For this week’s Guest Post Friday here at Musings, we welcome back Harold (Hal) Good, CPPO. Hal served as Director of Procurement and Contracting for the city of Palm Springs, California and Palm Springs International Airport for twenty-one years. He has also held procurement and contracting related Positions at New York University Medical Center and Frederick County Government. He was a regional director for an early federal, state and local E-commerce and E-procurement services provider. He currently does consulting work and hosts a multi-discipline group on Linkedin; Procurement Pros. You can also find him on Twitter @Hal_Good and @ProcurementPros.
One of the hottest subjects in procurement circles is the need for procurement professionals to become less focused on process and cost and to think more strategically including collaboratively defining “value” with the input of stakeholders. Creating solicitation processes with award based on criteria, in addition to cost, requires development and utilization of sourcing and contracting processes more complex than traditional bids especially for highly regulated public construction projects. In many public agencies, the mandate to award to the “lowest responsible bidder” who submits a responsive bid remains in the mandated regulations. Public agency construction project development has been particularly restrictive in this respect, placing emphasis on cost, relying on the assumption that the same project will be built no matter which contractor performs the work.
I am going to share an example where a highly motivated and innovative team worked together to successfully complete a major construction project key to the success of a large business community in addition to the sponsoring agency. Although “cost” was a very important consideration in all phases of the project, there were key considerations above and beyond cost which were very important to the strategic success of the projects and the resultant building’s relevance to the needs of the owner and the stakeholder business community. The project was accomplished in a scenario where state regulations required awards of construction work to be made to lowest responsive responsible bidder. The project delivery methods utilized were all in compliance with state public contract code, and incorporated 43 bid awards based on hard bids. The innovative use of complementary methodologies by a smoothly coordinated project team are what make it worthy of note here.
The Palm Springs Convention Center was built in the mid 1980’s providing exhibit and meeting room space to help Palm Springs hotels successfully compete for conventions and trade shows in a very competitive marketplace. The convention center was expanded several times, but always seemed to be behind the curve in terms of size, losing some key business to larger facilities. The need to add at least 100,000 sq. ft. had become critical in the early 2000s, but was complicated by two major factors. One factor was a very tight budget. The other was the fact the existing facility was severely landlocked and there was limited space for expansion on the existing site. It would be too expensive to replace the existing structure, but no one knew if there would be an innovative and affordable way to expand the building to add the desired additional exhibit and meeting space. An expansion project would only be successful in achieving the desired “value” if the expansion could be achieved on the existing site at an affordable cost. 
The first step taken was not a traditional one. On the advice of Edward R. Fisk, PE, the noted expert and author of the book, Construction Project Administration, instead of preparing and issuing an RFP for an architect to design the expansion in a conventional public agency design-bid-build delivery method, a construction management firm Turner Construction was retained. Quoting from Mr Fisk’s book, “…CM involves participation by the Construction Manager from the very conception of the project, through the investigation and design process, selection of feasible separate bid packages, value engineering, constructability analysis, bidability, analysis, preparation of input into the specifications and other front end documents, assistance in examining bids and awarding the contract(s), and finally participation in the construction phase in the form of scheduling, cost control coordination, contract administration and final closeout of the project.” Construction Project Administration, Seventh Edition, Page 15.
The contract for the construction management services listed above was solicited on a qualifications basis to satisfy California Code Section 4526. Under this scenario, Turner Construction would provide all of the services listed above and manage the trade contracts, each of which was individually bid and awarded by Palm Springs procurement. This “multiple-prime” modified construction management project delivery methodology was utilized because the classic project delivery method, Construction Manager at Risk, is not an approved project delivery method for California Public agencies (with the exception of the University of California). Turner Construction would not perform any trade work with its own forces, because all such work had to be bid and awarded on the basis of a lowest responsible- responsive bid process.
