To: Honorable Mayor and Members of Town Council
From: Mark Marlowe, P.E., Director of Castle Rock Water
Title
Resolution Approving an Escrow Agreement between the Town of Castle Rock and Plum Creek Water Reclamation Authority for Construction Phase Engineering Services for the Wastewater Treatment Plant 3.0 MGD Expansion
Body
________________________________________________________________________________
Executive Summary
Castle Rock Water is seeking Town Council approval of a Resolution (Attachment A) for a Construction Phase Engineering Escrow Agreement (Exhibit 1) with Plum Creek Water Reclamation Authority (PCWRA) for the wastewater treatment plant 3.0 million gallons per day (MGD) expansion. The agreement obligates the transfer of Town funds in the amount of $1,078,323 for Construction Phase Engineering Services for the expansion. This amount will allow PCWRA to amend the existing design contract with Burns and McDonnell Engineering Company, Inc. (Burns and McDonnell) to add construction phase engineering services.
Burns and McDonnell was retained by PCWRA to complete design of the 3.0 MGD plant expansion through a competitive request for proposal (RFP) process. Design of the plant expansion began in August 2017 and is nearing completion. Through a publicly advertised request for qualifications (RFQ) and RFP process, Moltz Construction, Inc. (Moltz) was retained by PCWRA to provide Construction Management/General Contractor (CM/GC) services for the proposed expansion through a Guaranteed Maximum Price (GMP) contract. Moltz has begun mobilizing to the site and construction activities are underway.
PCWRA solicited a proposal from Burns and McDonnell for construction phase engineering services. Due to the complexity of the overall project, it will be crucial to have the Design Engineer onsite to ensure that the project is constructed in accordance with the design intentions and assist PCWRA in meeting effluent water quality requirements during and after construction. Burns and McDonnell’s proposal for these services (see Attachment B for full scope) is $1,078,323.
History of Past Town Council, Boards & Commissions, or Other Discussions
On June 20, 2017, Town Council was briefed on the PCWRA 2017 Capacity Study Update and the need for expansion of the treatment plant.
On August 23, 2017, the Castle Rock Water Commission unanimously voted to recommend Town Council approval of a Resolution approving a Professional Services Agreement between PCWRA and Burns and McDonnell Engineering Co., Inc. (Burns and McDonnell), for the design of the PCWRA plant expansion.
On September 5, 2017, Town Council voted to approve and fund a Professional Services Agreement between PCWRA and Burns and McDonnell for the Design of the PCWRA Plant Expansion in amount of $1,317,414.
On March 26, 2018, the PCWRA Board approved entering into contract negotiations with Moltz for preconstruction services for the 3 MGD Capacity Expansion, in the amount of $70,363, contingent upon Town of Castle Rock funding approval.
On May 18, 2018 the Town Manager’s Report provided a project update to council regarding selection of Moltz for CM/GC services for the 3 MGD Capacity Expansion.
On July 25, 2018 the Castle Rock Water Commission voted unanimously to recommend Town Council approval of a Resolution approving Work Package One Construction Escrow Agreement with PCWRA, CPMD, and CPNMD in the amount of $13,907,353. Note that this amount represented the Town’s share before the PCWRA entities approved in principle the cost sharing split.
On August 21, 2018, Town Council voted to approve Work Package One Construction Escrow Agreement and fund the Town’s share of the costs in the amount of $11,837,637.
On October 24, 2018 the Castle Rock Water Commission voted unanimously (7-0) to recommend Town Council approval of the escrow agreement for construction phase engineering services for the wastewater treatment plant 3.0 MGD expansion.
Discussion
Castle Rock Water has been planning for a capacity expansion of the PCWRA wastewater treatment facility since 2015. A 2017 capacity update study revealed that an expansion of three million gallons per day (MGD) of average day capacity may be needed as early as 2020, with construction beginning in late 2018 to meet Colorado Department of Public Health and Environment (CDPHE) regulations. Original conceptual level estimates for the expansion were in excess of $47 million.
Design of the plant expansion began in August 2017 with award of the design contract to Burns and McDonnell in the amount of $1,317,414. Burns and McDonnell staff completed thirty percent design documents in early 2018. The design includes improvements that will increase the rated hydraulic and treatment capacity of the plant from 6.44 MGD to 9.44 MGD. The design encompasses significant improvements to the plant headworks, tertiary filtration, ultra violet (UV) disinfection, and solids handling systems. Burns and McDonnell’s thirty percent design preliminary conceptual cost opinion was approximately $34 million.
In order to meet the accelerated schedule while delivering a quality-constructed project that maximizes value, staff recommended project delivery utilizing Guaranteed Maximum Price Construction Management (GMPCM). The GMPCM method involves hiring a construction manager/general contractor (CM/GC) to perform contract administration and guarantee a maximum price for the complete project. The owner and CM/GC agree on the price before the construction phase begins. Once construction starts, all work is awarded through a competitive subcontractor bidding process. The Owner, CM/GC, and Engineer work collaboratively to design a project that fits a given budget and adjustments to the project design and/or budget are made during the design phase to ensure a successful project that meets the Owner’s expectations regarding cost, quality and schedule. The CM/GC’s expertise in construction, contracting, and estimating can influence decisions made by the design consultant to keep project costs to a minimum in a manner consistent with the owner’s objectives for quality and functionality. Through a publicly advertised RFQ/RFP process, Moltz was selected by PCWRA and Town staff as the top-ranked contractor to provide CM/GC services for the proposed expansion.
