COURT
FACILITIES AND
SPECIAL MEETING
SEPTEMBER 28, 2009
** NOT APPROVED **
Members Present: D. Pullen, G. Benson, D. Fanton,
W. Hall, T. Hopkins, T. O’Grady,
C. Crandall
Others Present: D. Burdick, W. Dibble, A. Finnemore, M. Healy,
J. Margeson, T. Miner,
B. Reynolds, B. Riehle,
T. Seeler (Seeler Engineering), F. Sinclair, N. Ungermann
Call to Order: 12
noon by
Committee Chairman David Pullen.
Project
Labor Agreement Benefits Analysis (Feasibility Study):
Tim Seeler, from Seeler Engineering, forwarded his report
on the Project Labor Agreement Benefits Analysis for the Courthouse Project late
last week (copy attached to original minutes).
Committee Chairman David Pullen noted that he spoke with several
legislators to make sure everyone was aware the information was available on
the Internet. Mr. Seeler was present at
the meeting to discuss the report and answer questions.
Legislator
Committee Chairman Pullen noted that the benefits analysis
was broken down to show labor savings directly attributable to provisions in
the PLA, and that totaled $192,600. He
asked Mr. Seeler to explain how he arrived at that estimate and what was
included in the analysis.
Mr. Seeler summarized the analysis process. When determining if a PLA is applicable, (1) you
must demonstrate an economic benefit directly due to terms and conditions
negotiated in the agreement, and (2) you must make sure there is no favoritism. Seeler Engineering looked at the information
provided by LaBella Associates (design team) and Bovis Lend Lease (cost
estimator), met with LaBella to fully understand the features of the project,
and then evaluated the individual cost breakdowns. They put that together and projected the
amount of labor that goes into the project, using previous models for similar
projects. On that, they imposed the special
circumstances, i.e. weekend work to avoid certain conditions, night work to
allow building operations to continue, etc.
Those things trigger most of the premiums associated with a project. A projection of labor was made, totaling
about 125,000 hours, which was then broken down by trade, and each trade was evaluated
for those special conditions to ascertain what can be saved for this project by
applying the PLA that's been negotiated (Section 5, Table 2 of the report). That led to the projections included in the summary
table.
There are a couple of things that entered into that from
a project execution standpoint. There
are really two components: the new addition and the renovations to the existing
structure. The key to getting to these
renovations and maintaining the project on schedule is being able to move the Court
system into the new structure during the short period of time when the Courts
are not in operation, so some things will have to be done by a certain time. Otherwise you would have the potential of
disturbing the Court calendar and adding to the cost of the project. The second piece is the renovations. Some areas will be renovated in the absence
of personnel, but others will have to be renovated while staff is working there
at the same time. Those kinds of things
add the premiums, primarily in second shifts and weekends. Seeler Engineering has identified the savings
to be realized in those work activities.
The PLA was negotiated with no shift differential, where typically it's
five to ten percent, and this provides significant flexibility for how the work
is executed without worrying about extra pay.
The other thing that shows up in the estimates that's available
because of the PLA, but wouldn't be otherwise, is the ability to use a four
ten-hour work day program. There is a
significant increase in productivity just in the normal work day cycle, especially
for the general trades, in the existing building areas where there would be a
lot of prep time, special clean up, and protection of equipment. They have found that a significant benefit
can be derived by going to a four ten-hour day program.
In addition to the reduction in the shift differential to
zero, there are other things that are favorable to the County, like the
negotiation of industry funds and flexibility in start and finish times. All of that packages into one of the last
things Seeler made a projection on, and that was management rights. In a union situation, most agreements don't
say anything about management rights; it's inherent in the way they
operate. They will dictate to the
contractor for staffing requirements, delivery of the labor, and levels of
skill base - all adding to the costs or slowing the project down. The PLA negotiated for the County completely
removes those rights from the unions; they have no right to participate in those
decisions. That adds value to the project
as well.
In the end, the labor hours and all those different
scenarios are looked at to arrive at detailed calculations that support the
numbers for each individual thing (Appendix G).
This shows how Seeler arrived at the $192,600 estimate. These are dollars directly related to the
County's project: the labor and how they work on the job.
Two key things that allow the application of a PLA are
economic savings, which this demonstrates, and the absence of favoritism, which
the agreement in total demonstrates. If
those two conditions are met, then you look at the additional benefits, which
are things you can account for later on, but can't be used in the
decision-making process (Section 6 of the report). This has all been established through the
past ten to twelve years of implementing these types of projects. Included are all of the other intangible
benefits that don’t directly drive cost savings shown in Section 5, but are
still valuable.
About two years ago, the state changed the Labor Law to
say that for certain projects in certain dollar ranges, you are allowed to step
outside the Wicks Law and implement your project in a way that's more favorable
to you. The Wicks Law requires at least four
very specific contracts for any public labor bid job: general, electrical,
mechanical, and plumbing. The implementation
of a PLA allows stepping outside that to package the project in a way that is much
more favorable to the project owner.
That was not taken into direct account in the report, because it's really
more an indirect benefit, but studies done by the state and cited in the report
indicate you can reduce the project cost by anywhere from 10 to 30 percent as a
result of repackaging outside of that standard Wicks Law requirement. In Mr. Seeler's opinion, the County would not
see a 30 percent reduction; however, there is the potential for up to 10
percent.
An additional benefit, the management rights clause
mentioned earlier, or the right to manage the project the way the management
team sees fit, may be an intangible, but the County has control of the project.
Another aspect typically evaluated in the report is the
potential for project disruption. They look
at the labor market and the potential for disruption due to strikes, walk-outs,
and job actions, and then try to make an assessment of risk. The economy has made people more anxious
about their employment, and the change in national politics has allowed more of
a voice for those organizing labor, so things are changing a little. Mr. Seeler characterized the mood in
Seeler assessed the marketplace, the type of project, and
also what they expect as the bidding environment, to make some projections, and
those are reflected in the estimates.
