San Diego Municipal Code Div. 38 Construction Manager at Risk Contracts

(“Construction Manager at Risk Contracts” added 3-15-2010 by O-19934 N.S.)

The purpose of Division 38 is to provide definitions and guidelines for the award, use, and evaluation of construction manager at risk contracts for public works projects. Under a construction manager at risk contract, the goal is to engage the construction manager at risk entity early in the design phase to provide input on costs, schedule, and constructability. The construction manager at risk entity then commits to completing the construction services portion of the project within a guaranteed maximum price and ensures the project stays within budget while managing risks. (Added 3-15-2010 by O-19934 N.S.; effective 4-14-2010.) (Amended 10-13-2025 by O-22005 N.S.; effective 11-12-2025.)

All defined terms of Division 38 appear in italics. For purposes of Division 38, the following terms apply:

Construction manager at risk contract means a public works contract awarded to a
construction manager at risk entity during the design phase of a project with two
separate phases for preconstruction services and construction services. A
construction manager at risk contract may be a single contract with separate phases
that requires an amendment to authorize construction services to move forward, or it
may refer jointly to two separate contracts awarded to a single construction manager
at risk entity for the preconstruction services and the construction services.
Construction manager at risk contracts include construction manager general
contractor contracts.

Construction manager at risk entity means an entity which holds a California General
Engineering Contractor’s License Class A, a General Building Contractor License
Class B, or a General Specialty Contractor License Class C and undertakes
construction of public works under a construction manager at risk contract, or a
partnership, corporation, joint venture, or other legal entity that is able to provide
appropriately licensed preconstruction services and construction services as required
by the construction manager at risk contract.

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Construction services means that portion of the scope of work in a construction manager at risk contract relating to the physical construction of a project, including all labor, equipment, and materials necessary for construction and all management, supervision, administration, quality control, safety, and risk management related to construction, and all services required by the City at the completion of construction.

Guaranteed maximum price means a price expressed in dollars agreed upon by the City and a construction manager at risk entity negotiated during the preconstruction services phases of the contract that is a maximum price for a defined scope of work involving construction services.

Preconstruction services means that portion of the scope of work within construction manager at risk contracts which relates to tasks performed in the project design phase in advance of or in staged coordination with construction services, including design and constructability review, value engineering, cost estimation, solicitation of subcontracted trades and materials, bidding, and preparation of a final guaranteed maximum price proposed for construction services. (Added 3-15-2010 by O-19934 N.S.; effective 4-14-2010.) (Amended 10-13-2025 by O-22005 N.S.; effective 11-12-2025.)

Selection Process

The City Manager shall establish a competitive prequalification and selection process
for construction manager at risk entities that specifies the prequalification criteria
and provides the manner in which the winning entity will be selected.

(a) Request for Qualifications. Prior to procuring a construction manager at
risk contract, the City Manager shall prepare a Request for Qualifications
setting forth the scope of the project and requesting statements of
qualifications from interested construction manager at risk entities. The
Request for Qualifications shall be noticed in a newspaper or posted on the
City’s website, or a website of a firm hired by the City to post such notices,
not less than twenty calendar days before statements of qualifications are due.
The Request for Qualifications shall state the required qualifications, the
criteria for prequalification, and the maximum number of firms that will be
placed on a short list for consideration of selection pursuant to a competitive
Request for Proposals. The short list shall be established by the Selection
Committee appointed by the City Manager under section 22.3804, which shall
rank statements of qualifications using criteria included in the Request for
Qualifications.

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(b) Request for Proposals. Before awarding a construction manager at risk
contract, the City Manager shall issue a Request for Proposals to those firms
on the qualifications short list provided for in subsection (a) of this section.
The Request for Proposals shall reference an engineering design prepared by
City engineers or by third party design professionals. The engineering design
is not required to be complete at the time a Request for Proposals for a
construction manager at risk contract is issued, but shall be sufficiently
developed as to the size of the project, its site, and an estimated construction
cost and schedule to allow for meaningful proposals to be tendered and to
permit assessment of those proposals. The Request for Proposals shall
indicate the scope of preconstruction services and construction services for
which proposals are sought and shall identify the criteria that will be used for
selection.
(Added 3-15-2010 by O-19934 N.S.; effective 4-14-2010.)
(Amended 10-13-2025 by O-22005 N.S.; effective 11-12-2025.)

