Owner of the Year:
City of Phoenix Builds the Future

By Scott Blair

Southwest Contractor is pleased to name City of Phoenix as the "2006 Owner of the Year", and recognizes the City's quality of work, the quantity of large-scale construction projects and the relationships it forms with contractors and designers.

 

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Southwest Contractor magazine has named the City of Phoenix as the fourth annual Owner of the Year. Based both on the quantity of large-scale capital improvement projects the city is planning or currently building, the award is also given based upon the quality of work and the relationships that the city builds with contractors and design firms.

"As an owner, the City of Phoenix is fair and honorable - a joy to do business with," said Mike Gausden, executive vice president and western division manager of Hunt Construction Group, Inc. "They go through a selection process that gives everyone a fair chance, while clearly communicating what they want and what your deliverables are going to be."

To prioritize what projects go out to bid, the city goes through several planning processes that culminate in the formulation of a Capital Improvement Program (CIP).
The CIP is prepared each year as a multi-year plan for capital expenditures needed to replace, expand and improve the public infrastructure.

For the year 2005, the CIP is budgeted for $2.3 billion. Through 2010, the city plans on spending almost $5.4 billion on water, aviation, downtown redevelopment and infrastructure projects.

"As a growing city, our focus on the five year plan is to continue to expand services out to the city fringes where the construction and the growth is, while also focusing on expanding and improving services to all residents of Phoenix," said Wylie Bearup, city engineer and director of the engineering and architectural services department.

This includes the downtown development plan. "We will complete our $600 million expansion and renovation of the Phoenix Convention Center and finish the $250 million downtown hotel. All of these are major downtown projects that are going to occur during the current five-year CIP."

"Phoenix is pushing forward with projects that will revitalize our downtown, like the expanded Civic Plaza, the new downtown hotel, light rail and the Arizona State University downtown campus," said Vice Mayor Michael Johnson, Phoenix Councilman for the city's District 8. "Making the process smooth for the businesses doing this work makes good sense for all. We appreciate the hard work so many groups and businesses are doing to make downtown Phoenix an even better place to live and work." Johnson also represents much of downtown and south Phoenix and is the Chairman of the council's "Downtown, Economy and International" subcommittee.

Over the past five years the city has transitioned away from the traditional design/bid/build project delivery method. "All of the city's major building projects are built using either CM at risk or design-build," Bearup said. "The only projects in the city that are still done using low bid process are the streets and some water line projects that still make sense since they can be designed very thoroughly and you don't have the integration of multiple trades like you do in vertical building projects."

The benefits of this shift were felt almost immediately. "We get the value of the contractor's participation throughout the design phase so that we get projects that meet our needs better." Bearup said. "We have a better relationship, and have reduced the litigation significantly from the old design/bid/build days. In fact, there used to be an expression: design/bid/build/litigate on our low-bid projects, for a number of reasons and not to fault anyone. But it was just an adversorial relationship by the way the contracts were managed. We've gotten away from that completely."

The city has only had one case of litigation within the $2.8 billion body of work performed using alternative delivery project so far, Bearup explained. "That is incredible. In contrast, the last four design/bid/build projects the city had have all gone to litigation. That was part of the reason we moved almost wholesale to alternative delivery methods in our vertical building projects," Bearup added.

Contractors have responded favorably to this change. "When Phoenix says they want to be your partner in a project, they mean it," said Ralph Ketchum, southwest regional manager for Austin Commercial, a general contractor on the $175 Sky Harbor Consolidated Rental Car Facility. "Teamwork and mutual respect are paramount to their work ethic."

All Sky Harbor, Goodyear and Deer Valley airport construction goes through the city's aviation department, with funding coming from operating revenue, federal and capital grant programs and various other sources.

"We try to bid out projects in design and construction packages because this provides multiple opportunities for firms to get contracts at the airport," said David Hensley, deputy aviation director for design and construction services. "We are very cognizant of that responsibility of trying to spread the work around. We are also embracing the qualification selection basis for contractors so they can be true members of the design and construction team. This is the same way we select the design professionals, so we feel we get a truly energized development team when decisions are made by qualifications rather than lowest price."

Contractors are currently working on the final phases of the Sky Harbor Terminal 4 Retail Improvements, a $45 million project designed to bring more retail options to meet customer needs, such as a bookstore and drugstore.

"Another project is the Inline Explosive Detection System, for baggage," Hensley said.
"Instead of the large lobby x-rays where people put their bags now, we are building a new area for them. After a passenger's bags are checked, they are conveyed to the EDS location, making the system seamless for our customers." Most of the funding for this project is coming from the federal government.

Looming in the airport's future is a major redevelopment of the west terminal, Terminal 2. "This is a very exciting development project with a lot of opportunities for the construction community," Hensley said. "It will be a 33-gate terminal which will also require a new west runway entry, roadway development, new aprons and cross-taxiways."

The Environmental Impact Statement is currently being finalized, and a decision on the timeline on construction should be made by second quarter of this year, according to Hensley.

The Water Services Department will also be keeping engineers and contractors busy in the coming months.

"Though we are considered a young city, we are now transitioning in terms of the age of our infrastructure, which is approaching 40-years old, to a point where we need to be making more of an investment in its rehabilitation," said Carlos Padilla, assistant director of the department. He added that there are various impending federal and state water quality regulations. "These require that we improve our processes and do various things to remain in regulatory compliance," Padilla said.

The department is currently overseeing the $117 million Lake Pleasant Wastewater Treatment Plant, which is planned for completion in early 2007.

"We are also converting some of our treatment facilities to granulized activated carbon, which is a pretty costly proposition due to all the other improvements that have to be made at the same time," Padilla said.

The city is also working on capacity improvements and rehabilitation to its aging sewer systems.

"We feel we have a great relationship with our contractors and engineers," Padilla said. "We work very much in partnership with them, and most of our projects have partnering-type arrangements." The department utilizes just about every type of project delivery, even adding job order contracting and design-build-operate to the mix, as with the Lake Pleasant plant.

An important facet of the city's 'spread the work' philosophy has been the disparity program for women-and minority-owned businesses, small business enterprises and disadvantaged businesses. "We are committed to continuing to have high goals for those kinds of programs within the city projects," Bearup said.

Through these programs, small or minority-owned contractors can gain experience and help propel their businesses forward. "We were involved in the rental car facility and teamed with a larger electrical contractor, who acted as our mentor," said Dan Puente, president of D.P. Electric, Inc., a Phoenix-based, minority-owned electrical contractor. "Without programs like that we wouldn't have the opportunity to be exposed to that size of a project. It has allowed us to work at another level, with the "big" boys, if you will. We are extremely grateful for the opportunities the city provides."

The city also benefits greatly from these programs. "By spreading the work around we create a healthy, competitive environment which in turn produces quality performance and competitive pricing from our construction partners," Bearup said.

The future for the City of Phoenix holds many opportunities for the construction community. In the coming five-year plan, the downtown core is set to explode with activity-the convention center, light rail, a large hotel project and an urban Arizona State University campus being just a few of the large-scale projects.

Yet there are many challenges to overcome. "The continued escalation of materials pricing and the shortage of qualified craftspeople in this market are challenges for all of these major projects that we have planned," Bearup said. "We used to see five or six bids for every trade, but now we're seeing only two or three and I see that getting tighter as we get more and more work underway."

 
Overview of Selected City of Phoenix Construction Projects>>