The URL can be used to link to this page

Home My WebLink About07/18/2000, 7 - MARSH STREET PARKING STRUCTURE - CONSTRUCTION BID RESULTS council July 18,2000 • acEnaa ReportN. CITY OT gAN LUIS OBISPO FROM: Michael D.McCluskey,Director of Public Works Prepared By: Timothy Scott Bochum,Deputy Director of Public Works SUBJECT: MARSH STREET PARKING STRUCTURE - CONSTRUCTION BID RESULTS CAO RECOMMENDATIONS: 1) Reject all construction bids received on July 12, 2000 regarding the Marsh Street Parking Structure Expansion Project. 2) Receive an update on staffs investigation as to why bids received were substantially above engineer's estimate for the project and direct staff to return as soon as possible with a more detailed report as to alteratives to the existing project design and a revised bid package. DISCUSSION At its May 16, 2000 meeting, the City_ Council authorized the CAO to advertise plans and specifications for the Marsh Street Garage Expansion Project, Specification No. 99684, and authorized the City Administrative Officer to award the construction contract if the lowest responsible bid was within the engineer's estimate. The engineer's estimate for the project was $4,780,600. Contingencies for the project were established at $717,400 bringing the total potential project construction cost to $5,498,000. Two bids were received for the project and were opened on Wednesday, July 12, 2000. The low bid was $8,170,000 received from ARB, Inc. of Lake Forest, California. This low bid was substantially above ($3,389,400) engineer's estimate or 70% above the expected cost of the project. The second lowest bid was received from Maino Construction of San Luis Obispo,with a construction cost of$8,400,000. Staff is currently investigating into the reasons why such a discrepancy exists between the engineer's construction cost estimate and the actual bids that were received for the project. Preliminary investigations have revealed that a number of factors might have led to higher than expected bid results. These factors include but are not limited to: current bid market and the climate in construction cost pricing and labor rates, construction restrictions placed upon the contractor, coordination of Post Office operations, project design specifics and limited staging areas. Staff is also reviewing if the project's engineer estimate is correct or if flaws exist in the project design that do not adequately reflect the true cost of the proposed Marsh Street expansion project. Additional and more specific information on these issues will be presented to Council at its meeting. Because of the extremely high cost of the bid, accepting the low bid for this project is not an 7-1 Council Agenda Report-Railroad Transportation Center(RTC) Page 2 option at this time. Staff is recommending that all bids for the project be rejected and that the • project be reconsidered, revised and re-bid. Investigation into ways of reducing project cost will be conducted with the intent to re-bid the project as soon as possible to obtain lower bid amounts. FISCAL EMPACT Unknown at this time. ALTERNATIVES The City Council could abandon the project. However, given the large investment in the project already, and the potential for lowering the cost, abandoning the project-at this time would be premature. 1:\Council Agenda Reports\Marsh Street Bids Results.doc • • ,_2 council Meafinz Jule ��ly 18,2000 j acenda nEpopm °am7 • C I T Y OF SAN LUIS OBISPO FROM: Michael D. McCluskey, Director of Public Works Prepared By: Timothy Scott Bochum, Deputy Director of Public Works SUBJECT: MARSH STREET PARKING STRUCTURE — CONSTRUCTION BID RESULTS CAO RECOMMENDATIONS: 1) Reject all construction bids received on July 12, 2000 regarding the Marsh Street Parking Structure Expansion Project. 2) Receive an update on staffs investigation as to why bids received were substantially above engineer's estimate for the project and direct staff to return as soon as possible with a more detailed report as to alternatives to the existing project design and a revised bid package. DISCUSSION At its May 16, 2000 meeting, the City Council authorized the CAO to advertise plans and specifications for the Marsh Street Garage Expansion Project, Specification No. 99684, and authorized the City Administrative Officer to award the construction contract if the lowest responsible bid was within the engineer's estimate. The engineer's estimate for the project was $4,780,600. Contingencies for the project were established at $717,400 bringing the total potential project construction cost to $5,498,000. Two bids were received for the project and were opened on Wednesday, July 12, 2000. The low bid was $8,170,000 received from ARB, Inc. of Lake Forest, California. This low bid was substantially above ($3,389,400) engineer's estimate or 70% above the expected cost of the project. The second lowest bid was received from Maino Construction of San Luis Obispo, with a construction cost of$8,400,000. Staff is currently