DESIGN-BID-BUILD DEVELOPMENT AND REVIEW - 6828

 

There are four components to a project using the design-bid-build delivery process:  preliminary plans, working drawings, bid, and construction.  Requirements to start and complete each of these phases, as well as the process to award a design-bid-build contract, are described within this section.  The discussion in this section applies to projects that are overseen by PWB and Finance.

Preliminary Plans Phase

What are preliminary plans?  Preliminary plans, defined in Section 3.00 of the Budget Act, are the initial design of the construction bidding documents for design-bid-build projects.  Section 1.80 of the Budget Act provides one year to encumber preliminary plans authority. 

Preliminary plans are based on the information contained in the COBCP (Section 6808) and/or the budget package (Section 6810).  Typically, the preliminary plans are developed in two distinct steps referred to as schematic design and design development.  The two-step process allows the department and architect/engineer to interact before the design is developed, helping to ensure a mutual understanding of the design objectives, limitations and budget.

1.   Schematic documents:  Schematic documents are the initial architectural and engineering plans prepared during the preliminary plan phase, depicting the designer’s conceptual solution to project needs.  The major difference between schematic documents and design documents is the amount of detail.

2.   Design development documents:  These are the final documents which result from the preliminary plan phase.  For each project, the drawings must be sufficiently descriptive to convey accurately the location, scope, cost, and the nature of the improvement being proposed.

Beginning of phase:  When DGS manages a project on behalf of a department, the preliminary plans phase starts with the request to Finance to release funds for preliminary plans using a Form 22 or a Form 220. Departments that manage their own projects should use a DF-14D to encumber preliminary plans funding if they do not have their own equivalent to the Form 22 or Form 220.  For projects that are not defined in a Budget Act or legislative appropriation, PWB must approve an action to define the cost, scope, and schedule of a project prior to the start of preliminary plans. 

Department’s role:  The department is responsible for obtaining PWB review and approval of preliminary plans prior to expenditure of appropriated funds for subsequent phases.  Section 13332.11(c) of the Government Code requires that any appropriated amounts for working drawings or construction shall be reverted if working drawings or construction start prior to the approval of preliminary plans.  Timeframes for submitting requests for preliminary plans approval to PWB staff are presented in Section 6822 and can be found on the State Public Works Board Calendar at www.spwb.ca.gov.

Finance/PWB’s role related to preliminary plans approval:  Section 13332.11(a) of the Government Code requires both Finance and PWB to approve preliminary plans for all major capital outlay projects to ensure that projects proceeding to working drawings and construction are consistent with the legislatively approved cost and scope.  Section 13332.11(j) requires Finance notification to the Legislature prior to approval of preliminary plans if the estimated cost of the project exceeds 20 percent of the amount recognized by the Legislature.

Value engineering:  If a project is expected to exceed recognized project costs based on the preliminary plans estimate, PWB typically requires value engineering be conducted to determine cost saving strategies prior to preliminary plans approval. The approach is to analyze the functional requirements of a project’s materials, methods, components and subsystems to explore alternate solutions that maintain project efficiency without reducing program value.  During this process, all expenditures related to design, construction, maintenance, operation, replacement, etc., are considered to ensure that any value engineering is cost effective and practical for the useful life of the facility, while maintaining the project scope approved by the Legislature.   

PWB agenda package for preliminary plans:  When submitting requests for approval of preliminary plans, the department provides the following:

1. All information requested in Section 6822, such as the standard fiscal reporting requirements and the agenda package.
2. If working drawing funds are appropriated and there is no concurrent augmentation request, a Form 22 or Form 220 for the working drawings phase;
3. A complete, dated set of preliminary plans and outline specifications, if requested.
4. A description of any value engineering performed;
5. For proposed cost increases, the information required in Section 6833.
6. For proposed scope changes, the information required in Section 6834. 
7. Evidence of CEQA compliance (Section 6826) such as a copy of the filed Negative Declaration or a link to the project within the state clearinghouse at https://ceqanet.opr.ca.gov; and
8. A Summary of Conditions Letter or other document demonstrating the completion of Real Estate Due Diligence (Section 6827).

Preliminary plans presentation meeting:  Departments must meet with PWB staff to present the preliminary plans before PWB staff will consider a request for preliminary plans approval.  The purpose of the meeting is to verify that the project meets all requirements necessary for preliminary plans approval.  After the meeting, if the project qualifies, PWB may opt to delegate approval.

