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01/29/1991 - City Council Public Works Committee /_ 3�_ q� NSP RATE INCREASE Enclosed on page 124 is notification by NSP that an 8.1 percent rate increase has been filed with the Minnesota Public Utilities Commission. INDEPENDENT SCHOOL DISTRICT 191 FINANCIAL REPORT Enclosed on page t 11 is a copy of a letter from Independent School District 191 referencing the Comprehensive Annual Financial Report for the Fiscal Year ending June 30, 1994 District 191. A copy of this document is filed in the City Administrator's office. If any member of the City Council would like to inspect the document, please ask! BLUE RIBBON TASK FORCE MEETING The Blue Ribbon Task Force meeting was held on Wednesday, January 30. In attendance were City Councilmember Gustafson and Assistant to the City Administrator Hohenstein. The purpose of the Blue Ribbon Task Force process is to allow the Cities of Mendota Heights, Inver Grove Heights and Eagan to meet with MAC staff and ultimately agree on operating procedures that develop noise contours acceptable to all three (3) communities. After several months of negotiation and meetings, it appears that the Corridor Task Force has reached agreement. A special thanks to Councilmember Gustafson for his commitment and involvement in the meetings and to Assistant to the City Administrator Hohenstein for the analysis and pre ntation he gave to this issue. Citizens who were in attendance seemed very appreciative. T• I „ 1 DARE GRADUATIONS As a reminder, Mayor Egan is scheduled for the DARE graduation at Deerwood Elementary on February 4 at 9:30 a.m., City Councilmember Pawlenty at Northview School on February 8 at 1:30 p.m. and Councilmember McCrea at Woodland Elementary School on February 15 at 2:00 p.m. City Councilmembers Gustafson and Wachter have attended DARE graduations at Thomas Lake Elementary and Pinewood Elementary respectively. PUBLIC WORKS COMMITTEE The Public Works Committee held a meeting on Tuesday, January 29, from 3:00 p.m. to 5:00 p.m. for the purpose of reviewing a change order policy and three (3) specific change orders, two of which pertain to the Cliff Road Water Treatment Plant and the other to the Maintenance Facility Expansion. There was an excellent discussion on the philosophy of change orders and direction was given to the Director of Public Works for preparing a change order policy to later be reviewed and considered by the City Council. Both City Councilmembers Wachter and McCrea were present for the meeting. AMM PRIORITY POLICY ISSUES/1991 Enclosed on pages through`)is a copy of the AMM Priority Policy Issues for 1991. Mayor Egan and City Administrator Hedges attended the AMM reception held at the Kelly It ',. ___fr. i,.... i 9 PUBLIC WORKS_. ITTE8 TUESDAY, z ARY 291` 1991 .x. Cry m I. Review Change'Qr er #6 & ;#7, ` Contract 89-13 (Cliff Road Water + t zit Plante 80tract 9 #i g)Con a Ch nce i Qrt r r ►ansion/sview #�I3. ( iatena i3. Rev Change Ca ## IV. other V. Adjourn 5:00 P.M.• MEMO TO: PUBLIC WORKS COMMITTEE • COUNCILMEMBER TED WACHTER, CHAIR • COUNCILMEMBER PAM MCRAE • THOMAS L HEDGES, CITY ADMINISTRATOR FROM: THOMAS A COLBERT, DIRECTOR OF PUBLIC WORKS DATE: JANUARY 25, 1991 SUBJECT: AGENDA INFORMATION FOR JANUARY 29, 1991 PUBLIC WORKS COMMITTEE At the January 15, City Council meeting, the City Council recommended that the Public Works Committee meet and discuss several change orders that are pending under two different City contracts, and also review and discuss a change order policy for the City of Eagan. Enclosed please find the agenda and discussion for each of these scheduled items. , N a ` .. . ITEM I. R4vIEN CHANGE ORDERS #6 & #7.. OONTR CT 89-13 (CLIFF 40AD MATER TREATMENT FACTLTTY) Change Order #6 is fort h a total add-on of $93,078 .consisting of two parts described as folows Tart 3.: In. sitpating; ti Treatment Plant facility at its - curren t location, ` soil boring results indicated a lens o " soft essible clay type material as I locate approximately 20 +/- feet deep below the 1 footi = and foundation for the 2 million gallon clear all reseritoir portion of this treatment facili t`y. In tom`=°design phase of this project, an evalua ion. analysis was performed to determine whethe> this material . should be removed through excava,, ion Or Whether it should be solidified` and stabil zed through a grout injection process. By evalua, ing t e ;so .l boring and estimating the extent of the ..Or soils:area, it was determined to be most cost - ffectiv to pursue the grout injection proces An` estimated quantity of grout was .. calcul ted and ;scified as a part of the lump sum ` base contract cement. However, due to the quanti ,y having -tg be, "guesstimated", the contract do .;:,�37y., is requested a unit price per cubic yard for any ads;itional grout that may exceed the contract estit a (286 cubic yards) . As the soil stabil :.xation progressed .. " er the contract, the • subcon , etor wee not ;able to stabilize the underl.