HomeMy WebLinkAbout01-05-2016 Item 08 - LOVR/US 101 Interchange Improvement Project, SPC. 99821
Meeting Date: 1/5/2016
FROM: Daryl R. Grigsby, Public Works Director
Prepared By: Kyle Rowland, Engineering Inspector, Project Manager
SUBJECT: LOS OSOS VALLEY ROAD/US 101 INTERCHANGE IMPROVEMENT
PROJECT, SPECIFICATION NO. 99821 - CONTINGENCY BUDGET
UPDATE
RECOMMENDATIONS
1. Authorize an $800,000 increase to the US 101/LOVR Interchange project contingency
budget to cover anticipated additional contract change orders (CCO’s), including repaving
approximately 0.75 miles of Calle Joaquin; and
2. Authorize the City Engineer to be responsible for construction CCO’s for the US 101 /
LOVR Interchange Project in any amount with the limitation that the sum total of all CCO’s
not exceed the budgeted contingency amount of $2,050,000.
DISCUSSION
Background
December marks the completion of the fourteenth (14th) month of construction, and stage six of
eight, for the Los Osos Valley Road/U.S. 101 Interchange Improvements Project (LOVR,
Specification No. 99821). The contract was awarded to Granite Construction at the September
16, 2014 Council meeting for a total amount of $16,572,129.84. The beginning of the 350
working day schedule began on October 27, 2014. Since construction commencement,
efficiencies in scheduling and items of work have accelerated the project, which is now
anticipated to finish earlier than the expected timeframe of summer 2016.
Due to the size and scope of this project, the City Council amended the City’s normal Contract
Change Order (CCO) Policy as part of their action of September 16, 2014. This revised project
specific CCO Policy authorizes the City Engineer to approve all CCO’s of any amount as long as
the cumulative total of all approved CCO’s does not exceed the total authorized contingency
amount of $1,250,000. For CCO’s under $25,000, the Project Manager will have the authority to
approve them as necessary followed by notification to the City Engineer. This policy has proven
to be very successful by nearly eliminating idled worker and equipment costs.
Summary of Contract Change Orders (CCOs) To Date
Out of the approximately fifty CCO’s to date, there are three that account for nearly half of the
contingency balance.
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1. CCO 7 - This $255,000 change is the result of errors in the earthwork quantity
calculations for the project. The actual quantities of earthwork were significantly larger
than estimated throughout various areas of the project. The plans themselves were not
changed in any significant way, rather in summing up the quantities for the various
locations, some areas were inadvertently omitted by the consulting design engineer.
2. CCO 30 - Pile driving costs were approximately $150,000 larger than anticipated when
working on the SLO Creek Bridge widening. Pile locations and lengths were designed
based on two soil borings samples that were taken during the design phase of the project.
During construction, the underground rock layer was deeper than expected in some
locations, requiring significantly longer piles to reach strong supporting earthen material.
This resulted in the City incurring additional material and equipment costs to lengthen
and drive piles to the required rock elevation.
3. CCO 41 - The project plans show an existing 18” City waterline crossing underneath a
new retaining wall at the corner of the southbound U.S. 101 off-ramp and LOVR. The
actual alignment of the waterline was discovered in a different location. This created a
major conflict with the new LOVR retaining wall installation. Therefore, a section of the
waterline was replaced in a new alignment with a retaining wall casing that allows the
City to access the line for future potential repairs. This CCO is anticipated to cost the
project approximately $150,000.
Request for Additional Contingency Budget
At this point, the project is nearly 80% complete according to the baseline schedule. Anticipated
work indicates a change to the initial Council authorized contingency amount of an additional
$800,000. Based on guidance from the consulting construction management firm, MNS
Engineers, it is anticipated that an additional $275,000 is needed through the end of the project.
This will address any unforeseen events and related CCO’s and increase the new contingency
balance to 9.2% of the project budget. This percentage aligns with other transportation projects
of this magnitude.
The project team is also requesting authorization to expend an additional $525,000 to repave a
large portion of Calle Joaquin that has been impacted by the interchange project. This extra work
will span from the northern end of Calle Joaquin to the southern end at Margie’s Diner. Over the
last year, Calle Joaquin has incurred accelerated wear due to the sewer force main project,
temporary southbound U.S. 101 off-ramp, construction equipment loading, and material staging.
By repaving Calle Joaquin now, its decline due to unusual wear and tear will be abated and the
City will save money in the long run by avoiding a reconstruction situation.
