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|August 13, 2020 City Council Meeting|
12. Authorize the City Manager to Execute Contract Modification No. 3 with AECOM/Hunt to Approve the Guaranteed Maximum Price for the New Arena in the Amount of $147,583,181 (Event No. 6096)
On September 18, 2018, City Council approved a contract with AECOM/Hunt Inc. to serve as construction manager at risk (CMAR) for the new arena, responsible for construction of this $165 million public asset. As CMAR, AECOM/Hunt was brought in during the design phase of the project to work with the architect, the project manager, and the operator to design, value engineer, and price the arena construction. A major milestone of the CMAR is to propose for the City a guaranteed maximum price (GMP) -- the contractually obligated maximum construction price for the arena, which is developed following completion of the final construction documents.
Since the approval of this contract in 2018, City Council has approved two modifications to the City's contract with AECOM/Hunt to authorize procurement of certain early-release packages to allow arena work to be performed prior to completion of the final construction documents and prior to adoption of the GMP.
The first early-release package (Contract Modification No. 1), approved on September 12, 2019, was anticipated at the onset of the project, and facilitated an expedited construction schedule by allowing work to begin on site work, underground utilities, foundations, elevators, and steel packages in an amount not to exceed $23,530,000.
It was anticipated that the next contract amendment with AECOM/Hunt would be approval of the GMP, which was anticipated in May 2020, following completion of the final construction documents and pricing of those specifications. However, the onset of the COVID-19 pandemic, with subsequent business closures and supply chain disruptions, prevented AECOM/Hunt from obtaining accurate pricing on those packages. To prevent project delay costs as the City waited on construction pricing to stabilize, on May 28, 2020, City Council approved a second early-release package with AECOM/Hunt (Contract Modification No. 2), this one totaling $22,045,582. This allowed partial procurement of concrete superstructure; concrete on metal deck; structural steel erection; mechanical, electrical, plumbing, and low voltage coordination and underground installation; ice flooring; and long-lead time material procurements for sports light and food service items.
The proposed Contract Modification No. 3 on this agenda is for adoption of the Guaranteed Maximum Price in the amount of $147,583,181 to fully construct the Savannah Arena. If approved by City Council, AECOM/Hunt will be contractually obligated to not exceed this amount, and will assume the risk of cost over-runs.
Included in this GMP is construction of:
This GMP includes the two previously authorized early-release packages as described above. It also includes nearly $4.2 million in contingency.
The arena will be a 216,290-square-foot multi-purpose facility, with four levels of dynamic event space, including 14 suites and a bowl with seating for up to 9,437 people.
The arena’s $147.6 million in hard costs have gone through multiple rounds of value engineering over the past year to bring the total arena project – which also includes $17,416,820 for soft costs that include architectural and project management services, as well as furniture, fixtures and equipment – within the $165 million overall budget. Not included in this $165 million budget are capital projects that fall outside the original scope, including arena parking facilities, the second phase of Stiles Avenue improvements from the railroad tracks to Louisville Road, and other capital improvements recommended in the Canal District Master Plan.
The $165 million arena project is being funded with $120 million in voter-approved Special Purpose Local Option Sales Tax funds, and proceeds from a $45 million bond issuance serviced by auto rental tax proceeds.
AECOM/Hunt's original contract included a Disadvantaged Business Enterprise (DBE) goal of 25%. While the contract preceded the City's adoption of a policy establishing a 10% Local DBE goal, the City has been working with AECOM/Hunt to maximize local participation and meet that goal. The below chart includes the percentage of AECOM/Hunt's contracts that are anticipated to be awarded to DBE and Local subcontractors through the end of construction. These participation rates exceed the project's DBE contract goal, and the City's Local DBE target.
The DBE participation goals for the other three arena contractors are as follows:
Project Manager JLL: 30%
Architect Perkins + Will: 22.02%
Arena Operator OVG: 75%
Recommend approval to authorize the City Manager to execute Contract Modification No. 3 with AECOM/Hunt to approve the guaranteed maximum price for the new arena in the amount of $147,583,181.
Bret Bell, Chief Operating Officer
$147,583,181 in SPLOST funds and bond proceeds
Exhibit 1 AECOM/Hunt GMP Contract Amendment 3.pdf
Exhibit 2 AECOM/Hunt GMP Overview.pdf
Exhibit 3 AECOM/Hunt Original Signed Contract.pdf