HomeMy WebLinkAbout05/16/2006, BUS 2 - WATER TREATMENT PLANT MASTER PLAN IMPROVEMENTS councit M n�D� 5-16-06
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CITY OF SAN LU IS O B I S P O
FROM: John Moss, Utilities Director/
Prepared By: Gary W. Hend son, Water Division Manager
SUBJECT: WATER TREATMENT PLANT MASTER PLAN IMPROVEMENTS lT loll
CAO RECOM IEENDATION
Authorize the Mayor to execute the agreement with Stanek Constructors, Inc. for construction of
the Water Treatment Plant Improvement Project, Specification No. 90225C in the amount of
$12,130,858 and increase the project total budget from $13,406,800 to $16,776,400.
DISCUSSION
The Water Treatment Plant Improvement Project has been under study and design for the last
three years. On March 7, 2006, the Council approved the plans and specifications and authorized
staff to advertise for bids. Bids were opened on April 26, 2006. Only two bids were received
and the low bid was from Stanek Constructors in the amount of$12,130,858. The second bid
amount was for$12,860,000 which is very close to the low bid.
The March 7h City Council staff report identified the engineer's estimate for the project at
$8,711,300. The low bid is approximately $3.4 million higher than the engineer's estimate.
Staff and our consultants have evaluated the bids and have identified a number of factors that
have likely led to the higher than anticipated bids.
Reasons for Increased Costs
There are a number of factors that can affect the bidding on complex construction projects such
as this one. Two primary areas are the number of contractors interested in bidding the project
and the level of risk that the project poses.
The number of contractors interested in bidding the project is affected by the contractor's
bonding capacity, current construction projects that the contractor is involved with, and
experience with complex treatment plant projects that must be constructed while.the plant
facilities are still being utilized for water treatment.
The level of risk, as viewed by contractors, is associated with the number of specialized areas of
work that require numerous subcontractors to accomplish. In addition, the tight time frames and
associated potential liquidated damages require the contractor to closely evaluate their bid to
minimize potential fiscal impacts. These two areas likely had the most impact on the overall
project bids. Without a larger number of bidders, the construction estimators may not have
"sharpened their pencils" as much in preparation of their bids. Staff was aware that this could be
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Water Treatment Plant Master Plan Improvements Page 2
an issue on the project, and provided very early notice (over six months in advance of bids) to
contractors.
Some other factors that may be increasing the level of risk to the contractor include the escalating
construction material costs and the uncertainty of oil and gas prices. The contract is expected to
take approximately 18 months to complete, and the contractor is providing a lump sum bid to
construct the entire project regardless of cost increases.
Other Similar Projects
The Lopez Water Treatment Plant Improvement Project opened bids about one year ago and
experienced a very similar result. The County of San Luis Obispo only received one bid which
was approximately 50% over the engineer's estimate. The lack of multiple bidders for this
project was also likely a significant component of the cost increases. When contractors are
preparing their bids, they are aware of the other contractors and subcontractors that have
purchased plans and who are likely to bid.on the project. The County had initially pre-qualified
five contractors for bidding on the project;but ultimately only one provided a bid.
Summary
The low bid received for construction of the Water Treatment Plant Improvement is significantly
more than the engineer's estimate, but staff does not believe that re-bidding the project at this
time would result in significant cost savings. It does not appear that there are additional
contractors that are currently interested in projects of this size (too big for some, too small for
others) or complexity. Without additional interest, it is not likely that re-bidding the project will
have any fiscal benefits. Therefore, staff recommends that the Council approve execution of the
agreement with Stanek Constructors in the amount of$12,130,858.
FISCAL IMPACT
On January 17, 2006, the City Council approved an increase in the project budget to
$13,406,800. The total project costs and the construction project costs are shown in Table 1 and
2 below:
Table 1: Total Project Budget
Phases Project Costs Table 2: Construction Costs
Study $91,100 Type Amount
Design 1,220,400 Low bid $12,130,858
Construction 12,980,900 Contingencies 7%e $850,042
"Actiflo" System 1,384,000 TOTAL. $129980990_.0
Const.Management 1,100,000
TOTAL $16,776,400
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Water Treatment Plant Master Plan Improvements Page 3
The funding for the treatment plant improvements will be accomplished by the issuance of water
revenue bonds. The bond amount will be for the total project costs excluding the previous
amounts expended for study and design. The total bond amount will be approximately $15.4
million. This bond amount and associated debt service payments will be included in the annual
water fund analysis that will be presented to Council on June 6, 2006.
ALTERNATIVES
1. Reject Bids and Re-bid the Project: As discussed above, without significant increased
interest in the project by qualified, contractors, it is not anticipated that re-bidding would
result in significant changes in the bid amounts. In addition, the City currently has a contract
with Kruger, Inc. for supplying the equipment and controls for the new sedimentation process
(Actino). This contract requires delivery of the equipment by September of 2006. Delaying
the project may require negotiating changes to the contract with Kruger for delay of
equipment delivery which would likely result in additional costs. Therefore, this alternative
is not recommended.
ATTACHMENTS
1. Bid Summary
2. Contract with Stanek Constructors for Construction of the Water Treatment Plant
Improvement Project
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Attachment 2
CITY OF SAN LUIS OBISPO
CALIFORNIA
AGREEMENT
THIS AGREEMENT, made on this day of , 2006, 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 Stanek Constructors, 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 firrnish all of the labor, materials, necessary tools,
expendable equipment, and all utility and transportation services required to complete all
the work of construction of
Water Treatment Plant Improvement Project
Specification No. 90225C
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:
Bid Description Unit Estimated Unit Bid Total Bid
Item Quantity Price Price
1 Mobilization LS 1 $200,000 $200,000
2 Sheeting, Shoring, LS 1 $10,000 $10,000
and Bracing
3 Base Project LS 1 $11,920,858 $11,920,858
CONTRACT TOTAL $1291309858
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:
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Attachment 2
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, or respecting the size of any payment to
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 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 Bond, 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 between the parties
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 nothing herein shall 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
By:
Audrey Hooper, City Clerk David F. Romero,Mayor
APPROVED AS TO FORM: CONTRACTOR
Jonathan P. Lowell,City Attorney Stanek Constructors, Inc.
Print/Type: Name &Title
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