FISCAL IMPACT
This project is identified in the 2013-15 Financial Plan, Appendix B – Capital Improvement
Plan, page 3-252 through 3-255. The financing needs of the project were presented at the June
10, 2014 City Council meeting which outlined all expenses to date, in addition to the expected
costs throughout the construction phase. Since the project is grant funded, 88.53% of most
project expenses are funded by a $16,000,000 STIP RIP Grant, and the City TIF bond funds the
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remaining 11.47%. The utilization of the project grant will be maximized during the construction
of this project. A summary of the construction phase funding and expenses are included in the
following table:
Table 1 -Project Construction Funding and Expenses
As the construction phase approaches completion, the consultant project management and
construction management team is being reduced due a decrease in demand. However, it is
anticipated that a contract amendment will be necessary to fund MNS Engineers throughout
project closeout. The original budget for this contract appears to be insufficient due to the
increased workload associated with design related CCO’s. Savings are expected from the project
management contract with Southstar Engineering and should offset any increase in the
construction management contract.
It appears at this time that there will be funds remaining from the bonds upon project completion.
As noted above, every effort will be made to maximize use of the grant. If funds remain after
completion, staff will provide options and a recommendation to the Council for funding other
improvements in the area. Both Los Osos Valley Road and Madonna Road are in need of
reconstruction work, which to date, there have not been adequate funds for.
ALTERNATIVE
Authorize $275,000 increase in project contingency budget, and defer paving of Calle
Joaquin. Council may decide to deny or defer the additional funding for street paving work.
Although the $525,000 for repaving of Calle Joaquin is recommended, this work is not required
to complete the project. However, with 75% of the original authorized contingency utilized and
Budget Expenses
STIP RIP Grant (9/16/2014)16,000,000$
City TIF Bond (9/16/2014)7,500,000$
Carryover from Environmental Review (7/1/2013)100,000$
Transfer from Land Acquisition (4/1/2014)759,475$
Carryover from Land Acquisition (2/28/2015)203,264$
Contract with Granite Construction (16,572,130)$
CCO Encumbrance (1,250,000)$
Project Management-Southstar Engineering (1,399,545)$
Construction Management-MNS Engineers (2,352,870)$
Design Support-Dokken Engineering (238,860)$
Misc. Printing, Permit, and Bond Expenses (69,711)$
LOVR Interchange Landscape Project (400,000)$
Total 24,562,739$ (22,283,116)$
Proposed CCO Increase to Complete Construction (1/5/2016)(275,000)$
Proposed CCO Increase to Pave Calle Joaquin (1/5/2016)(525,000)$
Total (800,000)$
Projected Balance Remaining 1,479,623$
99821 Construction Phase
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additional CCO’s imminent, the request for $275,000 is needed to finish construction of the
project and should not be deferred.
Attachments:
a a - 99821 CAR Award LOVR-101 to Granite Constr.
b b - 99821 LOVR-101 Change Order Policy
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City of San Luis Obispo, Council Agenda Report, Meeting Date, Item Number
FROM: Daryl R. Grigsby, Public Works Director
Prepared By: Kyle Rowland, Supervising Project Manager
Jason Bennecke, Consultant Project Manager
SUBJECT: CONSIDERATION OF APPEAL OF THE DIRECTOR OF PUBLIC WORKS’
DECISION DENYING BID PROTESTS FILED BY JOHN MADONNA
CONSTRUCTION, INC./ SOUZA CONSTRUCTION, INC. AND (IF FILED)
CALPORTLAND CONSTRUCTION COMPANY REGARDING THE LOS
OSOS VALLEY ROAD/US 101 INTERCHANGE IMPROVEMENTS
PROJECT; AWARD CONSTRUCTION CONTRACT FOR THE LOS OSOS
VALLEY ROAD/US 101 INTERCHANGE IMPROVEMENTS PROJECT,
SPECIFICATION NO. 99821
RECOMMENDATIONS
1. Adopt a resolution denying the appeal of the Public Works Director’s denial of a bid protest
filed by John Madonna Construction – Souza Construction Inc. for award of the Los Osos
Valley Road Interchange Project, Specification 99821, to Granite Construction.
2. Award a contract to Granite Construction of Santa Barbara, California in the amount of
$16,572,129.84 for the US 101 / LOVR Interchange Project, Specification No. 99821.
3. Authorize City Engineer to be responsible for construction contract change orders (CCO’s)
for the US 101 / LOVR Interchange Project in any amount with the limitation that the sum
total of all CCO’s not exceed the contingency budget amount of $1,250,000.
