survey to help us determine some of the reasons. so we can reduce our risk and exposure to higher bids with that i'd like to present natalie tailor to present her findings. she will be followed by west core and he will speak to that and share with us the program as well as the trade group schedule with that i'd like to turn it over to natalie. >> thank you: mark. lee land tailor associates was asked to perform a bidder survey. we polled them about possible

mitigation measures to reduce risk and make the project as attract active as possible. secondarily most of the bidders thought the design was unique and very custom and designed to an extremely narrow tolerance that was almost un constructible and so you pay for that level of complexity and in the trade packages currently on the street several of the bidders mentioned that the language in the bidder manual gave a perception to the perceived responsibility for

the design even though the package is essentially complete and that added risk in their eyes and language in the bidding manual possibly made them feel they had some responsibility for certain elements of previous subcontract or's work and that also added to the risk and potential costs and where you are bidding out trade packages over long periods of time to make sure the project came together also adds risk to the project. in terms of general requirements -- a few subcontractors mentioned that certain items like site logistics there was more of a burden to the subcontractors than they normally saw and that added to some of the complex tee and lastly most of the subcontractors mentioned because of the increasing

activity in the community it was reaching capacity and there were concerns about possible availability in packages to come. >> i just have a question on that. >> yes. >> you have the perception of design responsibility perception of -- were they mistaken in their perception? >> i can only go by what they told me we did not do an extensive review of all the bid documents but i do believe there's language there that would suggest that they are responsible or partially responsible for the design. >> so they weren't entirely mistaken about that. >> that is my understanding. going onto mitigation measures a lot of these were recommendations by the subcontracting pool some recommendations we came up with based on the previous comments

obviously capture current market pricing looking like it's already been done and the bid manuals to eliminate perceived responsibility for design if the package is already complete or alternatively many of the subcontractors would like to bid on performance specifications and felt like they could come up with solutions that are cost effective and anything that has a narrow design tolerance somehow make the design more flexible where it's not such a narrow tolerance that's difficult to construct. review the bid packaging to better match scope to trade this is not a large item but some of the contractors mentioned for instance there might be some concrete in the electrical

package review the general requirements and so that the subs can focus on what they do best and survey the sbe availability per trade as the market gets hotter they want to make sure the goals match the sbe's and that concludes my portion of the presentation. >> director metcalf? >> i'm really glad you did this survey and these recommendations seem really good i'd love to know which of these you guys want to take and which you don't. >> we're taking all of them we're really looking at all of them, director metcalf and steve humphreys is going into what webcor/obayashi is doing now that they have these findings and recommendations. >> okay. >> good morning directors. so

as we mentioned earlier i think one of the keys that we attract bidders to the project and they show up on bid day we've had pretty good success on getting bidders prequalified so we've had many of them dropout so we've taken the information that was gleaned from the survey and made a number of adjustments that we think are going to help to attract bidders to the project we're doing a lot more personal outreach to the bidders and continuous communication with them during the bid process so we know if they have any issues that are going to cause them to perhaps not bid the project so we can address those during the bid process before they just don't show up on bid day.

we're also developing fairly detailed scoping documents that we're presenting to the bidders during the preconstruction or prebid meeting so that they can clearly understand what it is we're asking them to bid actually walking them through specific sheets of the drawing and highlighting them on the drawings and showing them our what our anticipated scope is there's over 2500 sheets of documents just plans plus a lot of specifications for them to go through it's a lot of information so we feel by specifically pointing out to the bidders what it is we're asking them to do that it will help them to bid the project and not perceive that there's more risk than there really is as we mentioned earlier there was language in the bid manual which was our instruction to bidders that might have been perceived by the subcontractors as adding risk to their scopes

and the entire team and turner and have gone through the bid manual provided comments back to the nothing of great consequence but anything in there that might that might be construed by the bidders as causing any confusion as to what it is we're asking them to do on the project. as we mentioned earlier the design build trades in particular the glazing packages and w 1 the exterior awning system we went through a process over 3 years with contractors on board to bid those and by the time they actually were able to bid the

plans were completed and the design was prescriptive as a result the glazing bid and w 1 bids were rejected and now in the process of rebid those trades with far less prescriptive requirements and do a true design build and bring the value to the project and there were comments on the mep trades the documents we had at that time were not complete we didn't know for sure how complete the final bid documents were going to be and if it was the intent that the bidders were going to have to finish those drawing on their

own we had to describe that in the documents and we did. and we know they are complete enough that they are really not design built and we've removed that language from the bid instructions. we've implemented well via the engineering effort that's being undertaken is requiring reduction of scope in a number of trades and rather than waiting for the drawings to be fully completed to reflect those changes we're working with the design team to come up with ways to describe those changes to the bidders in narrative form or sketches so they can clearly understand what they are being asked to bid so if we can bid the packages out now not later i'll show you later our schedule. but we want to get the bids out as soon as possible.

