The team preparing to redevelop a vacant Northeast Portland building into a food hall, bar and event space is seeking a construction manager/general contractor for the project.

The Prosper Portland Board of Commissioners on Wednesday voted unanimously to exempt the 910 MLK Building food hall project from the usual low-bid selection process and instead seek a CM-GC. Prosper Portland will issue a competitive request for proposals early next month.

The property, owned by Prosper Portland, is at 910 N.E. Martin Luther King Jr. Blvd., near the northeast corner of the Oregon Convention Center.

In January, the board authorized the inclusion of the food hall in the Lloyd-Holladay Urban Renewal Plan and approved the revised plan for the property. Portland-based Parti Architecture LLC will submit to the city design plans for review next month.

The project scope will include a major renovation of the building’s west side; demolition of structural elements on the east side while retaining portions of the roof and structural framework; and construction of infrastructure to support food carts on the lot’s southeast side.

The CM/GC method allows for a contractor to join the process about halfway through the design phase, said Wendy Wilcox, construction and compliance manager for Prosper Portland.

“Through our work in the community, contractors have told us this is a preferred method as through the RFP, they feel they can be more fairly evaluated, the project pricing is more accurate and they have time to gather the best team by being involved from design,” she said.

The estimated total project cost is $7.5 million, including $6 million for construction. A CM/GC delivery method will likely result in cost savings over a low-bid one, according to a Prosper Portland staff report, because of time savings, value engineering, funding source security, and less risk of change orders. Use of the CM/GC method will increase confidence of the project’s partners that the work will be completed within the scheduled time frame and budget, Wilcox said.

Contractors’ proposals will be evaluated by a panel considering a set of best value criteria, Wilcox said. A CM/GC is expected to be part of the preconstruction contract in April or May, she said. The CM/GC contract is expected to be presented to the board for approval this summer.

Construction is scheduled to start in the fall and finish in summer 2027.

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The Oregon Department of Transportation is seeking a construction manager/general contractor for a $795 million project intended to alleviate the traffic bottleneck on Interstate 5 through Portland’s Rose Quarter.

A request for proposals was issued April 13 for a CM/GC contract with a guaranteed maximum price estimate between $575 million and $635 million. The work will widen a 1.8-mile stretch of the highway between Interstate 405 to the north and the Morrison Bridge exit to the south.

Plans call for the additions of auxiliary lanes and shoulders, construction of highway covers, improvements to surrounding surface streets, and upgrades to interchanges – including relocation of a frequently congested southbound on-ramp near the Moda Center.

In addition, three new I-5 bridges will be constructed, and multiple bridges will either be widened or removed. The project is expected to be completed with limited reduction in the number of travel lanes during construction.

The CM/GC will be part of a project team that includes ODOT, an owner’s representative and an architecture and engineering consultant. A best value selection method will be used to determine the CM/GC, which will be responsible for consulting, providing constructability review, cost control and estimating services, and self-performing at least 30 percent of work during the project’s construction phase.

According to the RFP, ODOT anticipates Disadvantaged Business Enterprise (DBE) participation goals of about 18 to 22 percent. DBE goals for each amendment to the contract will be narrowly tailored to the subcontracting opportunities available for each such amendment.

The project has encountered opposition from critics who argue that it will increase emissions. They also have questioned how effective the improvements will be in relieving congestion and improving safety. The Oregon Transportation Commission recently gave ODOT the go-ahead to move forward with an environmental assessment for the project rather than conduct a more intensive environmental impact study.

A mandatory pre-proposal conference will take place April 28, and proposals are due May 19. Substantial completion of the project is to occur by Oct. 1, 2027.

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It took more than a year to draft the legislation, but Mike Salsgiver says a bill to amend Oregon’s public contracting law should make a lot of builders in the state happy.

“We’re fairly confident that the bill going forward is one way we can support,” said Salsgiver, the executive director of the Oregon-Columbia chapter of Associated General Contractors.

“It will make things better all the way around,” he added.

A work group has been meeting for more than a year drafting amendments for the construction manager/general contractor (CM-GC) law to address concerns by contractors that public agencies often skip the traditional low-bid process on construction projects and simply hire the company of their choice.

