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HomeMy WebLinkAbout02-20-2018 Item 09 - WRRF Project Contract Amendment Meeting Date: 2/20/2018 FROM: Carrie Mattingly, Director of Utilities Prepared By: David Hix, Deputy Director Utilities – Wastewater SUBJECT: WATER RESOURCE RECOVERY FACILITY PROJECT UPDATE AND PROGRAM MANAGEMENT SERVICES CONTRACT AMENDMENT RECOMMENDATIONS 1. Approve a contract amendment with Water Systems Consulting, Inc. for $1,124,453 for completion of Phase 3 Program Management Services for the Water Resource Recovery Facility Project, Spec. No. 91219; and 2. Approve transfer of $1,124,453 from the Sewer Fund working capital for the WRRF project to the project account. DISCUSSION WRRF Project Update The WRRF project is in the final design phase with the recent completion of sixty percent project design as a major project milestone. Completion of construction documents and bidding is scheduled for September 2018 with construction beginning the end of the calendar year. The WRRF project will deliver the key project drivers of regulatory compliance, replacing aging infrastructure, providing needed capacity for the future, maximizing recycled water production, and community resource center. The WRRF project changed considerably in early 2017 after comprehensive analysis determined that Membrane Bioreactor (MBR) technology offered considerable benefits from the conventional denitrification technology originally envisioned for the WRRF. MBR technology will produce a higher water quality, maximize recycled water production, and position the City for potable reuse. This major change and other conditions described later in this report have added additional time and cost to the project scope and schedule. Contract Amendment While best aligning with the City’s long-range goals related to water resiliency, recycled water, and environmental stewardship, the change to the MBR process have resulted in schedule Packet Pg 119 9 impacts. In addition, a variety of conditions were identified that required additional studies to provide more information to progress with design. These studies revealed important issues that required further analysis and changes to the Program Manager’s existing scope of work to keep the project moving forward. The necessary changes listed below have resulted in significant cost and schedule impacts: • MBR procurement to ensure the most efficient MBR system with the best warranty for the City. • Additional value engineering that has resulted in the reduction of the size of some processes, and efficiencies and optimization in others. • Flood studies that have provided enhanced analysis to inform the protection of the WRRF, the City’s Corporation Yard, and future and existing infrastructure in the Prado Road area. • Additional inflow and infiltration studies to ultimately reduce process replacement. • Additional analysis of cooling wetlands process. This study determined that regulatory constraints make this alternative infeasible. The extended schedule will require additional funding for the WRRF project program to complete the final design phase. These costs include ongoing program management, engineering support, permitting, funding support, and public and stakeholder engagement. This request is for the out-of-scope items and to complete program management for the final design which is critical to keeping the design phase on schedule. Staff has thoroughly reviewed the contract amendment (Attachment A) and believes the request to be accurate, appropriate, and fair. Program management services have been essential to the success of this highly complicated project. Water Systems Consulting Inc. (WSC) has been a valued partner in this project. Design services for the project have also been impacted by the schedule and out-of-scope items outlined above. The City is anticipating a contract amendment request to be submitted by the project designer CH2M. Staff will again thoroughly review the request and discuss and negotiate with the designer before seeking Council consideration. Project Costs and Funding On January 26, 2018, the City received written assurance that it will receive a low interest loan for up to $140 million in project costs from the State Revolving Fund (SRF) (Attachment B). This low interest loan will allow the City to save millions of dollars in interest. An SRF loan is based on the State’s General Obligation Bond and charged at 50% of the current rate. Based on the written confirmation, City and State legal staff will soon begin consultation on the draft agreements. Final loan documents will be presented later this year for Council consideration. The current bidding and building climate in California has seen a rapid escalation of construction Packet Pg 120 9 WRRF Project Phases Phase Schedule Status Phase 1 - Project Planning January 2014 – June 2015 Complete Phase 2 - Preliminary Design July 2015 – August 2016 Complete Phase 3 - Final Design October 