Administrative
Report
H.9., File # 23-5603 Meeting Date: 2/21/2023
To: MAYOR AND CITY COUNCIL
From: TED SEMAAN, PUBLIC WORKS DIRECTOR
TITLE
AUTHORIZE THE RELEASE OF $305,711 OF THE $611,423 OF RETENTION FUNDS HELD FOR CONSTRUCTION OF PHASE 1 OF THE REDONDO BEACH TRANSIT CENTER PROJECT TO
THE MS CONSTRUCTION MANAGEMENT GROUP
EXECUTIVE SUMMARY
The Redondo Beach Transit Center Project, Job No. 20120 and Kingsdale Avenue Widening Project, Job No. 41150 (Project), were combined into a single construction contract and scheduled in two phases. Phase 1 of the work included construction of the new Redondo Beach Transit Center, which is now operational, and accounts for about 85% of the total contract value. The contractor, MS Construction Management Group, has been progressively paid for Phase 1 activities, with the City retaining 5% of each payment, to protect against any disputed work. Typically, the contractor is paid the retention funds after the City Council accepts the project as complete. However, given the large amount of funding held for the project and that the first phase of the contract is significantly largely than the second phase, the contractor has asked that one half of the retention be released for payment now.
Retention is a practice the City uses for Public Works Projects to ensure that funds are available to address completed but disputed work. The retention held for the Phase 1 portion of this contract is $611,423.11, a significant sum for the contractor to carry over the long construction period. As mentioned above, the contractor has requested an amount equal to one-half of the retention be released now to assist with his cash flow requirements. Staff is comfortable that the remaining retention amount will be sufficient to address any future work disputes and recommends releasing one half of the retention at this time.
BACKGROUND
On May 19, 2020, the City Council awarded a construction contract in the amount of $11,500,000 for two related projects (combined as two phases) involving the City’s new transit center. The first phase includes the construction of the new transit center and improvements to the parking area, which began operations on January 29, 2023. The second phase, formally known as the Kingsdale Avenue Widening Project, Job No. 41150, is currently under construction and includes demolition of the old transit center, restoration of the site and widening of the northbound side of Kingsdale Avenue between Grant Ave. and Artesia Blvd with a scheduled completion date of June 2023.
As of December 31, 2022, the contractor had performed work totaling $12,228,462.28, resulting in a retention held of $611,423.11, an amount equal to 5% of the payments made. These payments
H.9., File # 23-5603 Meeting Date: 2/21/2023
retention held of $611,423.11, an amount equal to 5% of the payments made. These payments represent work that includes about 99.8% of the contract value for Phase 1, including approved change orders. The City has taken possession of, and is operating, the transit facility built as part of Phase 1. If Phase 1 were contracted alone, the City would be issuing the full retention (assuming no disputes) at this point in the schedule.
The contractor’s work on the project has generally been in accordance with plans and specifications and acceptable to City staff, consultant project managers and construction managers. There are some small disputed items which the City’s team is still pursuing resolution. These items are sufficiently covered in the proposed retention amount that would remain after the partial release of funds and will be resolved prior to the completion of all contracted work, when the remaining portion of the retention would be released. For the work represented by the retention amounts held, the contractor has provided the standard waiver to release any mechanic’s lien, stop notice or bond right that contractor has against these funds.
In addition to the small amount of disputed work, the City is still considering and negotiating several change order requests from the contractor, but these will be paid out of budgeted money for change orders if awarded. Retention funds are held to incentivize satisfactorily completed work, not as leverage against the cost potential of future work.
COORDINATION
Management of the project is being coordinated by the Public Works Department, with assistance from the Financial Services Department to track retention funds.
FISCAL IMPACT
The recommended partial release of the retention funds for Phase 1 of the project would reduce the retention held by the City by $305,711. Staff is confident the remaining $305,711 will be sufficient to address potential future claims.
APPROVED BY:
Mike Witzansky, City Manager