By changing its way of dealing with contractors, Peoria has managed to save money and improve the quality of work on its construction projects.

The city traditionally advertised projects, solicited bids and hired the contractor that submitted the lowest price. However, that approach is adversarial by nature – by setting the final price first, it encourages the contractor to bid low to get the job, overcharge for any changes and work as cheaply as possible to maximize profit. It also frequently leads to litigation.

A solution came from the Materials Management Division that oversees city procurement and contracts. Supervisor Dan Zenko proposed a different approach called "contract manager at risk," in which companies submit their professional qualifications, and the one with the best proven ability to get the work done is hired. The city then partners with the firm to negotiate a price proposal and do the job.

Because the contractors are part of the team – and presumably want to work with the city in the future - there is a huge incentive for them to come up with ways to do their jobs better.

The new approach recently saved taxpayers about $90,000.

The Thunderbird Road widening project required the removal a large amount of soil from underneath the bridge to accommodate larger river flows. To dispose of the soil would have cost just over $30,000.

At the same time, the process of completing Happy Valley Road between Lake Pleasant Parkway and Terramar Boulevard required a large amount of additional soil, which would have cost just over $60,000.

Tim Diekmann, the Thunderbird project manager for FNF Construction, proposed shortening their haul route and eliminating dump charges by hauling the soil from the Thunderbird site to the Happy Valley site. A testing lab was brought in to ensure that the soil met all the engineering requirements for the Happy Valley project, and the deal was done within a few days.

"This soil will work extremely well on Happy Valley," said Chris Kmetty, Peoria’s project manager for the Happy Valley work, which Ames Construction is performing.

"We would have never suggested saving money under the old low bid contract," Diekmann said. "This new, collaborative type of contracting method is really saving us time and money by speeding up the decisions and giving us flexibility."

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