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<br />..5: /,,£- ~
<br />
<br />As a result of the difference between the Engineer's estimate of $1,560,000 and the bid
<br />amount of $2,750,000, The Covello Group and Kennedy/Jenks Consultants have actively
<br />entered into discussions with D.W. Nicholson (DWN) to evaluate the variance between the
<br />Engineer's Estimate and DWN's Bid price. As a result of these discussions, and the
<br />subsequent value engineering that has been performed, it has been determined that the
<br />concrete observation boxes and the underground piping are responsible for a large
<br />percentage of the difference in estimates. As such, negotiations have been conducted with
<br />DWN to arrive at a revised estimate and a project redesign that would eliminate the
<br />concrete observation boxes and move the piping aboveground without compromising the
<br />integrity of the facilities and/or their performance. The Covello Group and Kennedy/Jenks
<br />Consultants have conducted these negotiations in a manner appropriate with public agency
<br />contracting, and, as such, on July 30,2005 the above participants finalized a one (1) page
<br />listing of items establishing a range of potential savings on the order of $601,000 to
<br />$701,000. Most of these items were firm prices and established a revised bid price of
<br />$2,050,000 to $2,150,000 and three (3) items required further clarification from
<br />subcontractors, suppliers and the Engineer. It is the intent to finalize these value
<br />engineering changes as part of future Contract Change Order No.1 (CCO No.1) as soon
<br />as practicable after the issuance of the Notice to Proceed. In the interim, D.W. Nicholson
<br />has entered into a Memorandum of Understanding with the South Bayside System
<br />Authority to acknowledge the good faith, cooperative effort that has been engaged in
<br />between the parties to accomplish the cost savings contemplated.
<br />
<br />Overall, the anticipated construction costs for recycled water facilities under construction or
<br />with firm bids at SBSA as of this time are within the December, 2004 refined costs
<br />estimates on which the Council's approved Water Financing Plan is based. In summary:
<br />
<br />Project Bid Packages
<br />Disinfection, Storage & Pumping
<br />Dual Media Filter Modifications + PlC
<br />Connecting Pipes & Utilities
<br />PG&E Service Connection
<br />SBSA site prep, procurement + contingency
<br />Estimated costs w/ construction contingency:
<br />* Bid prices ** Refined Estimates
<br />
<br />12/04 Estimate
<br />$15,600,000
<br />$ 1,715,000
<br />$ 376,180
<br />$ 131,674
<br />$ 1,819,146
<br />$19,642,000
<br />
<br />Bid / Budget
<br />$14,910,500*
<br />$ 2,150,000*
<br />$ 505,625**
<br />$ 131,674*
<br />$ 1,820,000**
<br />$19,517,799
<br />
<br />Alternative
<br />Redesign and Re-bid: The project team has studied this option and concludes that re-
<br />bidding will not bring significant cost saving and would delay the project schedule.
<br />
<br />Fiscal Impact
<br />The Water Financing Plan was approved by the City Council on January 24, 2005,
<br />concurrent with the Council's authorization to issue Water Revenue Bonds to finance the
<br />construction of Phase One of the Recycled Water Project. Bond proceeds in the amount
<br />of $32,822,484 were deposited into the project trustee account on March 1,2005. Funding
<br />for this and other City-owned and SBSA-owned treatment, storage and pumping facilities is
<br />available f[ the trustee account.
<br />
<br />0 I Patterson
<br />Cbmmunity Development
<br />Services Director
<br />
<br />
<br />() ¡¡ ~ ¡f-
<br />
<br />Ed Everett v
<br />City Manager
<br />
<br />
<br />Chu Chang, P.E.
<br />Manager, Engineering and
<br />Construction
<br />Page 2 of 2
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