Letters, Winter 2016

MASSPORT HIGHLIGHTS MISPERCEPTION

I am writing in response to Jack Sullivan’s informative article (“Contracting system isn’t saving money,” Fall ’15) to correct a misperception some readers may take from the piece.

Initial estimates are not a guaranteed maximum price and one needs to clearly differentiate the initial good faith estimate—which Massport requests when the design is only 15 percent complete—from the guaranteed maximum price, which is given when the design is 60 percent complete.

In the case of Terminal B, the project had three components: the terminal renovation and addition, the TSA checked-baggage inspection system, and the airline and club equipment. Each of the aforementioned pieces had its own budget. The initial estimate referred to in the article was for the first component only. However, the final cost referred to was for all three components, which included a request from United Airlines to add two more gates and associated support to the original project.

The project was actually finished at a cost below the guaranteed price. We believe that CM-at-Risk provides a much faster construction schedule, brings large projects to completion faster, and leads to construction of a superior product.

Sam Sleiman
Director, Capital Programs & Environmental Affairs
Massachusetts Port Authority

 

CONTRARY TO STORY, CM-AT-RISK IS WORKING

The Associated General Contractors of Massachusetts strongly disagrees with the premise, content, and untenable conclusions in “Contracting System Isn’t Saving Money.” Your headline implies that Construction Manager-at-Risk has been unsuccessful. We believe there is considerable evidence to the contrary, which was minimally acknowledged in your article. In the 10 years since this alternative delivery method has been in use, CM-at-Risk has proven to be an effective and preferred choice for scores of state and local building projects.

CM-at-Risk was not adopted, as the article suggests, as a result of the Big Dig. It was a response to protests by a chorus of building authorities to repeal, replace, or reform the restrictive and often contentious Chapter 149 “design-bid-build” method, the sole option available to public agencies at that time. Prior to January 2005, when CM-at-Risk was authorized for use, media reports about local school project delays, cost overruns, and cyclical litigation between public owners, designers, and contractors were commonplace. By 2001, dissatisfaction became so widespread that many municipalities began filing home-rule petitions for an exemption from Chapter 149 in an effort to secure a saner construction experience. By 2003, the Legislature responded by launching the Public Construction Reform Task Force that unanimously recommended (among many reforms) the CM-at-Risk option for building projects.

The comparison between CM-at-Risk and the Green Line extension is highly flawed and disingenuous. Although the MBTA has had success with Design-Build since 2005, it sought—for whatever reason—and secured special legislation completely unhinged from and without any similarity to the CM-at-Risk statute for the Green Line extension project. Not only does the article completely ignore the distinction between the two statutes, it cites the T’s cost overruns and directly links them to the CM-at-Risk statute that has worked so well for the past decade on building projects.

The characterization of the Supreme Judicial Court’s recent decision in the Coghlin case as “a blow to CM-at-Risk” is unfounded and presumes the outcome of litigation that is far from over. The case was a procedural decision allowing the construction manager to present its case through evidence regarding the comparative responsibilities of the project participants. How those responsibilities and any costs are divided is a matter for the court to determine at a future date. It should be noted that this suit was the first litigation of its type. The paucity of litigation after nearly a decade of use is a very positive contrast to the volume of litigation accompanying design-bid-build projects in the years leading up to the 2004 Public Construction Reform Law.

Contrary to what was stated in the article, Newton North High School ultimately benefited from CM-at-Risk. Despite the major changes in the scale of the project—in addition to architectural team changes, discovery of unanticipated site conditions, and material pricing escalations—once CM-at-Risk was selected as the new delivery model in 2007, the project was constructed on time with the guaranteed maximum price established by Newton. This is a real measure of the success of CM-at-Risk, which, notably, Newton has adopted for several more recent projects.

The paragraph describing the cost overruns at Logan’s Terminal B is grossly misleading. After demeaning the decision by the construction manager to contain costs (that’s the point) by engineering out a larger waiting area, the article, almost as an afterthought, acknowledges that the $53 million cost overrun changes were the result of the TSA adding extra security measures. Owner-initiated changes in the scope of projects already underway are going to increase costs under any project delivery method.

The section entitled “No Good Data” seriously calls into question the article’s premise. The first half of the article presumes CM-at-Risk to be outrageously expensive, yet it is finally admitted that “final reconciliation of costs” on half the school projects is not complete. Further, the author’s own arguments are undermined when it is reported that the Inspector General gave high marks to CM-at-Risk on the projects that had been completed by 2009.

The argument that CM-at-Risk limits competition is inconsistent with observable trends in the construction marketplace. The availability of CM-at-Risk for public building construction since 2005 has resulted in a significant number of qualified construction managers with private sector experience entering the public marketplace. If awarding authorities lack internal management staff and expertise to effectively manage both the CM-at-Risk process and construction managers,  there is statutory permission for state officials to avail the services of an outside, professional owner’s project manager to assist them.

Many of the most complex and award-winning buildings across the state have been constructed using CM-at-Risk. Those contractors who complain of being locked out need to realize that if they want to perform both design-bid-build and CM-at-Risk, they need to be skilled in both. Those unable or unwilling to adapt to new methods are still able to participate on the many ‘design-bid-build’ projects routinely procured.

Robert L. Petrucelli
President, CEO
Associated General Contractors of MA