HomeMy WebLinkAbout01/17/2006, BUS 3 - WATER TREATMENT PLANT MASTER PLAN IMPROVEMENTS counat M.�
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CITY O F SAN LUIS O B I S P O
FROM: John Moss, Utilities Director
Prepared By: Gary W. Henderson, Water Division Manager �nl4s
SUBJECT: WATER TREATMENT PLANT MASTER PLAN IMPROVEMENTS
CAO RECOMMENDATION
Authorize staff to proceed with finalization of the plans and specifications for the Water
Treatment Plant Master Plan Improvements and increase the project total budget from
$8,943,600 to $13,406,800.
DISCUSSION
The Water Treatment Plant Master Plan Improvements Project has been under study and design
for several years. The project construction costs have increased significantly since the last
approved CIP budget in 2004-05. The previous budget estimate for construction was $7.1
million while the current construction estimate, including the Actiflo contract with Kruger, is
approximately $11 million. This report outlines the changes since the previous approved budget
and requests Council direction prior to finalization of the project plans and specifications.
The major components of the project include the following:
1. Demolition of existing 4 million gallon (MG)clearwell
2. Demolition of existing transfer pump station
3. Construction of one 3 MG clearwell and one 2 MG clearwell
4. Construction of new transfer pump station
5. Installation of new ballasted sedimentation process (Actiflo)
6. Nacimiento raw water pipeline on the treatment plant site
7. Pretreatment building and equipment
8. Seismic upgrade of existing washwater tank
9. Residuals thickener package treatment plant
A number of the project components identified above have been added as the project has
progressed based on Council input and direction. The cost estimates for some of the items were
not included in past estimates. The current project budget that was approved in the 2003-05
Financial Plan Supplement, Approved 2004-05 Budget identified $7,100,000 for construction.
Previous consultant contract amendments have been approved by Council that utilized a portion
of the project construction funding. In addition, the contract with Kruger, Inc. for procurement of
the Actiflo system was approved by Council on July 19, 2005, for a total cost of $1,381,925.
This leaves a current project construction budget, excluding budget for construction
management, of approximately$5.6 million.
Water Treatment Plant Master
Plan Improvements Page 2
90%Plans and Specifications
In December of 2005, staff received the 90% submittal of the project plans and specifications
from our design consultants (Black and Veatch). Several weeks later, the 90% "Probable Cost
Estimate" was received which identified that the project cost estimate has increased substantially.
Based on this information, staff directed Black and Veatch to stop work associated with
finalizing the plans and specifications to allow for an evaluation of the cost increases and
possible modifications to the project to reduce the fiscal impacts.
Staff discussed a number of options to reduce costs with Black and Veatch. Staff have identified
several areas where construction costs may be reduced while not impacting the overall project
goals. The savings are likely on the order of several hundred thousand dollars and staff will
request these changes prior to bidding of the project.
Cost Increases
One of the largest factors that has caused budget increases is the construction cost escalation that
has occurred in the last several years. Construction bidding for major water treatment plant
improvement projects can be very difficult to predict and can have variable bid results depending
on the bidding"climate" at the time bids are requested.
Designing improvements at an existing water treatment plant which must remain operational
through construction adds a number of unknowns for project engineers. Construction projects of
this type are very complicated and it is not uncommon for the construction cost estimates to
increase as the project proceeds through design and final bid opening. While the project
engineers use their best estimate for construction costs for various components, as the detailed
plans are prepared, problems that must be addressed are identified resulting in cost impacts. The
following list identifies several of the larger components, besides the cost escalation factor, that
have contributed to the increased cost and why they are important to include in the project.
1. Actiflo Residuals Thickener ($325,000) — In June of 2005, the Council considered a
staff report relative to the procurement contract for the Actiflo system from Kruger, Inc
(see Attachment 1 for brief overview of Actiflo process). The staff report identified that
an evaluation of the residual material discharged from the Actiflo system would waste up
to 300,000 gallons of water per day at full capacity. Loss of almost an acre foot of water
per day was not deemed acceptable or even possible, since there is no location to dispose
of this large waste stream.
2. Nacimiento Pipeline ($440,000) — Following Council approval of participation in the
Nacimiento Pipeline Project, staff recommended including a raw water pipeline from
Stenner Road along the plant access road into the plant site. The pipeline will deliver raw
water to the ozone contact basins at the start of the water treatment process. Since a
number of pipelines will be installed in the access road and the road is planned to be
repaved as part of the project; the costs and disruption would be reduced by installing the
pipeline as part of this project.
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3. Pretreatment Building ($150,000)—The pretreatment facilities necessary for the Actiflo
treatment process are estimated to cost $906,300. This is in addition to the $1;381,925
contract with Kruger for design, manufacture, and purchase of the Actiflo system. The
building to provide protection for the chemical feed systems and storage of sand (50
pound bags) is estimated to cost $150,000 which is included in the total cost above. This
amount was not included in previous budget estimates.
Summary
The current project construction estimate is approximately $4 million above previous current
construction budget of$7.1 million. The actual bids received for a complicated project like this
can vary widely depending on contractor interest and suppliers bids for materials and equipment.
If history tells us anything, it is that projects such as this only get costlier overtime. This project
is essential to ensure that the water treatment plant can meet the water demands for the
community in the future while continuing to provide water that meets all federal and state
standards. The upgrades are necessary to allow treatment of both Nacimiento and Salinas water
at the same time and achieve the operational flexibilities that have been identified in the City's
Water Management Plan policies.
