To: Honorable Mayor and Members of Town Council
From: Andrew Focht, Project Manager
Title
Resolution Approving an Amendment to Increase the Purchase Order for the Construction Contract between the Town of Castle Rock and Jalisco International Inc. for the Plum Creek Parkway Widening and Roundabout Project [Gilbert Street to Eaton Street]
Body
________________________________________________________________________________
Executive Summary
The purpose of this memo is to obtain approval (Resolution - Attachment A) to increase encumbered funds for Purchase Order #2021 (Attachment B) from $6,817,147 to $7,507,723 (an increase of $690,577). Purchase Order #2021 encumbers funds for the construction contract between the Town and Jalisco International Inc. (Jalisco) for the Plum Creek Parkway Widening and Roundabout Project.
As construction has progressed, it has been determined that additional work must be completed to deliver the project as designed. The additional costs can be categorized into four categories as outlined in the discussion section. It should also be noted that the proposed increase is accounted for in the budget amendment approved by Town
Council in July.
History of Past Town Council, Boards & Commissions, or Other Discussions
A resolution (2020-028) approving a construction contract with Jalisco was unanimously approved by Town Council on 03/03/2020. A budget amendment to the accounts funding the construction project (accounting for the proposed Purchase Order increase) was unanimously approved by Town Council on 07/07/20. The current resolution was also unanimously recommended for Town Council approval by Public Works Commission on 08/03/20.
Discussion
As with any construction project, changes in the anticipated total cost are common. Typically, the risk of these cost changes are addressed by providing a “Town Managed Contingency” within construction Purchase Order Agreements. Standard contingency amounts for construction contracts typically fall in the range of 10-15% of total construction costs and are used to mitigate unforeseen conditions and additional costs. However, this project has presented a number of challenges that will exceed the current 10% contingency amount. The known additional costs originate from: contract quantity adjustments, additional traffic considerations, schedule maintenance cost and additional contingency. The costs are illustrated below on Table 1.
Contract Quantity Adjustments
As construction progresses, quantity adjustments to the original contract must be made in order to construct the project as designed. The amount of these adjustments currently account for $686,963 of the unanticipated costs and are further detailed on Exhibit 1. The majority of quantity adjustments outlined in this line item are a result of incorrect quantification of work at bid time. Projects of this size and complexity typically result in quantity adjustments in the range of 3-5% of total contract value. The current adjustment (10%) is outside the normally anticipated adjustment range, thus the project team has taken action to address the root cause with the design consultant. This action has resulted in additional quality control reviews, design revisions and monetary contributions to the project made by the design consultant in the amount of $75,000.
Additional Traffic Considerations
In order to maintain a high level of service to residents traveling through the project, additional consideration will need to be given to traffic impacts during construction. The project has implemented a temporary signal at the intersection of Plum Creek Parkway and South Gilbert Street to improve service to residents. Moving forward, additional grading effort and detour pavement may be necessary to construct the roadway while maintaining traffic. Adding 50% of the current amount earmarked for detour pavement and an additional 25% to the current total for traffic control will be sufficient to maintain a high level of service to residents. The estimated cost for these changes total $127,563.
Schedule Maintenance Cost
During construction of phase 1A, new utility installations and unforeseen site conditions have resulted in a delay in project completion. Some of these conditions include; unanticipated soil conditions, unidentified utilities and erroneous utility locations. The completion delay of phase 1A may lead to a corresponding delay of completion of phase 1B construction. In order to be proactive in the maintenance of the construction schedule and achieving project completion within 2020, additional encumbrances must be made for potential construction acceleration. CDOT and Town cost data show that 3% of the construction contract value ($185,922) for a project of similar scope and duration would be adequate to account for these costs.
Additional Contingency
As with all construction projects, reserves must be set aside for unknowns. It is appropriate at this stage in construction to add 5% ($309,870) of the original contract value to be reserved for unanticipated site conditions.
|
TABLE 3: PHASE 1 CONSTRUCTION COSTS SUMMARY |
|
Category |
PO Number |
Additional Amount |
|
Contract Quantity Adjustments |
2021 |
$ 686,963 |
|
Additional Traffic Considerations |
2021 |
$ 127,563 |
|
Schedule Maintenance Cost |
2021 |
$ 185,922 |
|
Additional Contingency |
2021 |
$ 309,870 |
|
|
|
|
|
|
Total Additional Cost |
$1,310,317 |
|
|
Current Contingency |
$ 619,741 |
|
|
Difference |
$ (690,577) |
Budget Impact
The funds necessary for the Purchase Order Amendment are included in the project’s amended budget approved by Town Council on 07/07/20 and confirmed by the Finance Department.
It is proposed that $690,577 be added to Purchase Order #2021 for a total encumbrance of $7,507,723. The additional amount will be labeled as “Town Managed Contingency” to be used as described above. The additional $690,577 will be funded by
account # 135-3175-431.77-05.
Staff Recommendation
Staff recommends Town Council approve the Resolution as introduced by title.
Proposed Motion
“I move to approve the Resolution as introduced by title.”
Attachments
Attachment A: Resolution
Attachment B: Purchase Order #2021
Exhibit 1: Change Order(s) Schedule of Values