TO: HONORABLE MAYOR
AND CITY COUNCIL
FROM: Jeffrey Provenzano
Matt Loesch
SUBJECT: See Below DATE: August 19, 2026
Approved
Date:
8/28/26
COUNCIL DISTRICT: Citywide
SUBJECT: Construction Contingency Increase for 10186 – Yard Piping Improvements Phase 3 Project at the San José-Santa Clara Regional Wastewater Facility
RECOMMENDATION
Approve an increase to the construction contingency from 10% to 18%, in the amount of $1,540,000, from $1,949,000 to $3,489,000 for the 10186 – Yard Piping Improvements Phase 3 Project.
SUMMARY AND OUTCOME
Approval of the recommended construction contingency increase will provide the additional funding needed for the proper completion of the 10186 – Yard Piping Improvements Phase 3 Project (Project) at the San José-Santa Clara Regional Wastewater Facility (RWF) in fall 2026.
BACKGROUND
The RWF has over 300,000 linear feet (LF) of piping, 67,000 LF of which are wastewater process pipes. Seventy percent of the piping is 30 to 68 years old. The City completed a desktop study of these pipes, which identified 16 pipe segments, totaling 21,000 LF, as high priority for rehabilitation. Seven of the 16 pipe segments were rehabilitated or replaced between 2022 and 2024. The Project addresses the last nine segments of these high-priority pipes, totaling 11,218 LF. These critical underground pipes carry raw sewage, primary effluent, and secondary effluent for various treatment processes, and their locations are shown on the Attachment – Project Location Map.
COUNCIL AGENDA: 9/15/26
FILE: 26-943
ITEM: 2.9
HONORABLE MAYOR AND CITY COUNCIL
August 19, 2026
Subject: Construction Contingency Increase for 10186 – Yard Piping Improvements Phase 3 Project at the San José-Santa Clara Regional Wastewater Facility
On April 1, 2025, the City Council awarded a contract for the Project to the lowest responsible bidder, Michels Trenchless, Inc. (Contractor), for $19,490,000 and approved a 10% contingency in the amount of $1,949,000. The City issued a Notice to Proceed for construction on June 5, 2025, with a contract duration of 349 working days.
Construction is approximately 75% completed to date, with work finished on four of the nine pipe segments. Substantial completion is anticipated for October 1, 2026.
A total of six change orders have been approved to date, totaling $1,437,277. This represents approximately 74% of the approved contingency amount. Additional change orders totaling $347,484 are pending or under review, leaving an available contingency balance of $164,239 or 8% of the approved contingency. These change orders are related to unforeseen site conditions, design changes, and City-requested changes, as shown in Table 1.
Table 1. Approved and Pending Change Orders
Reason for Change Orders Approved
Change
Orders
Pending
Change
Orders
Total
1. Unforeseen Site Conditions
(Sum of 1a, 1b, and 1c) $1,103,937 $259,523 $1,363,460
1a. Utility conflicts $ 53,052 $259,523 $ 312,575
1b. Severe pipeline corrosion $ 974,747 $ 0 $ 974,747 1c. Miscellaneous unforeseen
conditions $ 76,138 $ 0 $ 76,138
2. Design changes $ 347,893 $ 87,961 $ 435,854
3. City-requested changes* ($ 14,553) $ 0 ($ 4,553)
4. Total (Sum of 1, 2, and 3) $1,437,277 $347,484 $1,784,761
5. Approved Contingency $1,949,000
6. Contingency Balance (5 minus 4) $ 164,239
* The City -requested changes were for deleting minor and miscellaneous temporary facilities specified in the contract but not needed for construction work, resulting in credits to the contract.
