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HomeMy Public PortalAbout20060302_TybeeCouncilMinsCouncil Minutes Page 1 of 7 Meeting of 2006-03-02 City Council Special Meeting Minutes Change Order discussion for Butler Avenue Water Main Improvements Mayor Buelterman called the special meeting of the Tybee Island Council to order at 6:30 PM. Council members present were, Wolff, Sessions, Crone, Pearce, Williams and Doyle. Also present was Assistant City Manager Dee Anderson. Mr. Greg Harris of Garney Companies, Inc. presented documentation for Council to review concerning the change orders. In opening he stated that Garney had laid the last piece of pipe yesterday. The next three weeks will be spent wrapping up including service connections and the final coordination and paving. From their perspective, it has been a great project and we’ ve gotten a lot of feedback from city staff that it’ s been a good project. We said at the pre construction meeting we were going to come in and be aggressive time wise and that is what we’ ve done. We interact with people on these projects all over the country and you can be proud of your staff and yourselves because it is enjoyable to have the owners engaged and working with us on the project. We believe the bigger issue is the quantities. Mr. Harris explained the differences between a lump sum contract and a unit price contract. This is a unit price contract. Most entities choose that contract when they cannot fully and readily identify the full scope of work. Typically they don’ t know where all the water services are at, so we think that is why you selected a unit price contract. As a contractor we price up those units not knowing what the final quantity will be. We believe one of the issues here is the perceived unit contract amount verses the final contract amount relative to those quantities. We are simply using the quantities required to complete the scope of work intended. There are some pretty significant quantity overruns on the final contract but that is not something we had any effect on. Normally on a project such as this you advertise the job and give a contractor thirty days to review the requirements and respond. We typically bid three or four hundred projects a year so everyday we are bidding a project somewhere. When we have a good set of contract documents, which we had on this project because the engineer did a great job, we look at the basic things we are interested in with that being the pipe work. We analyze the quantities and if they seem to be close we don’ t spend a lot of time or money trying to disprove the quantities in the contract. We assume those quantities are correct and we build our cost structure around it. Pages 3 and page 4 contain the quantities and the ones highlighted in yellow have not been verified yet. We wanted to let you know that those projected numbers may need to be adjusted once the audit process is complete. We believe the quantities listed are pretty accurate but we haven’ t finished measuring everything. If you total the quantities you will find they total three million three hundred and forty five thousand dollars. That is the projection of just the quantities it has taken to complete the project. The next two items listed are the agreed upon changes to the contract that everyone has signed off on. I think we have billed for one of those items but not the other. The marathon prep was the work required to safe up the job site and complete all the right things leading up to the marathon. Change number three has to do with the fairly significant amount of underground utilities that were unknown. A lot of times it is tough to know where the utility lines were installed many years ago. There were a fair number of unknown and unmarked utilities that we all sat down and agreed upon and pages 5 and 6 delineate those items. Next are the unresolved items with the first being unknown interference with the main line, which is a continuance of the items just above it. When the thirty thousand five hundred and eight dollar ($30,508) change order was issued, it was through a particular point in time. The five thousand Council Minutes Page 2 of 7 two hundred and fifty dollars ($5,250) is the additional utilities, from the time we agreed to the thirty thousand, to the end of the project. Concerning services, we have had a great deal of discussion and it’ s similar to the unknown interferences. With one item having to do with the mainline pipe or mainline utilities in your infrastructure and the service item having to do with individual services running off of the mainline. We think there is a disagreement relative to reading the contract documents as to whether or not we can be compensated for this. From our perspective there is a reasonable amount of unknown utilities that we should anticipate as a builder. What happened is those amounts exceeded anything we could have anticipated and we expect some financial help. Once we run into one of these unknown utilities we have to stop and depending on the situation we have to get fittings and go around things or over things or remove things. On page six you will see the delineation of where those occurred, how much time was involved and how we got to those numbers. The next line item is concrete removal. During the pipe laying we used a large asphalt mill to keep a nice tight trench. On a section of the job we ran into some concrete that not only