Smaller contractors, in particularly, feel they are left at a competitive disadvantage.

State Sen. Lee Beyer, D-Springfield, organized the work group that hashed out the proposed amendments. Beyer said he likes the results.

“I think it’s a pretty good bill,” he said. “No one is totally happy with it, so that must mean we did a good job.

“Policy-wise, it adds more transparency and requires local governments to follow the attorney general’s rules for using a general contractor.”

For instance, the bill requires public agencies to hold a public hearing before selecting a contractor instead of going through a low-bid process. Hearings must also be held with input from the Department of Administrative Services, the Oregon Department of Transportation or the agency’s local contract review board (whichever is the most applicable).

The agency must also post a notice of the hearing in one trade newspaper and one general circulation newspaper at least 14 days before the hearing.

When considering whether to hire a contractor directly or go out for bid, public officials must also balance such factors as the size and technical complexity of the project as well as whether it is new construction or a modification of an existing structure.

They must also consider whether the structure will be occupied or unoccupied during construction and whether the work will be done in one phase or multiple phases.

Another amendment requires agencies to consult state experts to assist in developing alternative contracting methods and helping negotiate, administer and enforce the terms of the contract.

Patrick Brennan, the administrator of the Senate Interim Committee on Business, Transportation and Economic Development, said the bill will be introduced when the Legislature convenes in February and no doubt face further revisions as its winds its way through the committee process.

“As it was introduced by a Senate interim committee, and is a Senate bill, it will go to a Senate committee – though not necessarily Sen. Beyer’s committee,” Brennan said. ���� fact, they have not yet officially named committees for the 2013 session, so no decisions have been made as to where bills will go. That being said, I’d say there’s a high likelihood that it’ll be assigned to Sen. Beyer’s committee once the 2013 session gets going.”

Beyer chairs the Senate Business, Transportation and Economic Development Committee.

The bill is already a little different from the final version the work group drafted, Beyer said.

“It just got back from the legislative counsel, so it’s not quite the same bill we submitted to them,” he said.

However, he added, most of the changes are matters of legal wording.

Salsgiver said AGC takes particular pride in the bill going before the Legislature.

“Our team has been … on this effort for the past 14 to 18 months,” he said. “We’re confident with the process behind this bill.”

AGC’s team included its incoming board President Tom Gerding and Public Affairs Director John Rakowitz.

Despite Salsgiver’s optimism, the way public agencies hire construction companies still meets with considerable cynicism among building professionals.

“I am not crazy, but I really hate CM-GC,” said Robert Gray of Robert Gray and Associates in Sherwood. “I just want to be able to compete.”

Jerry Valencia of Bridgeway Contracting in Lowell noticed that Linn-Benton Community College recently hired a contractor for $2 million without going through a bidding process.

“There’s no reason … for them to do that,” he said. “They’re not exempt (from public contracting laws).”

That sort of news makes him suspicious of lawmakers’ sincerity as they debate the contracting law, he added.

Beyer said that’s exactly why the law needs to be changed – to restore confidence in the building profession by increasing the transparency of the process.

“I went in with no specific expectations,” Beyer said. “Some subcontractors were not sure of the requirements and what to expect from the contractors. Many people in the public said there was no transparency, and they were not getting the best deal. I wanted transparency across the board.”

The 25-member work group included both large and small contractors and subcontractors as well as lawyers and lawmakers.

“We had the right people at the table,” Beyer said.

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Legislators will make more than a dozen changes to Oregon’s public contracting law if they accept the recommendations drafted by an advisory group made up of builders, contractors and other stakeholders.

State Sen. Lee Beyer, D-Eugene, formed the work group after the 2011 Legislature and numerous failed attempts to reform ORS 279. The 25-plus members have been meeting monthly for the past year.

“I suspect they’ll come up with a recommendation in September so we can draft a bill for the next session,” Beyer said. “There is quite a lot of agreement.”