ANALYSIS
The RWF has been operating since 1956 and has been upgraded and expanded over the years, resulting in numerous underground utilities and process pipelines installed during different periods. In the early years, underground infrastructure was not accurately documented in record drawings, and the exact locations, depths, and alignments of many existing facilities remain unknown. In addition, many large-diameter
HONORABLE MAYOR AND CITY COUNCIL
August 19, 2026
Subject: Construction Contingency Increase for 10186 – Yard Piping Improvements Phase 3 Project at the San José-Santa Clara Regional Wastewater Facility
process pipelines have no redundancy and cannot be taken out of service for detailed inspection without temporary major flow rerouting. Furthermore, limited available space within the operating facility has resulted in new utilities being installed near or directly above / below existing infrastructure. This congested, layered underground network limits access to aging pipelines, making inspection, replacement, and installation of new pipes complex and costly.
During the condition assessment, two large diameter pipes could not be fully inspected due to safety and accessibility constraints. For the 102-inch raw sewage pipe, challenges associated with only one entry point and large quantities of wet debris settled on the pipe floor limited human entry into the downstream pipe segment. For the 66-inch plant drain, the pipeline could not be taken out of service due to hydraulic constraints. Inspection instruments, including a CCTV robotic crawler and a Multi- Sensor Inspection technology were only able to assess approximately half the pipeline due to turbulence backflows. As a result, the limited inspection data of the two pipelines were used to develop the design. However, construction later revealed that the actual condition of the pipelines was worse than anticipated. These circumstances resulted in several changes needed during construction.
Unforeseen Site Conditions
During construction, the Contractor encountered many unforeseen site conditions, including more extensive underground utility conflicts and more severe pipeline corrosion than expected due to the limited access described above. The major impacts encountered to date are summarized below.
Utility Conflicts
When replacing approximately 4,000 LF of the 8-inch Waste Activated Sludge Pipe and 8-inch Sanitary Sewer Force Main, the Contractor potholed at 10-foot intervals to locate existing utilities to confirm the new pipe alignments. More than 30 undocumented electrical duct banks were encountered. In addition, the field-verified alignment and elevations of several other utilities were found to be different from the record drawings.
Design changes and additional trenching were required to modify the alignment of new pipes, add air relief valves at high points, and reroute conflicting utilities.
This additional work resulted in $312,575 in approved and pending change orders. Staff anticipates the alignment of Waste Activated Sludge Pipe, running under a utility- congested street, to require additional modifications and estimates the cost of these changes not to exceed $130,000.
HONORABLE MAYOR AND CITY COUNCIL
August 19, 2026
Subject: Construction Contingency Increase for 10186 – Yard Piping Improvements Phase 3 Project at the San José-Santa Clara Regional Wastewater Facility
Severe Pipeline Corrosion
66-Inch Plant Drainpipe: After draining and cleaning the pipe, the Contractor reported severe concrete corrosion along the entire crown of the 2,214 LF pipeline, with 50% of the reinforcing steel disintegrated, significantly weakening the pipe’s structural integrity.
A design change was necessary to replace this pipe via cured-in-place-pipe technology in lieu of spot repairs as specified in the contract. The associated change order of $783,078 represents 40% of the overall project approved construction contingency.
102-Inch Raw Sewage Pipe: Substantial interior corrosion of the concrete and reinforcing steel in the crown was observed for 43% of the length of this pipe. The most extensive deterioration was located at the upstream section of the pipe, which was not accessible during the original condition assessment. In addition, the Contractor discovered that the reinforcing steel embedded in the concrete pipe is larger than the diameter specified in the contract drawing; no record drawing was available to verify the construction details of this pipe.
Due to the tight clearance between reinforcing steel and large quantity of complete reinforcing steel deterioration, performing the contract-specified spot repair method was determined to be technically challenging, time consuming, and costly. To return the pipe to service before the upcoming wet weather season, staff is implementing rehabilitation under this contract that will patch the voids in the crown of the pipe and apply a corrosion protective coating. This combined work is estimated not to exceed $803,000.
Changes to date in this category amount to $974,747 in executed and pending change orders. Forecasted costs are estimated not to exceed $933,614.
