Rural water project shows how early collaboration can save time, cost

This article was originally published by Jodi Schwan of SiouxFalls.Business

By the time construction equipment arrived this spring on a new water treatment facility for Clay Rural Water System, many of the most important decisions already had been made.

The owner, engineer and construction manager had worked through design ideas, challenged assumptions, priced the project multiple times, identified long-lead equipment and looked for ways to protect both the budget and schedule.

“Had we done this as a traditional design-bid-build, we would have designed things the way we always have and it would have come in above the engineer’s estimate,” said Brian Hoellein, water treatment manager for engineering firm Bartlett & West.

“We would have had a project that came in well over budget, delaying construction and requiring redesign efforts while determining who pays for added costs. I’m 100 percent confident that would have been the case.”

Instead, the Clay Rural Water System project is using a construction manager at risk, or CMAR, delivery model — an approach that brings the construction manager into the process earlier than a traditional low-bid project and can give public owners more flexibility, cost confidence and opportunity for savings.

“CMAR delivery protects the owner, includes the owner and truly is the best for the owner to deliver through this construction method,” said Beau Mannino, project executive for Journey Construction. “Once construction starts, everything is set. We’ve coordinated with trade partners. We’ve talked through logistics. Everyone has had input.”

All three entities involved in the project will present the case study this month at the South Dakota Water and Wastewater Association Annual Conference.

The presentation is scheduled for 4 p.m. Sept. 16 at the Best Western Ramkota Hotel in Aberdeen.

Modern approach

For public entities considering major water or wastewater infrastructure projects, the Clay Rural Water project offers a timely example of how the CMAR model can support decision-making long before the first shovel hits the ground.

Clay Rural Water’s existing facility is nearly 50 years old and originally was designed for about 1.2 million gallons per day of treatment capacity. Over the decades, demand has increased substantially and the aging facility can no longer reach even 1 million gallons per day.

“The capacity is diminished, the treatment process is starting to get cumbersome, so we’re basically tripling the capacity,” said Steven Muilenburg, general manager of Clay Rural Water System. “It’s going to be a conventional system, pretty much what we’re doing now but modernized and expanded.”

Clay Rural Water serves parts of five counties, including all of Clay County, much of Union County and portions of Yankton, Turner and Lincoln counties.

The new ground-up water treatment facility, valued at just under $25 million, is being built on the same property as the existing plant. Once the new plant is operational, the systems likely will run in parallel for a short time before the old facility is removed.

The project started construction in spring 2026 and is scheduled to be online in summer 2027.

“That timeline is one of the key benefits of the CMAR model,” Hoellein said.

If the project had followed a traditional design-bid-build process, he estimated construction would have taken at least 24 months. Instead, from groundbreaking to anticipated startup, the timeline is expected to be about 16 to 17 months.

“We shortened the construction cycle by half a year, and that six months is cost savings back to the owner because they’re out there less and we’re involved less,” Hoellein said. “There’s cost savings, and Clay gets the functionality of their plant a half-year early.”

The CMAR approach began when the project design was about 30 percent complete, a point Hoellein said is typical for beginning an alternate delivery path. Bartlett & West was working with Clay Rural Water on the high-level plan, and the team then went through a request-for-proposals process to bring in a construction manager.

Journey ultimately was selected after a competitive process.

“Their proposal was very thorough,” Hoellein said. “They included a lot of information on their experience, their team, their understanding of the project at that point and their proposed project approach.”

Hoellein previously had worked with Journey on a water treatment project for Mid-Dakota Rural Water System near Pierre, which gave him additional familiarity with the team although that project was a more traditional delivery method.

“That all went really well,” he said.

For Muilenburg, choosing CMAR opened the door to flexibility that can be difficult for public entities under traditional bid laws.

“It opened the door for us to pick and choose process and equipment,” he said. “If you’re not doing this, your South Dakota bid law means you have to pick your low bid, and it gets really difficult to get any flexibility. The option for that was critical.”

It also brought another set of eyes to the project early, he added.

“Journey brought a lot to the table, especially in the design phase,” Muilenburg said. “There are just a lot of moving parts, but it really streamlined the process and took a lot of weight off our shoulders and even off our engineers.”

For Journey, the value of CMAR comes from having the owner, design team and construction manager working as one unit.

“There are three cogs to the wheel — the design team, the construction manager and the owner — and we worked as one unit through design, back and forth, to change this, add this, provide that,” Mannino said. “The real value here is that the community and the user really benefit from that.”