{ ing • poorr soils within the contract's estima -. quantities. Su _ equently once this method':had `been osen, it 'was necessary for the contr. ,`tor to continue to pump additional grout into the so 1 until -further soil tests determined that '', this ompress :ble .layer. had been stabilized. Subse• eritly, an additional 332 cubic yards (118%) had to;be injected resulting in an additional cost of $91;300. Bart 2: During the construction of the high service pump room onion of , the treatment plant, it was discov red that .. : ssary reinforcing steel within the contract fuss inadvertently omitted from the o ginal. desist ,'plans. In order to provide y. struct al stability for the pumps to be placed on this c ncrete slab, additional reinforcement had to be ins ailed at stn additional cost of :$852. 1 5 , Y , i The total amount of Change Order #7 to Contract 89-13 results in an additional cost of $4,495.32. This change order is broken down into four parts and is described as follows: Part 1: During the excavation of the treatment plant in the ;, area of the ravine in the rear yard of the previously eXisting • single-family house at the corner of cliff and Pilot Knob Road, an abandoned dump was discovered containing unsuitable materials ranging from garbage to buried tette debris which had to be removed to prevent future' settlement of the ground around. the backs fled area of the treatment plant. This disposal area wee not known at the time of bidding and resulted in additional costs incurred ,. by the contractor 'ti) properly dispose of this material resulting in .an additional cost of $926. Part 2: During the consttian of the clear well reservoir, it was discovered that the sump pit did not provide for the separate reinforced concrete wall segregating this, from the rest of the clear well floor. subs" ntly, this omission had to be corrected duri # field construction at an. additional cost of $1,416. Start. 3: In reviewing the sip drawings and construction plans as phased -cons ruction progressed near the 1 vicinity of tbs.-chlorine and high service pump room, 1 it was disco. , that additional lintels and •' reinforcing abovdthe doorways and in the walls were inadvertently omitted from the original design plans and had to be in*tel.l.ed during construction at an additional cost Of $1,234. ? Pat 4: Again,, in reviewing shop drawings and construction plans during phased construction, it was discovered that additional liAtele and reinforcing was necessary above theay to the mechanical room to properly support 'Mechanical ducts and piping through . ove . d .mil at an addonal cost of $919.32. Enclosed on pages / throug are copies t the change processed by orders as rocessed b. our c tittf engineer to,-.=the general contractor. It is my understainding that; some of the prices in '� Change Order #7 have changed and ill be updated at the meeting on Tuesday. 4. Also enclosed on pages is a smeary of the various work requests that lave been "' forwarded to the contractor identifying their current statue and incorporation into a related change order. , t r .. • . - l . • � � _ .-. .� - • 4 - - X • • ✓E•. y.. . H-,, .t r } T. • }fie• : ' . ' t.: . .... -- •.7'....,'.'• -,:•:-,,,-:,', • } wa a. . � j f. i CHANGE ORDER DATE: December 29, 1990 PLACE: Eagan, Minnesota FILE NO: 49500-CO PROJECT: Cliff Road Water Treatment Facility PROJECT NO. : 548; CONTRACT NO. : 89-13 CONTRACTOR: Penn-Co Construction, 1301 Corporate Crt. Dr. , Ste. 150, Eagan, MN 55121 BOND CO.: (Safeco Ins. Co. of Amer.) Alexander & Alexander, PO Box 1360, Mpls. MN CHANGE ORDER NO. : 6 55440 Attn: Chris Watters DESCRIPTION OF WORK: Total Change Order Item Amount 1. ADJUSTMENT IN COMPACTION GROUT QUANTITY This item provides for an adjustment in the volume of subsurface grout injected as part of the compaction grouting operation. This work was necessary to consolidate a soft clay layer in the area of the clear well at a depth such that mass excavation to remove and replace the material was uneconomical. Payment for this item shall be based on the unit rate of $275.00 per cubic yard of grout placed as bid in the Bid Proposal and the difference between the actual volume of grout injected (612 cu. yds.) and the grout volume estimate contained in the specifications (280 cu. yds.) . The quantity adjustment is 332 cu. yds. , and the Contract Add is 332 x $275, or $91,300. ADD for Item No. 1 $91,300.00 2. CONCRETE REINFORCEMENT IN HIGH SERVICE PUMP ROOM PIT This item provides for additional concrete reinforcement in the pit in the floor of the High Service Pump Room. The reinforcement was omitted from the construction plans. Payment for this item shall be based on a mutually agreed upon lump sum of $852.00 ADD for Item No. 2 $852.00 J - • CHANGE ORDER DATE: December 29, 1990 PLACE: Eagan, Minnesota FILE NO: 49500-CO PROJECT: Cliff Road Water Treatment Facility PROJECT NO. : 548; CONTRACT NO. : 89-13 CONTRACTOR: Penn-Co Construction, 1301 Corporate Crt. Dr., Ste. 150, Eagan, MN 55121 BOND CO. : (Safeco Ins. Co. of Amer.) Alexander & Alexander, PO Box 1360, Mpls. MN CHANGE ORDER NO. : 6 55440 Attn: Chris Watters Total Change Order Item Amount 3. REMOVAL OF TREE DEBRIS This item provides for the removal and hauling from the site of four loads of tree debris discovered below the surface at the south end of the clear well area. The material was not evident from subsurface explorations and therefore is an unforseen condition of the project. Payment for this item shall be based on a mutually agreed upon lump sum of $926.00. ADD for Item No. 3 $926.00 TOTAL ITEM