FISCAL IMPACT
The Capital Improvement Project request for the Water Treatment Plant Master Plan
Implementation was revised as part of the Approved 2004-05 Budget., The financial plan request
estimated $7.1 million for construction costs. Council previously approved additional funds
from the construction budget to fund additional design costs. There is currently $5,548,100 in
the construction budget to support the construction, excluding the Actiflo contract with Kruger.
There is also $700,000 identified for construction management services. Typical budgetary
estimates for construction management services are 10% of construction costs. Actual
construction management services costs will be negotiated with the engineering consultant.
Table 1 below shows the current available budgets and the increased budgets needed to fund the
project.
Table 1: Pro'ect Budget
Phases Project Budget Available.Budget Additional Budget Total Project Budget
Required
Study $91,100 $10,500 none $91,100
Design $1,220,400 $100 none $1,220,400
Construction $6,932,100 $5,548,100* $_4,063,2_00 $10,995,300
Const.Management $700,000 $700,000 $400,000 $1,100,000
TOTAL $8,943;600 $4,463,200 $13,406,800
* Reduced for California sales taxes of$78,400 due for contract with Kruger for Actiflo equipment
The funding for the treatment plant improvements will be accomplished by the issuance of
bonds. If the project requires an additional $4.5 million of bond issuance, this would likely result
in an additional water rate increase of 4% to 5% above the previously identified 8% increase in
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last year's fund analysis, other factors may modify the total rate increase needed (i.e. revised
water impact fees). The award of the construction contracts will closely coincide with the next
water fund rate review. This will provide Council a full review of the rate increases needed to
support this project and other water fund programs and how to balance rate increases over several
years to minimize fiscal impacts to our customers.
Role of Development Impact Fees in Funding This Project. Based on a detailed analysis
prepared as part of the Water System Master Plan prepared in October 2000, 29.4% of the cost of
this project is attributable to new development (the balance is required to meet the needs of
existing residents and businesses). As such, given the significant increase in the cost of this
project, we plan to return to the Council in the next 90 days with recommended revisions to our
water development impact fees, in accordance with our policy that the Finance Director do so
whenever significant changes in the basis for the fees are identified. However, since the current
fee is largely based on water supply costs (accounting for about 90% of the total fee), we do not
expect this adjustment to have a significant impact on the overall fee: just the water treatment
portion, which currently accounts for about 7% of the total water impact fee.
ALTERNATIVES
1. Value Engineering: The City could place the project on hold at this time and undertake a
"Value Engineering" (VE) effort to identify potential costs savings. Staff would need to
prepare a request for proposals to provide these engineering services. This process would
likely take several months to complete. The project has a tight time window for installation
of the first Actiflo system during the winter months when water demand is lowest. If this
window is not met, the project would be delayed for one year. Also, the City has a contract
with Kruger for the procurement of the Actiflo system which could also be negatively
impacted by a time delay. While the VE process could yield substantial cost savings, project
delays could easily diminish any savings or actually end up costing more. Black and Veatch
did some VE analysis at staffs request in December after the new estimate was received. As
noted earlier, some of these cost savings will be included in the project prior to bid and
would limit the additional cost savings that could be achieved by additional VE analysis.
For these reasons, staff does not recommend proceeding with this option.
2. Reduce Project Scope: The City could consider eliminating certain project components
from the current project to reduce construction costs. While some components could be
considered for a future construction timeframe, delay of the improvements will only increase
future costs when undertaken. In addition, construction management services would be
needed for the delayed construction components when they were constructed in the future.
For these reasons, this alternative is not recommended.
ATTACHMENT
Overview: Actiflo Process
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Attachment 1
Prepared By: Gary Henderson, Water Division Manager
Overview: Actiflo Process
Actiflo is a high flow rate, compact clarification process that uses sand to enhance the
settling process. The sand allows the Actiflo process to produce high quality settled
water in significantly less time than the current conventional clarifier. In addition, the
footprint of the Actiflo process is typically 5 to 20 times smaller than a conventional
clarifier. The small size allows the process equipment to be installed within the existing
flocculation basins which is beneficial since locations for additional onsite facilities are
very limited.
The City currently has a limitation at our water treatment plant based on the current
sedimentation process. The capacity of the existing sedimentation basin is rated at 8.0
million gallons per day (mgd) while the total plant capacity is 16 mgd. To achieve the
total 16.0 mgd capacity, water from Whale Rock by-passes the sedimentation process and.
goes directly to the filters. This process is referred to as "direct filtration" and is only
allowed for high quality water with low turbidities such as the water we receive from
Whale Rock.
With the City's participation in the Nacimiento Project, additional sedimentation
capacity will be required. The water quality from Nacimiento Lake will require full
treatment and the City will be treating water from Nacimiento and Salinas at the same
time which requires the increased sedimentation process capacity.
The Actiflo system is a proprietary system which is only available from Kruger, Inc.
which now owns the product rights. The Actiflo system will be designed specifically to
meet our water treatment plant site constraints.
Summary
Following an evaluation of the options available for increasing the water treatment
plant's sedimentation capacity, Actiflo was recommended as the preferred option. The
Council supported this recommendation and the City has executed a contract with
Kruger, Inc for design and procurement of the Actiflo system. The Actiflo system will
provide the ability to meet current and future water quality regulations and will provide
full conventional treatment of all water up to the treatment plant's rated capacity of 16
mgd. With the increased treatment capacity, the water treatment plant will be able to
meet the future City buildout water demands as identified in the adopted General Plan.
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