Down Came the Construction Industry

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This is the reason for the colapse of the construction industry.

This is the reason for the colapse of the construction industry.

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  • 1. Down Came the Construction Industry A story of an anticipated collapse
  • 2. THE COLAPSE OF 81% OF THE CONSTRUCTION INDUSTRY DUE TO FAVORTISM ORS 279c.335 AND ORS 279.015
  • 3. Can Exempt Can Exempt Can Exempt Can Exempt Short List or Sole Source Short List or Sole Source Short List or Sole Source Short List or Sole Source CMGC CONSULTANT CMGC CONSULTANT CMGC CONSULTANT CMGC CONSULTANT $ OVER $25M TO UNION $ $ SHORT LIST SOLE SOURCE CONTRACTORS UNIONS PLA’S Contractors Other Qualified Contractors DISTRIBUTION OF CONSTRUCTION PROJECTS Slide 1 of 10 8% of Ind. Are: 11 % of Ind. Are: 81 % of Ind. Are: State Projects City Projects County Projects Federal Projects Private PROJECTS
  • 4. Other Eligible Contractors Todd Construction Robert Gray Partners BNK Construction Skyward Construction Brockamp Jaeger Yorke & Curtis Joseph Hughes Construction Lorentz Bruun Construction ALL OTHER TAX PAYING LOCAL BUSINESSES AND HOME OWNERS B O N D MONEY Portland Metro 2005 Income Skanska USA Building $408M Hoffman Construction Co. $251M Andersen Construction Co. $190M J.E. Dunn-Construction $150M Howard S. Wright Const. Co. $121M Walsh Construction Co. $155M LCG Pence Construction $55M   Willamette Valley Slayden Construction $74M John Hyland Construction Co. $40M Triplett Wellman $31M Essex General Construction $20M McKenzie Commercial Contractors $20M   Central Keeton-King Construction $20M $ $ $ $ $ $ $ $ Slide 2 of 10 $251 Million $408 Million $190 Million $150 Million $121 Million $155 Million $55 Million $74 Million $40 Million $31 Million $20 Million $20 Million Year 2005 13 General Contractors were awarded $1,515,000,000 In Public Contracts They have earned even more in the coming years. $1,330,000,000 Over $1.3 BILLION DOLLARS That is how much OREGON awarded to 7 General Contractors in year 2005.
  • 5. Portland Metro 2005 Income Skanska USA Building $408M Hoffman Construction Co. $251M Andersen Construction Co. $190M J.E. Dunn-Construction $150M Howard S. Wright Const. Co. $121M Walsh Construction Co. $155M LCG Pence Construction $55M   Willamette Valley Slayden Construction $74M John Hyland Construction Co. $40M Triplett Wellman $31M Essex General Construction $20M McKenzie Commercial Contractors $20M   Central Keeton-King Construction $20M $ $ $ $ $ $ $ $ $ $ $ Potential Projects Green Building Projects PLA’s $25,000,000 (+) MATOC’s PROJECTS EXEMPT FROM PUBLIC BIDDING PROCESS Other Eligible Contractors Todd Construction Robert Gray Partners BNK Construction Skyward Construction Brockamp Jaeger Yorke & Curtis Joseph Hughes Construction Lorentz Bruun Construction $ $ $ $ $ $ $ $ $ Project Exempt From Public Bidding National Building Budgets $300 Million OHSU Improvements $400 Million College Improvements $600 Billion - Schools $120 Million Libraries $65 Million City Halls $100 Million State Buildings $400 Million Federal Buildings $85 Million Parks SHORT LISTS Slide 3 of 10
  • 6. Condo Towers Big Box Retail Public Projects DOMINO EFFECT OF LACK OF WORK FOR GENERAL CONTRACTORS AND SUB-CONTRACTORS Skanska USA Building Hoffman Andersen J.E. Dunn Howard S. Wright Walsh LCG Pence 2 Story Buildings Skanska USA Building Hoffman Andersen J.E. Dunn Howard S. Wright Walsh LCG Pence Skanska USA Building Hoffman Andersen J.E. Dunn Howard S. Wright Walsh LCG Pence Andersen Howard S. Wright Projects (2) Projects (4) Projects (10) Federal Projects $25,000,000 And UP MATOCS? Projects UNIONS Slide 4 of 10 Projects (0) Emerick Robert Gray Partners Todd Construction Skyward Construction Brockamp Jaeger Joseph Hu ghes Construction Lorentz Bruun Construction Market Contractors Emerick Robert Gray Partners Todd Construction Skyward Construction Brockamp Jaeger Joseph Hu ghes Construction Lorentz Bruun Construction Brockamp Jaeger Joseph Hu ghes Construction Lorentz Bruun Construction
  • 7. ROTATION OF THE SHORT LIST Public Projects Exempted From Public Bidding Slide 6 of 10 $ $ $ $ $ $ $ $ Slayden LCG Pence Walsh Howard S. Wright J.E. Dunn Skanska Andersen Hoffman PUBLIC PROJECTS EXEMPT OHSU Biomedical Research Bldg. $195M EXEMPT Oregon State Univ. EXEMPT University of Oregon $45.6M EXEMPT Hillsboro School Dist. EXEMPT Beaverton School Dist. EXEMPT Centennial School EXEMPT West Linn- Wilsonville Schools EXEMPT City of McMinnville EXEMPT City of Wilsonville EXEMPT OHSU Patient Care Facility. $195M EXEMPT University of Oregon $400 MILLION
  • 8. 2008 Construction Projects in Dollars 2009 Construction Projects in Dollars Exemptions OHSU Oregon University System Portland Development Commission School Districts County Exemptions OHSU Oregon University System Portland Development Commission School Districts County EXEMPTED WORK – CM-GC REQ.D EXEMPTED WORK – CMGC REQ.D Who will survive in the end?
