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Home My WebLink About5/6/2009 - STAFF REPORTS - 2.I. ppLM SA �oF 'Pi c U N t City Council Staff Report Date: May 6, 2009 CONSENT CALENDAR Subject: APPROVAL OF AMENDMENT NO. 1 TO NOTICE TO PROCEED FOR VEOLIA WATER NORTH AMERICA-WEST, LLC, FOR THE FINAL DESIGN PHASE OF THE DIGESTER NO. 1 REHABILITATION, CITY PROJECT NO. 08-09, From: David H. Ready, City Manager Initiated by: Public Works and Engineering Department SUMMARY Approval of this item revises the City's prior authorization to Veolia Water North America-West, LLC ("Veolia") to proceed with the completion of plans and specifications, and construction bidding, for the rehabilitation of Digester No. 1 at the wastewater treatment plant. Veolia's prior proposal involved a design-build approach; it is staffs recommendation that wastewater treatment plant projects use the typical design-bid-build approach to take advantage of the current construction market. RECOMMENDATION: Approve Amendment No. 1 to a Notice to Proceed authorized by the City Council on December 17, 2008, for Veolia Water North America-West, LLC, for an increase of $290,626.48 for a total amount of $743,000.14 for the design and bidding phase of the Digester No. 1 Rehabilitation, City Project No. 08-09, STAFF ANALYSIS: Previously, the City and Veolia coordinated the overhaul of the wastewater treatment plant Digester No. 2 system, which is now operating as the City's primary digester. Currently, the previously used primary digester (Digester No. 1) is not in operation. On December 17, 2008, the City Council approved a Notice to Proceed to Veolia in the amount of $503,826 for advance acquisition of specified equipment and completion of design-build plans. This budgeted wastewater treatment plant Capital Project will overhaul Digester No. 1 similar to the recently completed Digester No. 2 project, such that both of the Digester systems are operational and on-line. ITEM NO. Z ` City Council Staff Report May 6, 2009—Page 2 Amendment No. 1 to Notice to Proceed for Digester No. 1 Design In accordance with Section 5.3(f) of the Amended and Restated Wastewater Services Agreement between the City and Veolia, Veolia is entitled to make a first proposal to do any Capital Project related to the wastewater treatment plant. This section of the Agreement specified the typical design-build approach to wastewater treatment plant capital projects, where Veolia would first: prepare 30% designs and estimated cost, and second: procure and bid based on subsequent designs and submit proposal for construction. This design-build approach for straightforward wastewater treatment plant projects proved too cumbersome for staff to implement, and removed the standard bidding process where competitive bidding ensures that the lowest, responsive and responsible bidder is awarded the contract. As Veolia operates as the General Contractor on behalf of the City for wastewater treatment plant projects, under the design-build approach, Veolia solicits bids from sub- contractors for the specific trades required in a wastewater treatment plant project (such as mechanical plumbing work or electrical work). The City is not involved with and does not control Veolia's bidding process. The Director of Public Works and his staff were determined to ensure that Veolia's bidding process was as inclusive as possible, however, Veolia as the General Contractor assumes all risk and liability with wastewater treatment plant projects, and had concern with soliciting bids from inexperienced sub- contractors. The Notice to Proceed authorized on December 17, 2008, included completing the design-build approach for the Digester No. 1 Rehabilitation. Subsequent to Council's authorization, staff continued to pursue a change in capital project management approach with Veolia, to move away from the design-build approach to the typical design-bid-build approach, as a way to address staffs concerns that Veolia's internal bidding process was not as inclusive as the City would expect or require. As City-Veolia discussions on this issue continued, an unexpected change in Veolia management occurred. The currently assigned Veolia management understands staffs concerns for using an inclusive bidding typical of the design-bid-build approach, and has agreed to implement the design-bid-build approach for the City's projects. Veolia still assumes all risk and liability with wastewater treatment plant projects under the design-bid-build approach which includes the design, construction and operational performance of each project. Previous Veolia proposals for wastewater capital projects were based upon a Veolia derived margin which included markup, overhead and profit. Veolia agreed to modify their proposal methodology to be based upon a markup only for vendors, professional services and contractors. Veolia labor will be an all inclusive rate that accounts for overhead, profit and other direct costs such as office supplies, telecommunications and associated expenses. Veolia proposals include the numbers of hours per position for the individual projects being proposed so the City can review and request adjustment if necessary. With the new procedure in place for procurement of capital projects, Veolia reviewed the initial proposal associated with Digester No. 1 Rehabilitation. The result was a revised proposal associated with City Project # 08-09. The revised amount for %2 City Council Staff Report May 6, 2009— Page 3 Amendment No. 1 to Notice to Proceed for Digester No. 1 Design the initial phase of the project is $452,373.65 versus the original approval project budget of$503,826.00. This is a decrease of$51,452.35. Veolia has submitted an amended proposal to account for final engineering, additional engineering scope and bid services. The original Veolia proposal did not include preparation of final plans and specifications that are suitable for normal bidding, being equivalent to 