HomeMy WebLinkAbout08/16/2005, BUS 1 - 919 PALM STREET TENANT IMPROVEMENT PROJECT council '�08/1 ,2005
acEnaa nEpoizt �
CITY OF SAN LUIS OBISPO
FROM: Jay Walter, Public Works Director
Prepared By: Mike McGuire; Assistant Engineer
SUBJECT: 919 PALM STREET TENANT IMPROVEMENT PROJECT
CAO RECOMMENDATION
1. Approve an additional $110,000 to the overall budget for 919 Palm Street Project,
Specification No. 90323,to be funded from the planned bond financing for the project.
2. Award the construction contract to S.J. Deferville Construction, Inc. for the amount of
$1,598,000.
DISCUSSION
Background
On May 17, 2005, the City Council approved a revised budget for the tenant improvements at
919 Palm Street and authorized proceeding with advertising for bids for the construction of the
improvements. As part of the discussion when asking the Council to increase the project budget,
staff explained the efforts that had been made to reduce costs through, "value engineering".
Substantial cost savings estimated at about $230,000 were expected by making changes to the
ceiling design, tile type, location and patterns, and lighting fixtures.
Bid Responses
Unfortunately, on July 7, 2005, three bids were received and opened for the project, with the
lowest bid $198,000 higher than the revised Engineer's Estimate of $1,400,000. In
communications with the low bidder, S.J. Deferville Construction, Inc. of Santa Maria,
California, they indicated that higher costs for the environmentally sensitive geothermal
mechanical ($44,000) and the electrical/communication ($70,000) systems made up the majority
of the higher costs in their bid. The remainder of the increase ($84,000)reflected slightly higher
costs for labor, insurance and other items in the scope of construction.
Bid Analysis
Due to the highly technical and specialized nature of the geothermal system and the
electrical/communications requirements for the tenant improvement, the contractor stated that
costs could not be lowered for these 'items. As these items were non-conventional and more
highly specialized than for a typical tenant improvement project, all the bids submitted reflected
higher costs in these areas than the Engineer's Estimate. Bids were also higher due to
construction costs continuing to soar as a result of increases for fuel, materials, insurance and
labor. Staff concurs that all the bids submitted are legitimate in reflecting the current
919 Palm Street Tenant Improvement Project Page2
construction climate and the highly specialized nature of the mechanical and electrical
components of this project.
Proposed Additional Funding Sources
A total of an additional $220,000 is required to award the construction contract, which includes
$198,000 in construction costs plus $22,000 in order to maintain a 10% construction
contingency. To address the additional funding necessary to award the contract, Staff is
recommending that half come from reductions to certain items within the. existing 919 Palm
budget, along with a reduction to the budget for reconfiguring City Hall, The other half would
come from an increase to the overall debt financing for the project. This would result in an
added debt service cost of approximately$6,800 annually.
The items that would be reduced in order to make funds available for the award include:
1. Construction Management. As part of its May 17, 2005 action, the City Council also
approved authorizing the CAO to issue a Request for Proposals (RFP) and award a contract
for Construction Management services for 919 Palm Street, if the contract was within the
project budget of $30,000. This recommendation was undertaken due to the uncertainty of
City inspection staff being able to perform construction management and inspection services
for the tenant improvement based on anticipated summer workloads. The recent hiring of
two temporary inspectors will allow a current City Inspector to perform construction
management and inspection for the tenant improvement without hiring a consultant to
perform these duties, and will provide $30,000 that can be reallocated to the construction
contract amount.
2. Interior Reconfiguration at City Hall (990 Palm Street). $350,000 was approved by Council
to reconfigure and remodel City Hall after the Community Development Department moves
to the new building. At this point, a final cost estimate for this project has not yet been
determined. However, staff thinks that the minimum goals of carpet replacement, and some
level of reconfiguration of existing office space, especially with the use of some existing
modular furniture and walls, can be accomplished with a reduced budget of $300,000. The
savings will provide$50,000 to apply to the 919 Palm Street construction contract. .