damaged the mill but also at that point required a different technique and required significantly more time to remove that concrete. No one had knowledge of that prior to the job bidding. I heard rumors that there used to be a tank training facility here and maybe that was a concrete pad where tanks would cross the road. On pages seven and eight it goes into detail relative to that change. The last item will probably generate the most discussion and that is the installation of the grated aggregate base below the asphalt. Originally the contract required us to put a certain amount of stone underneath the asphalt prior to paving. Early on it was decided that stone was not needed and the stone would be deleted from the contract because the DOT would accept the concrete being applied directly over the sand and that’ s what we did. There is a pay item in the contract that we put in, a unit price of twenty dollars ($20) a square yard and that was to place and pack the stone. When the engineer came to us and asked to delete the stone we had to analyze that. We found our cost structure relative to that item is not necessarily reflected in the unit price item. The amount of stone that we did not have to purchase was roughly fifty eight thousand dollars ($58,000). We came back and said we were willing to give a credit for the amount of fifty eight thousand dollars ($58,000) for the stone but not two hundred and ten thousand dollars ($210,000) for the deletion of the stone. The only thing different to our cost structure is that actual amount for the purchase of the stone. All labor and equipment to build the job is the same. There have been numerous meetings and we wanted to talk about this. We feel we have done a good job for the city and we have enjoyed the process but this is not financially acceptable to us. We are looking to try and resolve these items in a manner that we can all feel food about. Mr. Pearce asked for the exact amount they were requesting and referred to the thirty thousand dollar ($30,000) change order. Mayor Buelterman said the thirty thousand dollar ($30,000) change order, number three in the packet has already been agreed upon along with change number two for the marathon. We are here to deal with the unresolved items on page four. Mr. Harris said one other item that came up yesterday with the Ga. DOT was concerning the painting of the line stripes. The DOT is requiring us to use thermal plastic for the line striping and they want us to mill off the old lines before painting. From our perspective that is not needed and from a cost standpoint hopefully sometime in the near future that roadway is going to be milled with an overlay. Because this hasn’ t been resolved we do not understand the cost impact and that is an issue. We have indicated to city staff members that if we can resolve the other items then we will work jointly with the DOT to minimize that expense. If we can resolve the other items we would be willing to absorb that expense in the spirit of the partnership we have had on this project. Mayor Buelterman asked for a ballpark figure of the amount for the striping. Mr. Harris said it would be fifty one thousand dollars ($51,000) if they want the entire project done with the thermal plastic. We think the DOT will require the thermal plastic on at least two lines over the entire project but we think we can work this out. Mr. Pearce asked how much more Garney is Council Minutes Page 3 of 7 asking for. Buelterman said two hundred twelve thousand four hundred and twenty one dollars. Mr. Harris said that amount represents the unresolved financial issues. Ms. Sessions said about the fifty eight thousand dollars ($58,000) that you did not use to purchase the stone, are you saying that you will absorb that expense. Mr. Harris said there is a unit price payout that is relative to the placement of materials such as the stone. We are saying we still need to be paid the unit price relative to that item less the cost of the stone. Ms. Sessions said you are requiring us to pay you everything else included in that bid associated with laying that stone. Mr. Harris said that is correct we essentially bid that item at twenty dollars ($20) a square yard and our cost relative to the stone is five dollars and thirty cents ($5.30) a square yard. Ms. Sessions said in trying to justify that cost, what are we getting for that amount? Mr. Harris said you have gotten the rest of the construction project. If this was a lump sum job and we agreed to build the job for three point six or three point seven million dollars and you came to us after the fact and said we want to delete the stone. We would have gone through the contract and found the cost associated with the stone and given a fifty eight thousand dollar ($58,000) credit. But this is a unit price contract so we need to amend the unit price to reflect that change. Ms. Williams said going back to the stone that wasn’ t purchased did you not factor in the labor cost associated with hauling and laying that stone? Mr. Harris said the hauling cost is within the fifty eight thousand dollars ($58,000) and the labor was still used. Instead of placing stone we placed dirt which actually is more labor intensive because of varying moisture content and takes more compacting effort on our part then the stone would have. We decided not to split hairs on this considering the good people you have on staff and the overall experience