  • 9. TAX PAYER MONEY GAME COMPLETION REPORTS WINNING CONTRACTOR MUST SUBSTANTIATE HIS BID AMOUNT BID PROCESS MOST POINTS ON QUESTIONAIRE CMGC COMPANY SELECTED EXEMPT PROJECT FROM PUBLIC BIDDING PUBLIC BIDDING PROCESS MEETINGS SUBSTANTIATING NEED TO EXEMPT PROJECT FROM PUBLIC BIDDING PROCESS PROJECT SCHEDULE ESTABLISHED FUNDING DESIGN CONCEPT LOCAL ENTITY DECIDES ON PROJECT START 2-100 Years Prior 2-20 Years Prior – Architect Hired Bonds, Savings, Donations After Funding Approved Board decision only. Public may attend to voice their concerns. Exemption From Public Bidding must be based on an EMERGENCY or Significant Cost Savings without harming other potential bidders or Start Date. ALL QUALIFIED CONTRACTORS MAY SUBMIT A BID. NO CMGC. Board limits the bidders to a Short List of 1-6 Bidders. Owners Representative. Hired for a fee of a percentage of the total project. Typically 10-50%. ($10M = $1M-$5M FEE) The Short List of Bidders submit a Questionnaire Packet which will be judged. The board shortens the list of bidders again. The winning contractor begins an actual estimate of the project costs. It is required by law that the Board submit a Cost Savings Report post – construction on all Exempt Construction Projects. OR PER ORS 279C.335 AND ORS 279.015 Slide 7 of 10
  • 10. Green PUBLIC Project Green Certified Workers Green PUBLIC Work goes to PLA’s UNIONS PUBLIC Work goes to Short List Of Contractors AND $25M Proj. to UNIONS Portland Metro 2005 Income Skanska USA Building $408M Hoffman Construction Co. $251M Andersen Construction Co. $190M J.E. Dunn-Construction $150M Howard S. Wright Const. Co. $121M Walsh Construction Co. $155M LCG Pence Construction $55M   Willamette Valley Slayden Construction $74M John Hyland Construction Co. $40M Triplett Wellman $31M Essex General Construction $20M McKenzie Commercial Contractors $20M   Central Keeton-King Construction $20M What direction are we heading? Other General Contractors – CLOSE UP SHOP. Not enough projects available to cover costs of doing business. Slide 5 of 10
  • 11. PUBLIC PROJECTS EXEMPT FROM PUBLIC BIDDING PROCESS ARE EITHER GIVEN TO A SOLE CONTRACTOR OR GO THROUGH SHORT LIST BUDGET BID.
    • POINTS ARE AWARDED FOR THE FOLLOWING:
    • (Members give Points of 0 to 5 for each section and then it is multiplied by the weight for final scoring for section. (Point of 5 x Weight of 20 = 100 Points))
    • Insurance, Safety, Proof of Bonding Capacity, Valid License. (Pass/Fail)
    • Contracting Practices (15 Weight)
    • Background and Experience (20 Weight)
    • Key Personnel (25 Weight)
    • Scheduling and Site Logistics (20 Weight)
    • Safety & Security (10 Weight)
    • Statement of Why Should You Be Hired (10 Weight)
    • References
    D. Section 4.0 – Experience … Contractor must provide evidence of current and past experience acting as a general contractor in general and specifically for a minimum of three public or institutional buildings projects in Oregon with a construction value of $4 million or more in the last five years. Emphasize any specific similarities of the example projects with the Project, including, if applicable, similar programs, installation of raised floor with displacement: ventilation system, use of masonry veneer … In addition to the above, the contractor may submit evidence of up to three projects that they have constructed using CM/GC contracting method.