PCWRA and Town staff worked with Moltz to refine the budgetary construction estimate into an Initial Guaranteed Maximum Price (IGMP) for the project. The IGMP includes the cost of general conditions, overhead and profit, and the direct cost to do the work. PCWRA, Moltz, and the Town worked together to develop an agreed upon IGMP for the work based upon the thirty percent design documents. The agreed upon IGMP for the project was $32,196,804. This amount was finalized prior to execution of the CM/GC services contract between PCWRA and Moltz. The scope of services authorized by the contract was preconstruction services only, with a not-to-exceed fee of $70,363. The agreed upon IGMP serves as the budgetary target for the remainder of the design process.
Burns and McDonnell completed sixty percent design documents in May 2018. Moltz’s updated sixty percent construction budgetary estimate was $33,359,726. This represents a 3.6 percent increase over the original IGMP.
In order to keep the project on schedule, the team decided to split project construction into two work packages. Construction Work Package #1 is primarily process equipment procurement from vendors along with early site grading, utilities, demolition, and electrical work. PCWRA has contracted this work with Moltz and construction is beginning in October 2018. The balance of the project scope is included in Work Package #2 and Moltz is currently bidding this work to subcontractors. This split work package configuration allows the Town to allocate funds for Work Package #1 and Work Package #2 that are within the established budgets for 2018 and 2019. Burns and McDonnell is finalizing design documents for construction, Moltz is competitively bidding various scopes of the construction work, and the project is transitioning from design to construction.
PCWRA solicited a proposal from Burns and McDonnell for construction phase engineering services. The wastewater treatment plant cannot be taken offline during construction and the project will require retrofit construction of various treatment processes that must be completed under live flows or with temporary alternative treatment processes in place. Due to the complexity of the overall project, it will be crucial to have the Design Engineer onsite to ensure that the project is constructed in accordance with the design intentions and assist PCWRA in meeting effluent water quality requirements during and after construction. Burns and McDonnell will provide design staff assistance, as well as a full-time resident project representative, for approximately eighty percent of the 24-month construction duration. Burns and McDonnell staff will provide the following services during construction;
• Attend and document construction meetings
• Review contractor submittals
• Review and respond to requests for information from the contractor
• Observe and report on critical construction events
• Inform owner on progress and quality of construction work
• Verify and witness tests and equipment startups
• Conduct special inspections for structural work
• Assist with inspections and punch lists for substantial and final completion
• Provide assistance for start-up treatment processes
• Prepare an O&M manual for the project
• Issue CDPHE certificate of completion and secure final approvals
• Prepare final Record Drawings
See Attachment B for the full scope of construction phase engineering services that will be provided by Burns and McDonnell. The total proposal amount is $1,078,323.
The Construction Phase Engineering Services Escrow Agreement (Exhibit 1) attached will authorize transfer of funds to a dedicated PCWRA-managed escrow account. This will allow PCWRA to contract with Burns and McDonnell for the proposed construction phase engineering services.
Budget Impact
Funding for this project is included in the 2018 budget under PCWRA Capacity Expansion. Upon approval, $1,078,323 will be transferred to the PCWRA Capacity Expansion Construction Phase Engineering Escrow Account.
|
Project |
Account Number |
Current Balance |
Transfer Amount |
|
PCWRA Capacity Expansion |
213-4575-445.78-79 |
$ 4,603,500 |
$ 1,078,323 |
The Construction Phase Engineering Escrow Agreement obligates the Town to deposit funds authorized for the project into an escrow account maintained by PCWRA. Funds held in the escrow account will be released for payment of Burns and McDonnell’s invoices after review and approval in writing by the Town.
A Design Escrow Agreement executed between the Town and PCWRA in November 2017 previously transferred $1,317,414 from the Town to a PCWRA-managed escrow account for Burns and McDonnell’s design contract with PCWRA. A Preconstruction Escrow Agreement executed between the Town and PCWRA in April 2018 previously transferred $70,363 to a PCWRA-managed escrow account for Moltz’s preconstruction contract with PCWRA. The Construction Work Package #1 Escrow Agreement executed between the Town, PCWRA, CPMD, and CPNMD in September 2018 previously transferred $11,834,638 from the Town to a PCWRA-managed escrow account for Moltz’s Construction Work Package #1 contract with PCWRA. The Town anticipates recovering a portion of these costs as part of a cost-sharing agreement for the project.
The established IGMP for construction of the plant expansion is $32,196,804. It is currently anticipated that the construction contract will be amended with the remainder of project construction scope as Work Package #2 in early 2019. PCWRA, Burns and McDonnell, and Moltz are contractually obligated to work together to keep the project construction costs within the established IGMP.
Other anticipated costs in addition to Burns and McDonnell’s Engineering Services and Moltz’s GMP contract will include permitting fees, utility service upgrades, construction testing services, and other miscellaneous construction costs necessary for the expansion. These costs are currently estimated at approximately $500,000.
PCWRA is working with the Town to finalize an expansion cost-sharing agreement that will establish the escrow account for the construction funding. The agreement will outline the cost responsibilities of all PCWRA entities participating in the plant expansion, as well as any repayment terms and conditions necessary. Per the tentative cost sharing agreement, Castle Rock Water’s share of the total project costs are estimated at 85.10 percent ($29,439, 679), allocated between ten percent to existing customers to cover the costs of improvements, and ninety percent to new customers (recovered through system development fees) to cover the costs of capacity expansion. Castle Rock Water’s anticipated share of the 3.0 MGD capacity expansion is 86.3 percent, or 2.59 MGD. See (Attachment C) for a draft summary of the cost split estimates.
Staff Recommendation
Staff requests Council approval of the Construction Phase Engineering Escrow Agreement with Plum Creek Water Reclamation Authority (PCWRA) and obligation of $1,078,323 for these services.
Proposed Motion
“I move to approve the Resolution as introduced by title.”
Attachments
Attachment A: Resolution
Exhibit 1: Escrow Agreement (Draft)
Attachment B: Design Agreement
Attachment C: Summary of Costs (Draft)