3. 919 Structure Contingency Balance. With approximately 70% of the shell construction
completed, the situations requiring the use of contingency funds for Change Order expenses
have significantly diminished, and with primarily exterior finish work remaining for the
parking garage, Staff does not anticipate further Change Order expenses to significantly
impact the contingency balance. This will allow a $30,000 portion of the shell contingency
balance to be utilized for the tenant improvement construction contract.
CONCURRENCES
The Public Works and. Community Development Departments, along with Finance and
Administration; concur with the recommended actions.
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919 Palm,Street Tenant Improvement-Project Page 8
FISCAL IMPACT
919 Palm Offices/Parking Structure Project Cost.Summary
Project Costs Current Proposed Proposed
Budget Changes Budget
Parking Fund 10,149,800 1011491800
Real Property Acquisition 911,900 911;900
Environmental Mitigation 65,600 65,600
Site Preparation 66,300 66,300
Structure Purchase 8,446,000 8,446,000
Construction Inspection 222,500 222,500
Contingencies 437,500 437,500
General Fund -- - - -- _ - - 7,204,200 - -' _ - - ----71204400
Real Property Acquisition 356,100 356,100
Environmental Mitigation 3,900 3;900
Site Preparation 22,100 22;100
Structure Purchase 3,724,000 3,124,000
Construction Inspection 83,500 83;500
Padang Space.Purchase 145,000 145,000
Tenant Improvements at 919 Palm
Design 199,500 199;500
Design Construction Support 10,000 10,000
Construction 1,400,000 2.201000 1;620,000
Interior Utilities and Data Communications 82,900 82,900
Other Equipment and Utility Connections 27,500 27,500
Construction Management 30,000 (30,000) 0
Printing and Advertising 5,000 5,000
Office Filing System 59,700 59,700
Office System Furnishings 525,000 525,000
Moving Costs_ 9,000 9,000
Total Tenant Improvements 2,348,600 2,348,600
Interior Reconfiguration at 990 Palm 350,000 (501000) 300,000
Contingencies 171,000 (30,000) 141,000
Total Project $17,354,000 1 1101000 $174649000
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919.Palm Street Tenant Improvement Project Page 4
Proposed funding sources for additional construction costs:
Current Revised Funding
Project Costs Budget -Budget Available
Construction Mana ement $30,000- _ $0 $30,000_
In Reconfi tion-at-990 Palm $350;000 $300,000 $50,000
Shell Construction Contingency $171,000 $141,000 $30;000
Additional Debt Funding ---- ---- $110,000
-- TOTAL - - $220,000
The estimated cost of the additional $110,000 in debt financing is $6,800 annually.
ALTERNATIVES
1. Reject all bids and re-bid the project. Staff does not recommend this option as it would most
likely result in even higher bids due to the almost daily increase in construction costs. The
City would incur additional costs for advertising, printing and awarding the project. Re-
bidding would also delay the start of construction by three to four months.
2. Apply more cost reductions identified through the value engineering process. Upon
completion of the "value engineering" process, Council approved materials and design
changes that were able to lower overall tenant improvement costs yet still maintain an
enjoyable and healthy office environment. Any further reductions or changes would result in
a much less desirable work environment and additional re-design expenses. The cost savings
from further value engineering would be minimal. In many cases, the savings realized from
using cheaper materials would be offset by the increased maintenance and replacement costs.
3. Do not reduce the budget for the City Hall reconfiguration and increase the amount of
additional debt financing. Staff is still in the process of developing plans to reconfigure City
Hall, including replacing currently worn carpeting. At this point, we have not developed any
actual cost figures for this undertaking. It would be our intention to "make do" with
whatever the available budget is. However, taking$50,000 from the current$350,000 budget
for the project could have a significant impact on the amount of improvements that. can be
made. The Council could choose to leave the City Hall project budget intact. In doing_ so, an
additional $50,000 would need to be debt financed at an estimated-additional annual cost of
about$3,500, (bringing the total additional annual debt service costs to about$10;300).
4. Allocate the entire additional amount from debt service proceeds. The Council could decide
to authorize an increase to the project budget of the whole $220,000, with the corresponding
increase in annual debt service costs of approximately $14,000. However, since $60,000 is
currently available within the existing budget for 919 Palm.Street, staff is not recommending
this option.