DISCUSSION
Background
On June 10, 2014, the City Council authorized inviting bids for the Los Osos Valley Road/US 101
Interchange Improvements Project, Specification No. 99821 (Attachment 1). Advertisement of the
project began on July 5, 2014. The City has a responsibility to award this project within six
months of the construction allocation, per State requirements (Attachment 2). The California
Transportation Commission voted on June 25, 2014 to allocate a $16,000,000 grant towards the
LOVR/US 101 Interchange Improvements Project. Therefore, the City must award a contract by
December 25, 2014 to avoid loss of grant funding. The project is scheduled to complete
preliminary work this fall, with construction which impacts traffic, to start after the holiday
season.
Five sealed bids were publicly opened on August 12, 2014. The submitted bid documents were
evaluated based on three criteria: cost, responsiveness and responsibility. Initially, all bids were
reviewed for mathematical errors and ranked from the lowest to the highest cost bid. Granite
Construction (Granite) of Santa Barbara, CA was the lowest bidder with a proposal of
September 16, 2014
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Los Osos Valley Road/US 101 Interchange Improvements Project Award Page 2
$16,572,129.84. This low bid is under the Engineer’s Estimate by approximately $398,000 or
2.35% (Attachment 3).
The lowest cost bid package was reviewed to verify that requested items of information were
complete, addenda acknowledged, and reference information included. Incomplete bids or bids
found to otherwise materially not to comply with the bidding instructions are cause for the bids
to be considered as “non-responsive.” If a bid is determined to be “non-responsive,” it is no
longer considered for award, and the next lowest bid document is reviewed. Granite’s bid
documents were determined to be responsive. After reviewing Granite’s bid for responsiveness,
their qualifications and references were reviewed to determine responsibility. Granite’s
experience and references indicate that Granite is qualified to perform the work contained within
the Contract.
The bidders were also responsible to provide work for Disadvantaged Business Enterprises
(DBEs), as a condition of the grant funding. Granite indicated in their bid documents that 3.2%
($535,560) of the total project cost would be performed by DBE firms. This exceeds the
minimum goal of 3% listed in the project specifications.
It is the Public Works Director’s recommendation that the contract be awarded to Granite
Construction based on the review of the bid submittal and the findings shown above.
Bid Protest - Madonna-Souza
Madonna-Souza Joint Venture (Madonna-Souza) submitted a bid protest on August 19, 2014
protesting the award to Granite for failure to comply with the Federal Disadvantaged Business
Enterprise rules and regulations (Attachment 4).
The protest revolves around a quote Granite submitted in their supporting DBE bid
documentation from Dragon Material Transport, Inc. (Dragon) dated August 11, 2014. The
quote indicates delivery fees for liquid asphalt tonnage from Greka Energy to Paso Robles and is
addressed to CalPortland Construction (CalPortland). Madonna-Souza claims there is no
evidence given of any contractual relation, or contact between CalPortland and Granite, or
between Dragon and Granite with respect to this project. Therefore, Madonna-Souza claims that
Granite cannot use these expenses as a contribution to Granite’s DBE goal.
Granite responded by indicating that CalPortland is a listed subcontractor supplying material on
this Contract and Dragon is committed to supply and haul asphalt oil for this project as
CalPortland’s supplier. Consequently, Dragon is a second-tier supplier. The asphalt oil will be
delivered to CalPortland’s facility in Paso Robles where the asphalt is produced. Additionally,
all DBE participation (including lower tier subcontractors and suppliers) counts toward the DBE
goal (Attachment 5). Therefore, bidders were required to identify on the DBE Commitment
Form all DBE firms participating in the project regardless of tier. Dragon is listed on this form,
Exhibit 15-G.
City staff contacted Dragon and spoke with the estimator, Ms. Summer Bradford. Ms. Bradford
confirmed that the oil was to be sold to CalPortland Construction for purposes of providing
asphalt concrete to Granite Construction, all of which is intended to be used for the US 101 /
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Los Osos Valley Road/US 101 Interchange Improvements Project Award Page 3
LOVR interchange project. She also confirmed the price and understood that Dragon is to be
counted as a second-tier DBE.
Furthermore, the DBE good faith effort submitted by Granite was determined to be satisfactory.
Therefore, hypothetically even if the Dragon DBE contribution was not utilized, the minimum
DBE good faith requirements would still be met with Granite’s submitted bid.
After reviewing the protest from Madonna-Souza, the response from Granite, and input from
City’s counsel, the Public Works Director denied the protest on September 2, 2014.
On September 4, 2014 the City Clerk received an appeal from Madonna -Souza of the denial of
the bid protest (Attachment 6). The appeal cited a lack of documentation that Granite had
obtained the DBE commitment at the time of bid, and had not shown a good faith effort to
include DBEs. These are similar issues raised in the original appeal, and responded to in the
denial letter. Staff is recommending denial of the appeal and award to Granite and currently
drafting a resolution that will be distributed via memo prior to the September 16th hearing
(Attachment 7).
