BOARD AGENDA MEMORANDUM
Government Code § 84308 Applies: Yes ☐ No ☒
(If “YES” Complete Attachment A - Gov. Code § 84308)
SUBJECT: Title
Receive Information on Construction Project Delivery Methods and Senate Bill 598 - Expanded Authority for Construction Manager/General Contractor Delivery Method, and Approve Preliminary List of Projects.
End
RECOMMENDATION: Recommendation
A. Receive information on construction project delivery methods, including Design-Bid-Build (DBB), Design-Build (DB), Progressive Design-Build (PDB), Public-Private Partnerships (P3), and Best Value selection approaches;
B. Receive information on Senate Bill (SB) 598 and the expanded authority for the Construction Manager/General Contractor (CM/GC) delivery method;
C. Approve the list of projects for delivery using the CM/GC method, authorizing staff to proceed with CM/GC delivery for the identified projects; and
D. Provide feedback to staff as needed.
Body
SUMMARY:
Santa Clara Valley Water District (Valley Water) utilizes a range of construction project delivery methods to deliver capital improvement projects, each with varying levels of risk allocation, cost control, and schedule efficiency. These methods include traditional Design-Bid-Build as well as alternative delivery approaches such as Design-Build, Progressive Design-Build, and Public-Private Partnerships.
Senate Bill 598, effective January 1, 2026, expands the authority of public agencies to use the Construction Manager/General Contractor (CM/GC) delivery method for water infrastructure projects. This legislation provides Valley Water with an additional project delivery tool that allows for early contractor involvement during the design phase, improving constructability, cost certainty, and schedule performance for complex projects.
Staff is presenting an overview of available delivery methods, the benefits and limitations of each, and the applicability of CM/GC to Valley Water projects. A preliminary list of projects has been identified as candidates for CM/GC delivery based on complexity and alignment with SB 598 objectives.
Background:
Valley Water delivers a diverse portfolio of capital projects, including dams, treatment plants, pump stations, pipelines, and recycled water facilities. Selecting the appropriate delivery method is critical to achieving project objectives related to cost, schedule, and risk management.
Traditional Design-Bid-Build (DBB) is the most commonly used method and involves separate procurement of design and construction services. Under this approach, Valley Water completes the full design prior to bidding, and construction is typically awarded to the lowest responsive and responsible bidder. While DBB provides a high level of design control, it allocates a majority of the risk on the agency for design errors, omissions, and coordination issues, which are often remedied through change orders for complex projects.
Design-Build (DB) combines design and construction under a single contract, allowing for overlapping phases, streamlined coordination, and reduced delivery timelines, with the design-builder assuming responsibility for design performance and constructability.
Progressive Design-Build (PDB) builds upon the DB model by introducing a two-phase process in which the contractor is selected early to collaborate during design development, followed by negotiation of final pricing prior to construction. This approach promotes transparency, shared risk management, and flexibility for projects with evolving scope or higher uncertainty.
Public-Private Partnerships (P3) involve long-term contractual agreements with private entities that may include design, construction, financing, operation, and maintenance responsibilities. P3 delivery transfers significant lifecycle risks to the private sector and is typically used for large-scale or revenue-generating infrastructure projects.
In addition to the methods described above, the Best Value selection approach is not a project delivery or procurement method, but rather an evaluation and selection methodology used in conjunction with various delivery methods such as Design-Build, Progressive Design-Build, and, in limited cases, Design-Bid-Build. This approach allows Valley Water to evaluate proposals based on a combination of price and qualitative factors, including technical expertise, project approach, and relevant experience, rather than relying solely on lowest bid. By using weighted evaluation criteria, Best Value supports the selection of the best suited contractor to manage project risks and achieve desired outcomes, particularly for complex or high-risk projects.
Construction Manager/General Contractor (CM/GC) Delivery Method:
SB 598 expanded the use of CM/GC for regional recycled water projects or other water infrastructure projects undertaken to alleviate water supply shortages attributable to drought or climate change. The legislation allows agencies to select a construction manager to advise during the design phase, regarding but not limited to scheduling, pricing, and phasing. The number of CM/GC projects is limited to 15 per agency, and the authority sunsets on January 1, 2031.
The CM/GC delivery method provides a collaborative, phased approach to project delivery. During the preconstruction phase, the selected contractor provides input on design, cost, and construction sequencing. Prior to construction, Valley Water and the contractor negotiate a Guaranteed Maximum Price (GMP). If agreement is not reached, the project may be competitively bid, or delivery strategy reassessed.
Key benefits of CM/GC for Valley Water include:
• Early contractor involvement to improve constructability
• Enhanced cost control through negotiated GMP
• Reduced schedule risk through phased delivery
• Improved risk management for complex and high-risk projects
• Flexibility in selecting the most appropriate delivery method for each project
The CM/GC method is particularly well-suited for complex water infrastructure projects such as dams, treatment plants, pump stations, and large capital projects where risks are difficult to fully define during design.
Board approval is required for key milestones, including:
• Authorization to use CM/GC
• Award of the preconstruction services contract
• Approval of the GMP and construction contract award
Staff has identified a list of projects that may benefit from CM/GC delivery based on project complexity, risk profile, and alignment with SB 598 criteria. Approval of this list authorizes staff to proceed with CM/GC delivery for the identified projects. Staff will notify the Board and return for approval if the recommendation is to proceed with a project delivery method other than CM/GC. These projects are listed below.
ENVIRONMENTAL JUSTICE IMPACT:
There is no direct environmental justice impact associated with this informational item. Future project-specific approvals will include evaluation of environmental justice impacts as applicable.
FINANCIAL IMPACT:
There is no immediate financial impact associated with this item at this time.
CEQA:
The recommended action does not constitute a project under CEQA because it does not have the potential to result in a direct or reasonably foreseeable indirect physical change in the environment. Approval of the list of projects is solely for authorization of the GM/GC delivery method and does not constitute project approval. Appropriate environmental review for the projects listed herein will be completed prior to project approval.
ATTACHMENTS:
Attachment 1: PowerPoint
UNCLASSIFIED MANAGER: Manager
Tony Ndah, 408-630-2208