of this project. The effect this had on labor and materials, we did not feel warranted getting into that much detail. Mr. Wolff said the big item is the cost of the concrete that went from roughly seven thousand cubic yards to eleven thousand cubic yards at a cost of two hundred and eighty thousand dollars ($208,000). Mr. Harris explained that in a unit price contract the amount is based on numbers shown in the bid documents. But in reality the actual numbers are much more than are contained in the bid form. We do not have a choice of numbers we base our numbers on the numbers contained in the bid form. The bid form had seven thousand and eighty eight (7,088) cubic yards of concrete. The actual amount that it has taken to pave the streets has been eleven thousand eighty seven (11,087) cubic yards. Mr. Wolff asked why such a big discrepancy? Mr. Harris said he thinks it was a mistake in the bid documents. In some instances the quantities in the bid form were not accurate. Mayor Buelterman asked Mr. Lovett of Hussey, Gay, Bell and DeYoung (HGBD) for a response. Mr. Lovett asked what Council wanted them to do. Buelterman said they wanted Mr. Lovett to advise them. Mr. Lovett said he had not seen the document that was given to Council at the beginning of the meeting. Mayor Buelterman asked if Mr. Lovett was unaware of the figures and numbers contained in the document. Mr. Lovett said no. Mr. Lovett looked at the document and Mayor Buelterman asked if he was in agreement with the assessment that Mr. Harris gave to them. Mr. Lovett said no. He does agree that Garney has done an outstanding job on this project. We have had no citizen complaints and they have managed the job extremely well. We are thoroughly pleased with the work they have done and there is no question about that. We had a meeting with Garney and their representative about a month ago and we agreed on some items we felt Garney was entitled to be compensated for. Those items were what we call a wet tap in that we thought a business was served from the rear and put a line in and paved over it and then found that it was actually served from the front and we had to go back and instead of cutting the asphalt they made a wet tap on the water line and that cost about fifteen hundred dollars ($15,000) and we thought they should be paid for that. There were some instances where they were delayed in the work that they were doing and we felt they should be paid for those instances, as it said in the specifications, and that was about twenty one hundred dollars ($2,100). We prepared a change Council Minutes Page 4 of 7 order, which is an amendment to the contract between the city and the contractor. It isn’ t a change order until everybody signs it. They present us with the prices and we review those prices for the benefit of the city and recommend approval. Even though we are not a party to the contract the change orders have a place for us to sign recommending approval and we have done that. We sent that change order to Garney on February fifth for them to execute and we don’ t normally bring that to Council until they sign the change order. We sent a copy of the change order to the city so that Jan could show it to the Council for review for an approval so that when Garney signed the change order Council would have already approved it and the City would sign off on it. That way Garney could include it in with their pay request. That was change order number three and as far as we know it is still in Garney’ s hands. Mr. Lovett said in regards to Mr. Harris making reasonable assumptions regarding one of the issues concerning the number of laterals that he would have to repair. The contract specifications, which we cannot change unless Council changes them, say you will not be paid for replacing the laterals. The reason for that is that no city knows where all their service laterals are. The city staff and our firm did the best we could at identifying service laterals when we put the plans out for bid. That’ s all we can do, the contractor has to be responsible for the rest and the best way to find them is with a backhoe. Unfortunately that is what happens and that is the cost of doing business and we don’ t feel they should be reimbursed for any of those extra monies. Second item is concrete removal and Garney was not required to mill that asphalt. They chose to do that themselves. They could have removed the asphalt with a backhoe. We are glad they used a milling process. We feel that the subcontractor, the milling company that was doing that work, deserves extra money for hitting that concrete. If Garney had been removing the asphalt with a backhoe and hit the concrete we would have Okayed a change order for a certain amount of money to deal with the concrete because that is an unexpected item that they would have to deal with. What Garney is requesting is reimbursement for their subcontractor’ s cost plus delay time for themselves. We do not think they deserve the amount for additional delay time. We feel the amount for the subcontractor with a reasonable mark up for Garney is what they should be paid. Mayor Buelterman asked for a ballpark figure of the delay time amount. Mr. Lovett said fifteen thousand dollars ($15,000). Mr. Harris said our cost is not delay time. We had to put men and equipment with the subcontractor the entire time he was milling the asphalt. That was part of our deal with him. We milled because