60% level drawings suitable for design-build contracts. The amended proposal includes design services necessary to prepare final plans and specifications suitable for bidding, equivalent to 95% level drawings. The additional design fee is $163,376 which includes markup, from Veolia's consultant, Carollo Engineers, and includes designing additional items for the project not previously included in the original proposal: 1) Adding a second boiler, to provide redundancy and reliability, such that each digester has its own boiler to provide required heating for wastewater treatment; and 2) Upsizing methane gas waste flare piping and valving, to be available for future replacement of the existing methane gas flare Veolia's amended proposal also includes more hours for Veolia project management staff not previously included in this project. These hours are related to Veolia's coordination of the pre-qualification of sub-contractors for the City's wastewater treatment plant projects. Staff understood Veolia's concerns with using inexperienced or unqualified contractors for wastewater treatment plant projects, and suggested that the City and Veolia coordinate on a pre-qualification process. Subsequently, the City issued a Notice Inviting Statements of Qualifications ("SOW) on March 24, 2008, on behalf of Veolia, requesting qualifications from contractors in the following trades: Scaffolding, Fencing, Earthwork, Paving, Demolition, Concrete, Metals, Coatings, Painting, Mechanical, HVAC and Electrical. To ensure a far-reaching and broad solicitation, Notices for the SOQ were published in the following newspapers: The Desert Sun, The Orange County Register, the Press Enterprise and San Diego Union- Tribune. The deadline to submit qualifications is May 8, 2009, Upon receipt of the qualifications, the City will forward the qualifications to Veolia for review and approval. The approved, or pre-qualified, contractors will then create the pool of bidders with whom Veolia will solicit bids on all wastewater treatment plant projects. The additional Veolia labor of $125,251.48 represents Veolia's estimated time to coordinate the pre-qualification of contractors for wastewater treatment plant projects, prepare bid packages and solicit bids from qualified contractors and was not included in the prior Veolia proposal. The labor associated with pre-qualifying contractors will not be required for future projects, as the list of pre qualified contractors will be used for this and other future wastewater treatment plant projects conducted in the next three years. Staff is greatly encouraged by Veolia's willingness to use the typical design-bid-build approach on the City's wastewater treatment plant projects to capitalize on the current City Council Staff Report May 6, 2009— Page 4 Amendment No. 1 to Notice to Proceed for Digester No. 1 Design construction market which may result in significantly reduced construction costs for this and future wastewater treatment plant projects. The process also provides greater transparency of the procurement process and allows City staff to be involved in the various phases of each project. Staff has reviewed Veolia's amended proposal, and recommends approval of the additional fee of $290,626.48 which includes additional professional design fees for Veolia's consultants, additional Veolia labor fees for coordinating a pre-qualification process, and a 12.5% mark-up as authorized pursuant to the Agreement. FISCAL IMPACT: Sufficient funds are available in the Wastewater Treatment Fund Account No. 420- 6800-57023 (Digester Rehab 1). Submitted: David J. Barakian Thomas J. Wildon Director of Public Works/City Engineer Assistant City Manager David H. Ready, City M a Attachments: 1) Veolia Proposal CITY OF PALM SPRINGS Project: Digester#1 Final Design and Bid Services Project#: 3301700 Updated:4122109 PROFESSIONAL Descri tion TP 08-09 RevisedI Final Desi nS Bid Services Revised Total 100 Oemolitlon Subcontractors $ S $ 3 101 Site Remediatlon Subcontractors $ 66 183.75 11 5 S 3 55 155,75 102 Earthwork Subcontractors $ 5 $ S 103 Civil/Corcreie Subcontractors 5 $ 5 3 104 GeneraI/Buflding Subcontractors 5 5 S 6 105 Mechanical Installation Subcontractors S 3 S S 106 Electrical Inst'allaton Subcontractors S 14 525 00 S 3 _ S 14 625.D0 107 Field Erected Tanks Subcontractors a a 3 103 Miscellaneous Installation Subcontractors 5 S 5 _ 150 Professional Services $ 294 944 63 $ 166 376,00 5 3 370 319.53 160 Imorcom an Services $ $ S SUBTOTAL S 285753.38 5 165375.00 S 3 45113a 38 DesCTIPtiOn 200 Mechanlc al E ui ment $ 172 528 BS 5 5 S 172$26 6a 210 Eicctrlcal Equipment $ $ $ a 220 IntorcompaMV Equipment $ 5 $ a 230 Ocher E ul mem 5 5 $ SUBrOTALI 5 172 52e 88 1 1 $ I 1 $ 1 3 172 528.85 Descri lion 300 Pro ect Mana emen[ a $ 3 305 Senior Pro ect Mana emen[ 27 202.88 $ 61 208.48 $ 3 88 409 35 310 Project Ovorsl hi 5 7470.57 S 14,007,33 5 $ 21,477.90 320 Administmorl S 3 S S $30 Canstruchon Manager S S 3 5 340 Scheduler/Estimator S 1525552 3 47193,44 3 S 68448.96 350 Sr Construchon Manager 3 8615.85 a $ 5 5,51S,a3 360 Project Engineer S 5 2,844.23 S 2 544.23 370 x $ $ 5 S 360 Labor-Commissions $ $ S 390 0 erations Labor $ $ $ a SUBTOTAL S 50 544.80 S 125 251.48 S I I S 184,796 28 40-TRAVEL$.LIVING I CONCUR Description 400 Travel&LivingS S S S 400 Travel Livin Other 6 S 3 SUBTOTAL IS S 5 I S Descri mon 410 Trrao & 410 T &LLIV S S a 6 Other SUBTOTAL 1 S 3 Is S Descri tlon 500 Deduct for❑I ester Cleanin S 51,595 CO) S S $ B159G.00) 500 Surcry Bonds 5 S S S 500 8Id Bonds 5 S S S 500 8ullders Risk Insurance S $ $ 3 500 General Uabili Insurance 5 428510 5 $ S 4285.10 500 Sales&Use Tax $ 11 957.50 $ $ 3 11 857.50 500 License/Permit Fees $ $ 500 Pra em Develo ment Costs- S $ $ SUBTOTAL 5 65453.40) 5 3 (65453.40 Descri tion 600 General Site Costs $ $ s S 600 CM Llvin Ex erases 5 $ S S 310 Fleet Vehicle 5 15 1S 320 Start-u Casts 1 $ 3 SUBTOTAL $ 5 a 3 5 452,373,66 3 290,626.40 S 5 743,000.1M1 4I22120D9 C