NO. 1 - Adjustment in Compaction Grout Quantity $91,300.00 TOTAL ITEM NO. 2 - Reinforcement in high Service Pump Room 852.00 TOTAL ITEM NO. 3 - Removal of Tree Debris 926.00 TOTAL THIS CHANGE ORDER NO. 6 $93,078.00 ORIGINAL CONTRACT AMOUNT $8,094,000.00 PREVIOUS CHANGE ORDERS -112,052.19 THIS CHANGE ORDER NO. 6 - ADD 93,078.00 REVISED CONTRACT AMOUNT $8,075,025.81 Recommended for Approval by: BONESTROO, ROSENE, ANDERLIK & ASSOCIATES, INC. . By Tc d K -Lc;0 Approved by: PENN - • • STRU ON By 41119104r/IWO Approved by: CITY OF EAGAN, MINNESOTA By , Mayor Distribution 1 City By , Clerk 1 - Bonding Co. 1 - Contractor Date: 1 - BRA • CHANGE ORDER DATE: January 16, 1991 PLACE: Eagan, Minnesota FILE NO: 49500-CO PROJECT: Cliff Road Water Treatment Facility PROJECT NO. : 548; CONTRACT NO. : 89-13 CONTRACTOR: Penn-Co Construction, 1301 Corporate Crt. Dr. , Ste. 150, Eagan, MN 55121 BOND CO. : (Safeco Ins. Co. of Amer.) Alexander & Alexander, PO Box 1360, Mpls. MN CHANGE ORDER NO.: 7 55440 Attn: Chris Vatters DESCRIPTION OF WORK: Change Order Item 1. REMOVAL OF UNFORESEEN STUMPS AND DEBRIS This item provides for the removal and off-site disposal of tree debris discovered in the area of the south end of the clear well. The material was not detected by preliminary site investigations or soil borings. Payment for this item shall be based on a mutually agreed upon lump sum of $926.00. ADD for Item No. 1 $926.00 TOTAL ITEM NO. 4 - ADD $926.00 2. INSTALL CONCRETE WALL IN AREA OF GRIDS 2 AND G This item provides for the installation of a reinforced concrete wall in the area of Grids 2 and G in the clear well corner. This item results from an omission on the plans, where a sump in the corner of the clear wall was not shown. Provision for the sump requires the construction of a wall separating the sump floor and the raised floor throughout the rest of the clear well. • Payment for this item shall be based on a mutually agreed upon lump sum of $1,416.00. ADD FOR ITEM NO. 2 $1,416.00 TOTAL ITEM NO 2 - ADD $1,416.00 3. RELOCATE AND PROVIDE ADDITIONAL LINTELS This item provides for additional lintels and reinforcing at the chlorine room door, Door 11SA, and in the walls near the High Service Pump Room and Hall 106 as shown on Figures SR3 through SR9 previously submitted. This item results from an omission on the plans. Payment for this item shall be based on a mutually agreed upon lump sum of $1,234.00. ADD for Item No. 3 $1,234.00 TOTAL ITEM NO. 3 - ADD $1,234.00 • CHANGE ORDER January 16, 1991 Eagan, Minnesota JJECT: Cliff Road Water Treatment Facility FILE NO: 49500-00 OJECT NO. : 548; CONTRACT NO. : 89-13 CONTRACTOR: Penn-Co Construction, 1301 Corporate Crt. Dr., Ste. 150, Eagan, MN 55121 BOND CO. : (Safeco Ins. Co. of Amer.) Alexander & Alexander, PO Box 1360, Mpls. MN CHANGE ORDER NO. : 7 55440 Attn: Chris Vatters Change Order Item 4. ADDITIONAL LINTEL AT DOOR 106A This item provides for an additional lintel above Door 1O6A which was omitted from the plans. The 4 x 13 louver is necessary to support the wall through which several mechanical ducts and piping pass. Payment for this item shall be based on a mutually agreed upon lump sum of $919.32. ADD for Item No. 4 $919.32 TOTAL ITEM NO. 4 - ADD $919.32 • • •Y CHANGE ORDER January 16, 1991 f;E: Eagan, Minnesota FILE NO: 49500-CO ,MECT: Cliff Road Water Treatment Facility ItOJECT NO. : 548; CONTRACT NO. : 89-13 .CONTRACTOR: Penn-Co Construction, 1301 Corporate Crt. Dr. , Ste. 150, Eagan, MN 55121 'BOND CO. : (Safeco Ins. Co. of Amer.) Alexander & Alexander, PO Box 1360, Mpls. MN CHANGE ORDER NO. : 7 55440 Attn: Chris Watters TOTAL ITEM NO. 1 $926.00 TOTAL ITEM NO. 2 1,416.00 TOTAL ITEM NO. 3 1,234.00 TOTAL ITEM NO. 4 919.32 TOTAL THIS CHANGE ORDER NO. 7 $4,495.32 ORIGINAL CONTRACT AMOUNT $8,094,000.00 PREVIOUS CHANGE ORDERS -18,974.19 THIS CHANGE ORDER NO. 7 - ADD 4,495.32 REVISED CONTRACT AMOUNT $8,079,521.13 Recommended for Approval by: BONESTROO, ROSENE, ANDERLIK & ASSOCIATES, INC. By "Ca K t Approved by: PENN-CO CONSTRUCTION By Approved by: CITY OF EAGAN, MINNESOTA By , Mayor Distribution 1 - City By , Clerk 1 - Bonding Co. 1 - Contractor Date: 1 - BRA • STATUS OF CHANGE ORDERS Eagan Cliff Road Water Treatment Plant Contract No. 89-13, Project No. 548 January 24, 1991 Work ChAnge Bequest Description Order Number o Work $tatus Number AMQuilt 1 Replace instrumentation supplier with Custom Controls S 1 $ -95,000.00 2 Remove trees at S end of site; Shorten retaining wall S 2 -7,755.00 3 Delete filter bypass NE - -13,828.00 4 Provide additional membrane waterproofing S 3 +6,603.00 5 Replace chlorination system manufacturer with W&T S 4 -8,546 .69 6 Adjustments in well abandonment quantities S 5 -3,297 .50 7 Delete clear well overflow extension and manhole S 5 -6,413.00 8 Place surcharge material in area of clear well S .5 +2,357 .00 9 Adjustment in compaction grouting quantity E 6 +91,300. 00 10 Concrete reinforcement in Supp. Backwash Pump Pit E 6 +852 .00 11 Removal of unforeseen stumps and debris P 6 +926.00 12 Install concrete wall in area of Grids 2 and G in Clear Well P 7 +1,416 .00 13 Relocate and provide addi- tional lintels P 7 +1,234 .00 14 Grading changes, relocate water station, delete manholes $ 15 Additional lintels @ Door 106A P 7 +919.32 Co . 