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HomeMy WebLinkAbout1998-08-10 City Council (17)City of Palo Alto City Manager’s Report TO: FROM: DATE: SUBJECT: HONORABLE CITY COUNCIL CITY MANAGER AUGUST 10, 1998 DEPARTMENT:UTILITIES CMR:327:98 REJECTION OF BIDS FOR INSTALLING UTILITY TRENCH AND SUBSTRUCTURE SYSTEM IN UNDERGROUND UTILITY DISTRICT NO. 37 - EMBARCADERO/MIDDLEFIELD ROADS REPORT IN BRIEF This report requests that Council reject the bids received on June 30, 1998 for the installation of a utility trench and substructure system required for Underground Utility District No. 37. Staff is recommending that the bids be rejected because the lowest bid was 30 percent (approximately $1,000,000) over the engineer’s estimate and there are insufficient budget funds to complete the project as proposed. The high bids are most likely due to the current high demand for construction work. In addition to rejecting the bids, staff is recommending that the project be delayed one year and rebid in 1999/2000 after sufficient budget funds are requested through the budget process. Staff is recommending this alternative because it may result in a lower substructure cost and it will give Cable Coop and Pacific Bell an opportunity to budget the additional funding for their portion of the project. CMR:327:98 Page 1 of 5 RECOMMENDATION Staff recommends that Council: 1.Reject the bids received on June 30, 1998 for the installation of a utility trench and substructure system required for Underground District No. 37. Direct staffto include the project in the 1999/2000 fiscal year CIP with sufficient fimds and delay all other underground conversion projects by one year. BACKGROUND At its meeting on March 17, 1997, the Council adopted Ordinance No. 4408, creating Underground Utility District No. 37 for the Embarcadero/Middlefield Roads area shown on the attached district boundary map. As indicated in CMR: 170:97, this project involved constructing an underground distribution system in an area which meets both the City and Pacific Bell guidelines for undergrounding. The new underground system was to be installed in the public right-of-way and constructed in four phases. Phase I Substructure installation by contractor, consisting of placement of boxes, vaults, pads and conduits in the public right-of-way and in public utility easements. Phase II Installation, testing and energization of new underground distribution cables, transformers and switches. Phase III Customer service conversion - all affected property owners will be required to connect to the new underground system, Phase IV Removal of overhead lines and poles. DISCUSSION Prior to 1996, the Electric’Utility had funded $2,400,000 for Underground District No, 37 - Embarcadero/SealeiMiddlefield and $2,420,000 for Underground District No. 38 - Central Middlefield. The combined budget for both projects was $4,820,000. In 1996, staff combined the two underground districts to save money because of their close proximity to each other. Due to the consolidation of the proposed underground districts, the future underground districts were renumbered and the area bounded by Oregon Expressway, Colorado Ave., and Cowper St. became Underground District No. 38. When these districts were combined, staff underestimated the cost of the combined project and did not consolidate the funding. As a result, the current budget of $2,400,000 is insufficient to fired this project. Currently Staff is estimating that the cost of the combined project will be $5,000,000 which is $2,600,000 over the current budget and $180,000 over CMR:327:9~Page 2 of 5 the original budgets. The current project cost projection of $5,000,000 is greater than the budget due to the following: ¯Extensive changes in project scope to avoid conflicts with trees and other utilities and to accommodate the needs of Pacific Bell. Staffunder estimated the cost of construction. The estimate for the work was based on experience fi’om other underground districts. Historically, the City’s cost per residence for Underground Districts has been in the range of $9,000 to $11,000. Based on the bids received for Underground District No. 37, Staff is currently estimating the cost to be approximately $15,000 per residence. The substructure bids received were over the engineer’s estimate by approximately 30 percent. These bids were higher than expected due to competition from other projects for construction labor. ¯This project requires extensive work on Embarcadero and Middlefield Roads which will require extensive traffic control and limited work hours for the substructure contractor. The changes from the original project scope encountered during the design process were: °The addition of Byron Street to the project to accommodate design requirements by Pacific Bell. Traffic signal work required by the City at two major intersections was added. Moving the conduit trench on Embarcadero and Middlefield from one side of the street to the other due to Conflicts with other utilities. All trenching was moved to the street from the sidewalk area and Rinconada Park area due to recommendations made by the City Arborist. Bid Process A notice inviting formal bids for proceeding with Phase I was sent on May 22, 1998 to three builders’ exchanges and nine contractors. The bidding period was 40 days because of the complexity and magnitude of the project. A mandatory pre-bid meeting was held on June 5, 1998. Only five contractors out of the nine who received the formal bids attended the meeting. The four contractors who did not attend the mandatory pre-bid meeting did not CMR:327:98 Page 3 of 5 submit bids. Bids were received from only three qualified contractors on June 30, 1998, as listed on the attached bid summary (Attachment A). Bids ranged from a high of $3,837,246.60 to a low of $3,358,674.65. Two contractors who attended the mandatory pre- bid conference did not submit a bid because they are too busy at this time to take on new projects; or the work involved in this project was beyond their company’s capability. All bids submitted were reviewed by staff and were over the engineer’s estimate by approximately 30 percent. Staff believes that the high bids received were due to the large number of projects under construction, a shortage of construction laborers and the higher costs associated with work on Middlefield and Embrcadero Roads. Due to the current market situation, staff recommends rejecting the bids and rebidding the project in July 1999 after adjusting the project funds in the next budget cycle. Staff is recommending this alternative because it may result in a lower substructure construction cost and will give PacBell and Cable Coop an oppommity to get additional funding for the project. This recommendation will also delay the current Underground District No. 38 and future underground districts by one year due to staffmg and budget constraints. Alternatives to Staff Recommendation Prior to making a recommendation for completing the project, staff considered the following possible alternatives: Award the contract after approval of a Budget Amendment Ordinance (BAO) in the amount of $2,600,000 for the additional funds required to cover the total cost of this underground conversion project. This option has the least impact on the project schedule. However Staff is not recommending this option because both PacBell and Cable Coop, which are joint partners in the project, have indicated that they have insufficient funding.for the project as proposed and due to the higher than expected substructure construction costs. Issue a bid to do part of the project now and issue another bid in July 1999 to complete the project when proper funding is available in the budget. This alternative was considered undesirable due to the impact on Pacific Bell and Cable Coop construction plans and the additional disruption to residents caused by phased construction. RESOURCE IMPACT Partial Funding for this project are available in the FY 1997-98 Electric Capital Improvement Program Budget. To complete this project an additional $2,600,000 will need to be allocated to Underground District No. 37. If the staff’s recommended alternative is approved, the budget funds will be allocated during the 1999/2000 budget process. CMR:327:98 Page 4 of 5 POLICY IMPLICATIONS This report does not represent any change to existing City policies. ENVIRONMENTAL REVIEW Categorically exempt from California Environmental Quality Act (CEQA). ATTACHMENTS Attachment A: Attachment B: Underground District No. 37 Boundary Map Bid Summary PREPARED BY:Sager Farraj, Senior Power Engineer Tomm Marshall, Engineering Manager Electric DEPARTMENT HEAD" Director of Utilities CITY MANAGER APPROVAL: ~Y HARRISON Assistant City Manager CMR:327:98 Page 5 of 5 w 0 w w Z