that was the most cost effective method. Our cost relative to the milling issue is for our men and equipment for the extra days in supporting that sub contractor. It is not a delay in the sense that they were at the field house playing cards. It was that he was not as productive in doing what he was doing. We still had to have the loaders and the trucks there in order for him to do his job. We were better off financially to provide our own support people instead of paying for him to provide his own support personnel. Mr. Lovett said they don’ t agree. Mr. Lovett said the third item is the graded aggregate base. Garney is correct in saying this is a unit price contract that is specific in what they get paid for. The twenty dollars a square yard is what Garney put in the contract. They’ re not going to do that work and we cannot approve payment for work they are not going to do. Instead of putting in six inches of graded aggregate base they have to put in six inches of dirt and the dirt comes out of the trench. The dirt is sitting right by the ditch that they can put back in the trench. They have to compact it and then pour concrete on top of it. They are due some money for those six inches of graded aggregate base but certainly not seventy five percent (75%) of the twenty dollars ($20) a yard. At the water and sewer committee meeting it was suggested five dollars a yard. We don’ t think just because they have other cost for the project in this line item that they should be paid this amount. They should be paid for the extra concrete for the concrete overrun. In the bid documents we estimated the trench being six feet wide for the concrete to have to go back into and the DOT required two more feet on either side so there is more concrete out there than we had anticipated in setting up the contract. That’ s why we do a unit price contract because a lump sum would not be fair to the contractor. Mr. Wolff said he made the five dollars a yard suggestion at the water and sewer committee meeting because the dirt was already sitting Council Minutes Page 5 of 7 alongside the trench. So you not only saved the cost of the aggregate but you also saved the haul bill. You just pushed it back in the trench and compact it. Mr. Harris said that is true. Mr. Wolff said that is why he thinks the fourteen seventy ($14.70) is way high. Mayor Buelterman asked Mr. Lovett what he thought would be fair. He said five dollars ($5.00) a yard. Mr. Lovett said when we first bid this job it came in at three point three million dollars and we did some cutting of the contract and reduced it to three million five thousand dollars ($3,500,000). In that three million five thousand dollars there was seventy one hundred (7,100) cubic yards of graded aggregate base at twenty dollars ($20) a yard which came up to one hundred forty two thousand dollars ($142,000). They have installed on the side streets three thousand sixty four (3,064) square yards. So they have been paid out of that one hundred and forty two that was set up in the original contract or in the change order, they have been paid sixty one thousand dollars ($61,000). Mr. Pearce said he understands that Mr. Lovett believes they should be paid something but he believes Mr. Lovett hasn’ t figured out the exact amount yet. Mr. Wolff said just to put it in perspective the difference would be one hundred seven thousand four hundred and seventy six dollars ($107,476), which is a substantial difference. Ms. Sessions asked if a change order had been done on the delay time or support time. Mr. Lovett said no because that is the change order that was coming for your approval but hasn’ t gotten here yet. Ms. Sessions asked if that work has already been done. Mr. Lovett said yes. Ms. Sessions asked if that was the first change order that was submitted after the work had already been done? Mr. Lovett said yes. Ms. Sessions said she thought that was what the City was trying to avoid, was work being done without a change order approval for it. Mr. Lovett said in a construction contract like this, you couldn’ t stop the project and say we have to wait until Council meets in two weeks. We have to make some decisions in the field and we think the contractor should be compensated for this work. The hard part about our job is being fair to both parties. Ms. Sessions asked if Mr. Lovett had agreed to that type of freedom on the price of the change order. Mr. Lovett said what they agreed to at the water and sewer committee meeting was, a thousand dollars an hour ($1,000/hr) was a reasonable number. We went back added the numbers that the contractor said he was delayed. They had nineteen or twenty thousand dollars (20,000) more in this item, we did not approve because they were service laterals. Mr. Wolff said on line 21 of page 3, it says connecting existing 2-inch water lines to new main, there were nine bid and twenty-nine (29) in actuality and that’ s about a fifty thousand dollar (50,000) difference. Mr. Lovett said that is the actual number we found every one of them. A service lateral is one inch or less. That number caught everyone by surprise. We have found out where a lot of the water lines are that were installed in the early nineteen hundreds. Mr. Pearce said it seems we cannot make a decision until we receive a recommendation from Mr. Lovett concerning a reasonable amount. Mr. Lovett said they planned to make a recommendation to the water sewer committee