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CITY COUNCIL
AGENDA REPORT
MEETING DATE: September 12, 2022
TO: Mayor and City Council
FROM: Justin Vinson
PREPARED BY: Greg Thompson, Community Development Director SUBJECT: Approving Contract Change Order to the Design-Build Agreement with W.M. Lyles Co. for 1,2,3 - TCP Mitigation Project (Community Development Director Thompson)
RECOMMENDED COUNCIL ACTION
Motion to approve Contract Change Order No. 1 to the Design- Build Agreement with W.M Lyles Co. of Fresno, California for the Guaranteed Maximum Price (GMP) of the 1,2,3-TCP Project in the amount of $311,401, for a total amount of $23,727,209 to compensate for unanticipated cost increases resulting from extreme market conditions affecting the cost of metal components of the work and authorizes and directs the City Manager to execute the Change Order on behalf of the City; or Motion to approve staff's recommendation as presented.
I. BACKGROUND/ANALYSIS:
The 1,2,3-TCP Project has a Guaranteed Maximum Price (GMP) which represents the maximum amount the City of Atwater is obligated to pay for the contracted improvements. The initial GMP of $23,324,618 (total for all phases of work) was previously adjusted by $91,190 to reflect positive and negative scope changes for Phase 2.
Unlike a traditional design-bid-build project, this progressive design-build project is administered as an “open book” contract. City representatives have complete access to WM Lyles financial records. As reflected in those records, WM Lyles had significant increases in costs which resulted in exceeding the GMP. The majority of the increased costs are within the scope of the work intended and remain WM Lyle’s responsiblity.
One category of costs, however, was beyond WM Lyles’ control and rises to the level of an unanticipated condition which warrants treatment as a differing condition. As the beneficiary of the Work, the City receives the value of the expense associated with differing conditions. WM Lyles indicates that price volatility, much more extreme than typical in commodity markets, resulted in a $311,401 increase in costs for reinforcing steel, fencing, and pipe materials.
CITY COUNCIL
Paul Creighton, Mayor
Danny Ambriz Tyler Button
John Cale Brian Raymond
Agenda Report - Page 2
Engineering News Record (ENR) is a good resource for building cost information. Their Fourth Quarterly Cost Report, published in December of 2021, provides a forecast for future prices as well as a look back at material prices in recent years:
The extreme cost increases experienced by WM Lyles in reinforcing steel, metal fencing, and metal piping align with the material price increases documented by ENR.
Details of quotes have been provided by WM Lyles and are summarized in Exhibit A.
In public works, a Contractor’s unanticipated cost increases are not typically considered to be compensable. The risk of cost increases is just one of the risks assumed by the Contractor when undertaking a project. While Owners may hear about increases in prices, Contractors do not offer credits when price volatility results in lower prices. In this case, because the contract is administered as open book, the Owner shares in both increased and decreased prices. The market volatility experienced in 2021 and continuing into 2022 was not anticipated by either party, so adequate provision was not made within contingencies. Had either the City or WM Lyles suspected that prices would increase, provision would have been made to accommodate the costs.
Amending the contract to include these costs is consistent with the City’s intent to complete facility construction for less than $25,000,000.
II. FISCAL IMPACTS:
There is sufficient funding for this item in the 1,2,3-TCP Fund, Capital Improvement Projects, TCP ProJett, Account No, 6007.1080.H010.
This item has been reviewed by the Finance Department.
III. LEGAL REVIEW:
This item has been reviewed by the City Attorney’s Office.
IV. EXISTING POLICY:
Agenda Report - Page 3
This item is consistent with goal numbers one (1) and two (2) of the City's Strategic Plan: to ensure the City's continued financial stability and to improve public safety, respectively.
V. ALTERNATIVES:
VI. INTERDEPARTMENTAL COORDINATION:
N/A
VII. PUBLIC PARTICIPATION:
The public will have an opportunity to provide comments on this item prior to City Council action.
VIII. ENVIRONMENTAL REVIEW:
Pursuant to the California Environmental Quality Act (CEQA) guidelines section 15301 existing facilities, this item is exempt.
IX. STEPS FOLLOWING APPROVAL:
Upon approval, the City Manager will authorize Change Order No. 1 in the total amount of $311,401.00.
Submitted by:
Greg Thompson, Community Development Director
Approved by:
Lori Waterman, City Manager
Attachments:
1. Exhibit A - Contract Change Order
PROJECT SHEET 1 OF 2
PROJECT NO. 20-1
TO:
Cost increase in materials :
Unit of
Item No. Description Measure Quantity Rate
1 LS 1.00 $107,673.00
2 Rebar LS 1.00 $76,746.00
3 Pipe LS 1.00 $126,982.00
Original Contract $23,324,618.00
Contract Change Order No. 1 $91,190.00
Contract Change Order No. 2 $311,401.00
Estimated Revised Contract Amount $23,727,209.00
additional work days
Approval Recommended Date:
Approved: City Manager Date:
Signature: Contractor:
Date:
Name and Title
Amount
$126,982.00
$76,746.00
By reason of this order the time of
completion will be adjusted as follows:
Fence $107,673.00
If the Contractor does not sign acceptance of this order, his attention is directed to the requirements of the specifications as to proceeding with the ordered work and filing a written protest within the time therein specified.
Greg Thompson, Community Development Director
Lori Waterman, City Manager
We, the undersigned contractor, have given careful consideration to the change proposed and hereby agree, if this proposal is approved, that we will provide all equipment, furnish all materials, except as may otherwise be noted above, and perform all services necessary for the work above specified, and will accept as full payment therefore the prices shown above. $311,401.00
CONTRACT CHANGE ORDER NO. ___2___
BID CALL NO.
W.M Lyles Co.
You are hereby directed to make the herein described changes from the plans and specifications or do the following described work not included in the plans and specifications on this contract.
NOTE: This change order is not effective until approved by the City Manager 1,2,3- TCP Mitigation
Description of work to be done, estimate of quantities, and prices to be paid. Segregate between additional work at contract price, agreed price and force account. Unless otherwise stated, rates for rental of equipment cover only such time as equipment is actually used and no allowance will be made for idle time. Change requested by: Justin Vinson, Public Works Director
Material Quotes Increase
Fence 1/19/2022 Jun-22 22-Oct
Wrought Iron
Fence 123,480 216,931
Chain link 21,300 35,522
144,780 252,453 $ 107,673
Rebar 1/27/2022 3/18/2022
Total 214,439 291,185 $ 76,746
Pipe Jan-22 Various
Onsite 919,428 969,834
Offsite 879,040 955,616
1,798,468 1,925,450 $ 126,982
Total: $ 311,401