>> we have been working closely to streamline the timing of payments to the subcontractors and that has been there was a problem in the past we're getting caught back up and working closely to make sure that process runs more smoothly in the future so the payments to the subcontractors are timely we're just getting caught up in the last 2 months of progress payments and if we can establish a consistent track record i think that will go a long way to letting the potential bidders know that we're serious about getting people paid on time we've had a very successful sbe outreach program and continuing with that and taken a close look for every trade package and

adjusting those goals as appropriate to maintain our overall goal of 17 percent the sbe subs available in the marketplace are getting busy and not always available to bid this particular project. real quickly the schedule overall schedule -- we're on track to bid out an award the bulk of trade packages by april of 2015 and we'll go over that schedule really quickly here in a minute and the concrete structure complete by 2015 and above grade concrete may of 2016 and we're still on track for substantial completion of construction by october of 2017 so as i mentioned we've got many trade packages coming up

getting ready to bid we have a fairly aggressive bid schedule and 13 packages going to be bidding out in the next 3 to 4 months and the balance of the year another 12 trade packages and early next year another 9 there's still a couple more packages after that but the goal is by this time next year to have all of the trade packages under contract. any questions for me? >> director harper? >> it just seems to me risk allocation is huge in any construction project the bigger risk allocations -- what i'm surprised at is this wasn't realized earlier and i'm wondering who setup the policy as to the risk allocation and what risks should be pushed down and what risk shouldn't

what do we have lawyers run amuck or what do we have are these drawings being drawn up by people that aren't in contact of where the reality of where the risk should go? >> there's a couple of answers to that and one is the earlier packages were large scopes of work the dse package and the below grade concrete by shimmick they are all general contractors so there was a large scope of work put into one bid package for those trade contractors to manage and they also you know managed their own site logistics and as we're moving into future trade bid packages which are smaller trade packages with specific subcontractors we've removed all those things knowing it's unreasonable to expect them to

you know do temporary facilities for for example so it's not that we didn't recognize the risk, it's just a change in the philosophy of how we're putting these bid packages out which i think was suitable for those trade at that point in time and things that you could do and still attract bidders 3 years ago you can't do today so i think what we're doing is appropriate. >> director beall? >> thank you. i love the fact that you did a bidder survey i think that you got to always look at what's happening with a project to make sure sure you aren't making mistakes when you don't have simplified contracts the bids go up when they are not sure of what the risk is the bids go up that's just

natural and i wish this bidder survey had been done a little, earlier and i'm happy that we're going to stay to the individual components what we need to do to fix it but i hope it's not a stopping point but a beginning point of doing these surveys because the market is going to dictate as i said before what is it? 41 percent increase in construction over the last few years i know it's just crazy out there right now. >> it is. >> okay thank you. >> director reiskin. >> i think we're done with this presentation but not specific to this portion of the presentation but i guess generally start by saying less than a year after we were required to increase the budget for this project by 20 percent

by $310 million it's certainly disappointing to be at a place now where we have a 1$53 million problem i appreciate it's a hot market i think we're all seeing that around the city i think it's also true that if we had been able to keep to the original schedule of getting these design packages out we would have hit the market at a much better time so as a lesson and somebody said we need to make sure we get these things out because we're still in an escalating market as much as it's already escalated it's not going to abate anytime soon so we really can't afford to delay getting these things to market because it's not going to get better and like the other directors mentioned i think the bidder survey i think it was excellent that we did this and

i really appreciate the staff putting it out publicly sharing it with us in advance so i think the lessons are really important i absolutely concur we should have done this before i think some of the some of the things that we found are things we discussed an even a year ago my concern is that we didn't incorporate those lessons a year ago so i appreciate the commitment that we will do so now i think in terms of the design risk and the documents and the lack of clarity of the documents and those are the things i feel like we were talking about a year ago so it's un fortunate so i hope we'll all as the entire team will be working towards implementing those and on that point, i think what we

also discussed nearly a year ago is that it seemed the goals of an integrated project delivery approach didn't seem to be working in this project as well as they should be and it seems that the results of this survey bear that out at least from a potential bidder's point of view having a cmgc to do reviews are supposed to identify things just like that so either that review wasn't catching them or the designers weren't accepting the review comments i'm not sure what's not working how we could get to a point where some of these things you are putting on the street is almost un constructible so i hope we're really taking these lessons and applying them we have a lot of