    • IV. Selection Process
    • Selection Criteria
    • Each evaluator shall independently assign a score to each evaluation criterion as noted in the table below based on the SOQs.. Scores will be summed and the most qualified contractors will be invited to bid on the construction contract for the Project. NOTE: It is the of this process to identify a limited pool of the most qualified contractors to bid on the Project. Any contractor not selected for the Short List or Bid is because the contractor were ranked below other contractors.
    • Criteria Weight ( x Score = Points)
    • Contractor Experience / Record of Performance 40 (Min. of three public proj. $4M +/ 5 Years)
    • Key Personnel Experience / Availability 25
    • Financial Information 15
    • Background Questionnaire – Attachment A 10
    • Project Administration Methodology 5 (CM/GC Experience)
    • MWESB Experience 5
    Slide 8 of 10
  • 12. D. Section 4.0 – Experience … Contractor must provide evidence of current and past experience acting as a general contractor in general and specifically for a minimum of three public or institutional buildings projects in Oregon with a construction value of $4 million or more in the last five years. Emphasize any specific similarities of the example projects with the Project, including, if applicable, similar programs, installation of raised floor with displacement: ventilation system, use of masonry veneer … In addition to the above, the contractor may submit evidence of up to three projects that they have constructed using CM/GC contracting method.
    • IV. Selection Process
    • Selection Criteria
    • Each evaluator shall independently assign a score to each evaluation criterion as noted in the table below based on the SOQs.. Scores will be summed and the most qualified contractors will be invited to bid on the construction contract for the Project.
    • Criteria Weight ( x Score = Points)
    • Contractor Experience / Record of Performance 40 (Min. of three public proj. $4M +/ 5 Years)
    • Key Personnel Experience / Availability 25
    • Financial Information 15
    • Background Questionnaire – Attachment A 10
    • Project Administration Methodology 5 (CM/GC Experience)
    • MWESB Experience 5
    Slide 9 of 10 3 Public or Institutional Projects Value $4 Million each Within The last 5 years No longer qualified Contractor 2000 2001 2002 2003 2004 2005 2006 2007 2008 Hoffman School School City Hall School Fire Dept School $5M School $9M School $60M Library $400M Andersen School School School School School $8M School $13M Library $20M Pub. Bldg. School $7M Skanska School School School School School $50M Librar$15M School $8M School $2M School $16M JE Dunn School School School School Library $4M School $5M School $5M School $4M School $5M Howard S Wright School $8M School $6M Library School $9M School $7M Walsh School School School School School Library School School School LCG Pence School School School School School Slayden School School School School Robert Gray Partners, Inc. School School School School School $5M School $4.7M School $4M School $5M School $10M BNK Construction School $1M Todd Construction School $5M School $2M School $4M School $4M School $4M School $5M
  • 13.
    • Things to Remember Before Exempting a Project:
    • Sole Sourcing of Construction Projects costs more. If you doubt this then Publicly Bid the project and compare yourself.
    • Mechanical, Electrical, Plumbing and Fire Sprinkler is always reviewed by those professionals and Value Engineered on every project. (Even without the CMGC Consultant).
    • Engineers are used on every construction project to ensure that construction techniques and materials are the most sound.
    • General Contractors hold meetings weekly with the Architect, and Owners Representative to ensure that clear communication in regards to the schedule, the decisions to be made and complications are voiced.
    • Documentation is forwarded to the Architect and the appropriate engineers as necessary for review and approval.
    • Pay applications are provided to the Architect for signature and the Owners Representative for final signature and payment.
    • ALL OF THESE SERVICES ARE PROVIDED ON ALL PROJECTS BY THE GENERAL CONTRACTOR.
    • CMGC CONSULTANTS DUPLICATE THIS PROCESS AND ARE PAID MORE THAN THE GC. CMGC consultants are used on EXEMPT projects.
    • Schools boards receive training to learn how to exempt projects from Public Bidding. A seminar put on by Sole Source GC’s and CMGC Consultants. The fee isn’t discussed.
  • 14. Don’t stand on the sidelines while small contractors close their doors due to lack of new work. You wouldn’t want your income to be eliminated. It would mean a catastrophe for you and your family. Public Projects should always allow every qualified contractor to bid. Exemptions are favoritism. Emergency Declarations made by public agencies for the purpose of Exempting a project from the Public Bid Process should be strictly limited to the emergency description set by FEMA. Any other Emergency Declaration is simply fraud. Don’t allow abuse of the Exemption Rule in ORS 279c.015 or ORS 279.335. The Oregon University System should not exempt projects for any reason. The tax payers providing the funds for such projects should have construction costs substantiated through the OPEN Public Bidding Process. Keep the Door Open On Public Projects! Sincerely, Laura Alexander - Oregon Keep the Door Open On Public Projects! T-Shirts available through Aramark Uniform Service 1-800-234-6025 Contact John Harvey [email_address]