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HomeMy WebLinkAbout2005-08-01 - MinutesMayor Dan Coody City Attomey Kit Williams City Clerk Sondra Smith City Council Water & Sewer Meeting Minutes August I, 2005 Page 1 of 9 Member Aldermen aye evi le AR KA N SA 5 City of Fayetteville Arkansas City Council Water & Sewer Committee Meeting Minutes August 1, 2005 Ward 1 Position 1 - Ward 2 Position 1 - Ward 3 Position 2 Ward 4 Position 2 - Robert Reynolds Kyle B. Cook — Robert Ferrell Lioneld Jordan A meeting of the Fayetteville City Council Water & Sewer Committee was held on August 1, at 5:30 p.m. in Room 326 of the City Administration Building located at 113 West Mountain Street, Fayetteville, Arkansas. MEMBERS PRESENT: Kyle Cook (Chair), Robert Reynolds, Robert Ferrell, Lioneld Jordan Staff Present: Steve Davis, Gary Dumas, David Jurgens, Tim Conklin, Susan Thomas Chairman Kyle Cook called the meeting to order. Approval of Minutes of the Last Water/Sewer Committee Meeting Bobby Ferrell moved and Lioneld Jordan seconded the motion that the minutes of the meeting held on July 21, 2005 be approved as presented. The motion was approved unanimously. West Side Treatment Plant Bid &West Side Treatment Plant Action Plan Jim Ulmer, McGoodwin, Williams and Yates spoke to the Committee regarding the bids which have come in for the Westside wastewater treatment plant and discussed why he thought the bids were higher than the estimated by MWY. He distributed a bid tabulation for the bids received on July 21. Nine general contractors responded to the pre -qualification process and all were pre- qualified. Five of those general contractors took out plans to bid the project. Only two of those actually submitted bids, Van Horn Construction and Archer Western Contractors. MWY talked to both those contractors and four of the five companies who took out plans but didn't bid. One question they asked of those companies who chose not to bid was what the issues were that caused them to make that choice. The primary reasons were that they were already too busy with big jobs that were closer to home and that bonding is tight right now. MWY also talked to both of the bidders and gave the committee a synopsis of what they were told by these companies. They expressed that the labor market is very tight in Northwest Arkansas and the cost of labor on this particular project amounted to a substantial amount. Steel prices have also escalated significantly over the past several months. The price and availability of concrete was a significant issue as well as the price of petroleum products. Another issue seems to be the uncertainty of what the market place will be with regard to these escalating cost items. Another issue was the pricing structure of the equipment and the prices given to the contractors. He also said that the contractors may not have been as familiar with some aspects of the projects (for 113 West Mountain 72701 (479) 521-7700 (479) 575-8257 (Fax) accessfayetteville.org City Council Water & Sewer Meeting Minutes August I, 2005 Page 2 of 9 example, he noted the differences in the amounts each company bid on Broyles Rd. item and on the wetlands item) as others. He said one of the things that could be done is to restructure the bid so that people who are familiar with one aspect of the project could bid on just that one aspect. Another issue is the amount of time allowed in the bid process. All the contractors asked for six - weeks of time between advertising of the bid to opening of the bid to allow them time to prepare the bid. With this process Mr. Ulmer stated that we have in effect established the marketplace in Northwest Arkansas. The price that was bid is driven by the cost of labor, equipment, steel, concrete, petroleum, etc. and is not the fault of anyone involved. Mr. Ulmer reviewed the process that went in to coming up with the numbers for this project, beginning with the preliminary engineering phase, through facility planning, the design process, etc. The goal was to optimize the value and the function of the facility that was designed. The plans were evaluated and reviewed by Burns and McDonnell, by the Arkansas Department of Environmental Quality, the Arkansas Depaitment of Health. Mr. Ulmer said that as a result of talking to the two bidders and reviewing the project, MWY developed a list of possible ways to reduce cost. He distributed this list to members of the committee and audience and then reviewed it with the group. The total cost savings listed came to $1,529,325. Mr. Ulmer stated that the marketplace for this particular project, as it stands, appears to be $57 to $58 million. He said that the history of rebidding a project without making substantial reductions is not good and does not usually result in lower bids. He suggested that in taking the lowest bid submitted, the City might have the lowest cost on this facility. He said the City could also reject the bids, make deletions (and thereby possibly reducing functionality) and revisions and rebid the project, possibly separating the bids by elements of the project such as wetlands, Broyles Rd., etc. But he did not think that we could do anything taking the project as it stands right now and get a $48 million bid. Alderman Cook said that, with all due respect to Mr. Ulmer, the cost savings discussed so far are peanuts compared to the total amount. He agrees that he really doesn't think they can find any more savings. The project has been through value engineering and the contractors have been hand