Miscellaneous Unforeseen Conditions
To take the 66-inch raw sewage pipe out of service, additional flow rerouting was needed to stop backflows from a downstream flow diversion structure, which could not be fully isolated. This resulted in a $76,138 change order.
As part of the Sanitary Sewer Force Main installation, the Contractor attempted to locate a buried manway to install a temporary pipe plug. During excavation, the excavator damaged an existing 30-inch diameter supernatant pipeline. This 56-year-old fiberglass pipe is no longer manufactured and has become brittle with age. The pipe has been repaired and returned to service. Due to the age and material of the pipe, an additional contingency of $180,000 is requested to provide flexibility should funding be required to support a long term resolution of this issue.
HONORABLE MAYOR AND CITY COUNCIL
August 19, 2026
Subject: Construction Contingency Increase for 10186 – Yard Piping Improvements Phase 3 Project at the San José-Santa Clara Regional Wastewater Facility
Contingency for Remaining Work
For the remaining work to be completed through October 2026, staff is requesting $243,625 for any additional unforeseen conditions that may arise beyond what has already been identified above.
Design Changes
When draining and cleaning the 84-inch raw sewage pipe, the Contractor discovered that the actual pipe profile differed significantly from the profile shown in the contract drawing. A design change was needed to reflect the actual pipe profile. The amount of debris removal and pipe joint repairs required before pipe repairs and coating could be implemented were also beyond design contract documents.
Design changes were also needed for the Space Heat Loop and Chilled Water pipes, including relocating the new pipe to deeper depths for certain sections, adding reinforced concrete caps where congested areas prevented deeper depths, and adding dielectric unions and cathodic corrosion monitoring stations to protect pipes that were discovered to be a different material than what was shown in the contract drawings.
Changes to date amount to $435,854 in executed and pending change orders. Future costs in this category are estimated not to exceed $197,000.
City-Requested Changes
The City-requested changes were associated with deleting minor and miscellaneous temporary facilities included in the contract, but determined not to be needed for construction work. This resulted in $14,553 of credits. Future costs in this category are estimated not to exceed $20,000.
Contingency Increase Needed
The combination of issues described above resulted in a depletion of the existing contingency and the need for additional funds to complete the Project. The total amount of the contingency increase requested in this memorandum is summarized in Table 2 below.
HONORABLE MAYOR AND CITY COUNCIL
August 19, 2026
Subject: Construction Contingency Increase for 10186 – Yard Piping Improvements Phase 3 Project at the San José-Santa Clara Regional Wastewater Facility
Table 2. Proposed Contingency Increase
Reason for Change Orders
Approved
Change
Orders
Pending
Change
Orders
Forecasted
Change
Orders
Totals
1. Unforeseen Site Conditions
(Sum of 1a, 1b, 1c, and 1d) $1,103,937 $259,523 $1,487,239 $2,850,699 1a. Utility conflicts $ 53,052 $259,523 $ 130,000 $ 442,575 1b. Severe pipeline
corrosion $ 974,747 $ 0 $ 933,614 $1,908,361
1c. Miscellaneous
unforeseen conditions $ 76,138 $ 0 $ 180,000 $ 256,138
1d. 5% Contingency for
remaining work
$ 243,625 $ 243,625
2. Design Changes $ 347,893 $ 87,961 $ 197,000 $ 632,854
3. City-Requested Changes ($14,553) $ 0 $ 20,000 $ 5,447
4. Total (Sum of 1, 2, and 3) $1,437,277 $347,484 $1,704,239 $3,489,000
5. Current Authorized
Contingency
$1,949,000
6. Total Estimated
Contingency Increase
Required (5 minus 4)
$1,540,000
The contingency increase request shown above is considered reasonable; the actual amount may vary depending on the actual conditions encountered and final negotiated pricing. The total approved and requested contingency amount of $3,489,000 represents 18% of the original construction cost of $19,490,000. The percentage is within a reasonable range of 10% to 20% for wastewater facility rehabilitation projects at the RWF. Based on the current available information, these changes are necessary to complete the project.