For each project where construction manager at risk proposals are sought, the City Manager shall appoint a qualified Selection Committee composed of at least five but no more than seven members. The City Manager may determine the number and qualifications of the Selection Committee members and shall ensure that at least one member has managerial experience in construction contracting for projects of similar size and character, and that at least one member is a registered architect or engineer. Selection Committee members and any firm with which any member is affiliated or interested shall be ineligible to submit a proposal for the project. The Selection Committee shall evaluate and rank submitted statements of qualifications and proposals for construction manager at risk contracts and make recommendations for the short list and award, respectively, to the City Manager. (Added 3-15-2010 by O-19934 N.S.; effective 4-14-2010.) (Amended 10-13-2025 by O-22005 N.S.; effective 11-12-2025.)

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In addition to the requirements of section 22.3004, consideration to be placed on the short list in response to a Request for Qualifications shall include evaluation of the following criteria submitted by a construction manager at risk entity:

(a) Possession of all required license, registration, and credentials in good
standing that are required to perform the preconstruction services and
construction services.

(b) Documentation establishing that the construction manager at risk entity
members have completed, or demonstrated the capability to complete,
projects of similar size, scope, building type, or complexity, and that the
proposed key personnel have sufficient experience and training to
competently manage and complete the preconstruction services and
construction services required for the project.

(c) A proposed construction management plan establishing that the construction
manager at risk entity has the experience, competence, and financial capacity
needed to effectively perform the project.

(d) Evidence establishing that the construction manager at risk entity has the
capacity to obtain all required payment and performance bonding from
acceptable sureties, liability insurance, and professional liability insurance.

(e) A declaration that the applying members of the construction manager at risk
entity have not had a surety company finish work on any project within the
past five years.

(f) A declaration setting forth details for the past five years of the following:

(1) Civil or criminal violations of the Occupational Safety and Health Act
against any member of the construction manager at risk entity.

(2) Civil or criminal violations of the Contractor’s State License Law
against any member of the construction manager at risk entity.

(3) Any conviction or judgment against any member of the construction
manager at risk entity of submitting a false or fraudulent claim to a
public agency.

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(4) Civil or criminal violations of federal or state law governing the payment of wages, benefits, or personal income tax withholding, or of Federal Insurance Contributions Act (FICA) withholding requirements, state disability insurance withholding, or unemployment insurance payment requirements against any member of the construction manager at risk entity. For purposes of this subsection, only violations by a construction manager at risk entity member, as an employer, shall be applicable, unless it is shown that that the construction manager at risk entity member, in his or her private capacity as an employer, had knowledge of a subcontractor’s violations or failed to comply with the conditions set forth in Section 1775(b) of the State Labor Code.

(5) Civil or criminal violations of federal or state law against any
construction manager at risk entity member governing equal
opportunity employment, contracting, or subcontracting.

(g) A declaration that the construction manager at risk entity will comply with all
other provisions of law applicable to the project. The declaration shall state
that reasonable diligence has been used in its preparation and that it is true and
correct to the signer’s knowledge.

(h) A declaration by the construction manager at risk entity that it has a record of
timely payment to subcontractors and suppliers and that it has not been the
subject of mechanics liens, stop notices, or lawsuits by subcontractors or
suppliers while acting as a general contractor in the preceding five years, or
alternatively, if any such claims have existed the declaration shall list them.
(Added 3-15-2010 by O-19934 N.S.; effective 4-14-2010.)
(Amended 10-13-2025 by O-22005 N.S.; effective 11-12-2025.)

The construction manager at risk entity shall fully and satisfactorily document to City its subcontractor and employment outreach efforts to all subcontractors in all disciplines required for the project prior to being awarded a construction manager at risk contract. (Added 3-15-2010 by O-19934 N.S.; effective 4-14-2010.) (Amended 10-13-2025 by O-22005 N.S.; effective 11-12-2025.)