After the PWB has approved preliminary plans:  Finance will sign the DF-14D and if applicable, a Form 22 or Form 220 for the working drawings phase, and distribute them to the department, DGS, and SCO. Once plans are approved, Government Code Section 13332.11(c) requires that a substantial change shall not be made without written approval of Finance.

Working Drawings Development Approval and Proceed to Bid   

What are working drawings?  Working drawings are defined in Section 3.00 of the Budget Act and are the final design phase in preparing the construction bidding documents. In addition, the funding for the bid process is included in the working drawings appropriation. Section 1.80 of the Budget Act provides one year to encumber working drawings authority. The discussion in this section applies to projects that are overseen by PWB and Finance.

Beginning of phase:  Before the working drawing phase can begin, PWB must approve the project’s preliminary plans).  Should working drawings authority be available, Finance will release working drawings funds concurrent with preliminary plans approval. For DGS managed projects, a Form 22 or 220 is used. Departments that manage their own projects should their own equivalent to the Form 22 or Form 220. Should working drawings begin prior to approval of preliminary plans, Section 13332.11(c) of the Government Code requires that any appropriated amounts for working drawings be reverted.

Department role:  Government Code Section 13332.11(c) requires Finance to approve working drawings.  An agenda package is not required unless the drawings result in cost or scope changes. To obtain Finance’s approval of workings drawings, the client department must:

1.   Demonstrate that the working drawings are adequate for bidding and construction of the proposed project. This would include copy of stamps of approval from oversight agencies.  Various statutes require that certain elements of design be reviewed by oversight agencies before proceeding to bid.  Examples of approvals which may be required at the working drawing phase include those from the Division of the State Architect, State Fire Marshal, State Historic Preservation Office, California Department of Health Care Access and Information, and California Coastal Commission.

Finance may require a letter verifying the adequacy of the working drawing documents or elect to review actual working drawings.  If requested, departments must provide Finance with a complete, dated set of working drawings, bid specifications, and a final cost estimate with a statement from the department Director/designee that the documents are adequate for constructing the proposed project.

2.Complete standard fiscal reporting requirements as defined in Section 6822.

3. For proposed cost increases, provide the information required in Section 6833.

4. For proposed scope changes, provide the information required in Section 6834. 

5. Submit evidence of CEQA compliance (Section 6826), such as a copy of the filed Negative Declaration or a link to the project within the state clearinghouse at https://ceqanet.opr.ca.gov/.

6. Submit a Summary of Conditions Letter or other document demonstrating the completion of Real Estate Due Diligence (Section 6827).

Obtaining approval to proceed to bid: Prior to initiating the bidding process, the client department must request approval to proceed to bid. This request is generally submitted concurrently with approval of working drawings, if the construction funding has been appropriated. To obtain Finance approval to proceed to bid, the client department must:

1. Have a construction appropriation:  A construction appropriation for the project must be authorized (Budget Act and/or legislation) prior to advertising the project or issuing the bid.

2. Confirm availability of non-state funds:  For any projects that include non-state funds, the client department must provide proof that those funds are either available (local or private partners) or committed (federal), including a reasonable augmentation reserve, typically 20 percent of the non-state share of total project costs. If the non-state funds are from a federal program that restricts augmentations, the client department must specify the nature of the restriction.

3. Obtain approval of bid alternates:  Public Contract Code allows bids to be accepted on additive or deductive alternates up to 10 percent of the estimated cost of the base project. Government Code Section 13332.11(c) requires Finance approval of bid alternates. Bid alternates cannot be so substantial as to create a scope change. Deductive alternates need to follow the guidelines for value engineering (Section 6828) in which the deduction is cost effective and practical for the useful life of the facility.

The purpose of bid alternates is two-fold: if a project comes in over budget, deductive alternates can help avoid the need to re-bid the project. Conversely, if bids come in under budget, additive alternates can allow project improvements. Bid alternates (which must be bid separately from the main contract) must include all proposed deductive items in priority order followed by all additive items in priority order. Finance encourages submittal of at least three deductive alternates to ensure a successful contract award in the event that all bids submitted exceed budget.

4. Obtain PWB approval for combined bids:  Public Contract Code authorizes DGS to receive bids for the construction of several projects, treated as a single project for bidding purposes as long as those projects are within 100 miles of one another.  PWB must approve any request to combine bids. Departments are required to assign costs to the various projects and appropriations, and to maintain separate cost accounting for each project.