What they’ve agreed on so far is a laundry list of amendments. The law allows government agencies to choose contractors for public works projects without going through a bidding process under certain circumstances. When evaluating those circumstances, the amendments require state officials to consider, among other things:

• The agency’s construction budget and operating costs.
• Any possible public benefit, including public safety.
• The extent to which the cost and duration of the project can be controlled.
• Whether or not the project’s size and complexity warrant choosing a particular contractor.
• Whether or not the project involves new construction or an existing building.

Beyer said these and other changes are designed to make the process more transparent. A formal recommendation has not been approved, but Beyer said a final draft is forthcoming.

The process remains contentious, especially among contractors who feel they are slighted when agencies avoid the bidding process.

“Though I am sure common sense is in short supply in Salem, I’ll bet our legislators can all understand the economics of competition,” said general contractor Robert Gray of Robert Gray and Associates Inc.

“Our government represents the people but seems in this case to be swayed by the big business construction firms and those architects who line their pockets,” he added.

Beyer said aggrieved contractors often oversimplify the issue, adding the current process is an attempt to make public agencies’ actions and motivations more understandable and accountable.

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Robert Gray, owner of in Tualatin, has a bone to pick with the state.

Since starting his small commercial construction company nearly 50 years ago, Gray, 81, has seen many economic ebbs and flows. But he said that making business adjustments has become increasingly difficult in recent years because of a state practice that he believes is choking his business and many others in the industry.

He calls it “restraint of trade.”

“I’ve lost a lot of friends who are other contractors that are out of business now because there just wasn’t enough jobs to bid, and that’s sad,” Gray said. “And I think if they’d been allowed to compete, they’d still be here.”

Gray referred to the Construction Manager/General Contractor procurement method, which under certain circumstances allows state agencies to choose general contractors for public projects based on a subjective qualification process rather than competitive bidding.

The idea behind CM/GC is that for extremely difficult or complicated jobs, hiring a contractor as a consultant at the beginning of the design phase can help owner-agencies plan better for unforeseen issues.

Gray said that in good years, when plenty of private-sector jobs were available, contractors like himself didn’t pay much attention to CM/GC because it was too difficult to get on the short list for consideration. Meanwhile, Gray’s firm maintained competitiveness via pricing, he said. But now, much of the work available is coming from the public sector, and Gray says state agencies are rewarding 80 percent of those jobs through CM/GC.

“That just means that 20 percent of the jobs are competitive,” he said. “It gets pretty crowded.”

Gray said a recent pre-bid meeting for a fire station project drew 45 contractors.

The issue began to boil over during the last legislative session, so on Monday, Sen. Lee Beyer, D-Springfield, Rep. Paul Holvey, D-Eugene, and Rep. Gene Whisnant, R-Sunriver, held a meeting for the Public Construction Contracting Work Group Advisory Committee – an ad-hoc group of nearly 30 industry professionals gathered to discuss the CM/GC process.

“The main concerns (were) some felt the process was being over used, some felt it locks out many contractors from the process and some believe it has a tendency to raise cost for the public because of the lack of detailed bidding,” Beyer wrote in an email before the meeting.

Beyer said the committee’s purpose is to review the existing law, consider transparency and cost concerns and, if needed, propose statute changes by fall 2012.

Opinions on CM/GC differ within the industry.

Gray believes the method increases the cost of construction by 20 percent and closes the door to small general contractors.

Bart Eberwein, vice president of Portland-based , a major CM/GC provider, says it’s a value-added service that owners seek because it can save them time and money.

In a 2002 report for a Eugene School District project a review committee estimated that the CM/GC process would save the district as much as $300,000 through increased planning and fewer change order fees.

Eberwein, one of the work group members, said he went through a similar process in 1997 that sought to identify when and how CM/GCs should be used. Before the meeting he talked about his expectations.

“(There) are two big guiding principles: competition is open – the proverbial level playing field – and taxpayers best served,” he said. “I think there’s a feeling we should come together and see how we’re doing on those two counts.”

The 91��Ƶ contacted Eberwein after the meeting but he said Beyer had requested that all media inquiries be sent to him. Beyer could not be reached after the meeting.

Another work group member present Monday was Gerald Williams of Portland-based In 2003, Williams published a dissertation on the CM/GC process.

