DATE:
December 6, 2022
TO:
Mayor and Council Members
FROM:
Nils Bentsen, City Manager
BY:
Rachel Molina, Assistant City Manager
Dani Fox, Deputy Director of Development Services
David Burkett, Project Construction Manager
SUBJECT:
Approve and Accept Construction of FY 2019-20 CDBG Street Improvements - Phase II and Approve Increases to the Original Contract Amount
RECOMMENDED ACTION
It is recommended that the City Council:
1. Authorize the City Manager to accept the work constructed under FY 2019-20 CDBG Street Improvements – Phase II (C.O. No. 7158); authorize staff to record a “Notice of Completion”; and release all withheld retention amounts pursuant to California Public Contract Code § 7107; and
2. Approve change orders to the original contract for the total amount of $168,977 for cost escalations; and
3. Adopt Resolution 2022-80 Amending the Adopted Fiscal Year 2022-23 Capital Improvement Program Budget by appropriating $225,000 from Fund 207 – Local Transportation Fund to the FY 2019-20 CDBG Street Improvements – Phase II project (Account No. 207-29-700-7158-7500) and authorize the City Manager to execute a Time & Material change order with Christensen Brothers General Engineering, Inc. to their contract in a not-to-exceed amount of $170,000 to repair the storm damage on Peach Avenue.
BACKGROUND
The City Council has continuously expressed a desire to improve existing roadways within the city. As a result, staff has sought innovative ways to fund such improvements. Annually the City receives Community Development Block Grant (CDBG) funding from the U.S. Department of Housing and Urban Development (HUD). In the past a large part of this funding was directed to programs, which left small amounts available for capital projects. In order to accomplish the Council’s goal of improving more streets throughout the City, staff has designated a larger amount of the CDBG funding towards the CDBG Capital Fund.
The FY 2019-20 CDBG Street Improvement – Phase II Project consists of construction of a new reinforced concrete box drainage structure and appurtenant roadway improvements on Peach Avenue where it crosses the Antelope Valley Wash. Improvements to Peach Avenue will include construction of 26-foot wide asphalt concrete (AC) pavement within the middle of existing 60-foot wide right-of-way.
ISSUES/ANALYSIS
Staff issued a “Notice Inviting Sealed Bids” for this project on October 26, 2021. A total of six bids were accepted and publicly read on December 9, 2021. Subsequently, the Council awarded a contract to Christensen Brothers General Engineering, Inc. (CBGE) at its December 21, 2021 meeting to construct the roadway improvements for the amount of $1,273,128 and approved a contract contingency amount of $127,313. The total expenditure authorization for the Work was $1,400,441. A Notice to Proceed was issued to CBGE to commence work on February 7, 2022.
During construction, four (4) contract change orders in the amount of $75,559 were processed to compensate the contractor for changed conditions and additional work requested by the City. A final addition to the contract amount was approved in the amount of $24,831 to reconcile the actual quantities of work completed versus the quantities estimated in the Bid Documents. These costs were paid out of the Council approved contingency and used 7.89% of the 10% contingency amount, increasing the contract total amount by $100,390 to $1,373,518.
Normally with those approved change orders the contract would be complete;however, due to the rapid rise in the price of oil and other commodities used during construction of the project, the contractor additionally filed a claim for escalation of material costs. As the Council may be aware, the inflation rate increased significantly between January of 2022 and August of 2022, while the contractor submitted his bid in December 2021 prior to the increase of costs. The increase in the cost for materials could not have been anticipated by either the City or the contractor. California courts have ruled in the past that an unexpected increase in inflation warrants additional compensation to a contractor.
The Contractor has requested an additional $195,900.10 in compensation due to the rise in inflation during 2022 as summarized below:
Original Contingency Amount
$127,313.00
Approved Change Orders from Contingency
(100,389.67)
7.89%
Balance of Contingency
26,923.33
CLAIM DUE TO MATERIAL COST INCREASES
Price
From
Cost
Item
Qty.