selected. All the market issues discussed (labor, steel & petroleum costs, etc.) are true. He asked for clarification on the pricing structure on equipment Mr. Ulmer mentioned earlier. Jim Ulmer explained that there is a unique bidding process on big infrastructure projects. A multitude of equipment has been specified and several different pieces of equipment are acceptable in the specifications. Manufacturer's representatives try to group their equipment with a single cost. Another manufacturer may have another group of equipment with a single price, but there may be some overlap in the two groups. There may be some ways to price each piece of equipment is purchased on its own and not as a part of a group of equipment. Alderman Cook also mentioned that Mr. Ulmer had talked about the bid time being too fast. He asked if there was any way to work around the time frame. Jim Ulmer said that every contractor asked for six weeks as a minimum amount of time. 113 West Mountain 72701 (479) 521-7700 (479) 575-8257 (Fax) accessfayetteville.org City Council Water & Sewer Meeting Minutes August I, 2005 Page 3 of 9 Alderman Cook said he was confused about the possibility of separating some of the projects out. He thought that we had discussed all along that packaging bids together would save money. Has it worked against us this time? Jim Ulmer said the only way to know was to try another way. He said that a decision was made early in the process to bring Broyles Road into the project, to prevent the road construction from competing with the plant construction (a single contractor could decide to build the road when it was best to fit into the project). One concern the contractors had was that if they built the road quickly, they would have to maintain the road for a long period of time because of the long construction period of the project. After discussions with the contractors and with the WSIP team, the possibility of delaying the building of the road for about a year to let the heavy construction, earth moving, concrete work get done before that project is bid was discussed. Alderman Cook clarified that Mr. Ulmer was saying that we can't change the price on this project without sacrificing either quantity or quality. Alderman Jordan asked what Mr. Ulmer means when he talks about cutting back on functionality. Jim Ulmer gave an example a storage building in the project that is fairly expensive which will be used to park trucks full of sludge. It has climate and odor -control built into it so if a truckload of sludge is sitting there for 24 hours it won't be causing odor problems around the site. That building has a wash bay in it that can serve as a second storage bay if needed. Another function of that facility is to create an inventory of critical spare parts on site to prevent time loss in the event a piece of equipment fails. It was decided that this building must stay in the project due to functionality. He cited a couple of other examples of areas where the City could cut costs on the project by eliminating some odor control or other items from the project, adding up to big dollars but they weren't taken out of the project up to this time because of the reduction in functionality of the plant. Even these reductions, however, don't add up to the difference between $48 million and $62 million. Alderman Jordan stated that we might as well build it right. Alderman Reynolds questioned who gives MWY their work order changes. Jim Ulmer stated that the changes were made during the design process, principally by staff or the value engineering team. In response to a further question from Alderman Reynolds, he stated that Greg Boettcher was on staff at that time. Some changes were also made during the bid process to try to reduce the cost to the engineer and that decision was made through Mr. Davis. Alderman Reynolds questioned why it would not be smart to rebid the project. He talked about the difference in amounts bid on different areas of the project by the two bidders. Jim Ulmer said that through the overall process, since 1999 or 2000 when it began, there have been many reductions and we have squeezed about all that can be squeezed out of the project and still meet the effluent limit with regulatory agencies. If more is taken out of the project, we will be putting ourselves at risk of not meeting regulatory requirements or of not making good on commitments we've made, for instance, regarding odor control. 113 West Mountain 72701 (479) 521-7700 (479) 575-8257 (Fax) accessfayetteville.org City Council Water & Sewer Meeting Minutes August I, 2005 Page 4 of 9 Alderman Reynolds pointed out that the list just distributed by Mr. Ulmer lists a possible $1.5 million in cuts. He questioned why these things were not already out of the project if they weren't really needed. Who is making those decisions? Jim Ulmer said most of these items were brought up in conversations with the bidders as suggestions for cost reductions. The ornamental fencing and the brick pilasters were understood to be conditions of the large-scale development process. That is only on the frontage of Broyles Road. This suggestion would bring it back to an absolute minimum of nothing more than a secure gate and two ornamental panels that allow it to function with the rest being higher grade chain link fence. The other items were listed after discussion of allowable risk. For example there is $1 million worth of protective coatings in the project. There is a risk in reducing that by $600,000, but probably