Agenda No. 3.
CITY COUNCIL MEMORANDUM
| City Council Meeting: | October 21, 2025 |
| Department: | Fire Department |
| Subject: | Resolution 25-R-148 - Authorizing a contract amendment with Marksmen General Contractors setting the Guaranteed Maximum Price (GMP) for construction of Fire Station #4 (S.Williams/G.Rodgers) |
BACKGROUND
Project Context
The Fire Station #4 project is a critical component of the City's Capital Improvement Plan (CIP) designed to enhance emergency response capabilities and reduce response times in the City of Schertz. This station is vital to ensuring the safety and timely service delivery across our growing community.
Understanding the Process: Construction Manager at Risk (CMR)
The City of Schertz utilized the Construction Manager at Risk (CMR) project delivery method for Fire Station #4. This method is preferred for its collaborative approach and its ability to establish budget certainty early in the process.
Under the CMR method, a contractor (in this case, Marksman General Contractors) is selected early in the design phase to act as the construction manager. This allows the contractor to work alongside the City and the project architect to provide continuous input on design, materials, and constructability, ensuring that the final design remains within the project's established budget targets.
The Guaranteed Maximum Price (GMP)
The Guaranteed Maximum Price (GMP) represents the second and final phase of the CMR contract. The GMP is a formal proposal from the contractor that includes every cost associated with constructing the facility, including materials, labor, sub-contractor bids, permits, and the contractor's fee.
During the rigorous GMP negotiation process, Marksman General Contractors requested two specific deviations from the standard Master Agreement terms:
Final Budget Reconciliation
The proposed GMP amount of $9,720,063.00 successfully aligns with the total project budget.
Staff confirmed that the Pre-construction Fee, which compensates the contractor for their design phase services, was not initially included in the GMP calculation. This fee has been added as a separate line item in the total budget. To accommodate this addition and ensure the project remains within the authorized overall funding, staff made minor budget adjustments by slightly reducing the allowances for Materials Testing and Water Testing.
These minor internal budget shifts ensure that the final recommended GMP and the total project cost are within the City’s financial parameters, specifically coming in $673.83 under the total project budget ceiling.
Current Request for Council Action
Approval of the GMP formally confirms that the project's scope, as designed, aligns with the final fixed price proposed by Marksman General Contractors. This action is the final step required to allow staff to finalize the contract documents and execute the agreement, officially transitioning the Fire Station #4 project from the design phase to the full construction phase.
The Fire Station #4 project is a critical component of the City's Capital Improvement Plan (CIP) designed to enhance emergency response capabilities and reduce response times in the City of Schertz. This station is vital to ensuring the safety and timely service delivery across our growing community.
Understanding the Process: Construction Manager at Risk (CMR)
The City of Schertz utilized the Construction Manager at Risk (CMR) project delivery method for Fire Station #4. This method is preferred for its collaborative approach and its ability to establish budget certainty early in the process.
Under the CMR method, a contractor (in this case, Marksman General Contractors) is selected early in the design phase to act as the construction manager. This allows the contractor to work alongside the City and the project architect to provide continuous input on design, materials, and constructability, ensuring that the final design remains within the project's established budget targets.
The Guaranteed Maximum Price (GMP)
The Guaranteed Maximum Price (GMP) represents the second and final phase of the CMR contract. The GMP is a formal proposal from the contractor that includes every cost associated with constructing the facility, including materials, labor, sub-contractor bids, permits, and the contractor's fee.
- What the GMP Means: The GMP of $9,720,063.00 is the absolute highest price the City will pay for the completion of Fire Station #4. This price acts as a ceiling or cap for the construction costs.
- Protection for the City: If the actual costs to build the station exceed this approved amount, the contractor (Marksman General Contractors) is responsible for covering the overage—the City's maximum obligation remains the GMP amount.
- Cost Savings: If the actual construction costs come in under the GMP, those savings are typically returned to the City.
During the rigorous GMP negotiation process, Marksman General Contractors requested two specific deviations from the standard Master Agreement terms:
- Fee on their Self Perform work: Allowing Marksman to charge a fee for work they perform directly (rather than subcontracting it), which incentivizes efficiency.
- Lump Sum General Conditions: Fixing the cost for administrative and site overhead (e.g., trailers, site utilities, safety) as a lump sum, which minimizes the City’s exposure to escalating monthly overhead costs.
Final Budget Reconciliation
The proposed GMP amount of $9,720,063.00 successfully aligns with the total project budget.
Staff confirmed that the Pre-construction Fee, which compensates the contractor for their design phase services, was not initially included in the GMP calculation. This fee has been added as a separate line item in the total budget. To accommodate this addition and ensure the project remains within the authorized overall funding, staff made minor budget adjustments by slightly reducing the allowances for Materials Testing and Water Testing.
These minor internal budget shifts ensure that the final recommended GMP and the total project cost are within the City’s financial parameters, specifically coming in $673.83 under the total project budget ceiling.
Current Request for Council Action
Approval of the GMP formally confirms that the project's scope, as designed, aligns with the final fixed price proposed by Marksman General Contractors. This action is the final step required to allow staff to finalize the contract documents and execute the agreement, officially transitioning the Fire Station #4 project from the design phase to the full construction phase.
GOAL
Approve the guaranteed maximum price for fire station # 4 allowing construction to begin once all pending legal review and approvals are complete.
COMMUNITY BENEFIT
This resolution once signed would allow the construction of fire station # 4 to begin once all pending legal review and approvals are complete.
SUMMARY OF RECOMMENDED ACTION
Authorize the City Manager to execute a contract approving a guaranteed maximum price for Fire Station # 4. Once all pending legal review and approvals are complete this would allow the construction of fire station # 4 to begin.
FISCAL IMPACT
Consideration and possible action to approve this guaranteed maximum price for fire station # 4, with Marksmen General Contractors, for an amount not to exceed $9,720,063.00 would allow for construction to begin pending final contract negotiation and legal review.
RECOMMENDATION
Authorize the City Manager to execute a contract approving a guaranteed maximum price for Fire Station # 4, with Marksmen General Contractors, for an amount not to exceed $9,720,063.00, pending final contract negotiation and legal review.