“We found that there was no statistically significant difference between the project delivery systems, either CM/GC or design-bid-build, with respect to their ability to control cost expansion or schedule,” he said.

Williams said one advantage of CM/GC is that it allows contractors to get a jump start on projects because they can start work before blueprints are finalized.

In his dissertation, a comparison of construction for two nearly identical elementary schools found that the CM/GC project cost $7.38 million and was finished in 17 months; the design-bid-build project cost $6.6 million and was finished in 24 months.

Williams said part of the problem with CM/GC is that there has been a lack of oversight in cost savings analysis, which is required by law for all CM/GC projects.

“Unfortunately, not all the public agencies that use CM/GCs did such a good job,” he said. “Some of them just said, ‘Oh yeah, we find that it’s going to save us money,’ and then when the job was over their post-doc report was, ‘Yeah, it saved us money.’ ”

Gray said that during the meeting Eberwein made the point that CM/GC should be used when there is a special need. His example was an airport project in which planes arrive and depart during construction.

“I could go along with that,” Gray said of the airport scenario. “But not 80 percent of the jobs; that’s just tearing the whole building community apart.”

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Troutdale Chief of Police Scott Anderson says the city has long needed a new police station.

The police department presently is headquartered in a former bank building that was constructed in 1956. The building has no holding cells and no safe place for police to park either their personal cars or the city’s police cars.

“It has been quite well known for several years that this is not functioning as a police department building,” Anderson said.

is designing the new building. The firm previously conducted some study work for the project.

“We’ve seen quite a few police stations, and this one was by far in the most disrepair,” HSR principal John Ralston said. “The cops moved into it, the city grew and the facility didn’t.”

In 2008, the police department sought a $5 million bond to pay for a new building – and that bond failed.

Last year, the department pursued a $7.5 million bond – in part to pay for planning work by a consulting architecture firm. The police chief and sergeants went door-to-door to support the cause. One police representative even dressed in a Star Wars stormtrooper costume to advocate for the new building.

The measure passed, even though the election cycle was one in which few cities were able to convince voters to approve tax increases.

“The police really rallied the community,” Ralston said. “They really went all out.”

“When we went out to the voters, we made it clear as to the services we could provide in a new building,” Anderson said. “Residents want certain things from us, and we want to deliver them, but we can’t do it without the level of support a building can give us.”

A new facility will let Troutdale’s police department offer more proactive programs such as crime analysis and neighborhood watch, Anderson said.

The other argument that resonated with voters was an economic one, he added.

“Because the economy is where we’re at, we are able to get more bang for our buck right now,” Anderson said. “The construction industry is very competitive.”

“We worked with the city to look at options: one was to renovate an old Saturn dealership,” Ralston said.

The city settled on a new, 22,800 square-foot, two-story building on city-owned land. Now the project is speeding ahead.

“It’s a fast-track deal,” Ralston said. “We want to get in the ground before it starts to rain because we’ll save a lot of money that way.”

HSR advocated for the use of the construction manager/general contractor delivery method because of the timeline and because of a recent experience where low-bid contractors went out of business in the middle of a job.

“This project had to happen so fast, and it has to come out right,” P&C Construction project engineer Ryan Weber said. “There’s no other way (other than CM/GC) that the project could be done.”

Weber said that P&C has experience both with law enforcement buildings and with the CM/GC delivery method.

“On these projects, it’s very important that the end users get what they want. If they don’t, it’s horrible,” he said.

Weber cited the example of a police station’s security gate systems – if an officer is escorting a suspect and has only one hand to activate a security gate, it needs to work properly.

Crews broke ground Aug. 25, and preliminary site work is under way. P&C Construction expects to move its construction trailer to the location soon. The project team will use a series of bid packages to hire subcontractors so that construction can move forward while upcoming phases are being designed.

The facility will have the “typical” aspects of a modern-day police station, Ralston said, including holding cells, juvenile detention facilities and a community room that will double as an emergency operations center when needed.

Also, the new facility is being designed to not become as cramped and inadequate as the existing one.

“The building has room to grow for the next 20 years,” Ralston said.