not a high risk. Same issue with several other issues. Alderman Reynolds asked if Van Horn Construction, which is out of Russellville, is doing any business in this area right now. Jim Ulmer stated that Van Horn is building a $2 million lift station in Springdale now. Alderman Ferrell said he favors rebidding all three facets of the project separately but asked if there is any down side to bidding them that way. Jim Ulmer said Broyles Road and the plant are no problem. The wetlands construction, however, involves the construction of berms that have a clay core to keep them from leaking from one side to the other and structures to take the water from one cell to another. That is general contractor type construction. But the part that is a problem is the planting of all the wetland plants. The general contractor is not going to have an interest in doing that and probably won't have access to the people who are familiar with that technique. That part might be bid separately. The construction part of the wetlands might be put in with the plant or the road. Alderman Ferrell asked if a decision was made right now to rebid the project, what would a reasonable time frame for how long the rebid process would take before we could start construction. Jim Ulmer said that question had been discussed by the leadership team today and it was estimated that figuring about four weeks to restructure the bid packages, and another six weeks for the bid process you have the bid in hand in two months. The award process would take approximately eight weeks, after which you can give the contractor notice to proceed. Alderman Ferrell asked if four and a half months would be an accurate estimate. Alderman Jordan: " ...of time lost". Jim Ulmer: Something on that order. Alderman Ferrell said he likes the idea of rebidding and if there is any way to save money by taking out the wetlands, then he thinks it would make sense to do that. 113 West Mountain 72701 (479) 521-7700 (479) 575-8257 (Fax) accessfayetteville.org City Council Water & Sewer Meeting Minutes August I, 2005 Page 5 of 9 David Jurgens, responding to Lioneld's comment about time lost, asked that it be recognized that on the original schedule, had we accepted this bid, it wouldn't have started construction until the middle of October. Alderman Jordan said that if we go ahead an rebid it however, wouldn't that push the date of completion on down? Jim Ulmer said that probably ten of the 18 weeks estimated would be regrouping. Steve Davis, restated Alderman Jordan's question by stated if the project is repackaged, bids opened, go through the fourteen week cycle, when does the City Council award the bid and when does the contractor start? David Jurgens said that from the time the decision is made, approximately eighteen weeks. Steve Davis asked how that compares to the other schedule — the October 4 original schedule. David Jurgens said it adds about eight weeks to the original schedule, given a decision tonight. It's a rolling schedule. Alderman Cook said that from his experience, you don't have any luck with rebidding. His experience is that when it a company goes to rebid a project they find things they missed the first time. Alderman Jordan said that in the mean time steel and other costs continue to rise and everything is rising all the time. He made it clear that he doesn't want to sacrifice any odor quality at all with the plant. It is in his ward and he wants it to be built with quality. So if this is the price, where would we get the money from to make up the difference in what was estimated and what it will cost. Steve Davis said impact fees could be used to cover some of the increased cost, that's a Council decision. Also, our rate structure was built so that we would be generating operations and maintenance costs for this plant in 2006 which was what we expected to need. That amounts to approximately four million dollars a year and will allow for some cash flow from our existing rates. There are also some incremental revenues generated in 2004 and 2005 and we just have to run the numbers to find out how much. Alderman Jordan asked that Steve run those numbers and provide them to the Council. He also asked, if construction on the plant was supposed to start in 2006 and we're just now getting bids, what happened? Steve Davis explained that we didn't get the permits until March or April of this year. Alderman Jordan said he was not terribly surprised when the bids came in high in this time frame. Whereas, if we had gotten the bids out two years earlier, we would have probably hit it pretty close. The question is now, do we go on with the project as is and he feels we have to go on with it. 113 West Mountain 72701 (479) 521-7700 (479) 575-8257 (Fax) accessfayetteville.org City Council Water & Sewer Meeting Minutes August I, 2005 Page 6 of 9 David Jurgens said one thing we need to make sure is understood is that based on our interpretation of the law, since the bid was 25% over the estimated amount, we can't award the bid that was opened. So we're talking about the option of repackaging and rebidding or something else. Alderman Jordan asked about the "something else". Gary Dumas said when the management team first began talking about this they wanted to review all the options. Although everyone is probably thinking that repackaging and rebidding is the most probable option. However, the team feels they would not be responsive to the Council or the public if they did not at least explore what other options are available