0 . SB L I OOSSt! ' OOZ11S3NOB ZS : 0 T I ZIP T b — SZ — Niel' • Work Change Request Description pumbez of Work Status Number &Mount 16 Change injector supply line from galv. to PVC $ 17 Reduced-size control console and separate graphics panel $ 18 Delete flagpole $ 19 Increase size of altitude valve manhole from 6 ' to 7 ' $ 20 Replace cast-in-place entrance columns with precast columns $ 21 Remove add. burled debris * +6, 113.00 Abbreviations: S: Change order has been signed by all parties NE: Change order was not executed E: Change order has been signed by Penn-Co and sent to City P: Change order has been prepared and sent to Penn-Co $: Quote from Penn-Co has been requested *: Quote has been received from Penn-Co £ 6 d S3 L I OOSS '' '3 OOalS3NOH Ss;: e T T 6 - � Z - Ntit' • II* 4' I?�� . . ORE #2. This particular ,change order consists of 11 different it as summarized , a litter from th City's architect dat ' :' meter 17 of pages through ,. ; , The net effect 0 t3 it change order would be to reduce . U contract 'amount $592. , lehowever, it ..1....‘,,,,i,4. ' ben ; fence and adriitxanal earth �'` work {+$3134.1)' as i of E er Item bill have to be .. completed and paid or tilt- , � N rate punch has agreement beyond the scope of this eon a pit will have ' be delayed until after this contract mss; feted. You will. note that thi + er s ;refers to " I 4". This is a referent i a .-- ins tructions ,th .ch is s ` art documentation wi ` filed dr .< . and techn 1. work din . ion related to each of. 4 change $ # . This in +motion is very technical and`. c-� : a :-will b fable at the Public ,.. storks 'Committee=see ng if fi e a addit questions r icing these change order items. rt, l t - t . i' i .r • • 1 .• . ,,. .. r:.r. {s� f: `.-4^ _^rg .. . r.1 - - ,mo 4-i • } ii.' .i.',k . :Y' - - f THRESHER SQUARE • DAVID I.BENNETT 700 THIRD STREET SOUTH MARK DONALD W G SWENSON RINGROSE MINNEAPOLIS.MN 55415 DENNIS 1 SUTLIFF PHONE 16121370-0700 DAVID L GRAHAM FAX.6121370-1378 PETER E IARVIS • B • R • W • A R C H l T E C T S • I N C. CHANGE ORDER NO. 2 TO: City of Eagan DATE: January 2, 1991 3830 Pilot Knob Road FILE NO.: 83-9004 9.2 Eagan, MN 55121 PROJECT: Eagan Maintenance Facility City of Eagan Project #559 CONTRACTOR: Shaw-Lundquist Contract #89-03 Associates The Contract is changed as follows: For changes to the contract that involved additions or deductions of items including field conditions, hidden conditions, resolutions of details and deletions for work to be performed later. Refer to attached letter for detailed information. The Original Contract Sum was $565,262.00 Net change by previously authorized Change Order (297.00) The Contract Sum prior to Change Order was $564,965.00 The Contract Sum will decrease by this Change Order in the amount of (582.00) The new Contract Sum including this Change Order will be $564,383.00 • The Contract Time will be unchanged. _ ARC 4 ' T CONTRACTOR OWNER lB�j e chitects, Inc. Shaw Lundquist Assoc. City of Eagan • 700 Third Street S 2805 Dodd Road 3830 Pilot Knob Road Minneapolis, MN 55415 St. Paul , MN 55121 Eagan, MN 55122 DATE: /./5-q/ DATE: DATE: NOTE: There was a typo/mathematical error on Change Order #1. The number $564,745.00 should have been $564,965.00. The correct number is used above. 9. AN AFFILIATE OF THE BENNETT RINGROSE.WOLSFELD IARVIS GARDNER.INC..GROUP ARCHITECTURE.URBAN DESIGN PLANNING TRANSPORTATION ENGINEERING MINNEAPOLIS•DENVER•PHOENIX•TUCSON•ST PETERSBURG THRESHER SQUARE DAVID I.BENNETT•7(01111RD STREET`SOUR l MARK G SWENSON MINNEAPOLIS.MN 55415 DENNIS I.SUiLIFF PHONE 16121370-1)700 - --- DAVID I.GRAHAM FAX 16121370-1378 PETER E IARVIS DONALD W RINGROSE B • R • W • A R C H I T E C T S • I N C. December 17, 1990 Tom Colbert Arnie Erhart City of Eagan 3830 Pilot Knob Road Eagan, MN 55122 RE: Eagan Maintenance 83-9004 City #559, Contract #89-03 Gentlemen, The following is a list of proposed adds and deducts to the contract along with an explanation of why these items were required: 1. Surcharge by City of Eagan for Permit $283.00 Note: The contractors were advised that they need to pay for electrical permit and fees eat*. (See copy of note) . After award, the contrac- tor was charged the additional fee by the State . of Minnesota..or A. no+t elte*r►a.d surehAvle. 2. Masonry Items a. ASI#4: Revised grade beam detail $410.00 Note: After discussion, this number was reduced from $600+. This was detailed making some assumptions, as we were deal- ing with some non-exposed conditions. Thus, there were some field modifications. b. ASI#5: Revised detail at the blockwall/stair $411.00 Note: This detail has been discussed at some length and revised a couple of tithes. In addition, the dollar amount has been argued and lowered. This was also a buried condition. When workmen demolished the floor and opened up the footings, we had to make revisions to the footing/column location. - AN AFFILIATE OF TI IT:BENNETT RINGROST:.\VOI SF111,I)IARVIS GARDNER.INC..GROUP ARCHITF("1!IRF I IRR:\N DE SIGN PLANNING TI:!\N-POI:I\I ION FNGINFFRING \IINNI:AI't)I lS•1 ILNVI R•1'111)1 NIX• 1 111 ti■)N•ST PI'I1 RS131IRG Arnie Erhart December 17, 1990 Page 2 c. Credit for not installing block at old Door (160.00) to grinding room 136B. Note: We kept the door in place. d. Credit for floor joints at Vehicle Maintenance Bay • (80.00) Note: The contractor did not install per specification e. ASI#6: Add dowls at overhead door $167.00 Note: We did not show dowls on our plans but in the field I felt it necessary to tie the footing to the concrete apron. 