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The Selection Committee shall evaluate and rank all proposals submitted in response to a Request for Proposals in order of preference and recommend that the City negotiate with the highest ranked construction manager at risk entity. The City Manager shall approve the criteria used for ranking and include those criteria in a Request for Proposals. Selection criteria may include the following:

(a) Price of proposed fee for preconstruction services and proposed general
conditions for the construction services

(b) Successful experience with projects of similar size and complexity

(c) Financial capacity, bonding, and insurance

(d) Equal Opportunity and Small Business Plan

(e) Value Engineering Plan

(f) Key personnel dedicated to the project

(g) Construction Management Plan

(h) Proposed Construction Schedule

In preparing a Request for Proposals for a construction manager at risk contract, the
City Manager need not prioritize selection criteria in the order listed in this section
and shall have discretion to assign relative weights to selection criteria which serve
the best interests of the City and the project. All proposals shall be evaluated by the
Selection Committee using the selection criteria contained in the Request for
Proposals.
(Added 3-15-2010 by O-19934 N.S.; effective 4-14-2010.)
(Amended 10-13-2025 by O-22005 N.S.; effective 11-12-2025.)

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(a) Construction manager at risk contracts may be awarded by the City Manager provided that all of the following are met:

(1) The construction manager at risk contract does not contain any
provisions that guarantee the construction manager at risk entity an
amount that exceeds the Purchasing Agent’s authority to award a
consultant contract for a public works contract as established in
section 22.3207 for the preconstruction services phase of the contract;

(2) The construction manager at risk contract provides that the costs for
labor, equipment, or materials to be provided by a subcontractor or
self-performed by the construction manager at risk entity will be
negotiated as part of the guaranteed maximum price. However, the
construction manager at risk contract may include limited costs at the
time of award, including costs for general contract conditions, hourly
labor rates, overhead, and the construction manager at risk entity’s
proposed fee.

(3) The construction manager at risk contract requires that the contract
will be open book among the City, construction manager at risk entity
and subcontractors, and shall require full disclosure to the City of all
documents and information by the construction manager at risk entity,
including estimates, schedules, records of direct and indirect costs,
field and home office overhead calculations, subcontracts, records of
payment and any other data or document deemed by the City to be
relevant to the project.

(4) The major public works project was previously identified and
appropriated through the Annual Capital Improvement Program
budget adopted by City Council or identified by City Council in a
resolution establishing an Underground Utility District;

(5) The City Council has not required by resolution or ordinance that a
major public works contract for the project be returned to City
Council for approval prior to award;

(6) The construction manager at risk contract has been advertised as
described in section 22.3803 or it has been certified by the Purchasing
Agent as a sole source contract under section 22.3016;

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(7) The construction manager at risk contract has provisions that prohibit
any construction services from being performed until all of the
following are satisfied:

(A) The potential environmental impacts of the project have been
considered as required by the California Environmental
Quality Act;

(B) The City and the construction manager at risk entity have
agreed upon a guaranteed maximum price;

(C) An amendment to the contract, or a separate contract,
authorizing the construction services to proceed that includes
the guaranteed maximum price has been signed by the City and
the construction manager at risk entity;

(8) The construction manager at risk contract is in writing.

(b) Notwithstanding section 22.3018, the City Manager is authorized to enter into
an amendment, or a separate contract as part of the construction manager at
risk contract for the construction services phase provided that all of the
following are met:

(1) The potential environmental impacts of the project have been
considered as required by the California Environmental Quality Act;

(2) The guaranteed maximum price does not exceed the City Manager’s
authority to award a major public works contract as established in
section 22.3102 and the combined total amount for the preconstruction
services and construction services for the project does not exceed the
City Manager’s combined authority to award consultant contracts and
major public works contracts included in sections 22.3207 and
22.3102, respectively;

(3) The amendment, or additional contract, does not cause the project
costs to exceed the total amount allocated for the project in the Annual
Capital Improvements Program budget adopted by City Council;

(4) The City Council has not required, by resolution or ordinance, that the
project be returned to City Council for approval prior to amendment;

(5) The amendment to, or separate contract as part of the construction manager at risk contract, for the construction services is in writing.

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(c) If the City and the construction manager at risk entity cannot reach an
agreement on the terms and conditions of an amendment to a construction
manager at risk contract for the construction services phase, the City may do
any of the following:

(1) Award a public works contract for the construction services phase to
another entity for the project in accordance with the requirements for
the type of public works contract awarded.

(2) Exercise its discretion not to proceed with the construction services
phase of a construction manager at risk contract. If the City chooses
not to proceed with the construction services phase of the project
because the guaranteed maximum price exceeds the amount
appropriated for the project in the Annual Capital Improvement
Program budget, or other funding considerations, and the City decides
to move forward with the project at a later date, the City may award a
public works contract for the construction services phase of the project
under any procurement method authorized by this Code that the City
determines is appropriate at that time.
(Added 3-15-2010 by O-19934 N.S.; effective 4-14-2010.)
(Retitled from “Separate Agreements for Preconstruction Services and Construction
Services; Essential Terms” to “City Manager’s Authority to Award Construction
Manager at Risk Contracts” and amended 10-13-2025 by O-22005 N.S.; effective
11-12-2025.)