out there that might help generate more savings than the $2 million we're looking at now. Alderman Jordan wanted to ask another question — what if we rebid it and the bids are the same? Gary Dumas said that as long as you certify the appropriate funds, you can award the bid. Steve Davis said that instead of setting $48 million, we set it at $57 million Gary Dumas said that we need to look at the other options are even though the probability is that we will continue down the same path we are on. With that, he introduced Don Evans with CH2M Hill and Earl Jenkins of Black and Veatch to talk about what some of those options might be. Don Evans introduced himself'. He is with OMI and also with the parent company of CH2M Hill. He talked about what he called a "tiger team". A tiger team's goal is, maintaining complete functionality on odor control and on discharge, esthetics, and everything else that is envisioned in the project to see if there are any significant savings to be found (defining significant as $10 million). The team would look to see if there is a way to get back within the budgeted parameters. This tiger team review could be done at the same time the City is repackaging the project for rebid so no time would be lost. He said the tiger team looks at three areas. They look to see if there is something in the scope that can be changed (new technologies or advances in technology) to give you the odor control that is needed. They look at alternative delivery methods. Alderman Jordan asked what the tiger team would cost. Don Evans said that the City is OMI's existing customer so OMI would do the work themselves and let the City pay them what they think it is worth. If it is something the City is seriously interested in looking into, he would be happy to work with us. Alderman Reynolds asked how long it would take. Don Evans said it would take about four weeks, the same plan. He said he doesn't know if it is feasible. He can't say they'll find $10 million in savings. After three to four weeks, he can probably tell the Council if the savings are potentially there. But OMI is the City's existing supplier and they feel they have a long term relationship with the City and are offering their assistance. His company can look over the scope of the project, the delivery method and the 113 West Mountain 72701 (479) 521-7700 (479) 575-8257 (Fax) accessfayetteville.org City Council Water & Sewer Meeting Minutes August I, 2005 Page 7 of 9 means and methods of construction if the Council is interested. It is a difficult task and will take their best people to come in and look at it. He doesn't want to do it if the Council is not seriously interested. Alderman Reynolds said he knows OMI doesn't want to work for nothing so asked what the cost of this type of project. Don Evans said it is expensive. He said he, with Black and Veatch, would try to get the best people in the United States on the job. He said the cost would be significant. Alderman Ferrell asked for an explanation of the term integrated engineering and construction team. Don Evans said it is the new approach people are taking that they call design -build, construction management design -build, anything you might want to call it. It may be something you're not interested in. It's find with us if you're not. Steve Philips introduced himself as the principal in charge for the Black and Veatch work that is being done for Fayetteville right now. He said that Earl Jenkins, also in attendance, is the project manager. He said that while the situation the City finds itself in right now isn't pleasant, and it's not something that anyone can just open their spec book and make $10 million go away. But there are some approaches that can be taken if the City is interested. The question is could there be a project built for less money. Probably. Whether it would be a project the City would be comfortable with or not won't be known until they can look at some of the kinds of things that have been mentioned. He said they would take senior specialists out of his and OMI's firms and get their best ideas to reduce the costs for the City. Some of the questions they will ask is what the City's quality limits are, and if we are interested in staging things or deferring some facilities to a future time. He doesn't know the answer to those questions but asked if the City is interested in having any of these questions brought up to look at them closer, then that's the kind of service that Black and Veatch and OMI can offer. Alderman Cook clarified that the staff is not looking for a decision tonight. Gary Dumas said that given the timeframe, though they don't want a decision tonight but will want a decision as soon as possible. He thinks it is prudent to explore the options. We may not find anything, but we know what the potentials are for repackaging — about $2 million, maybe a little more by bidding the road construction separately. If the Council is interested in looking at these other options, we could tell both groups today to go ahead - tell MWY to go ahead and repackage the bid and tell Black & Veatch and CH2M Hill to begin that analysis. In four weeks we would be ready to rebid. Alderman Jordan said he thinks they need to know what it is going to cost for them to look into this thing. Gary Dumas said he understands there is no price tag on this right now. Don Evans said they could certainly give the Council a budget if they want one. 113 West Mountain 72701 (479) 521-7700 (479) 575-8257 (Fax) accessfayetteville.org City