Editor’s note: If you think lowest-bid contracts don’t necessarily maximize the taxpayer’s dollar, you’re not alone. With cities, counties, and states still rebounding from Great Recession budget cuts, alternative project delivery methods are becoming more popular.
In 2012, Ohio began allowing public agencies to award construction manager, construction management at risk (CMAR), design-build, and general contracting contracts. Two years later, Fremont became the first city to use CMAR.
Unlike design-build, where the design and construction contractors partner on a single contract, with CMAR the same company serves as consultant during design and as general contractor during construction. The CMAR contractor provides project management assistance before construction via scheduling, budgeting, and construction advice during the planning and design phases. Unlike construction manager delivery, the CMAR contractor is held accountable for ensuring project completion on-time and on-budget, and enters into subcontracts with trade contractors.
As a result, the Division of Water Pollution Control saved almost $6 million on a $57 million treatment plant overhaul to increase capacity from 10 mgd to 24 mgd and meet future total phosphorous (TP) and total nitrogen (TN) requirements via three-stage (or A20, for “anaerobic/anoxic/oxic”) biological nutrient removal (BNR). The renovated facility’s new liquids treatment technology has met state and federal regulatory requirements since completion in February 2016.
We asked Water Pollution Control Center Superintendent Jeff Lamson and Bryan Canzoneri, project manager for CMAR contractor MWH Constructors Inc. (MWHC), to explain how start-to-finish collaboration saves money. This was the first time MWHC had worked with the city. Founded in 1993, MWHC is a wholly owned subsidiary of MWH Global that provides single-source solutions for the water and energy markets.
Like many parts of the country, Fremont, Ohio, relies on an aging and increasingly ineffective wastewater and stormwater collection system. The city’s Water Pollution Control Center (WPCC) was built in 1949, but sections of the collection system were buried more than 100 years ago.
In 2012, the Ohio EPA imposed a National Pollutant Discharge Elimination System (NPDES) discharge permit requiring the city of 17,000 residents to rebuild the treatment plant’s liquids treatment phase by January 2016 and complete other long-term control plan collection system improvements by 2028.
Why did the city decide to try an alternative project delivery method?
Fremont had used design-bid-build on large improvement projects in the past and encountered several costly issues that could have been prevented with more team involvement during each step of the design and construction processes. In one case, the errors resulted in an increase of tens of millions of dollars over the initial project budget.
For the wastewater treatment plant upgrade, the Division of Water Pollution Control’s goals were to stay on or under budget; be heavily involved in procurement, especially regarding process equipment; and eliminate multiple subcontracts. Division managers also wanted a partner to serve as the primary contact, help own the risk, and be involved early in the design phase.
Why was construction management at risk (CMAR) better for this project than other alternative delivery methods, such as design-build?
When Ohio EPA gave Fremont a narrow timeframe to complete upgrades that would reduce or eliminate combined sewer overflow (CSO)-related pollution, the city established the following project parameters:
- Hire a construction management partner to oversee completion from design through construction
- Ensure separate contracts to handle design and construction to improve project oversight
- Engage in a procurement process that’s quick and supports selection of local subcontractors and suppliers
- Establish a guaranteed maximum price (GMP) to avoid cost overruns
City employees began educating themselves on project-delivery options through individual research, attending workshops, and meeting with experts. Based on its potential for cost savings and strong project oversight, they identified CMAR as the best way to meet these requirements.
The decision made Fremont the first Ohio city to use the method on what was to become the city’s largest infrastructure project.
What design and/or construction challenges made CMAR best-suited for this project?
The improvements had to be squeezed into a small footprint while keeping the current facility operational and meeting a tight regulatory compliance deadline. In addition to value-engineering constructability ideas to keep costs down, MWHC’s role as construction manager was to work with treatment plant managers to disrupt operations as little as possible. Several studies were conducted during the initial design phases and phasing became a carefully orchestrated juggling act.
For example, during construction, a large portion of the new influent line conflicted with the plant’s existing potable water feed. MWHC developed a plan to install the new feed earlier than scheduled so the potable water feed could remain operational. This gave the team more time to take the old line out of service and demolish older facilities in a later phase when installing the new influent line.
Another example: When it was time to integrate the new liquids process, the treatment train had to transition from the old equipment to the new. The division chose A20 (for anaerobic/anoxic/oxic) – an active sludge process that removes nutrients biologically instead of chemically – not because Ohio EPA required the process but to be able to meet more stringent requirements in the future. With the new solids treatment process being constructed in existing structures and tanks, the transition required many systems to run in an interim mode of operation.
Combining the return activated sludge thickening and dewatering into a single facility saved approximately $1 million. Using a pre-engineered structure instead of designing and building administrative offices saved $500,000. Combined with many smaller adjustments, these two changes enabled construction to begin before design had reached 100%. That, in turn, enabled the liquid process portion of the project to be completed in line with state regulators’ tight deadline and full project completion ahead of the city’s deadline.
The construction cost savings were identified through close collaboration among teams during early design phases. For example, MWHC was tasked with reviewing design about 30% of the way through and create a projection for additional work and components, which indicated the project was on track to exceed initial estimates. In response, the team planned additional value engineering workshops to adjust the design and thus lower the cost.
Ultimately, the delivery method saved $5.5 million during design and more than $500,000 during construction.
What were the city’s concerns about using CMAR for the first time?
Treatment plant managers feared losing control. However, issues regarding costs, risks, available design, and material alternatives were jointly managed.
They also wanted to be involved in selecting and acquiring equipment. To ensure both partners were comfortable with the purchased equipment and minimize the risk of unforeseen costs, the city allowed all equipment bids to be submitted before deciding on a guaranteed maximum price (GMP) for each of the three construction phases.
If a governing body had to sign off on the alternative delivery method, was there pushback?
Fremont’s city council had to approve the use of CMAR, so education was critical.
MWHC and city employees explained how the process works and its advantages during meetings. Site tours brought CMAR to life and illustrated how it produces cost-effective, on-time projects.
In an in-depth presentation to council members, MWHC representatives provided details of previous CMAR successes for public project owners. From the bidding process through project completion, the city had continuous, open communication with project partners and the community, delivering regular budget updates via newspapers and ensuring all stakeholders understood the process, next steps, and project status.
Although this was Ohio’s first large-scale CMAR project and would become Fremont’s largest public project, elected officials readily signed off on the alternative delivery method.