EVALUATION AND FOLLOW-UP
No additional follow-up action with the City Council is expected at this time. A progress report on this and other RWF capital projects will be presented to the Transportation and Environment Committee meeting on an annual basis. Quarterly progress reports of the RWF Capital Improvement Program will also be submitted to the Treatment Plant Advisory Committee meeting and posted on the City’s website.
HONORABLE MAYOR AND CITY COUNCIL
August 19, 2026
Subject: Construction Contingency Increase for 10186 – Yard Piping Improvements Phase 3 Project at the San José-Santa Clara Regional Wastewater Facility
FISCAL IMPACTS
The source of funding for this project is through Fund 512 – San José-Santa Clara Treatment Plant Capital Fund. The Project will have no additional impact on the San José-Santa Clara Treatment Plant Operating Fund or the General Fund. In accordance with the recommendations set forth in the Capital Project Cost Allocations Technical Memorandum (Carollo Engineers, March 2016), this project is allocated between the four billable parameters relative to the rolling weighted average distribution of all RWF assets.
1. TOTAL COST OF PROJECT:
Project Delivery $8,464,366
Original Construction Contract Amount $19,490,000
Original Contingency (10%) $1,949,000
Proposed Contingency Increase $1,540,000
TOTAL PROJECT COSTS $31,443,366
Prior Years’ Expenditures and Encumbrances
through June 30, 2026
$27,557,050
TOTAL REMAINING PROJECT COSTS $3,886,316
BUDGET REFERENCE
The table below identifies the fund and appropriation to fund the contract recommended as part of this memorandum and remaining project costs, including project delivery, construction, and contingency costs.
Fund
#
Appn.
#
Appropriation
Name
Total
Appropriation
Amount for
Contract
2026-2027
Proposed Mid-
Biennial
Capital Budget
Page*
Last Budget
Action (Date,
Ord. No.)
512 7396 Yard Piping
Improvements
$3,984,000 $1,540,000 177 6/16/2026
31336
* The 2026-2027 Proposed Mid-Biennial Capital Budget was approved on June 9, 2026 and adopted on June 16, 2026 by the City Council.
COORDINATION
This Project and memorandum have been coordinated with the City Attorney’s Office, City Manager’s Budget Office, Finance Department, and the Planning, Building and Code Enforcement Department.
HONORABLE MAYOR AND CITY COUNCIL
August 19, 2026
Subject: Construction Contingency Increase for 10186 – Yard Piping Improvements Phase 3 Project at the San José-Santa Clara Regional Wastewater Facility
PUBLIC OUTREACH
This memorandum will be posted on the City Council Agenda website for the September 15, 2026 City Council meeting.
BOARD, COMMISSION, COMMITTEE RECOMMENDATION AND INPUT
This item is scheduled to be heard at the September 10, 2026 Treatment Plant Advisory Committee meeting. A supplemental memorandum with the Committee’s recommendation will be included in the amended City Council meeting agenda.
CEQA
Addendum to the Environmental Impact Report for the San José/Santa Clara Water Pollution Control Plant Master Plan (Resolution No. 76858), Yard Piping and Road Improvements Project, File No. PP19-063.
PUBLIC SUBSIDY REPORTING
This item does not include a public subsidy as defined in section 53083 or 53083.1 of the California Government Code or the City’s Open Government Resolution.
/s/ /s/
JEFFREY PROVENZANO MATT LOESCH
Director, Environmental Services Director, Public Works
For questions, please contact Mariana Chavez-Vazquez, RWF General Manager, Environmental Services Department at (408) 535-8550.
ATTACHMENT:
Project Location Map
ATTACHMENT – PROJECT LOCATION MAP