Massachusetts has made far-reaching revisions to its public construction procurement regulations that are described as the most significant changes in nearly 25 years.
A key change is that all public projects with a value of more than $5 million have the option of using a construction management-at-risk format. Until now, Massachusetts public owners were required to use a design/bid/build format in conjunction with filed subbids encompassing 17 trades — a system instituted to prevent bid shopping.
Under the old system, the general contractor subsequently selected a subcontractor from each of the 17 trades. The general contractor normally hired the subcontractor with the lowest bid. If the GC did not, the owner could force a substitution, or the second-lowest bidder could file a protest.
The general contractor's involvement came later, and the GC was barred from communicating with the subcontractors as to specifics of their bids. "That was the inefficiency of the system," says Robert Petrucelli, CEO of the Associated General Contractors of Massachusetts. General contractors had no input into the plans and specifications, or about how the architects packaged the bid documents.
The new regulations permit the CM/GC to be hired simultaneously with the architect, allowing the two to work collaboratively to determine the breakdown of bid packages.
General contractors gained the right to prequalify subcontractors, and subcontractors agreed to provide performance and payment bonds. Neither was previously required. The subcontractors' right to file for direct payment by the owner was preserved, as were the 17 subcontractor categories.
Architect Russel Feldman represented the Boston Society of Architects in negotiations that led to adoption of the new regulations. As an example of an overlapping responsibility issue that might arise under the only format formerly available, Feldman cites whether a thermostat associated with a boiler should be the responsibility of an electrician or of the mechanical contractor. "These are the kind of issues that normally are worked out between general contractors and subcontractors," he says. "The architect can now work with the builder to subdivide the construction work, and the architect is no longer left alone to figure this out."
Another major change in the regulations requires every city, town, and school district to hire a professional project manager for any project with a value of more than $1.5 million.
The Massachusetts School Building Assistance Bureau previously provided extra reimbursement to districts that retained project managers, which effectively covered their cost of hiring a manager.
Unlike in other parts of the country where governments are structured to provide greater management expertise, the majority of Massachusetts cities and towns have populations of less than 25,000, and lack the sophistication needed to manage a major construction program, Petrucelli says. The new regulations are expected to result in better-run projects with fewer change orders, bid protests, and lawsuits. The state says the new regulations should reduce construction costs by as much as 10%.
Although regulations for conventional design/bid/build (Chapter 149) projects were streamlined, they retain the requirement that design professionals are responsible for allocating the work among the 17 trade categories. For projects valued at more than $10 million, prequalification of both general contractors and subcontractors is now required.
The new regulations were hammered out by a Special Commission on Construction Reform and shepherded through the legislature by a coalition representing primarily contractors, subcontractors, and designers. The parties sought not only a more efficient procurement process, but also a more "team-oriented" environment, Petrucelli says. They decided to save a review of the complicated issue of public design-build for future deliberation.
A boost for school funding
The new regulations are expected to streamline a major school construction program approved by the state legislature. Incrementally over the next seven years, one cent of the state sales tax will be allocated to fund construction of elementary and high schools. This is expected ultimately to provide $600–$800 million annually for school construction. A moratorium on new school construction that affects 425 projects has been in effect. About half of these projects already have been constructed and will now be reimbursed for the state's share of the project cost.