Early advantages

Because Journey was involved before design was complete, the team could help refine cost models with real-time input from subcontractors, suppliers and trade partners. Journey self-performs concrete work and has structural and process engineering expertise on its team, allowing it to evaluate the design through a construction lens.

“We’re able to marry the design intent with our construction understanding and what needs to be there,” Mannino said. “Typically, every progression set is a refinement of the budget.”

That was a major advantage, Hoellein said.

Instead of relying only on engineer-generated cost estimates, Journey brought current market knowledge and connections with subcontractors and suppliers.

“The costs at that point were as real as they could be,” Hoellein said. “Better than I could have been.”

That early involvement also led to design changes.

“We had some design ideas, things we had done before, and they pushed back a little on why we were doing it that way,” Hoellein said. “That feedback resulted in changing gears on the water treatment process design and making changes that still accomplished the goal but ultimately saved money.”

The team also worked through constructability issues, including the facility’s new administration area. Clay Rural Water, Journey, and Bartlett & West’s architectural team coordinated on how the space should function and how the exterior should look, particularly from state Highway 19.

“I love the idea of having a contractor involved during design,” Hoellein said. “Just because we’ve done something before, maybe there’s a better way to save the owner money and time.”

Another benefit came in procurement.

As key equipment was identified, Journey worked with Clay Rural Water to secure authorization to order longer-lead items before design was fully complete and before a guaranteed maximum price was finalized.

“It kept things rolling and shortened the time frame,” Hoellein said.

Muilenburg said Journey’s tracking of long-lead items has been especially helpful.

“They’re really organized,” he said. “They really track the long-lead-time items, so we got that ball rolling, and we are making sure they’re on schedule and on track, and when we’re ready for them, they’re being delivered.”

Cost assurance

The guaranteed maximum price is one of the defining features of CMAR.

Journey developed project specific costing models and prices the project multiple times through design, then sets the guaranteed maximum price, or GMP, once pricing is complete. By bid day, many allowances and contingencies can be reduced or eliminated because firm supporting numbers are in place and any additional contingencies or allowances not used during construction are returned to the owner at the end of the project.

The delivery model is based on best value rather than simply low bid, Mannino said. Journey reviews scopes of work, levels bids so they can be compared fairly and makes recommendations to the owner, who ultimately decides.

“It secures pricing for the owner, and any savings at the end goes back to the owner in full,” Mannino said. “It also allows us during the preconstruction phase to work through the risk, mitigate risk through design so you don’t have a lot of change orders.”

That has been Muilenburg’s experience so far.

“By far, even ongoing with the project, having an extra set of eyes looking at the project, even with change orders, has been helpful,” he said. “Everybody kind of says, ‘Oh, dang, that’s going to cost me a bunch of money,’ and in this aspect with this CMAR project, we have a lot of change orders that are favorable to us and put money back into the system.”

Transparency and regular communication have been key, he added.

“They’re not scared to tell us when something doesn’t make sense and they can save us money,” Muilenburg said. “Ultimately, their goal is to come in well under the GMP, and they’re working hard at it.”

For public entities, the approach is gaining traction as state laws, bid laws and funding agencies become more receptive to alternate delivery methods, Hoellein said.

“I personally think as things move forward in time, there’s going to be this idea of getting the design team, the contractor and the owner together in some format,” he said. “It’s going to be much more common.”

Journey also is seeing more regional interest in CMAR delivery in North Dakota, Minnesota, Iowa and Nebraska, Mannino said.

But the approach depends on having the right people in the room with the right mindset.

“You need the right team,” Hoellein said. “Getting everyone together, as long as everyone is open and honest, ultimately leads to a project that meets the owner’s goals and expectations.”

For Clay Rural Water, the experience has been positive enough that Muilenburg said he couldn’t ask for it to be going any better.

“I’ve talked with other municipalities in particular about water treatment plants with a CMAR, and they have not had the good working relationship that we have here,” he said. “My experience with Journey and working together with our engineering firm, everyone really worked together well.”

For Mannino, that’s a message he’s excited to share with others in the industry at the upcoming SDWWA presentation.

“What I want the takeaway to be is that CMAR delivery protects the owner, includes the owner and truly is the best for the owner to deliver through this construction method,” he said. “When delivered correctly, it really sets the owner up for success.”