The City Manager shall provide in the Request for Proposals for construction manager at risk contract services the method by which subcontracts shall be obtained for construction services and the general terms under which the construction shall be performed. The Request for Qualifications shall indicate whether self-performance by a construction manager at risk entity will be considered for any portion of the construction services other than management and project administration.

(a) The construction manager at risk entity shall, as part of a preconstruction
services agreement, obtain bids for subcontracts for proposed construction
services agreements and at the direction of the City Manager commit in its
proposal for a guaranteed maximum price to award all subcontracts according
to:
(1) lowest responsible bid; or

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(2) highest qualifications as proposed by the construction manager at risk
entity and agreed to by the City; or

(3) best value for price and qualifications as proposed by the construction
manager at risk and agreed to by the City.

(b) If the Request for Qualifications indicates that proposals for self-performance
of part of the work by a construction manager at risk entity will be
considered, the construction manager at risk entity shall identify the portions
of the work it intends to self-perform as part of its statement of qualifications.
If self-performance is not required in the Request for Proposals, then any
Request for Proposals or invitations to bid for the construction services shall
require that all work or trade, including any work or trade proposed to be self-
performed by the construction manager at risk entity, shall be obtained
pursuant to competitive bidding under subsection (a)(1) of this section.
(c) All bids for subcontracts in any construction manager at risk contract shall be
open and published and provided to the City without reservation or redaction
as part of the proposal and negotiation process for any construction services.

(d) The City may administer bidding itself for any subcontracted work, or direct
the bidding procedures to be used by the construction manager at risk entity.
(Added 3-15-2010 by O-19934 N.S.; effective 4-14-2010.)
(Amended 10-13-2025 by O-22005 N.S.; effective 11-12-2025.)

(a) A guaranteed maximum price for construction services shall not be negotiated or agreed upon unless the project design is substantially complete to permit bidding of subcontracts by the construction manager at risk entity as provided in Section 22.3811(a).

(b) Notwithstanding sections 22.3808(b) and 22.3810(a), the City Manager may
authorize amendments to the contract or a separate contract that is part of the
construction manager at risk contract for limited portions of the construction
services before the entire project design is substantially complete and the
guaranteed maximum price is negotiated, provided that:

(1) The environmental impacts of the project have been considered as
required by the California Environmental Quality Act;

(2) The construction documents are complete for that part of the work that
is the subject of the amendment or separate contract;

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(3) All labor, material, and equipment is competitively bid; and

(4) The City Manager determines that the project schedule requires staged
coordination of design and construction.
(Added 3-15-2010 by O-19934 N.S.; effective 4-14-2010.)
(Retitled from “Conditions for Entering Agreement for Construction Services” to
“Conditions for Entering Amendment or Contract for Construction Services” and
amended 10-13-2025 by O-22005 N.S.; effective 11-12-2025.)

(a) The provisions of the Subletting and Subcontracting Fair Practices Act [Act], California Public Contract Code Sections 4100 through 4114 as amended, shall be applicable to construction services under all construction manager at risk contracts.

(b) In preparing its proposal for a guaranteed maximum price for construction
services, the construction manager at risk entity shall provide a written list of
all proposed subcontractors who will perform work in costing equal to or
greater than one half of one percent of the total guaranteed maximum price.
The list of subcontractors shall include names of the subcontractors, the value
of each subcontract, and a description of the scope of work to be performed
by each listed subcontractor.

(c) Upon the parties’ agreement to a guaranteed maximum price and execution of
an amendment or separate contract as part of the construction management at
risk contract, all subcontractors listed under this section shall be afforded all
the protections of the Act, and the construction manager at risk entity shall
not substitute any other person to perform the scope of work listed for each
listed subcontractor, except as provided in the Act.
(Added 3-15-2010 by O-19934 N.S.; effective 4-14-2010.)
(Amended 10-13-2025 by O-22005 N.S.; effective 11-12-2025.)

It is unlawful to knowingly submit any declaration under this Division containing any material information that is false. (Added 3-15-2010 by O-19934 N.S.; effective 4-14-2010.)

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Article 2: Administrative Code