investigating into the reasons why such a discrepancy exists between the engineer's construction cost estimate and the actual bids that were received for the project. Preliminary investigations have revealed that a number of factors might have led to higher than expected bid results. These factors include but are not limited to: current bid market and the climate in construction cost pricing and labor rates, construction restrictions placed upon the contractor, coordination of Post Office operations, project design specifics and limited staging areas. Staff is also reviewing if the project's engineer estimate is correct or if flaws exist in the project design that do not adequately reflect the true cost of the proposed Marsh Street expansion project. Additional and more specific information on these issues will be presented to Council at its meeting. Because of the extremely high cost of the bid, accepting the low bid for this project is not an 7-1 Council Agenda Report-Railroad Transportation Center(RTC) Page 2 • option at this time. Staff is recommending that all bids for the project be rejected and that the project be reconsidered, revised and re-bid. Investigation into ways of reducing project cost will be conducted with the intent to re-bid the project as soon as possible to obtain lower bid amounts. FISCAL IMPACT Unknown at this time. ALTERNATIVES The City Council could abandon the project. However, given the large investment in the project already, and the potential for lowering the cost, abandoning the project at this time would be premature. L\Council Agenda ReportsWarsh Street Bids Results.doc 7-2 i F - ". _,• � � _. .. TING AGENDA DATE 2-1 8-pO ITEM # °: council mcmoRanbum July 18, 2000 GKOUNCIL O CDD DIR TO: City Council FRICAO O Fl�Ni EDCHIEF IR ATTORNEY 04W DIR INJO VIA: John Dunn, City Administrative Officer 0 MONT TEAM O POLICE CHF F O UTIL DIR FROM: Tim Bochum, Deputy Director of Public Works & LI f O PERS DIR Keith Opalewski, Parking Manager T. (501:,;4UH K.0PAVI,=VJ SUBJECT: Marsh Street Garage Expansion Bid Update As Council is aware, the bids for the Marsh Street Garage expansion were substantially higher than the Engineer's estimate for the project. The low bid of$8,170,000 was nearly 70% more than the $4,780,000 that was estimated for the basic construction. As a result of this high cost overrun, staff directed the consultants, design, structural engineer, and construction management, to conduct a detailed critique of the high bids. After meeting with the low bidder the design team has provided some additional information as to why the bids were so much higher than expected. The attached documents detail their findings with the following brief over view being provided for your information • Consultants underestimated the cost for foundations for the garage,bridge and gazebo • Consultants underestimated the cost for steel and concrete for gazebo and bridge • Consultants underestimated the cost for construction of the office space • Current availability of bidders was very limited resulting in only two bidders • Location and site constraints contributed to overall higher bid cost In addition, the attached Industry Update on California Bid Climate memo reflects the higher bid climate that currently exists in the Northern California area. A cost estimator used by the design team provided this article as additional background for the high bids that were received for this project. The consultants will be available at tonight's meeting to answer all questions relating to the bid process. attachments RECEIVED ccmemohighbids J U L 1 8 2000 SLO CITY CLERK MEMORANDUM PHILLIPS METSCH DATE 18 July,2000 SWEENF TO Keith Opalewski,Parking Manager FROM Fred Sweeney MOORE PROJECT City of San Luis Obispo—Marsh Street Parking Garage Expansion A R C H I T E C T S JOB NUMBER 98028.00 San Luis Obispo Marsh Street Parking Structure Addition July 12, 2000 Bid Analysis Issues of Bid Vs. Budget The following are possible areas of the project which may be subjects of discrepancies between the original project construction estimate and the bids received on July 12, 2000. The list has been divided into two categories. The first are items with relatively objective quantity definitions,and the second are items which might be viewed as more subjective. It should be noted that until the architect and engineers can review both contractors'bid breakdowns, definitive discrepancies between the estimates and the bids cannot be determined As of the date of this memo those documents have not been made avallable for review. QUANTITATIVE ITEMS: A. Extent of foundation work at the garage foundation: There may have been higher than estimated costs associated with this work because of the high water table and poor soil conditions. B. Foundation work for the bridge and gazebo: This may have been an area of additional unanticipated cost. C. Cost of the bridge and gazebo: Both contractors noted that the cost of steel and concrete in the San Luis Obispo area