Continue Discussions on Change Order #3 and Engineering Amendment #3 for Water Treatment Plant 

Purpose:
The purpose of this case is to continue discussions on Change Order No. 3 and Engineering Amendment No. 3 for Improvement Project #21-09, Centralized Water Treatment Plant.    
 
Background:
Attached to this case is a copy of the case as presented to the City Council on July 8, 2025, including all attachments, for reference.
 
The purpose of this case is to continue discussions between staff, the City Council, Advanced Engineering and Environmental Services, Inc. (AE2S), and Magney Construction, Inc. (Magney) regarding the need for their requests as presented, as well as the potential outcomes if their requests are not approved.
 
At the July 8^th City Council meeting, Council rejected Change Order #3 and Engineering Amendment #3.  Furthermore, council directed staff to discuss these requests in greater detail with AE2S and Magney and to present a case to Council at their July 22^nd work session to review any amendments to the requests and/or allow AE2S and Magney to provide more detail justifying their requests for approval and respond in greater detail to Council’s questions.
 
Attached to this case are additional slides provided by AE2S following more detailed discussions with staff after the last Council meeting.
 
Below are additional bullet points that Magney requested be shared with Council following more detailed discussions with staff and a review of AE2S’s attached slides.

1. Magney believes all parties that are intimately involved with this project would deem it very successful to date.
2. Magney believes this project will be completed under the established budget. 
   1. The Engineer’s pre-bid estimate was $37 Million
   2. Magney’s bid was $31.4 million
   3. Only one monetary change order was submitted, for $794k, of which the City received $3.2 million from the state.  A net $2.4 million gain to the City.
   4. AE2S’ slides reference $546 k in change orders to date.  This is not accurate, as these changes/modifications are being paid via the project allowance/contingency…and have not resulted in an increased contract amount for construction.
   5. Approximately $700k in allowance/contingency funds are still available within the construction budget.
3. Change Order # 2, the 88-day extension due to delays at the beginning of the project beyond Magney’s control, provided no benefit to Magney and had immeasurable effects on the project, which are only being realized now, towards the end of the project. 
4. Regarding AE2S’ slide 5:
   1. Magney would like to clarify that the “Impact of winter concrete was not fully anticipated” DUE TO THE DELAY THAT OCCURRED AT THE START OF THE PROJECT.
   2. Additional material and subcontractor delays include;
      1. Below grade concrete and foundation work that was slowed due to the original delay, impacted all trades.  If this were a skyscraper, you cannot work on the penthouse before the lower floors are completed. 
      2. We are still working through design and finishes decisions. 
5. Magney wishes to continue our strong partnership through the end of this project and beyond.  We believe it is in the best interest of the City and of the project to approve the time extension and engineering amendment. 
6. AE2S’ engineering amendment #3 equates to only 0.5% of the construction costs for this project. 

Below are several bullet points staff feel are important considerations related to these requests.

• Change Order #3 only requests additional time, not additional funding.
• Approving Change Order #3 would result in the Substantial Completion date being revised from July 28, 2025, to October 15, 2025, and the Final Completion date being revised from October 28, 2025, to December 31, 2025.
• The requested time extensions would not adversely impact municipal water users as water use is not in high demand during Fall and Winter months.
• The requested time extensions would dovetail well with Fall watermain flushing.
• The funds requested in Engineering Amendment #3 are to cover costs for AE2S staff during the 2½-month time extension approved with Change Order #2, as well as for the time extension requested in Change Order #3.

Representatives from both Magney and AE2S are planning to attend this meeting.  

The contractor will not be able to meet the current Substantial and Final Completion deadlines.  If Change Order #3 is not approved, the contractor and/or their subcontractors will likely complete their work hastily and will likely seek less coordination and/or direction from AE2S and city staff to minimize potential liquidated damages.  This could result in the need to make future modifications to the WTP that may cost more than the requests as presented.   City staff therefore support approving Change Order #3 and Engineering Amendment #3 to ensure the water treatment plant project contractor will complete the project in an orderly manner, and that the project engineer is able to provide adequate inspections and representation on behalf of the city through the end of construction.   

Dependent on discussions.  Formal cases requesting approval of Change Order #3 and Engineeering Amendment #3 will be presented during the regular City Council meeting this evening.