The County can expect up to 60 percent of the project being conducted by
union contractors due to the high percentage of the skilled trades (electrical,
mechanical, and plumbing) that are union.
Also, the general contract is large enough to make it a real stretch for
some of the local generals, but it would draw attention from
Mr. Seeler concluded by stating that the economic savings
are clearly demonstrated, the agreement is fair and equitable to both union and
non-union contractors, and the County will also see additional benefits.
Legislator Fanton asked how much time operating engineers
would be involved in the project, and expressed concern about the high rate of
pay with the project beginning in the winter.
Mr. Seeler replied that about 6,000 labor hours are projected. A chart included in the report lists typical
guaranteed hours for unusual conditions under existing agreements in the
absence of a PLA, but "guaranteed" pay was eliminated in the County's
PLA. The agreement only guarantees one
hour of work across the board. The PLA acts
like a master labor agreement that overrides all local agreements, but if
nothing is said in the PLA on a particular issue, the local agreement applies. The key features of the local agreements are
summarized in the PLA.
Legislator Reynolds questioned if the PLA eliminates the
need for a construction manager, allowing the retention of a clerk of the works
with a potential savings. Mr. Seeler
responded that the County could consider eliminating the full construction manager
scope of services and reduce it to a clerk of the works. There are some advantages to having a more
comprehensive set of services. Some of the
studies that address the reduced cost by going to a single contractor and
eliminating the Wicks Law found that the claims related to a contract will go
up, even in a single contractor environment.
Managing risk and the potential for claims may add a higher cost for
litigation or resolution. A construction
manager's presence helps to resolve issues on the site, such as between the sub-contractor
and the prime, and just enforcing the prime contractor. You really want someone with more involvement
in the project. There is a very
substantial difference in the quotes the County received for construction
management and clerk of the works services, but that depends on the scope of
services. Mr. Reynolds questioned if any
of the responses received for clerk of the works qualified. Mr. Pullen answered that the committee
interviewed three firms that quoted on both approaches, two for clerk of the
works and three for construction management.
The committee hasn't made a decision, but is still gathering information
and checking references. Mr. Pullen's
opinion was that even with the savings (there was $190,000 difference between the
low quotes), there were additional advantages to be gained by retaining the
construction management services: additional inspection services, supervision, value
engineering, etc. We would not be
choosing the cheapest approach, but would be gaining other advantages. Mr. Pullen has gathered viewpoints from
several people outside of the County, including some from uninvolved engineering
firms, and the conclusion was that the retention and involvement of a
construction manager as soon as possible will save money and improve the quality
of the project. He personally would
choose construction management services, and there were similar sentiments
expressed by committee members.
Legislator
Chairman Crandall referred to the break-down of
categories included in Mr. Seeler's cover letter, and some of the issues, such
as the four ten-hour work days, need to be actually implemented by the construction
manager in order to experience the savings.
Mr. Seeler acknowledged that was true.
Six of the seven savings areas identified become automatic with the
implementation of the PLA. The only one
that’s optional is the four ten-hour work day program, which would have to be
implemented, so that message would have to go back to the design and management
teams.
Committee Chairman Pullen reviewed the next steps, and
noted that LaBella is anxiously awaiting the decision on the PLA, as it affects
how the specs are drawn up for the bidding process. They plan to advertise in mid-October, with
bids to be received sometime in November.
If this committee approves of the benefits analysis, the PLA is already scheduled
to be considered by the full Board this afternoon. If the committee is unhappy with the study or
feels that the PLA would be detrimental to the project, the resolution can be
withdrawn. The law requires that this analysis
be done, and it has to show an economic benefit. It is clear that there is an advantage, and Mr.
Seeler has recommended moving forward with the PLA. Chairman Crandall voiced his opinion that the
$192,600 estimated savings is very positive, and he would support the PLA. He noted that there is no further action
needed from this committee, unless it desires to withdraw the PLA
resolution. Mr. Fanton asked if the PLA
has to be approved by any other entity.
Mr. Seeler noted that no one else needs to approve it, and the unions
have their own approval process. Mr.
Pullen reported that Peter Godfrey, from Hodgson Russ Attorneys, indicated that
all unions have voted to approve the PLA, but they’d like to hold off on
signing until the County approves it.
Steve Thorp, from the Construction Trades Council, will circulate the
agreement for signatures. LaBella
Associates wants to send out signed copies with bids.
Legislator Ungermann questioned how the no-strike protection
provision in Section 5.2 of the report affects the savings estimate. Mr. Seeler responded that it was not projected
into the estimate. He is assuming the project
will proceed without disruption as a conservative way of estimating savings. Mr. Pullen added that there could be
disruption without a PLA, and if so, that would add cost to the project.
Legislator Reynolds expressed concern about the apparent lack
of negotiations with the unions. Mr.
Pullen dismissed that concern and explained that over three months were spent
in negotiations with the unions, which were conducted by Attorney Peter
Godfrey, acting on behalf of the County.
All of the issues that have been mentioned – the “tag-along” provision (one-to-one
union-to-non-union labor ratio), payment of union benefits by non-union
employers, use of apprentices, and premium pay – were on the table and
negotiated. Five major points were
identified by Mr. Godrey, and he was able to get all five, possibly due to the
lack of work.
Legislator
Next Meeting: Wednesday, October 7, 2009, 3:00 p.m.
Adjournment: The meeting
was adjourned at 12:45 p.m. following a motion made by Legislator Hall,
seconded by Legislator Fanton and carried.
Respectfully submitted by
Adele Finnemore, Journal
Clerk