is higher than other areas within the state. D. The cost of the specified concrete may have been higher because of the city's desire to have significantly less cracking than was seen in the previous garage. E. The proposed leased offices along Pacific and Morro Streets may have discrepancies in the amount allocated for this work. F. The public restrooms on the second level may have required higher cost because of their location and the nature of their finishes. G. Exterior skin design: The proposed architectural elements may have been perceived as more complicated to construct than anticipated in the original cost estimate. ■ ROGER A.PHILLIP- ..IA STEPHEN METSCH AIA 2020 ALAMEDA PADRE SERRA.4220 SANTA BARBARA,CA 93103 TEL 805.963-1955 FAX 805-564-8582 FRED L.SWEENEY AIA 935 RIVERSIDE AVENUE,020 PASO ROBLES.CA 93446 TEL 805-227-4540 FAX 805-227-0712 JAMES E.MOORE IV AIA POSSIBLE SUBJECTIVE ITEMS: A. Metric requirements of the project vs. standard English system: The majority of construction work accomplished in the industry still uses the English system. The bidders we spoke to said that a considerable number of bidders chose not to bid a metric project. Those that did may have factored in additional costs to deal with conversions. B. Bid climate of subcontractors: Both contractors indicated that many of the major trades are busy and chose not to bid. One of the bidders could not get a plaster bid; the other only had two responses. Many of the local subcontractors had other work and chose not to bid. Those that did bid may have provided a"courtesy bid". C. Bid climate of general contractors: Prior and during the bid period, the architect,engineers,and construction manager inquired about several local and state-wide contractors who would be eligible and capable of bidding this job. Most did not want to bid because they were busy. The apparent low bidder had even requested that the bid date be extended,which it was. An appropriate number of bidders would have been four to five generals. There would usually have been six to eight bidders for a job this size. D. Schedule: Both bidders indicated that the projects restrictive time schedules,particularly at the bridge and gazebo,may have increased cost. One of the two bidders anticipated concrete pours over two weeks,rather than the normal one week time period anticipated because of local noise, traffic,and other neighborhood conditions. Another felt that closing down Marsh Street for the bridge installation drove the cost up. E. Both bidders said that many of the subcontractors anticipated issues of building in the San Luis Obispo climate,i.e. environmental restrictions, public government procedures,public opinion,etc. Specific site constraints: Issues concerning storage, staging areas,construction traffic access,requirements for U.S.Postal Service,and Towne Center constraints may have been a contributing factor in higher costs. Industry Update on California Bid Climate As a project manager,you may wish to account for a "volatile"bid climate as described by Hanscomb in their most recent email message perhaps as a line item in estimate The recent upturn in market conditions in the Bay Area has produced a number of conditions that are driving bid prices up: Frequently,there are only two or three bidders for a project, or for a sub-trade. Also,a look at the range of bids will often indicate that the high bidder was not supplying a bona-fide bid. It has been established that a reduced number of true bidders results in an increase in bid prices, and a report published on this was published in the Hanscomb News in December 1991.The report shows that,on average,under normal market conditions, bids can be expected to be up to about 15%higher than estimated where only two bids are received. There is also not the migration of workers that is usual in the construction industry,since workers can usually now find employment near to home. Consequently, the Bay Area is experiencing a shortage of skilled workmen especially foremen.In the mechanical trades in San Francisco,there is no longer such a person as an apprentice any more,just craftsmen and foremen.The prevalent,prolonged effect of overtime has adverse effects on productivity and labor costs. A previous Hanscomb News article,published in March 1995,was based on an analysis of bidding trends over the range of market conditions. That article was written in relation to a recessionary period,but it shows that a period when contractor's work- books are full can lead to prices being up to 30%above the"norm". While there is undoubtedly a measure of overlap in this issue and the preceding one, it can be expected that the current situation in relation to workload is adding around 5%to bids. This factor will(in general)be consistent across the bid packages,and reflects the added costs of doing business in a busy market, over and above normal escalation/inflation. Another trend that we have noticed for some time, is that contractors are getting more and