3. ASI#6: Additional Sheet Metal at roof of $460.00 V.M. connection to existing storage building Note: I would not allow the contractor to cut into the metal panels as I was afraid this would destroy the integrity of the Butler building panels. Thus, we needed .. , to provide a watertight seal and quite a bit more sheet metal was required. 4. ASI#6: Return dryvit from face of wall to $345.00 door with a drip at the top (at new overhead door) . Note: Frankly, I do not believe this was adequately detailed on the base set and this final detail provided a more permanent return detail at the door. 5. Roof detail at existing Vehicle Maintenance $713.00 wall/new office Note: In a field direction, I advised the contractor to remove the stucco and provide a steel angle with an extended leg to carry the steel decking. There was 45 lineal feet of this. • Arnie Erhart December 17, 1990 Page 3 • 6. Delete fence and earthwork and receive credit (3,341.00) Note: We decided it would be better to not do any earthwork or fencing in the area of the Salt Storage Building until that separate contractor can complete his work. The subcon- tractor will provide same work next year for same price. 7. Upsize the trolly for beam $210.00 Note: If push came to shove, we could say this is not justified, however, I believe the contractor honestly provided a standard size unit and we needed a wide flange unit. Please call me if we need to discuss any of the items. I can provide a Change Order summarizing the changes, if accepted, for council review and approval . Sincerely, BRW ARCHITECTS, INC. J- f -, L. Oertel , AIA As .cute JLO/ag cc: 83-9004 9.2 ITEM III. RISVIEj! CE ►1OE Q' POLICY This past fall, the City Council expressed concerns regarding the timing and amount of various change orders that wex� being processed for Council approval. Subsequently, they directed staff to look at the City's present policy pertaining to change orders and to provide additional information and guidelines for consideration of and processing future change orders to City contracts. Enclosed on pages o through is a memo prepared by the public WorksDirec r addressing this issue. 1 i i • } 1 leV MEMO TO: THOMAS L HEDGES, CITY ADMINISTRATOR FROM: THOMAS A COLBERT, DIRECTOR OF PUBLIC WORKS DATE: JANUARY 25, 1991 SUBJECT: CHANGE ORDER POLICY On occasion, the City Council has raised questions and expressed concerns regarding the timing and/or amount of various change orders that periodically are processed for Council approval. Subsequently, you have requested the departments of Parks & Recreation along with Public Works to review the City's change order policies and procedures and to provide a summarization for the Council 's information and benefit. The following report summarizes the issues associated with public contracts and their change orders. TYPES OF CONTRACT There are two basic types of contracts that are employed by the City of Eagan for major capital improvements; LUMP SUM and UNIT PRICE. The Lump Sum type of contract is primarily used for architectural type capital improvements involving structures and buildings (i.e. park shelters, treatment plants, maintenance facility, city hall, etc. ) . In these type of contracts, the total contract amount is one base price and progress payments are based on percentage completion of significant specific elements or the contract as a whole. Usually, an itemized breakdown for significant aspects of the contract is requested with the bid proposal documents or subsequent to receipt of bids to be used in processing the pay request. The Unit Price type of contract is primarily used for other municipal type of improvements where the complexity of the building materials is relatively limited to a manageable number of line items where unit quantities (square yard, ton, lineal foot, etc. ) can be estimated. The contractor then applies a unit price to each line item construction element. Then, through the extension and summation of the unit quantity and related bid price, a total estimated contract amount can be arrived at. Periodic pay requests are then based on field measurements of the quantity of line item elements on a monthly basis. In the Lump Sum contract method, the contract documents reference the specific contract dollar amount. If for any reason this contract amount must change, it requires a formal amendment to the contract documents which usually takes the form of a Change Order. In the Unit Price contract method, the controlling contractual obligation is the unit prices submitted with the bid proposal with the total contract costs being recognized as an estimate to be revised based on final quantities installed. Therefore, the final • contract amount could change without impacting the contract documents, thereby eliminating the necessity for any formal Change Orders being processed. However, under this Unit Price type of contract, if a line item construction element needs to be added, deleted and/or revised or the unit price for any particular line item element needs to be changed, this would