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3. SR 05-25-1995of Item 3. River MEMORANDUM TO: Mayor & City Council FROM: Pat Klaers, City Administrator DATE: April 25, 1995 ~u~~ SUBJECT: Ice Arena Update Consider Hiring Construction Manager The last City Council action on the ice arena project was to authorize the architects to complete the construction documents. No significant activity has taken place on this assignment by the architects and, as the council has been advised, the Ice Arena Task Force is pursuing the hiring of a construction manager along with modifying the existing contract with Mr. Brad Lemberg of I.C.E., Inc. Overall, not much has changed with the finances for the project. We are still about 10-15 percent short of being able to finance a bare bones facility and we are probably 30 percent short of being able to finance the ultimate facility. The goal of the task force is to get a "bare bones" facility constructed as soon as possible and it is believed by the architect and the task force that the hiring of a construction manager will help us achieve this goal. It is believed by the Task Force and the architect that the total project will cost less if we use the construction management approach. Typically, like with the City Hall project, the City would bid out the project and would receive bids for the total project from a few general contractors. The general contractors would have gotten quotes bids from subcontractors and then adjusted the subcontractors figures to cover themselves and to receive a profit on their activities. By going to a construction manager approach the City will be having the construction manager obtain approximately 3 - 5 bids directly from the subcontractors on 15 or more different sections or components of the project. Essentially, we are cutting out the profit the general contractor receives by coordinating and taking the risk on the subcontractors. This approach is only one of the financial benefits for the City in going to the construction management approach for this project. 13065 Orono Parkway • P.O. Box 490 • Elk River, MN 55330 • (612) 441-7420 • Fax: (612) 441-7425 When Mr. Lemberg of I.C.E., Inc., was hired as our "construction manager", • it was acknowledged that his expertise is in the ice design aspect of the project. It was also acknowledged that Mr. Lemberg does not have the general construction experience of most construction managers and he was hired for his specific expertise in financing, desigxung, and developing the ice components of the project. Mr. Lemberg was hired to work with the architects to finalize the specifications and to do the packaging of the bids and to supervise the on-site construction of the ice related aspects of the facility. It was suggested by Mr. Lemberg that his contract now be amended and reduced in scope so that he is only used in relationship to the ice components of the facility. In this regard, he then suggested (along with the architects), that the city pursue a construction manager that has expertise in general construction. It was felt that this type of assistance would help the City get the lowest total price for the project and could help the City modify the project while still achieving its overall goals of providing a first rate facility. The task force sent out proposals for construction management services to seven professional firms. Five firms responded and the task force interviewed three firms. Following interviews on 4/18/95, it is the task force recommendation that the city hire Mortenson Construction Organization for • the ice arena construction manager services. Please see the attached material from Mortenson regarding their proposal. The proposal from Mortenson was the lowest priced of all the proposals that the city received. The personalities and expertise of Mortenson matched our city needs for the construction of this ice arena. Furthermore, if a project is deemed financially unfeasible, then the most that the city would have to pay Mortenson for their preconstruction services would be $7,000. Also attached for your review is the revised I.C.E., Inc., contract with Mr. Brad Lemberg. This contract is still on an hourly basis and the not to exceed amount has been reduced from $50,000 to $27,500. This will allow the city to retain the services of Mr. Lemberg to oversee the installation and specifications for the ice components of the facility. If we were to not retain Mr. Lemberg on our side of the table, he certainly would be hired by the contractors who are awarded the ice components of the facility. It is believed that we will receive more services from Mr. Lemberg at a better price by having him remaining employed by the city versus being hired by a subcontractor for the ice arena components of the project. • Regarding the funding for these professional consulting services, the council • is reminded that the Youth Hockey Organization has stepped forward with $100,000 cash for this project. They have agreed to allow $40,000 of these funds to be spent on the construction documents as prepared by RSP Architects. It is my understanding that youth hockey would have no problems with some of the balance of the $100,000 from their organization being used for the construction management services offered by Mortensen in case the project did not move forward. As noted above, our exposure then to Mortensen is $7,000 if no project is constructed. Requested Action The City Council is requested to modify the I.C.E., Inc., contract with Mr. Brad Lemberg. It is recommended that the City Council approve the construction management services contract between the City of Elk River and Mortensen in the amount of 3.25 percent of the cost of the work based on the guaranteed maximum price that is established. Furthermore, it is acknowledged that if the project does not take place, the most the city would pay is $7,000 for preconstruction services. • • council:iceupdt E River ICE ARENA ADDITION Elk River, Minnesota Request