more choosy about projects, and bidding accordingly. Work that is straightforward (e.g.new construction)will attract more attention and have some competition,whereas work that is unattractive will(if bid at all)be priced at a level that covers all current and future risks, and possibly more.Renovation work generally would fall into This "problematic" category for many trades,and the premium(over and above the other premiums) could be up to 25%.This factor will vary, depending on the type of work, e.g. it can be expected to affect the structural sections,but will have minimal affect on finishes. To summarize the above three factors affecting bids, we have the following range of effects: Low Range High Range Lack of bidders 0% 15% Hot Market conditions 5% 5% Attractiveness markup 0% 25% Total effect 5% 45% July 18, 2000 Mr. Keith Opalewski Manager Parking Services City of San Luis Obispo 955 Morro Street San Luis Obispo, CA 93401 Re: City of San Luis Obispo Marsh Street Garage Expansion Project Bid Analysis and Recommendations The intent of this letter is provide the City of San Luis Obispo with Hams &Associates' analysis of the bids received for the Marsh Street Garage Expansion project. Bids were opened July 12, 2000.The City received a total of two bids,with the low bid being $8,170,000. The Architect's construction cost estimate was $4,780,600. It is our understanding that this estimate was prepared using reliable cost data from previous similar parking structure projects. Harris provided a cursory review of the Architect's estimate in March of 2000. Based on our review of comparable cost data from other parking structure projects, it was our determination that the estimate was reasonable. It is Harris' recommendation that the City reject the bids based on the significant discrepancy between the bid prices received and the expected cost of construction.The City should then consider re-bidding the project with the Bid-Form revised to list certain portions of the work as bid- alternates.This would allow the City some flexibility in awarding the contract should the bids come in high again. Items that could be bid separately include the pedestrian bridge,gazebo, bathrooms, and office space. It is recommended that the City re-bid the project early in the upcoming winter months to take advantage of off-season bidding.The planned start of construction should be in March or April of 2001 to avoid working in the rainy season. Noted below are several potential factors that could have contributed to the inflated bid prices: ➢ The current availability of bidders is very limited. Many contracting agencies in California are experiencing a shortage of bidders for projects.The condition is quite evident on this project. ➢ The project location in downtown San Luis Obispo creates concerns related to neighborhood sensitivity.Working hour and noise limitations increased concrete pour cycle time durations. ➢ The remote project location in San Luis Obispo made bidding difficult for the majority of parking structure contractors based in the greater Los Angeles area or the Bay Area. ➢ The soil and groundwater conditions below the project site are difficult to work with.The 55' deep cast-in-place caissons appear to be more costly that previously estimated. The cost of concrete appears to be more costly that previously estimated due to stringent limitation on concrete shrinkage and local market conditions. ➢ The use of metric units in the bid documents discouraged certain subcontractors from participating on the project.The overall effect of metric units appears to be marginal. The cost of structural steel has fluctuated upward in recent months. Very truly yours, HARRIS &ASSOCIATES Stephen Mimiaga, P.E. Project.Manager cc: James Guerrero,Vice President-Harris&Associates Jul 18 00 02: 17p P• l ETINGAGENDA DATE —1S-00 ITEM # E-21LERKIORIG IL O CDD DIR To: Council Rt O FIN DIR City O FIRE CHIEF [Y --�PWDIR ORIG 0 POLICE CHF From: Dave Romero EAM 0 REC DIR --AT 0 UTIL DIR Subject: Marsh St. Parking Structure O PERS DIR NJM K. 0PAL-SkU1bk<< It is obvious from the bids that our consultant grossly underestimated the cost of constructing the Parking Structure. Costs can be reduced considerably by eliminating Metric units and using only American units,by revising the finish details,by relaxkg some of the very tight construction restrictions, and by finding a way to provide more construction working area for the contractor. With all of these however,we will be unable to bridge the gap between$4.8 and$8.2 million without a major change in concept. The bridge across Marsh St. and the very nice landing and elevator in the Downtown Center were added as a mitigation and are not fimdamental to the purpose of the project. If these features were elin®ated and a traffic signal installed to separate pedestrian and vehicular traffic, we could save somewhere between $1 '/z-2 million. Staff should be directed to consider this alternative. RECEIVED W! 1 R 2000 SLO CITY COUNCIL