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PCC writes MWESB inclusion into construction bond contract – DJC Oregon

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Jan. 30, 2012

from the Daily Journal of Commerce – Portland, Oregon

By: Lee Fehrenbacher

Portland Community College has found a unique way to increase inclusion of minority-owned, women-owned and emerging small business contractors. Officials simply wrote it into the contract.

“We did tell the contracting community when we were proposing this language and how we wrote the RFP … we told them we want our cake and (to) eat it too,” said Kathy Kiaunis, bond finance manager for PCC.

In 2008, voters approved a $374 million bond for renovation and development of PCC campuses. Because projects would be large and potentially complicated because of staging and on-site student management, Kiaunis said PCC wanted to use the construction manager/general contractor process.

But officials didn’t want only large contractors to benefit. So in addition to requiring that 20 percent of the CM/GC’s subs be MWESB contractors, they charged the building community to come up with some creative ideas.

“How do you guys increase the capacity of smaller general contractors to create opportunities so that at the end of the bond we have more folks who are in the community who are able to handle bigger projects and are able to grow their businesses?” Kiaunis said.

To that end, PCC recently hired a company called O’Neill/Walsh Community Builders for a $30 million project at its Southeast Portland campus. It’s a strategic partnership between Walsh Construction Co. – a large firm – and O’Neill Electric Inc. – an MWESB certified contractor. Those two companies have partnered with another MWESB firm, In Line Commercial Construction. Kiaunis expects the arrangement to open doors previously closed to smaller firms.

“Both of those firms should be able to, as a result of this work, increase their bonding capacity and be able to bid then on larger jobs themselves,” she said.

Don Geddes, vice president of Walsh Construction and partner in charge of the Southeast Center project, said the partnerships with O’Neill and Inline will add another layer of complexity to the job, but the challenges will remain the same.

“The biggest challenge, and is always our challenge, is communication,” Geddes said. “If you look at the industry we’re in, it’s all about building buildings. But the reality is it’s communication, because there are so many different pieces and so many different people.”

With three companies managing different parts of construction, Geddes said they will, for instance, make sure that solutions identified in one phase are shared so that problems are addressed effectively. Walsh also will have one managing superintendent to oversee O’Neill’s and In Line’s superintendents.

Geddes acknowledged that it’s a delicate situation.

“It’s a little scary, but the reality is we’re always going to have competition and if it’s not them it’s going to be someone else,” he said. “In order to have a community that we all want to live in, everyone has to have an opportunity to get part of the package.”

Maurice Rahming, owner of O’Neill Electric, said the idea for the partnership came about one day over coffee with Bob Walsh, owner of Walsh Construction, as they discussed ways to create opportunities for small, disadvantaged firms. Rahming said he hopes the experience will give him the opportunity to see how big companies take care of business.

“We’re able to work with them and see from the ground up how a large, professional company like Walsh works and implements the contract,” he said. “It also highlights how the CM/GC process can produce inclusion. Without spending a million dollars for the disparity study, it has done what the disparity study would hope to achieve.”

Rahming referred to a $906,000 study that the city of Portland and the Portland Development Commission commissioned in 2009 to assess the disparity between availability and utilization of MWESB contractors.

One of the study’s findings was that revenues were less for certain disadvantaged groups than for others in the Portland area; that those same companies faced greater disadvantages in seeking capital financing and insurance; and that MWESB firms faced barriers in winning public-sector contracts.

For instance, the study found that for PDC-sponsored contracts, 3.2 percent of contract dollars went to minority-owned business enterprises out of a possible 4.8 percent. Additionally, 5.9 percent went to women-owned enterprises out of a possible 7.5 percent. The disparity was less significant for PDC-owned contracts.

While PCC’s big bond projects are just now ramping up, initial efforts to include MWESB firms on smaller projects has been successful.

According to PCC, 8.3 percent of the contract dollars for the $21.9 million Willow Creek job, managed by Skanska, went to MWESB contractors. For the $39 million Sylvania job, managed byHoward S. Wright, 22 percent of contract dollars have gone to MWESB contractors. And for the $5.98 million Newberg job, managed jointly by R&H Construction and Colas Construction – an MWESB firm – 25.2 percent of contract dollars went to MWESB contractors.

PCC also recently hired Fortis Construction, in partnership with MWESB firms Faison Construction and Northwest Infrastructure, for a $38 million project at its Rock Creek campus.

Kiaunis said an RFP for a $39 million project at the college’s Cascade campus closes on Feb. 9 and that the mandatory pre-proposal meeting drew approximately half a dozen contractors.

Rahming said the fact that large contractors are inviting the little guys to the table is a big change for the industry.

“If you look at those projects (Newberg, Rock Creek and the Southeast Center) you’ll notice there is quite a bit of inclusion, whether awarded or proposing,” Rahming said. “The general contractors are making significant opportunities for minority and women firms … they drastically changed the landscape and drastically addressed the question.”

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