work coming out in the next year and we can't afford at this point to be putting out documents that are not clear that are too complex and have unreasonable tolerances i can't emphasize enough this is the time to make sure the cmgg the designer everybody is together working on this to get clean stuff out to protect the schedule and the budget to the extent that we still can. in terms of i guess then just kind of 2 questions i think director harper was correct the slide showing the contingencies and reserves is important i want to commend the whole team i know that's very a very difficult process what you are at this point in the process to go back so i really appreciate that it looks like there's some more

potentially to come but we're taking a big chunk of the construction contingency down when we still have a lot of construction to go and we're not really necessarily counting for the un foreseen looking forward or for whatever exposure we already have my questions specifically what is our current exposure in terms of anticipated change orders for what we have already under construction and then the second question is after we've made these adjustments going from $225 million down to 128 and it sounds like another 40 of that will go away soon so really be down to what is that 80 or ninety million total contingencies and reserves will we still be meeting the fta

risk model recommended levels that this revised budget was based upon? ? >> on the pending change orders i can't show you the exact amount but between five and $8 million. >> all right so relatively little. >> little exposure is not that great but there's still exposure as far as the contingency with the fta model we've shared our mitigation with the fta early on they told us they understood the market environment and they understand what we're doing but they would like to have a healthy contingency and 128 is probably the lowest they would like to see they did tell us in san francisco and la cost pressures

some places are below normal as far as depressed markets so they understand the bidding environment in san francisco but they would like to see -- but we have to live within our means between the estimate and the budget it was one third cost reduction measures of two-thirds other sources given that we only have $500 million remaining to award we took basically a 10 percent cost reduction looked at everything possible and there's not much left to do that would not adversely impact so. >> i appreciate that and i appreciate that at least we're not facing a possible budget increase that we're staying

within the budget that we approved last year and hope that we'll be able to stay with this budget until the ribbon cutting. >> right now we've had some sessions so we're going to focus on the upcoming risks and making sure we mitigate them as best as we can so we can still keep the $50 million in program reserves i'd like to respond to one comment you made on the challenges of the integrated team this project it's a design project whereas the foundation is being constructed while the rest of the building is being designed. we've issued -- we finished design of the mep's in late january and the main package in late april so we're finishing the design so we did that in

order to go to construction as soon as possible that process is efficient in doing so it's inefficient in catching a lot of overlapping errors between packages so it makes it difficult to do that. >> thank you. >> any other comments or questions? seeing none i just want to think the team for the phase 1 construction cost estimate i think -- i don't want to repeat what fellow board members have said but i'll just concur with a lot of the comments and feedback this is a massive project and i appreciate the immense amount of work i'm looking at reductions and improving our bids in the process and i get to see all of the planning projects in our district which i would say take up a vast

majority of the city and it's certainly not slowing down so we have a lot of work ahead of us and you know a lot of that is going to come down to the management the construction management of this project so thank you. >> thank you director your comments and we're pleased we're still within the approved budget. one more thing jobs created outside of california so for the benefit of the board we created a map that shows as of to date we've created over 3145 jobs offsite close to 3000 jobs michigan florida ark and oregon and washington so contributing to jobs across the united states and you can see

the map across the screen and i'm going to pass it out so the directors can have one so that concludes my report thank you. >> at this time we'll up it up to public comment. >> good morning ladies and gentlemen. i'm jim patrick with patrick and company in san francisco. i argued to this board gosh a year and a half ago that this joint labor agreement was a mistake because it would yield the highest cost results and i think we're seeing the implementation of that policy i was disappointed in the labor agreement which i see i see no dollars where's the money? where are we spending the money? i consider that a real shortfall we have

the minimum wage argument it will ripple forward our costs i can guarantee that i believe this board needs to make a policy statement that we don't want this minimum wage thing to roll through our political environment because we're going to be buying a lot of labor and this is not a good time to have that happen. thank you. >> thank you. >> thank you. i'll be brief the first point last month mr. reiskin asked staff to include the presentations in the packet for the benefit not just of the board but the public so appreciate that i respect ly disagree with my good friend jim patrick you are seeing here a carbon copy of what we went

through in europe 30 years ago the channel tunnel and at that point the government said enough is enough we got to get down to the bottom of this figure out what the problem is and a massive report generated called the latham report there's a very good write up on wikipedia and they came up with a completely different way of doing business that's been working very well the last 20 years the way it works is like designer built but very very special basically up to 35 percent design at that point they go to the bids and they carry on working together as they gradually bring the design up to 100 percent that's where the value engineering is

working there's all the risk is shared and it worked very very well and extreme familiar with how that works ask them about the new engineering contract then take it from there. thank you. >> thank you. any other public comment on this item? >> seeing none we'll move on to regular public comment and this is for matters that are not on today's calendar. >> correct and jim patrick would like to address on this item as well. >> so seeing no members of the public that would like to speak we'll move onto our regular calendar. >> item number 7 authorizing webcor/obayashi as the lowest responsible bidder for