In most city public works projects, city engineers estimate a project’s scope and cost, then send it out for contractor’s bids. But for the civic center’s new arena project, the process is different.
It’s called the construction-manager-at-risk model, which the city of Rapid City is using for the first time in a public works project but which has been used in a bevy of public works projects elsewhere.
The model is especially popular for sports arena projects, said Allen Troshinsky, Vice President of Operations at Mortenson Construction, the Minneapolis-based firm hired by the city to serve as the construction-manager-at-risk for the new arena project.
In short, the model works by having a company, Mortenson — and its local partner, Scull Construction — act as the middleman between the city and the various subcontractors who will work on the project or provide materials for its construction.
According to a profile of Mortenson provided by city staff, Mortenson is the second largest sports arena builder in the United States, having worked on more than 170 sports and entertainment projects valued at over $11 billion — including 40 sports arenas — in the company’s 30-plus years of operation.
Part of Mortenson’s resume includes working on the Denny Sanford Premier Center in Sioux Falls which, after a visit to Sioux Falls by Rapid City staff to study the process of building the arena, prompted city officials to decide that the construction-manager-at-risk model should be used should a new arena be built in Rapid City.
“It’s different and sure, people that aren’t familiar aren’t going to be comfortable with it at first until they see it work and be successful,” Troshinsky said of people’s concerns about the process, which met some criticism in Sioux Falls during the Premier Center construction as a process that trades increased efficiency for a lack of transparency. “There’s some patience involved in that and we understand that.”
Mortenson representatives have been present at the city’s bi-weekly working sessions involving the project’s architects, Perkins + Will and its local partner JLG Architects, and the city’s representative, Tegra Group.
By having the contractor present in the discussions, Troshinsky says, Mortenson can vet the feasibility of ideas given the local construction and materials market. They can also ensure the project stays within budget. That’s huge, since if the project goes over budget, Mortenson, not the city, will be responsible for cost overruns.
“By having the contractor at the table, as we go through and analyze each piece of the building, what it’s made of, what its intended use is going to be, we weigh in on matters of construction means and methods, on schedule, cost, labor availability, material availability, all sorts of market influences,” he said in an interview last week. “That way we don’t get to a point down the road in the design process where then we’re asked to comment and there’s surprises and disappointments and expectations are not satisfied and the architect then has to redraw the building.”
As Troshinky explained the typical public works project from the contractor’s perspective, most projects present the contractor with a drawing of a project, which the contractor must then bid on. Thus, the contractor’s bid is based solely on what’s within the drawing. If, say, the drawings are missing something or do not match the actual conditions at the project site, issues arise and change orders — requests by the contractor for more funds for the project — result. But, since Mortenson is at the table during the entire design process, they can address those issues during the planning process as opposed to much further down the line.
“We account for all of those inconsistencies in the price so our guaranteed maximum price includes a list of all of those little items that aren’t accounted for in the drawings,” Troshinsky said.