for Proposal Construction Manager Services HISTORY AND `~ BACKGROUND In 1954 M.A. Mortensen Sr. founded M.A. Mortensen Company. In so doing he drew upon e his heritage, a tradition of excellence and pride in a job well done passed down from father to son, and dedicated his company to quality workmanship and personalized service. . By December 1954 M.A. Mortensen Company had secured 15 contracts totaling $424,000 and completed its first year with a modest profit. From this humble beginning, Mortenson's founders developed two objectives for the company's furore development: the company would sustain steady growth by increasing its revenue annually; and the company would strive to be profitable S every yeaz of its history. The hard work and long hours expended in those eazly years paid off as the business grew and as projects got lazger. Mortensen currently is ranked as the 41st largest S construction firm in the 1994 ENR rankings, with revenues exceeding $700 million per yeaz. Chazacteristic of the company's work has been the fact that many project assignments have resulted in repeat business. For example, in 1961 M.A. Mortensen Company built the first major addition for Northwestern Hospital in Minneapolis and in 1980 completed a new facility to accommodate the consolidation of Abbott and Northwestern hospitals. During the intervening ~ years, M.A. Mortensen Company successfully completed nine additional major projects for • Abbott Northwestern Hospital and continues to build for the organization. . The Mortensen Company has been primazily focused on general construction services enabling . the company to serve all aspects of the construction market including general construction, construction management, design build, and development services. In 1987 Mortensen established a dedicated Sports Facilities Group which is solely focused on the construction of sports and public assembly projects throughout the United States. To date, Mortensen has provided construction services for major sports and related public assembly projects totalling S approximately $1 billion. ~ M.A. Mortensen Company is chazacterized by its people -honest, hardworking, professional, energetic. Working together, M.A. Mortensen Company employees, through their dedication and integrity, have formed a collaborative relationship with owners, architects and engineers, enhancing the company's reputation for superior workmanship and performance. M.A. Mortensen Company, through these employees, continues to perpetuate the principles of its founder. The company is committed to a business philosophy that is dedicated to excellence in performing services; workmanship that has enduring character; meeting customer expectations on time, every time; and supporting the local communities in which we perform our services. S 1 WHY Mo~rsox • FOR E River ICE ARENA ADDITION • Value Engineering Performance Record • Ability to Expedite Contract/Construction Process • Open Book Approach • Mechanical/Electrical Specialists on Staff • Ability to Self-Perform Work • Budget Estimating Performance Record • Supportive of Community Involvement ~ ~ CONSTRUCTION SERVICES ' The following is a general description of the major services which we anticipate providing to the City of Elk River and the Elk River Hockey Association: ' Working With the Community - We understand that this is truly a community project and that support both . financial, and in labor and material, will be forthcoming as dte project develops and enters into construction. Mortenson's "open book" approach to project management will allow for these gifts to ® directly benefit the Hockey Associazion. Our project management staff will be encouraged to support these efforts. We will coordinaze and manage these components of the project to accommodate a timely completion, while maximizing the monies saved by these efforts. ^ Cost Estimating -Utilizing our extensive historical data base construction costs, as well as our staff of experienced estimators in all disciplines including architectural, strocmral, mechanical and electrical, ® Mortensen will provide the owner with the most accurate, reliable and timely estimates of construction costs throughout the duration of the project. Project estimates will be provided on a regular basis during . the design phase. This will enable the owner to make decisions which are influenced by cost with the highest level of confidence. Additionally, after the completion of the construction documents and ® subsequent awazd of trade contracts, project change requests which are issued for pricing by the trade contractors will be estimated in detail by Mortensen jobsite cost engineering staff to ensure that trade ® contractor pricing is accurate and reasonable. ®• Value Bngineering/Cost Benefit Analysis -Mortensen will proactively analyze all phases of the facility's design from a construction viewpoint with the goal of balancing performance and quality against initial and life cycle costs. As a continuous process during the design phase, our staff of professional value engineers will lead the team in the evaluation process to include cost analysis, constmction feasibility . (constroctabiliry), considerations relaive to labor and material availability, and effect on the project schedule. This process will begin az the inception of our involvement in the project -when potential . savings are greatest -and will continue throughout the design phase and even into construction. . Mortenson's value engineering efforts on the National Sports Center Project in Blaine, Minnesota were instrumental in that project being completed within the established budget. • Mechanical and Electrical Estimating/Value Engineering -Mortensen has both mechanical and electrical . construction professionals on staff. Throughout the design process, Mortenson's mechanical and electrical specialists will be intensively involved as members of the owner's project team that selects the appropriate systems for the building. We maintain extensive cost infotrnation from comparable projects which enables us to evaluate the relative costs and benefits of alternate systems, including ice systems. Scheduling - Mortensen will develop, in detail, an integrated design and coasttvction CPM schedule ^ reflecting the most effective and economic approach to the project. In collaboration with the owner and the design team, we will build a schedule which identifies all key milestone dates for use in designing and constructing the project. ' During the constmction phase, we will continuously monitor the progress of the work, addressing schedule problems with trade contractors and tttazerial suppliers to correct delays, review manpower and tttaterial availability, and make appropriaze demands upon contractors to maintain sazisfactory progress. 