and have that committee present it to council at the next meeting. Mr. Harris said on the GAB issue, when we bid a construction project the unit price items don’ t live exclusive from each other, they live in consort with each other. There is not a magic book that gives us the perfect bid amount to turn in. We look at the plans and specifications and visit the site and do some basic take off of the pipe items and if we feel that it is quantitative than we sit down and do a construction estimate based on what we think it is going to take to do the job, based on how many feet of pipe we can lay a day and how many services we can install a day. We figure this out based on the owner’ s quantities. We start working out the bid amount by unit pricing on a spreadsheet. If at the end the calculation it is so much over your ideal bid price, we go back in and start adjusting the unit numbers until it reaches the ideal bid price. That is how contractors that have been in business a long time do it. In the GAB item, concerning Bill believing it is worth five dollars ($5.00). The problem is, if we go from fifteen (15) to five (5) that’ s about ten dollars ($10) a yard, which comes to about one hundred thousand dollars. There is nothing in my cost structure that changed except I didn’ t buy the stone. There is no other place for that money to come off of except our bottom line. The reality is we don’ t have one hundred thousand dollars ($100,000) to give back to you because our cost structure didn’ t change. The Council Minutes Page 6 of 7 only change was the expense of the stone. Mr. Anderson asked if the cost of hauling away the dirt was in the original bid amount. Mr. Harris said there is actual value in dirt and they were planning to sell the dirt but when the City said they wanted it, Garney agreed to give it to them. The city may be in a position to potentially damage our firm because the contract allows it. We have not had any indication thus far that would lead me to believe the city would do that. Other than the appropriate number of unknown utilities, we feel that the rest of the unknown utilities whether or not it was a main line or a service line, ultimately it effected us and for us to be held liable for that from a cost perspective seems somewhat punitive. Ms. Sessions asked if they figured in their profit by line item. Mr. Harris said if it’ s a five million dollar ($5,000,000) job and they want to make a half million gross profit on it. Gross profit is before regional or home office overheads. We figure out our cost structure and turn in a five point five million dollar ($5,500,000) bid. At that point we sit down with a excel sheet using our experience and put in unit prices. If it totals more or less we go back in and adjust the unit prices. Part of it is just experience and bid history and another part is making it work because time is running out to submit the paperwork. We can round out numbers to make our bid total right and that’ s what we do. Ms. Sessions said she wanted to know if maybe a little more profit was in this line item therefore making it a bigger loss for their bottom line. Mr. Harris said they typically spread the profit across the line items in a rather unscientific manner. Ms. Doyle said she understands where they’ re coming from as far as bids go as she does bids for her company concerning roadways in and out of neighborhoods and then laying pavers. In our business it doesn’ t take as much manpower to deal with sand, as it would take to deal with other aggregates. Mr. Crone said concerning the aggregate, the contractor didn’ t have to compact it, but the dirt he had to put in, he had to compact and that’ s where the labor came in. Mr. Lovett said that’ s why they didn’ t put the aggregate in there because you don’ t have to compact it if concrete is going over the top of it. Mr. Harris said there was some compaction effort for the stone but not half as much as for the sand. The DOT requested 100% compaction for the full depth. He said they are in a ten percent (10%) business and when you’ re talking about one hundred or one hundred and fifty thousand dollars ($150,000) on a three million dollar ($3,000,000) project it doesn’ t take long to do the math to know what this would mean to us. Ms Doyle said the fact that the DOT requires the extra work answered her question and explained the difference. Mayor Buelterman asked that the Engineer look at this information and make his recommendation to our water and sewer committee. They can then make a recommendation to Council and hopefully we can reach a friendly and fair resolution to this. Mr. Harris asked about a time frame. Buelterman said the water sewer committee meets next week and this will be put on our agenda and hopefully it will be resolved next Thursday night. He requested that Garney come to the committee meeting next Thursday at 6:00 PM. Mayor Buelterman said regarding the change order on page 4 under change number 3 the amount is thirty thousand five hundred eight dollars and forty-three cent. There is a signed approval from (H.G.B.D.) Mr. Wolff motioned to approve that change order, Mr. Crone seconded. The vote was unanimous. Mr. Wolff motioned to adjourn the meeting; Ms. Sessions seconded. The vote was unanimous. ____________________________________ Mayor Jason Buelterman Council Minutes Page 7 of 7 ____________________________________ Attested by Respectfully submitted by Vivian Woods