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919 Palm Street Tenant Improvement Project _ Page 5
ATTACHMENTS
1. Bid Summary Sheet
2. Construction Contract
I:Lcouncil agenda repoitct005 agenda reports\enginaring:and maintenance services (Walter)\capital projects design (Lynch)\90323 CAR
Award Const.doc
Attachment 1
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Attachment 2
CITY OF SAN LUIS.OBISPO
CALIFORNIA
AGREEMENT
THIS AGREEMENT, made on this day of , 2Q__, by and between
the City of San Luis Obispo, a municipal corporation and charter city, San Luis Obispo
County, California, hereinafter called the Owner, and S. J. Deferville Construction, Inc.,
hereinafter called.the Contractor.
WITNESSETH:
That the Owner and the Contractor for the consideration stated herein agree as follows:
ARTICLE 1, SCOPE OF WORK:. The Contractor shall perform everything required to
be performed, shall provide and furnish all of the labor, materials, necessary tools,
expendable equipment, and all utility and transportation services required to complete all
the work of construction of
City Office Improvements=919 Palm Street,Specification No. 90323
in strict accordance with the plans and 'specifications therefore, including any and all
Addenda, adopted by the Owner, in strict compliance with the Contract Documents
hereinafter enumerated.
It is agreed that said labor, materials., tools,equipment, and services shall be furnished and
said work performed and completed under the direction and supervision and subject to the
approval of the Owner or its authorized representatives:
ARTICLE II, CONTRACT PRICE: The owner shall pay the Contractor as full
consideration for the faithful performance of this Contract, subject .to any additions or
deductions as provided in the Contract Documents,the contract prices as follows:
Item Total
(in figures)
Total Bid For Tenant Improvement Construction $1,598,000
CONTRACT TOTAL $1,598,000
Payments are to be made to the Contractor in accordance with and subject to the provisions
embodied in the documents made a part of this Contract:
Should any dispute arise respecting the true value of any work omitted, or of any extra
work which the Contractor may be required to do, of respecting the size of any payment to
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Attachment 2
the Contractor,during the performance of this Contract,said dispute shall be decided by the
Owner and its decision shall be final, and conclusive.,
ARTICLE M. COMPONENT PARTS OF THIS CONTRACT: The full, complete
and exclusive contract between
en the parties hereto shall consist of the following identified
documents (the "Contract Documents") all of which are as fully a part thereof as if herein
set out in full, if not attached, as if hereto attached: Notice to Bidders, Instructions to
Bidders, Information Available to Bidders, Proposal Form Listing of Subcontractors,
Non-Collusion Declaration, Bidder's Bond, this Agreement, Escrow Agreement for
Security Deposits in Lieu of Retention, Performance Bond, Payment Bondi Insurance
Requirements, Guarantee of Work, Release, General Conditions, Specifications; Standard
Specifications, Engineering Standards drawings, any addenda, and any change orders,
field orders or directives issued pursuant to and in accordance with this Agreement.
ARTICLE IV, CONFLICTS: It is further expressly agreed by and betweeh the parties
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hereto that should there be any conflict between,the terms of this instrument and the bid or
proposal of said Contractor, then this instrument shall control and nothinghereinshall be
considered as an acceptance of the said terms of said proposal conflicting herewith.
ARTICLE V,BINDING AGREEMENT; ASSIGNMENT: Contractor, by execution of
this Agreement and the other Contract Documents, understands them, and agrees to be
bound by their terms and conditions. The Contract Documents shall inure to the benefit of
and shall be binding upon the Contractor and the Owner and their respective successors-and
assigns.
ARTICLE VI, SEVERABILITY: If any provision of the Contract Documents shall be
held invalid or unenforceable by a court of competent jurisdiction, such holding shall not
invalidate or render unenforceable any other provision hereof.
IN WITNESS WHEREOF,the parties to these presents have hereunto set their hands this
year and date first above written.
ATTEST: CITY OF SAN LUIS OBISPO,
A Municipal Corporation
Audrey Hooper David F. Romero
City Clerk Mayor
APPROVED AS TO FORM: CONTRACTOR
JonLowell Steve S Deferville
oem
City Attorney President