1 1 ^ ^ Our jobsite scheduling personnel will also reflect in our schedules the owner's meeting dates. We will keep . • the team informed of schedule status while constantly monitoring the progress of the work. . Site Utiliration/Logistics Planning - Eazly in the design phase, Mortensen will establish a comprehensive plan for the logistical organization and use of the site during construction of the project. This analysis will . aid in ttte identification of construction feasibility problems which may impact design decisions. It will also enable us to accurately reflect in construction cost estimates and schedules the logistical and organizational chazacteristics of the construction process which may have a cost and schedule relationship. . Bidding and Procurement - On behalf of the owner, Mortensen will administer the competitive bidding, trade contract awazd and procurement process in full compliance with the applicable policies and . procedures. We will do so in a manner which will ensure (a) the maximum interest in the project by trade contractors and suppliers, and (b) that the most favorable competitive prices aze received for the project. . Mortensen will utilize in-house specialists to assist the project team with the selection of appropriate mechanical and electrical contractors as specified in the request for proposal for this project. Permitting -Mortensen, working with the project team, will identify all specific reviews and permits . required by the city, the state and applicable Federal agencies. We will establish schedules and commitments for acquisition of required permits so as to ensure timely issuance to promote overall project efficiency. . Construction Supervision -Drawing from our long tenured staff with significant experience in projects compazable in size and type, Mortensen has assembled an extremely qualified and effective supervisory . staff for construction operations, Mortenson's commitment of this staff to this project will ensure a smooth running, efficient, and safe work environment for the benefit of all participants in the project. 1 1 1 1 1 1 Cost Control - As a continuation of our estimating and budgeting services, Mortensen will implement • systematic and reliable cost control techniques in a format which acwmmodates the owner's cost reporting requirements. Mortensen will perform check estimates on all trade contractor requests for change orders to evaluate pricing for fair-value-for-costs. Throughout the construction phase, costs to the project will be monitored and managed to accomplish the work within budget parameters. Mortensen will keep the owner continuously informed of the stams of project costs through the publication of montlily Cast Status, Trade Contractor, and Project Payment reports. 1 • 1 Safety Management -Mortensen will provide the overall safety management for the project. All supervisory personnel will be responsible for the safety of those in their chazge. All individuals involved in the project will be required to cooperate fully to perform in a safe manner, be alert to unsafe acts or conditions, and bring [o the attention of his/her supervisor any potential safety problem he/she may observe in order to protect him/herself and fellow workers. Mortensen will continually promote a safe, accident- free environment during the construction of the project with a goal of no serious injuries to people, no "lost-time aceidents° and no adverse publicity for [he project. Quality Control - Mortensods on-site personnel will implement a formal quality monitoring system. This system is designed to focus on prevention of eon-conformance with regazd to the project. Items noted in inspections and surveillance will be monitored through afollow-up process until the nonconforming item is corrected. Management Reporting -Beginning at the design phase of the project, Mortensen will publish for the primary use of the owner a monthly update of the stams of the project with particular regazd to estimated cost status, value engineering/cost benefit analysis stams, and design schedule performance together with a report of project problems and intended resolutions in an overall project action plan. We will continue publishing these monthly project overviews during the construction phase with a shift in focus to the status of current and projected costs and project schedule performance. 