Unit
Increase
Contingency
Escalation
Price Increase for Dirt Imported to Project
10,825
CY
$1.44
$15,580.00
$0.00
Price Increase for Asphalt Pavement (oil)
29,430
SF
1.41 11,343.32
30,152.98
Price Increase for Aggregate Base
29,430
SF
0.25 7,357.50
Price Increase for Concrete
300
CY
21.21 6,363.00
Price Increase for Guard Rail and Fencing
1 LS
8,032.50
8,032.50
Trucking Fuel Price Increase Importing Dirt
10,825
CY
1.68 18,186.00
Trucking Fuel Price Increase AC Delivery
29,430
SF
1.68 49,442.40
Trucking Fuel Price Increase Agg Base Delivery
29,430
SF
1.68 49,442.40
TOTALS =
$26,923.32
$168,976.78
The claim for escalation in material costs increases the cost of the project a total of $195,901 or an increase of 15.39% over the original contract amount. The total increase to the original contract amount is only $168,977, as $26,924 will be paid out of the remaining balance of the approved contingency amount.
Therefore, the final contract amount for work completed by CBGE is summarized as; the original contract amount ($1,273,128), plus the described change orders ($100,390), plus the escalation in material costs ($195,901), for a revised total contract amount of $1,569,418. The project was completed six weeks ahead of schedule. On August 26, 2022 all work on the project was completed to the satisfaction of the City’s construction inspector and project manager. Staff is recommending the following:
Acceptance of the completed work and authorization to release the final retention payment. Retention funds for this project, in the amount of $78,408 will be available for release to the contractor after recordation of the Notice of Completion pursuant to California Public Contract Code § 7107.
Approve an increase in the contract amount of $168,977 to compensate the contractor for the escalation in material costs.
Emergency Repair
Shortly after completion of this project, a major storm event occurred the week of November 14, 2022 in the vicinity of this project. Storm damage south of the new drainage structure undermined Peach Avenue, which resulted in a road closure. It is paramount that this roadway be repaired and that Peach Avenue is re-opened to vehicular traffic.
In order to repair the damage to Peach Avenue in an expeditious manner, staff has asked CBGE to construct the repairs as they are currently under contract with the City. Utilizing CBGE for the these emergency repairs without following the normal bidding process is provided for under the City’s Purchasing Ordinance, Section 3.08.070(A)(7) – Unforseen Circumstances. Emergency repairs to Peach Avenue are needed to protect public health, safety, and welfare.
Repair work will proceed by CBGE on a Time & Material basis where the contractor will be compensated based on the actual costs of labor, equipment, and materials used for the repair work, to be continuously monitored by a City inspector. It is expected that the repair work will not exceed $170,000. The costs for the repair work will also include fees for a contract inspector and fees for a geotechnical engineering firm to monitor the work to ensure proper backfilling operations are completed as required by the specifications. The budget for this emergency repair is summarized as follows:
Construction
Christensen Brothers Gen. Engineering
$170,000
Inspection
TKE Engineering
10,000
Geotechnical Engineering
GeoCon West
25,000
Contingency
20,000
Total Estimated Costs =
$225,000
Staff is also recommending that the Council adopt Resolution No. 2022-80 amending the Adopted Fiscal Year 2022-23 Capital Improvement Program Budget by appropriating $225,000 to Fund 207 – Local Transportation Fund to cover all costs related to the repair of the storm damage to Peach Avenue.
FISCAL IMPACT
There is adequate funding in the adopted budget to cover the increase in costs to the original project due to cost escalations. The FY 2022-23 Capital Improvement Program Budget included $1,000,000 for the FY 2019-20 CDBG Street Improvement project – Ph. II (C.O. No. 7158), funded from Fund 251 – CDBG Grant Fund. Any balance of CDBG funding remaining from this project will be re-allocated to other CDBG projects.
There are available funds in Fund 207 – Local Transportation Fund to cover the costs for the emergency repair work to be done on Peach Avenue.
ALTERNATIVE(S)
Provide alternative direction to staff.
ATTACHMENT(S)
Resolution No. 2022-80
City of Hesperia STAFF REPORT City of Hesperia STAFF REPORT City of Hesperia
STAFF REPORT
City of Hesperia
STAFF REPORT
Staff Report to the Mayor and Council Members
Approve and Accept Construction of FY 2019-20 CDBG Street Improvements – Ph. II and Approve Increases to the Original Contract Amount December 6, 2022