2017 – December 2018 Ongoing Phase 4 – Construction December 2018 – January 2022 Phase 5 - Close Out November 2021 – February 2022 costs statewide. The most recent cost document presented a low-medium-high range of estimated project construction costs with the high range exceeding the sewer fund’s financial capacity. The WRRF Project team continues to analyze the project and will modify the bidding documents to offer flexibility at the time of award to stay within budget. This will include a separate bid item for the Water Resource Center (WRC) to allow the required improvements to move forward and the City to determine if project funding can support the building. This approach allows competitive bidding for two distinctly different projects and may offer savings. If the WRC cannot be a part of the project, the building will be placed in the Capital Improvement Plan (CIP) for construction at a later date. Grants, partnerships and other funding mechanisms are being actively pursued for a variety of processes and improvements at the WRRF and the surrounding area. These include flooding, recycled water, energy, inflow and infiltration reduction, and transportation. Staff has identified a goal of fifteen million dollars in grants, loan forgiveness, and partnerships to help offset the cost of the project. Project Phases, Schedule, and Next Steps This calendar year will see the completion of project final design phase and the beginning of the construction phase for the project. Several key project objectives are on-track for this year and are summarized on the project milestone schedule below. Several key items that will be coming to Council for funding consideration include program management for phase 4 and 5 and engineering support for the project. Other activities for 2018 and 2019 include the revision and negotiation of the WRRF’s National Pollutant Discharge Elimination System permit (NPDES) permit and Time Schedule Order (TSO). Packet Pg 121 9 Packet Pg 122 9 FISCAL IMPACT This amendment to WSC’s phase 2 and 3 program management contract will cost $1,124,453. The Sewer Fund has sufficient unreserved working capital for this expenditure. On June 30, 2017, the City’s comprehensive annual financial report showed an unreserved working capital of $27,656,818. Original WSC Contract for Phase 2 and 3 $2,311,000 Amendment for Phase 3 $1,124,453 Total WSC Contract for Phase 2 and 3 $3,435,453 Industry average for total program related services for a project such as the WRRF are 6% of the entire project cost. Total project costs for the WRRF are estimated to be $120-$140 million, which places WSC’s anticipated total program management contract for Phases 1 through 5 within an acceptable range. Total costs for the project will continue to be refined as the design nears completion. ALTERNATIVE Elect not to approve the contract amendment. The City Council may elect not to approve the contract amendment at this time. Council may select this alternative if it believes that program management may be accomplished in a different manner. Staff does not recommend this alternative due to complicated nature of the project, the expense of bringing on a different program manager mid-project, and the lack of in-house expertise and resources. Attachments: a - WSC Contract Amendment b - Funding Letter from State Water Resources Control Board Packet Pg 123 9 AMENDMENT TO AGREEMENT NO. 2 THIS AMENDMENT TO AGREEMENT is made and entered in the City of San Luis Obispo on ______________________, by and between the CITY OF SAN LUIS OBISPO, a municipal corporation, herein after referred to as City, and Water Systems Consulting Inc, hereinafter referred to as Contractor. WITNESSETH: WHEREAS, on November January 29, 2014 the City entered into an Agreement with Program Manager Services for the Water Resources Recovery Facility per Specification No. 91 219; and WHEREAS, the City desires to amend the scope of services to extend Program Management Services for Phase 3 of the Water Resources Recovery Facility Project and the Contractor has submitted a proposal for this purpose that is acceptable to the City. NOW THEREFORE, in consideration of their mutual promises, obligations and covenants hereinafter contained, the parties hereto agree as follows: 1. The scope of services and related compensation is hereby amended as set forth in Exhibit A attached hereto. a. Program Management Services per proposal dated December 26, 2017, at a cost not to exceed $1,124,453.00 2. All other terms and conditions of the Agreement remain in full force and effect. IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed the day and year first written above. ATTEST: CITY OF SAN LUIS OBISPO ____________________________________ By: ____________________________________ City Clerk Mayor Heidi Harmon APPROVED AS TO FORM: CONTRACTOR _____________________________________ By: ____________________________________ City Attorney Packet Pg 124 9 Packet Pg 125 9 Packet Pg 126 9