Adopt Resolution #25-242 Approving Construction Contingency Expense No. 11 for Improvement Project #21-09, Centralized Water Treatment Plant

Purpose:
The purpose of this case is to adopt Resolution #25-242 approving Construction Contingency Expense No. 11 for Improvement Project #21-09, Centralized Water Treatment Plant.  

Background:
Construction costs for the Water Treatment Plant (WTP) include a construction contingency allowance of $950,000 to pay for new items identified during construction that were not contemplated during the design process or for items that the owner, engineer, or contractor(s) propose to revise during construction.  This construction contingency allowance is equal to approximately 3-percent of the overall construction bid price. Any unused allowance funds will be deducted from the final payment. 

The attached letter from Resident Project Representative Ryan Hanson with Advanced Engineering and Environmental Services, Inc. (AE2S), the City’s contracted project engineer, identifies those items approved under previous Construction Contingency Expense No.’s 1 through 10, as well as the four (4) items proposed to be adjusted during construction as part of Construction Contingency Expense No. 11.  

No extension of time is being recommended for approval as part of Construction Contingency Expense No. 11.  However, the contractor may decide at a later date to request an extension of time for any of the Construction Contingency Expenses.  If a time extension request is made, it will be presented at a later date in the form of a formal Change Order request.   

Notifications are not required for this case.

Observations:
The modifications proposed with Construction Contingency Expense No. 11 will serve to reduce operational and maintenance costs and improve operating and safety conditions over the life of the WTP.
 
It should be noted that under Proposal No. 048, Remote Actuator Hand Stations, the Contractor estimates the lead time for delivery of these materials to be 12–14 weeks from the date ordered. Therefore, if the materials are ordered on Wednesday, October 15th, delivery is anticipated to occur between January 7^th and January 21^st, well after the current Final Completion date of December 31, 2025.  While this work will not delay Substantial Completion since the remote heads are accessory items related to the valve actuator functionality and can be considered punch list work that just needs to be completed before final payment is approved, this work will technically delay the Final Completion date, which based on the anticipated 105-day delay would fall on January 28, 2026.  
 

AE2S and Magney are in agreement that time extensions not be approved at this time but rather after substantial completion has been achieved so all factors contributing to delays in construction between the current substantial completion date of October 15, 2025, and the date substantial completion is achieved, can be fully evaluated to determine if liquidated damages are applicable.  

Staff has invited representatives from AE2S, the project Engineer, and Magney Construction, the project Contractor, to this meeting to address any questions the City Council may have regarding Construction Contingency Expense No. 11 or the WTP project in general.  
 
Alternatives:
Alternative #1 – Motion to adopt Resolution #25-242 approving Construction Contingency Expense No. 11 for Improvement Project #21-09, Centralized Water Treatment Plant.  
 
Alternative #2 – Motion to deny adoption of Resolution #25-242 at this time. 

Costs associated with Construction Contingency Expense No. 11 total $76,070.79.  The original Construction Contingency amount was $950,000.  Approving Construction Contingency Expense No. 11 will reduce the available construction contingency amount to $265,194.80, which equals 27.9-percent of the original contingency amount.
 
Staff and AE2S are confident the construction of the WTP is progressing well and is not likely to require additional funding to cover change orders beyond what is already reserved in the construction contingency allowance. 

All costs associated with this case will be paid from Utility Funds and State Bonding Funds.

Staff and AE2S recommend approving Construction Contingency Expense No. 11 for reasons summarized in this case and the attached letter.   

Staff and AE2S also recommend denying approval of the Contractor’s request to extend the Substantial Completion date by 26-days related to Proposal No. 049 – Valve Actuator Voltage. According to AE2S, the work required under this proposal will not delay substantial completion so AE2S recommends denying approval of the 26-day time extension request.  

Motion to adopt Resolution #25-242 approving Construction Contingency Expense No. 11 for Improvement Project #21-09, Centralized Water Treatment Plant.