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Two items on Metro Council’s consent agenda Thursday afternoon will kick-start work on the Oregon Zoo‘s new elephant habitat. One resolution will allow the regional government’s chief operating officer to begin procuring a contractor for the project, which has an estimated cost of the project is $54 million, including design and construction. That is approximately half of the remaining funds from the zoo’s bond measure.

The other resolution will allow the government to use the Construction Manager/General Contractor method of procurement on the project. Utilization of the CM/GC method will mean that there will not be a standard competitive bidding process for the project, but that a contractor will be selected on specific qualifications to begin work during the design phase of the project and later sign a separate contract for the construction phase.

The CM/GC procurement method was chosen after a recommendation by consulting firm Pinnell/Busch, which recommended the use of CM/GC because of the highly specialized constructions methods required for the project, the “sensitive and dangerous occupants,” and the widespread access to nearby exhibits, which will be open and continually operating during construction. This will be the first CM/GC project undertaken at the Oregon Zoo.

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It’s a cautionary tale: In 2008, the city of Lake Oswego was working on its interceptor sewer project when Montana-based Barnard Construction Co. was brought in to advise the design team on technically complicated issues involved in replacing an underwater sewer pipe. When it came time for Barnard and the city to negotiate the price of work, however, the parties couldn’t agree – and went their separate ways.

The city of Lake Oswego and Barnard were using the construction manager/general contractor method.

���� CM/GC, (an owner) hires a contractor on their qualifications on a technical proposal for a project,” said Bill Hawkins, construction manager with CH2M HILL. “The contractor works on a professional services contract, until they can establish a price they’re willing to contract for. Then it becomes a true construction contract.”

Steve Pinnell of project management consulting firm Pinnell/Busch is developing a set of “best practices” for CM/GC, and has started making presentations to professional organizations around the city. He recommends the use of CM/GC for some projects, but certainly not all.

“Competitive bid is the best way to go if you can do it,” Pinnell said. CM/GC contractors are selected in regard to qualifications for a specific project, rather than price, which is standard in design-bid-build.

An advantage of CM/GC is that the contractor brings expertise to the design team, with the goal of identifying cost-saving measures. Then, as the contractor begins construction, it has a more thorough understanding of why certain design decisions were made.

“CM/GC is well-suited for complex projects,” said Dan Blocher, TriMet’s capital projects director. TriMet has used the method successfully for some of its projects, he said.

“We’ve been able to list out improvements and cost savings gained by having the contractors with us” in the design process, Blocher said. “We’ve noted a markedly lower level of change orders.”

The city of Lake Oswego discovered one of the potential pitfalls of CM/GC, when Barnard’s proposed price for the project was higher than predicted by the project’s engineer – mostly because of the contractor’s markups.

“The bottom line was we could not agree to the terms of the construction-phase contract,” said Joel Komarek, project manager for the Lake Oswego interceptor sewer project, “specifically in regard to the fee, or profit, but also in regards to the markup that Barnard would add to the work both they and subcontractors would perform.”

Komarek doesn’t blame the CM/GC method for the delay; in fact, he doesn’t blame anyone. “It’s not that either party did anything wrong,” he said.

Fortunately for the city, it had enough schedule flexibility to halt its relationship with Barnard and bid the contracting work using the usual process. The project was delayed, but the city wasn’t stuck with a contract it didn’t want.

The LOIS project story should not be used to discount the value of CM/GC, Pinnell said, but rather serve as an example of an owner doing something right.

“CM/GC is not a silver bullet; you need to be ready to pull out and go back to design-bid-build,” he said. “The owner needs to have a team that can step in and take over.”

Thomas Peterson, chief engineer for the Port of Portland, says that is the most important caveat for using CM/GC.

“The owner needs to know what they’re doing, or hire someone that does,” Peterson said. In CM/GC, owners are involved in every step of the process, from design elements to the selection of subcontractors.

“They’re much more involved in the contractor’s business,” Peterson said. An owner who doesn’t have the necessary expertise, he added, may be stuck with higher costs.

Komarek, like Pinnell, noted that CM/GC can work in certain situations, but not all.

“It reduces risk, the number of unknowns, and it reduces schedule; it doesn’t reduce cost,” Komarek said.

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