Council Water & Sewer Meeting Minutes August I, 2005 Page 8 of 9 Steve Davis asked what deliverable the City could expect from CH2M Hill and Black and Veatch in four weeks. Would it be a report listing what has been reviewed. Earl Jenkins there would be some customized report but what the City is really after is present cost, present value. We have no way to find out exactly what the contractors bid on each item. They would have their estimators look, estimate the cost and see if by going at it a different way to get to the same place, what that cost would be. It is also important that they show the impacts on the schedule that would come from that change and they would need to have some discussion with the City about the perception of risk their companies might have. Steve Davis said that he would be concerned about is that the original estimate assumed a $4.1 million operating cost for the new plant in 2006. So that is a threshold he would be interested in maintaining. Gary Dumas is interested in maintaining the 33 to 36 month bill schedule. Gary Dumas said that all the quality factors that we have already said we wanted are givens. They are not debatable. Don Evans said they agreed to that. Gary Dumas asked if the low bidder on the rejected bid wanted to make a comment. Chad Weisler, Van Horn Construction said he thinks there is a little bit of misconception about the bids. MWY has done an excellent job on the drawings. They are clear and clean. His company feels they have a good bid. The 25% law is there for the protection of the City. However, he said that according to Leo Munsford at the State Building Services you can actually award this job if the City has the money. He said the City would have to send him a letter stating that the estimate you had appropriated is incorrect. He also said that work loads are becoming very heavy. His company is in a position where they could do the job — in a month they might not be able to in that position. In twelve weeks they might not bid the project. Alderman Ferrell said if he understood it correctly, the Council was uneasy with the DBO idea two years ago. He said he feels going that direction would cause the project to loose continuity. He said he would also save the money it would take to pay the tiger team and check into this before the tiger team takes off. Alderman Cook said he would like to see a budget and a scope from B&V and CH2M Hill and he would also like to look into the issue regarding the 25% with the State Building Services. Alderman Reynolds asked how soon Van Horn could start if they got the bid. Chad Weisler said he said the City should set up a value engineering committee with the City, the MWY team & the Van Horn team and work on taking out some things out that you don't need, i.e. the trailer. He said there were other things in the plans that they could save us money on, small items that will not affect the treatment process. He said they would not propose anything that would change the design but they might see small things that have been overlooked. He said they would like to work with the City. But you have to have a realistic goal, not $49 million. 113 West Mountain 72701 (479) 521-7700 (479) 575-8257 (Fax) accessfayetteville.org City Council Water & Sewer Meeting Minutes August I, 2005 Page 9 of 9 Steve Davis said he would call Leo Munsford Tuesday and will let the Committee know what he finds out. Alderman Ferrell said he would like for the City Attorney to hear what Leo has to say and then give an opinion. Alderman Cook asked Jim Ulmer if MWY would continue working on repackaging or would they wait for the next few days and see what happens at this point. Jim Ulmer said he that would be the Committee's call. If the Committee wants to move forward, MWY is ready to do so. Gary Dumas suggested another Water & Sewer Committee as soon as possible. The Committee agreed to schedule a meeting on Thursday, August 4 at 5:00 before the Transportation Committee meeting. WSIP Revised Cost Summary Gary Dumas said he thought one of the problems in the past has been a lack of timely, updated cost estimates. He said the staff would provide one to the Committee on Wednesday and then will update the estimates quarterly until everything is bid and awarded. David Jurgens said the engineering firms are already working on developing estimates based on the newer information available. Steve Davis informed the group that if they decide on the tiger team option and its over $25,000 it will require a bid waiver from the Council. Water Usage and Capacity David Jurgens said due to the hot and dry weather, Rogers and Bentonville have been under a voluntary water conservation measures. Fayetteville has not been and does not need to be. Our storage capacity and transmission capacity are in good shape. We should not have any need for conservation measures. If we were to have to go under any voluntary conservation measures, it would be at the Beaver Water District request because of their plant production capacity. Reroute Alternative Analysis David Jurgens talked about the process staff is going through procuring land for easements for sewer lines. He said he would be presenting the items to the Committee as they are finalized Staff has a map on the computer that will be updated every two to three weeks with easements already acquired being marked as green (those not acquired are red). This map will be made available to the Committee. 113 West Mountain 72701 (479) 521-7700 (479) 575-8257 (Fax) accessfayetteville.org