5. Reporting requirements for approval to proceed to bid: 

a.   Standard fiscal reporting requirements as defined in Section 6822; unless already submitted as part of concurrent working drawings approval;

b.   If proposed, a list of additive and deductive alternates in priority order;

c.   For a request to combine bids, a PWB agenda package as defined in Section 6822 and an explanation of the benefits of combined bids in this situation; and

d.   If the request includes non-state funds, proof that those funds are either available (local or private partners) or committed (federal).

Once all documents have been received and validated by PWB, Finance will sign the DF-14D, providing approval to proceed to bid. 

Bid process:  Typical activities performed by the department, or by DGS on behalf of the department, during the bid process include advertising the project in construction trade papers, submission of bids by interested parties, analysis of those bids, and determination of the lowest responsible bidder. Once a valid low bid has been identified for the project, the next step is to award the construction contract.

Construction  Phase

What is construction? Section 3.00 of the Budget Act stipulates that “construction, when used in connection with a capital outlay project, shall include all such related things as fixtures, installed equipment, auxiliary facilities, contingencies, project construction, management, administration and associated costs.” Construction may also include departmental costs for agency-retained work related to the project. Section 1.80 of the Budget Act provides three years to encumber construction authority.

Beginning of phase: Awarding the contract initiates the construction phase. Should construction funds be expended prior to the approval of preliminary plans, Section 13332.11(c) of the Government Code requires that any appropriated amounts for construction be reverted. 

Information required to award the contract:  After bids have been received and a valid low bid is verified, the department requests Finance to authorize award of the contract. The department provides the following information with this request:

1. The standard fiscal reporting requirements specified in Section 6822.
2. Transfer of authority request.
3. A copy of the bid tabulation, which at a minimum includes the project name, bid opening date, award period, and each bidder’s lump sum.
4. Verification that legal requirements have been met for the lowest bidder (this can be included on the bid tabulation).
5. A list of accepted additive or deductive alternates, if applicable;
6. A PWB agenda package for augmentation (Section 6833), if applicable; and
7. A PWB agenda package for reversion of bid savings, if applicable.

Steps following contract award: Once Finance signs the DF-14D to award the contract, Finance will authorize the encumbrance of construction funds. For DGS managed projects, a Form 22 or 220 is used. Departments that manage their own projects should use a DF-14D to encumber construction funding if they do not have their own equivalent to the Form 22 or Form 220. With this approval, an official award of the contract may be made. Following execution of the contract, the contractor is provided formal notice to proceed with construction. Construction occurs in accordance with contract requirements. Any changes must be by contract amendment, and in some cases, Finance must concur with those changes (see following change orders). The phase ends when construction is complete and the contractor files a Notice of Completion with DGS or other project manager.

What are the cost elements of construction? 

1. Construction contract:This is the actual amount of the construction bid award, plus any approved change orders (referred to as “hard costs”).
   
2. Change orders: Change orders are formal contract amendments executed during the course of construction as required to address issues such as unforeseen site conditions, errors and omissions in specifications and drawings, and department requests. Change orders are funded from the contingency line item of the project budget, as discussed in the following paragraph. When a proposed change order potentially modifies the project scope or would exhaust contingency, thereby requiring a project augmentation, the department must discuss the desired change with Finance before executing the change order to determine whether or not PWB action is required. (See Section 6833 for augmentations and Section 6834 for scope changes.)
   
   

3. Contingency: The construction contingency is a set percentage of the construction contract amount budgeted for unforeseen costs identified after construction commences.
   

   Standard construction contingencies are 5 percent of the construction estimate/bid for a new facility and 7 percent of the construction estimate/bid for renovation projects. However, in some cases, a different contingency might be justified. Any deviation from the standard requires Finance concurrence. A construction contingency is included in the budget so the project can proceed with minimal interruption for non-scope changes or modest cost overruns. Generally, the project manager approves the use of contingency funds.
   

Construction support: The terms construction support or project administration are applied to all project expenses incurred during the construction phase other than actual construction costs and contingency. The major construction support/project administration cost items are inspection, construction management, architect/engineer review, and special consultants—primarily for materials testing and hazardous materials abatement monitoring. Project soft costs include costs for all pre-construction phases, plus construction support expenses. Each construction support cost is delineated in the Project Cost Detail Estimate (Section 6822).

Project Completion:  See Section 6832.