Title
RESOLUTION AUTHORIZING AN AGREEMENT WITH MCGOUGH CONSTRUCTION FOR PRE-CONSTRUCTION SERVICES RELATED TO THE CIRRUS BUILDING PROJECT FOR AN AMOUNT NOT TO EXCEED $45,000.
Body
CITY PROPOSAL:
RESOLVED, that the proper city officials are hereby authorized to enter into an agreement with McGough Construction, substantially in the form of that attached as Exhibit A, to provide pre-construction services pertaining to the development, design and construction of the Cirrus building project for an amount not to exceed $45,000, payable from Cirrus Building 412, Finance 030, Buildings & Structures 5520.
Statement of Purpose
STATEMENT OF PURPOSE: The purpose of this resolution is to authorize an agreement with McGough Construction to assist the city as the owner’s construction manager at-risk in the development and construction of the Cirrus building project (“project”).
The project consists of the development of an approximately 60,000 square foot manufacturing facility on city-owned property that will be constructed in 2015 & 2016. The occupant of the facility is anticipated to be Cirrus Aircraft. The city’s costs of the project will be paid in part by an up to $4 million grant of state of Minnesota investment funds to be equally matched by proceeds of tax increment and TIF revenue bonds issued by the city.
The city requested proposals for a construction management firm to provide pre-construction and construction management at risk services for the design and construction of a building which will be suitable for Cirrus’ need for a facility which will allow them to manufacture their new line of jet aircraft and expand their research and development capacity in Duluth. In addition, if needs should change, the facility will be suitable for other potential uses and users. McGough Construction was selected as the entity best able to assist the city. McGough Construction has extensive experience providing construction management at risk services and overseeing construction of a number of major projects. The evaluation team’s scoring sheet is attached as Exhibit B.
This contract represents one of two contracts with McGough Construction that will be in front of the City Council for approval. This first contract is for pre-construction services related to providing detailed project cost estimation, planning, value engineering and development of a guaranteed maximum price for this project (GMP). The second contract will be for all of the publically let and awarded project bids along with the construction manager at risk fees representing the total construction cost of the Cirrus Building project as the GMP. With a GMP project, any savings or unused contingency in this project goes back to the owner and DOES NOT become part of the Construction Manager’s profit.
The cost for this first pre-construction services contract (not to exceed $45,000) will be subtracted from the sum total of all fees collected by McGough Construction on this project, and said fees are as represented in Exhibit B. Construction Management fees and reimbursable expenses replace the overhead and profit which are typically incurred in sealed bid form in the general contracting model (using the traditional design, bid, build project approach), and are determined on a negotiated percentage of the total cost of construction for the project plus negotiated reimbursable expenses directly related to managing the project. In this case, McGough Construction is providing construction management at risk services for 2.5%. Mcgough’s proposal is attached as Exhibit C.