constitute an amendment to the formal contract document thereby requiring a formal Change Order to be processed and approved by both contractual parties. Under the guideline of the Uniform Municipal Contracting Law, the City is required to solicit competitive bids for any public expenditure that exceeds $15,000. It also limits to 20% the amount that a City can add to any contract without having to formally resolicit competitive bids for the additional work. This is based on the recognized fact that the vast majority of contracts are subject to some change from the original contract amount through its normal life. REASONS FOR CHANGE ORDERS Depending upon the type of contract method as described above, there are numerous reasons why a formal amendment or Change Order to the contract becomes necessary during the progression of construction. These are listed and described as follows: 1. Errors and Omission In Design Due to the complexity or scale of many projects, various numbers of different disciplines (electrical, architectual, structural, etc. ) and the numerous cross references from one plan sheet to another, the human element becomes a factor in recognizing that there will sometimes be certain errors and omissions that occur during the design phase that are only discovered once the improvement is being built. Once it is recognized and identified, it becomes evident that it needs to be installed to protect the integrity of the improvement. And, had it been included in the original design, the contractor would have been properly informed and would have taken it into consideration in submitting his bid. Subsequently, a Change Order is processed to provide for this additional cost to be incurred by the contractor through no fault of his own. 2. Unknown Conditions While the City tries to provide the contractor with as much information as possible through soil borings, asbuilt record plans, etc. , there are times when unknown conditions exist and are not discovered until the plans have been designed, contract awarded and construction initiated. Again, had these unknown conditions been discovered through a more detailed and expensive preconstruction investigation, it would have been included in the design plans and bid proposal documents. Subsequently, the contractor, if he is made aware of those conditions, would have taken that into consideration in submitting his original bid. Subsequently, a Change Order is processed to address the additional work incurred by the contractor to deal with a condition that was unknown to all parties at the time the contract was executed. 3. Field Design Changes When the detailed plans and specifications are prepared in the office, they take into consideration the best available information on existing conditions. However, plans and specifications are a scaled representation of much larger projects to be constructed in the field. Subsequently, once construction has been initiated, although a particular design may work on paper, it becomes apparent that it cannot physically be constructed in the field due to a variety of reasons. Some of these reasons could be that conditions changed at the time of construction from when the design was prepared. Subsequently, a field design is performed which may require a major change in the construction method or scope to protect the integrity of the original project's design and/or intent. Subsequently, this often times requires additional work beyond the scope of the original project which necessitates a formal amendment or Change Order to the original contract document. 4. Additional Work Many times, it becomes economically feasible and efficient to have the contractor perform additional work beyond the scope of immediate contract because of timing, favorable unit prices, ease of construction coordination, etc. , to amend the contract to allow the City to compensate the contractor for performing this additional work. Many times through easement acquisition negotiations, property owners request various improvements to their property in lieu of cash payments. This would be additional work beyond the scope of the contract which many times can be performed more economical than providing cash payment to the property owner. Also, on large dollar volume contracts, the economies of scale theory provides the City with more favorable unit prices than could be obtained through competitive bidding on a much smaller size project that would fall within the 20% discretionary limitation provided to the City. Also, / • • • • this relieves the City of the timely competitive bid solicitation process thereby allowing it to perform smaller projects on a timely and economical basis through a Change Order process. 5. Change in Scope/Extent of Work While this is very similar to #4, it pertains more primarily to expanding the scope of the improvement at hand by allowing the City to expand the quantities or size of the improvement based on very favorable unit prices received. In other words, if a bid comes in much lower than budget and provides additional flexible dollars, this would allow the City to expand the size or scope of the improvements through a Change Order process rather than changing the original design quantities and rebidding. 