Project Management Working Group Construction Management Subgroup - - PowerPoint PPT Presentation
Project Management Working Group Construction Management Subgroup FY2014 EFCOG Semi-Annual Meeting Fixed Price Contracting within the DOE Complex Ryan Molen McCarthy Building Companies December 12, 2013 Achieving Mission and Sustaining
Fixed Price Contracting within the DOE Complex Ryan Molen McCarthy Building Companies December 12, 2013
“Achieving Mission and Sustaining Operational Excellence in a Challenging Budget Environment”
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First, we must always seek to align contractor interest to the taxpayer interest. Second, we must structure contracts so that each party bears responsibility for its
In accordance with Administration policy, contracting officers will first consider the use of a firm- fixed-price contract to complete work requirements. This contract type is most appropriate for services that can be objectively defined in a statement of work and the risks involved can be estimated with an acceptable degree of certainty. …appropriate scoping of the contract to clearly-defined…
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K = Contract Kv KF
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Variable + Fixed = Variable Variable Fixed $
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KF
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KF
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Owner
AE Contractor
Owner
Single Design- Build Entity
Owner
AE Contractor
15% Design
Owner
AE Contractor
90% Design
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A firm-fixed-price contract provides for a price that is not subject to any adjustment on the basis of the contractor’s cost experience in performing the contract. This contract type places upon the contractor maximum risk and full responsibility for all costs and resulting profit or loss. It provides maximum incentive for the contractor to control costs and perform effectively and imposes a minimum administrative burden upon the contracting parties (FAR Subpart 16.202-1).
A firm-fixed-price contract is one in which the Owner contracts with the Contractor to complete construction of a fully designed project for a fixed contract price that is only subject to change if original scope of work changes or through the identification of previously undisclosed
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A parallel [firm-fixed-price] model where the AE and Contractor are separately contracted to the government during the design phase of the
Contractor is separately selected and contracted, also based on qualifications, but with a pricing component for delivery of the two major phases of the project: Preconstruction and construction services (The Military Engineer – CM at Risk for Federal Projects, Sept/Oct 2011). Both phases of services are awarded as firm-fixed-price contracts.
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Involves performing an estimated number of units of work at a firm-fixed- price per unit, with the total payment under the contract determined by the actual number of units delivered. Adjustments under this type on firm- fixed-price contract are typically made under FAR Subpart 11.702 which covers Variations in Quantities.
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Level of Small Business particpation requirement Availability of project management expertise within local DOE site office. Availability of quality subtier contractors in the geographic area of the project Project schedule requirements Incremental nature of project funding Degree to which design is or can be complete prior to price establishment Technical nature of project
"Expectation alignment" for all stakeholders is highly important High need for contractor input in startup, turnover, closeout requirement determination (best practices as incorporated in design documents) Ability to transition from design to construction on any nuclear project (10%) Possibility of extraordinary audit risk (external LEED or environmental audit requirements) Applicability of phasing and early work releases / work packages High need for cost effective project approach Availability of project management expertise within local DOE site office. Project interface requirements - e.g. are other primes responsible for interfacing processes, (utilities) or supplying support (fire protection). Complexity of project drives high level of quality requirements High uncertainty in market / economic conditions Availability of quality subtier contractors in the geographic area of the project Project schedule requirements Emphasis on need for early total price determination Limited capability of Owner resources to solicit and manage end user design input Current construction market pressures Project security i.e. terrorism, sabotage, theft, damage prevention, worker badging Emphasis on need for scope flexibility during construction (support Owner driven changes, funding and contingency releases, etc…) Low level of design completeness prior to construction Degree to which design is or can be complete prior to price establishment Project Size Heavy emphasis placed on collaboration / Low tolerance of adversarial environment Need for competitive procurement Design Maturity Quality and availability of skilled craft in the area. High complexity of design and scope of work Owner need for oversight of sub-tier subcontractor selection DNFSB impacts Related requirements in M&O contract in place High importance of Contractor input during design (budgeting, best means and methods, lessons learned, local customs, labor predictability, etc…) Prevalence or applicability of mandates / regulatory law Existing site conditions. Requirements for project safeguards and security High importance of design control by Owner prior to start of construction Project requires that Owner maintain control over means and methods Hazard Cat I, II and III Safety Basis requirements Risk associated with capital project location- green/brown field location vs. within operating area. High importance on the utilization of Small Business Requirement for Contractor (at risk) support in the development of funding profile Inclusion of contracting mechanism to align performance incentives with risk of fixed price contract. Technical nature of project High level of (or quantity of) project nuances Ability to "freeze" requirements. Incremental nature of project funding Technology Maturity High level of design completeness prior to construction Ability to control the site and work area with minimal DOE involvement. Other stake holders in the project. Worker safety and environmental considerations
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