission and San Francisco's Department of Public Works use the system to approve their invoices.
In retrospect, all these things are about setting standards. The key to moving from early planning to more than $2 billion in construction within business processes, construction management plans, and detailed construction procedures well ahead of construction.
We have 65 separate procedures to address all possible scenarios: scheduling, environmental reporting, change orders, accounting, right of way, and dispute resolution. They're integrated using Oracle's Construction Management and Primavera P6 Enterprise Project Portfolio Management software programs that, together, comprise our construction management information system (CMIS).