Bid Protest - CalPortland Construction
CalPortland submitted a bid protest on August 19, 2014 protesting the apparent second low
bidder, Madonna-Souza (Attachment 6). The protest appears to indicate three “critical errors” in
the Madonna-Souza bid and suggests that the mentioned errors deem the bid nonresponsive
because of inconsistencies with the Specifications and not meeting the intent of the Bid Books.
Additionally, they requested that CalPortland be moved to the apparent second low bidder
position, pending any potential issue with the apparent low bidder, Granite.
The CalPortland protest of Madonna-Souza bid was denied by the Public Works Director on
September 2, 2014. No appeal has been received as of the time of this writing.
Revised Change Order Policy
Due the size and scope of this project, the current Contract Change Order (CCO) Policy used for
CIP projects may result in significant delays and expenditures for the City. The interchange
project is approximately 100 times larger than the typical CIP project performed by the City. A
larger number of construction employees and equipment will be idled during delays, and
individual changes will have more significant costs. Were the construction to be stopped each
time a change order over $25,000 was deemed necessary, costs incurred by idled manpower and
equipment could be significant. A proposed project-specific change order policy has been
drafted for Council approval (Attachment 9). Expertise from the project consultant and
construction team was used to identify appropriate thresholds. The revised policy is consistent
with other public agencies that have completed similar interchange projects.
The proposed policy authorizes the City Engineer to approve all CCO’s of any amount as long as
the running total of all approved CCO’s does not exceed the total authorized contingency amount
of $1,250,000. For CCO’s under $25,000, the Project Manager will have the authority to
approve them as necessary followed by notification to the City Engineer. If the sum of all
CCO’s reaches 75% of the total authorized contingency amount, staff will notify the City
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Los Osos Valley Road/US 101 Interchange Improvements Project Award Page 4
Manager and Finance Director to address any budget concerns. Any additional funding needs
will come before the Council for consideration and direction.
CONCURRENCES
The Finance Director and City Attorney were consulted regarding the project specific change
order policy and concur with the recommendation.
FISCAL IMPACT
The financing needs of the project were presented at the June 10, 2014 City Council meeting.
This outlined all expenses to date, in addition to the expected costs throughout the construction
phase. Council directed staff to return with the following information once bids were opened:
1. Debt financing recommendations to provide up to $7.5 million in project funding to pay
the City’s remaining portion of the Los Osos Valley Road/US 101 Interchange
Improvements Project costs, Specification No. 99821.
2. Any necessary impact fee program modifications that may be needed to fund project
costs.
This debt financing recommendation will be presented at a public hearing to be held on
September 16, 2014 which will occur during the regular City Council meeting ahead of this item.
A summary of the expected projected costs can be seen below.
2014-15
Construction:
City Contingency Amount 1,839,481$
Loan/bond Origination Fee 250,000$
Construction (includes Env. Mit)17,986,302$
Construction Management 3,189,025$
23,264,808$
Misc.
GF Reimbursement for ROW 74,000$
Total All Project Costs:23,338,808$
Project Components
Table 1 - Expected Project Costs through Construction Phase
Debt Financing Needs
Based upon these estimates and the final grant amount, the amount to be borrowed needs to
generate $7,500,000 to complete the project. (the par amount of the debt will be greater than this
amount). This amount is determined by subtracting the $16,000,000 grant amount from the FY
14-15 expenses of $23,338,808 and rounding up.
Total Costs- FY 2014-15: $23,338,808
Grant Amount: $16,000,000
Subtotal: $7,338,808
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Los Osos Valley Road/US 101 Interchange Improvements Project Award Page 5
Rounded: $7,500,000
The Finance Department and the City’s Financial Advisor have developed a complete debt
financing package for the project that will be presented ahead of this item at tonight’s meeting.
Bond Financing Effects on Contract Award
Staff is recommending the award of a contract to Granite this evening to meet state funding
requirements to award a bid within 60 days of the bid opening and with the understanding that
the bond financing transaction may require up to four weeks to complete.
In the unlikely event that the bond financing is not completed in a timely manner or is not
completed due to unforeseen market conditions, the construction contract can be terminated at
the convenience of the City. However, the City would be liable for those costs incurred up to
that point which would largely be related to the contractor’s mobilization and work effort to
secure documents and permits from various agencies.