1 ~ Docament Control - Mortenson will implement document control procedures to control the flow of ' • documenu and correspondence in an organized, thorough manner to consistently achieve timely and accurate processing of project information and ensure that all project patticipants aze utilizing the most _ current information. Insurance Administration - Mortenson will support [he owner through the services of our full time, in- house insurance specialists and risk managers. We will work with the owner and the owner's insurance administrators to effectively manage the construction risks inherent in the project. We will work with the owner to avoid loss due to the exposure of each participant in the construction process -the owner, azchitects and engineers, trade contractors and their employees - to the many risks endemic to constmction work. Effective management of these construction risks will be vital to the success of this project, the preservation of its budget and schedule, and most importantly, the safety and security of the project's participants and the public. Project Commissioning - In close cooperation with the design team and owner's staff, Mortenson will prepaze written procedures for use in coordinating the systems testing and commissioning of the trade contractor's work. These written procedures will outline specific project requirements in complete compliance with design documents. for installation coordination, shop drawings, start up, commissioning, testing procedures, owner training of all systems, and the occupancy prepazation of life and safety systems. Owner Move Planning aml Management - Mortenson has assisted numerous clients in the logistics planning, preparation far and execution of their move-in. We will be able to provide substantial assistance to the owner in this critical phase of the project to help ensure a smooth operation. ~ Project Close Out - Mortenson will provide and implement a procedure which facilitates the timely and ' thorough prosecution of all outstanditrg comractual responsibilities necessary to effect contract close out. We will take the lead in compiling all data and expediting the prosecution of this work. Mortenson will ' • provide management of the warranty process and help ensure the response of trade contractors to meet their warranty obligations. Conduct Project Partnering Workshops -The concept of Project Partnering in the construction industry has received substantial publicity in recent yeazs. Partnering offers a framework in which all participants in the construction proc(owners, architects, contractors, etc.) can build a working relationship that is deliberately founded on mutual respect, trust and integrity. Projects involved in partnering are reporting improved teamwork, improved quality, more expeditious resolution to problems, and lower costs for all parties. As an extension of our commitment to the Total Quality approach, we have developed in the past few years a workshop in which the key decision makers and project management [earns can build a strong working relationship. We have conducted those workshops on several projects with great success and intend to provide this service on every project. • FEE PROPOSAL Mortenson will provide complete and comprehensive constructionmanagement services, including preconstruction phase services, in accordance with services outlined in the Request for Proposal dated Mazch 27, 1995 and as contained in AIA Document A121/CMc. A Guazanteed Maximum Price (GMP) will be established prior to the start of construction, and Mortenson will assume the risks attendant to such a GMP. Mortenson will perform certain key trade work with its own forces, including concrete work, masonry and carpentry. Mortenson proposes a lump sum fee equal to 3.25 % of the cost of the work, to be established at the time when the GMP is established. The fee will be billed in equal monthly instalhnents during the construction phase. The fee shall include all preconstruction services. In the event that the project is for any reason abandoned prior to the start of construction, we would request compensation for persommel cost and actual expenses incurred, not to exceed $7,000. • • INDEPENDENT CONSULTING ENGINEERS, INC. April 9, 1995 A. Lemberg, P.E., President Mr. Pat Klaers City Administrator City of Elic River Re: Proposed Revisions to Contract Professional Services on Ice Skating Facility City of Elk River File No. 230294 Dear Pat, APR f ~ 80 W. County Road C Little Canada St. Paul, Minnesota 55117 Suite 801 PHONE: 612-482-9313 FAX: 612-482-9558 Due to our recommendation to you on engaging the services of Construction Manager for the Elk River Ice Arena Expansion Project and based on our conversations both with you and with the Arena Task Force, we submit the following proposed revisions to our present contract based on our original "Proposal 'A "' dated .August 26, 1994. 1. Delete the following from the Proposal 'A' letter: "Modified Project Coordination/Construction Management &" thus leaving Consulting and Design Services. 2. In paragraph 2, delete the words "Project Coordination/ Construction Management and" 3. Under Phase III - Design Development, delete item III-D 4. Under phase Iv - Construction Documents Change as follows: A. Work with Task Force and A/E on review of final design and development of detailed bid documents including plans and specifications pertaining particularly to ice rink design, refrigeration system design, dasherboard design, and provide consulting service/recommendations or floor plan layout, dehumidification ventilation and lighting. B. Attend periodic meetings with A/E for final plan and specification coordination. C. Leave as is ®I.C.E., Inc. 1995 Proposed Revisions • City of Elk River page - 1 - 5. Phase V - Bidding and Construction Contracts A. Leave as is B. Add the words for the ice related items C. Delete word "hold" and change to "attend" D. Delete word "all" and change to "ice related" E. Delete in entirety 6. Phase VI - Construction A. Delete word "hold" and substitute "attend" B. Delete in its entirety C. Delete word "hold" and substitute "attend" D. Delete in its entirety E. Delete "entire project" and substitute "ice related items" F. Leave as is G. Delete "coordinate" and substitute "make" and add "on ice related items" H. Delete "coordinate" and substitute "attend" On next paragraph change "not to exceed" amount to $30,000 in lieu of $50,000. Change table of fees to read a s follows: Original Paid to date & Phase $ of Fee Estimated Fee Proposed Phase I 3~ $ 1,500 Through Phase II 16~ 8,000 Phase III Phase III 248 12,000 7,713.50 ~ Phase IV 40~ 20,000 ~~~o -].8;6~@~'00 Phase V 8$ 4,000 SOO.UO Phase VI 98 4,500 3,786.50 0 mI.C.E., Inc. 1995 City of Elk River 0 0 0 S ._3.U-; ttUD ~~~ ;Z7 y`vo Proposed Revisions page - 2 -