The separation of the work into multiple prime contracts was to have a significant impact on the selection of the architectural design firm because the bid documents for each of the 43 trade contracts would have to be individually and carefully scoped in a collaborative effort between the architect and Turner to delineate responsibilities with Turner ultimately responsible for the overall coordination of the project work. An RFP for architectural services was developed and advertised nationally. It specifically placed high value on the successful firm being innovative in effectively utilizing the existing site and structure most effectively to create a minimum of 100,000 square feet of additional exhibit and meeting space. It also placed a premium on the demonstrable ability of the architect to create an esthetically pleasing building with strong features compatible with other Palm Springs architecture and the environment. Also was an emphasis on experience in working as a team member in a successful project using a project delivery methodology relevant to that being utilized by Palm Springs. A short list of design firms was developed off the initial submissions, and after a rigorous interview process. Fentress Architects of Denver, CO was selected to do the design.
Fentress proposed innovatively changing the orientation of the building from facing East to facing West as part of it redesign and expansion plan. This was immediately recognized as the needed missing ingredient to make it all work and is what has been built. The completely redesigned exterior pulls colors and design elements from the surrounding desert and mountains. Over 100,000 sq. ft. of exhibit and meeting space was successfully added and seamlessly integrated into the existing interior layout.
Forty three trade contracts were bid and awarded by Palm Springs. Thirty eight of these were solicited using a two- step pre-qualification of bidders process. The pre-qualification process allowed competition to be limited to a pool of trade contractors who could truly perform the work. The state of California prequalification format was utilized with the addition of several questions specific to the trade and project requirements for each bid package. Evaluation of the qualification was done by a committee which included Turner, Fentress, the city’s project representative, Mike Fontana, and the procurement and contracting director, (the writer).
The project was successfully completed in 2005 during a period where costs for steel and other materials were rapidly changing in response to market conditions. Because not all of the trade contracts were bid at the same time, adjustments in scope and specifications were made to some of the latter occurring trade contracts on the basis of the results of the bids processes conducted early in the project. The ability to make adjustments as the project progressed was just one of a number of advantages to utilizing this process. Another large benefit was gained through the owner being the beneficiary of the low bid on all 43 prime contracts. Other advantages included the ability to choose the construction management firm on the basis of a qualifications based process as opposed to low bid. Turner was compensated with a negotiated fee with the addition of bonus incentives achievable through achievement of negotiated successful outcome goals applicable to the success of the overall project.
It should be noted that all of the bidding processes, all of the bid documents and contracts involved in this project were reviewed and approved by Palm Springs attorney, David J.Aleshire. It would have been impossible to complete a public project of this complexity and magnitude without the proactive cooperation of the legal staff. The front end documents for the trade contracts were EJCD documents with project specific modifications made by Edward R. Fisk, PE and approved by Mr. Aleshire.
Summary: Looking back on more than 30 years of public project experience, this project is one which I would single out as most illustrative of multiple disciplines working cooperatively to solve a problem for which a solution was not readily evident. The entire Palm Springs business community which is highly invested in the tourism hospitality industry benefitted from the successful project outcome. The process allowed the maximum desired expansion space to be built with the framework of available budget, desired business function capability and access as well as creating a pleasing architectural design which complement the city’s existing architecture. Use of the modified multiple prime project delivery method worked very well and indeed was utilized for the next two major Palm Springs projects, the new terminal building at the Palm Springs International Airport and a downtown parking structure. The methodology utilized conformed to the state of California’s public contract code in the fact that the work itself was awarded via a lowest responsive-responsible bidder format. The value added goals which were so important to the project success were accomplished by a collaborative effort of experts from construction, design, legal, risk and procurement. This was a case of the process being innovatively utilized to achieve strategic goals and benefits. The collaboratively defined “value” of the project was clearly defined and the solicitation processes were keyed to pursue and obtain that value. The writer believes we succeeded.
Hal and I welcome your comments below. Also, please subscribe to keep up with this and other Guest Post Friday Musings.