ALTERNATIVES
Award a Contract to other than Granite Construction. Council may decide to award to the
next lowest responsive, responsible bidder, if it finds, in compliance with state law regarding
public bids, that the low bidder’s bid was materially non-responsive or that the low bidder does
not meet responsibility requirements for the project. A non -responsibility determination would
need to be based on findings and would entitle the low bidder to a responsibility hearing, which
would delay project award. This alternative is not recommended because staff believes that
Granite is the lowest responsive, responsible bidder pursuant to public contracts law.
Deny the award. Council may choose to deny or defer the approval of award for this project.
Staff does not recommend this option. The current award and start of construction schedule
allows the City to meet the grant deadline for award. It also allows some necessary soil settling
work to occur during the shopping season, so significant construction efforts can get underway in
January. Critical components of work have to be performed prior to June due to environmental
permit regulations. It is unlikely that bids will be significantly different should the Council opt
to reject bids and re-advertise, and bidders have incurred expenses already to prepare their bid.
ATTACHMENTS
1. Council Agenda Report Authorizing Advertisement - June 10, 2014
2. Caltrans LAPG Guidelines for STIP Projects
3. Bid Evaluation and Analysis Report
4. Madonna-Souza Bid Protest
5. DBE Participation Standards
6. Madonna-Souza Appeal
7. Resolution Denying the Madonna-Souza Appeal [To be distributed under separate action]
8. CalPortland Bid Protest
9. LOVR/US 101 Contract Change Order Policy
10. Agreement
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Los Osos Valley Road/US 101 Interchange Improvements Project Award Page 6
t:\council agenda reports\2014\2014-09-16\lovr interchange contract award (grigsby-rowland)\99821 car award lovr-101 to granite constr..docx
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City of San Luis Obispo, Public Works, 919 Palm Street, San Luis Obispo, CA, 93401-3218, 805.781.7200, slocity.org
CONSTRUCTION CONTRACT CHANGE ORDERS FOR THE LOS OSOS
VALLEY ROAD INTERCHANGE IMPROVEMENTS PROJECT
Financial Management Manual - Section 225 - Revised for Referenced Project
CONSTRUCTION CONTRACT CHANGE ORDERS
OVERVIEW
When the City awards a construction contract, the need for contract change orders (CCO’s) is not
unusual. CCO’s are required whenever the scope of work changes from that in the original contract
or an unknown condition of the site requires a change in the scope of work. Usually a contingency
amount is established when the project budget is finalized upon contract award to accommodate
limited CCO’s. The purpose of this policy is to establish limits of authority for approving
construction project CCO’s.
GOALS
1. Ensure appropriate authority and accountability in the approval of change orders.
2. Minimize the time needed to approve a CCO in order to avoid project delays.
3. Establish a system under which the organizational level at which approval is given is
commensurate with the size of CCO and size of project.
4. Eliminate the potential for approval of a CCO when contingency funds are insufficient.
POLICIES
Conditions for Approval of CCO's by Staff
1. Sufficient contingency funds are budgeted and available in order for the Public Works Director or
City Manager (approved designees) City Engineer to approve a CCO.
2. The nature of work in the CCO is not significantly different from that in the contract.
3. Authorization limits are based on an individual CCO amount, not the or aggregate amount of all
CCO’s where noted.
4. Authorization limits apply to CCO’s for increases in contract amounts only.
5. When the aggregate amount of CCO’s reaches 75% of the contingency, the awarding authority
City Manager and Finance Director shall be informed of the status of the project and the
sufficiency of funding to complete the project.
6. Work will not be broken up into multiple CCO’s in order to circumvent this policy.
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7. All CCO's must be in writing and approved by the appropriate contract parties consistent with the
authorized limits established in this policy.
8. A copy of each approved CCO will be transmitted promptly to the Finance Division.
9. The City Manager may grant approval of CCO's in excess of $100,000 under the following
circumstances (all three factors must be present):
a. Immediate approval of the CCO is necessary to avoid delay.
b. The CCO is an integral and mandatory component of the project.
c. The costs associated with delay of the project would be excessive.
The Project Manager City Engineer is responsible for carrying out this policy.
10. The City Manager is also authorized to approve CCO’s in excess of $100,000 related to Job
Order Contract Task Orders.
Authorization Limits
1. Public Works Director/Approved Designee Project Manager - Not to exceed $25,000
2. City Manager -Not to exceed $100,000 Engineer - None on individual CCO’s, with cumulative
approved CCO total, limited to approved project budget
3. City Council - Greater than contract or $100,000* approved project budget
* See circumstances above where the City Manager may approve CCO’s in excess of $100,000.
Originally Approved by the Council on August 3, 1993; Revised by the Council on April 15, 2003
Approved by the Council on September 16, 2014 for the Los Osos Valley Road Interchange
Improvements Project, Specification 99821, Exclusively.
8.b
Packet Pg. 46
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