6. Lump Sum Contract As defined earlier, Lump Sum contracts lack specific unit prices for every little individual item that comprises the overall improvement. Subsequently, because the contract document is locked into a specific dollar amount, any variation or deviation for any of the above reasons requires a formal change order to the contract lump sum amount. 7. Change In Schedule/Completion Date Every contract document contains a substantial completion date as well as possible interim completion dates for specific phases. Many times, there are multiple contracts working on a larger overall improvement as well as other jurisdictions, agencies, etc. , (public utilities, MNDoT, etc. ) , that the City does not have contractual control over. If these other entities for whatever reason are unable to complete their work in the time frame required for the City's contractor to proceed as originally anticipated, the contractor is precluded from maintaining progress and/or meeting his original completion date. Also, unusual weather conditions, strikes, material delivery delays, etc. , are all beyond the contractor's control and subsequently affect his ability to meet the contractual completion date. As evaluated by the project manager, many times an extension or modification to the contractual completion dates are appropriate. However, they must be done through a formal Change Order process to amend the contract documents. 8. Subsequent Acceptance of Alternate Bids During the original design and bid solicitation phase, many times bids are requested for various alternatives and/or additional work for further consideration and evaluation. Subsequently, it becomes economically efficient to include these options to the contract as budget allocations permit through a Change Order process without having to resolicit competitive bids. As can be seen by the above various occasions for Change Orders, they involve activities that are usually beyond the foresight and/or responsibility of either party to the original contractual documents. Many times, these Change Orders can result in credits as well as additional costs depending upon their individual circumstances. With each Change Order, a detailed description of the work performed along with a justification or purpose for that Change Order is identified. The proposed contract Change Order format attached to the memo will provide a compilation of all pertinent information for processing with the contract amendment for Council 's consideration. PROCESS METHOD Change Orders are prepared at either the request of the Contractor who formally notifies the City of a claim for additional compensation or by the City requesting additional work of the Contractor. In either event, once the discovery or proposal is identified, a detailed description of the additional work is prepared and a method of payment is identified. This information is then put into a Work Request which is then submitted to the Contractor for consideration and cost proposal. The Contractor's response and proposal is then evaluated by the Project Manager to determine if all issues have been identified and if the additional cost is reasonable for the requested work. Many times, the Project Manager will either adjust the cost proposal or request a resubmittal from the Contractor to better reflect a cost that would be reasonable and acceptable to the City. Once this negotiation process has been completed, a formal Change Order document is then prepared and sent to the Contractor for execution. Once it has been agreed to by the Contractor, it is then processed to the City Council for formal approval and ratification. Copies of this Change Order are then distributed to the City's central file, the Project Manager's field file, the Contractor's office as well as his bonding company. Present contract documents stipulate that if the Contractor wishes to makes a claim for an increase in the contract sum, he must give the Project Manager written notice within 10 days after the occurrence of the event giving rise to such claim. A supplemental notice of the amount of the claim with supporting data must be delivered to the Project Manager within 30 days of the occurrence / . unless the City allows an additional period of time to ascertain accurate cost information. Subsequently, the preparation of a Contract Change Order document could take from 30 to 60 days from the occurrence of the event to formal Council consideration depending upon the extent of negotiations. There are occasions when a Change Order can be prepared based on estimated quantities if the work involved would take place over a longer period of time. Also, this would provide the Contractor an opportunity to be compensated for actual work performed which is comparable to the unit price contract rather than a lump sum Change Order which could have to be readjusted at a later date for a number of reasons. LIMITATIONS AND GUIDELINES As can be seen by the complexity and number of City improvement contracts, a significant amount of professional management is necessary to protect the expenditure of public dollars. No two projects, managers or contractors are the same. There are numerous variables that must be taken into consideration in achieving the best end product for the best price within the most efficient time frame while trying to avoid costly and timely litigation and arbitration in this litigious society. Subsequently, the Project Managers must employ a significant amount of judgment and discretion in managing these Contracts. However, it is appropriate that certain guidelines be established to maximize the management of these public dollars in improvements as well as helping to assure uniformity in the application of City policies. Larger governmental agencies (EPA, MnDOT, etc. ) do not have specified limitations or constraints for Project Managers representing the contractual interest of the agency. A survey of other metropolitan suburban communities has not discovered any type of formal policy pertaining to Change Orders. Managing public contracts including Change Orders is recognized as being one of the management responsibilities of the individual assigned. However, guidelines are a method by which the City Council can determine to what level of detail they wish to be involved in managing these public contracts. Historically, the City Council has created a policy whereby if the bid proposal exceeds the feasibility report/engineer's estimate or budget by more than 10%, a new public hearing is held or bids are re-advertised. This is the very first opportunity to manage and control the cost of a contract. Once a contract is awarded, it is assigned to a Project Manager to continue to monitor and control costs. Historically, the Project Manager has had the authority to approve changes in the unit quantities under a unit bid contract. Also, discretion has been provided for minor changes to the scope of the project and related negotiations on a limited basis. On a lump sum contract, any changes subsequently require a formal Change Order. The following proposal may help to provide a uniform basis for defining this "limited basis". /9. • PROJECT MANAGER'S AUTHORIZATION AUTHORITY CONTRACT AMOUNT MAXIMUM CHANGE ORDER AMOUNT 0 - $500,000 $35,000 (7%) $500, 000 - $1,000,000 $50, 000 (5%) $1,000,000 - $2,000, 000 $70,000 (31%) $2, 000,000 + $85,000 This would imply that the Project Manager has the discretion to authorize on behalf of the City of Eagan additional work as necessary up to these maximum amounts. If conditions of the Contract require that a formal Change Order be processed, it would then be processed to the City Council for formal ratification. If a Work Request proposal exceeded these limitations, a formal Change Order would have to be prepared and processed by the City Council before work could be initiated except in an emergency which endangers life or property. In such a situation, the Council would be so informed while work is proceeding with the formal Change Order to be considered at the next available Council meeting. As mentioned previously, any additional work resulting in a formal Change Order within the limits of the Project Manager's discretion will be processed within 60 days of the initiation of that work for Council ratification. These limitations would pertain to singular work requests and cumulative line item unit bid proposals not requiring formal Change Orders. Any Work Requests exceeding these guidelines would require formal Council approval of the Change Order before the work could be initiated. SUMMARY The Council 's interest in the amount and timing of Change Orders being processed is very appropriate and has allowed the staff to evaluate our past practices and compare them with other public agencies to ensure that we are managing the public tax dollars to the highest degree possible. If these guidelines are acceptable, they will be reviewed with all individuals who are employed as Project Managers to ensure compliance. We would continue to welcome additional discussion regarding this Change Order policy in general or specific individual Change Orders so that we can provide additional information and response as appropriate. Please let me know if I can provide any additional information or action on this matter. Respect y submitted // , f' - / Director of Public Works cc: Ken Vraa, Director of Parks and Recreation Michael P. Foertsch, Assistant City Engineer Steve Sullivan, Parks Planner/Landscape Architect Joe Connolly, Superintendent of Utilities/Buildings Arnie Erhart, Superintendent of Streets/Equipment TAC/jj/jf le) CONTRACT CHANGE ORDER . __..,_..,____. __\ 3830 PI101 KNOB ROAD EAGAN,MINNESOTA 55122-1897 LPHONE:(612)454 6100 -��"t', �itv Or aa an FAX (612)454 8363 CONTRACT #: CHANGE ORDER NO. : PROJECT #: DATE: PROJECT NAME: PROJ. DESCRIPTION: CONTRACTOR: ENGINEER: DESCRIPTION OF CHANGE ORDER WORK: JUSTIFICATION FOR/PURPOSE OF CHANGE ORDER Est. Est. Change Order Start Completion Unit Estimated Item(s) Date Date Unit Price Quantity Amount ---- ..111010 Page 1 of 2 THE LONE OAK TREE...THE SYMBOL OF STRENGTH AND GROWTH IN OUR COMMUNITY .—) Equal Opportunity/Affirmative Action Employer CONTRACT STATUS TIME/COMPLETION DATE AMOUNT Original Contract Change Order # Subtotal of Previous Change Orders This Change Order New Subtotal of All Change Orders Revise Contract RECOMMENDED FOR APPROVAL: APPROVED: By: By: Project Manager Contractor Date: Date: By: City Department Manager Date: City of Eagan Council Action Date: Mayor: Clerk: Distribution: 1-City 2-Contractor 1-Engineer