Fort Walton Beach Council agenda — 06-12-2007 workshop agenda — reading text

10. 91 million and we had various draws off that for Underwriter discount, bond insurance, and we had to create a reserve account and there was $ 724, 000. 00 set aside for that, which left us with a remaining balance of $9. 8155 million for the capital improvements to the water and sewer system. We also developed early on a probably opinion of cost for the various elements identified in the bond project listing. We estimated our projects, again, in February of 05' prior to going into the bond market, essentially knocking the dust off prior estimates we had for those projects. At the time we estimated for the elevated storage tank improvement roughly $ 1. 8 million including the cost of construction and contingency. For the 18" transmission main we identified another $ 1.8 million including contingencies for the installation of that three miles of transmission main. We also lumped into the water side of the projects CIP 50- 56 which is one of our on- going Capital Improvement Projects for the replacement of 2 y,." water lines with larger diameter, and thus more capacity, 6" water lines. So we set aside $ 225, 000.00 in there for those projects. On the wastewater side of the house, at the time back in February of 05' we felt like, given the level of renovation we were going to have to do at the plant, we were looking at roughly $ 3. 835 million for wastewater plant improvements with contingencies factored in for about $ 1.3 million. We also, at the time, lumped in CIP 50- 32, which is our on- going sewer system rehabilitation project. Each year we take various segments of our sanitary sewer system, some segments we line in place simply because its cost prohibitive to dig the line up and replace it plus the impact to private properties is such that it' s more efficient to go into that sewer line and line it in place and not have to dig it up. So we do some of that work. We do some actual point repairs where if we have areas where we can dig the line up and replace it and do it cheaper than lining it in place we will do that. We also do some root control treatment for our sanitary, our gravity sewer lines; the roots can get into that system, cause quite a bit of blockage, further damage, so we' ll treat segments of the line with a chemical to kill the roots off. We lumped all of those projects into this bond issuance as well to the tune of $800, 000. 00. So the total, as you' ll see, for all projects $ 9, 815, 500. 00. Then we started bidding projects, and this was post Ivan, post Dennis, post Katrina in some regards, and the cost of construction was heavily escalated over what we were looking at in the Spring of 05'. And I have a slide later where I'll get to the particular variables that we identified that lead to cost increases in some of our major capital improvements. But I wanted to include where we are currently and this slide kind of breaks that down. The elevated water tanks projects that we initially estimated at $ 1. 815 million, when we actually opened bids on that it was $ 1.969 million that was the low bid for the project. We have since completed that project at a cost of $1 million 952 thousand and some change for a savings over the bid award amount of $137, 000. Excuse me Mayor - it cost you more than you budgeted. John Hofstad - I've actually broke it down further on in another slide. I just wanted to give you a quick look at some of the projects of what we had, where the bid cost came in, and again I'll explain where we are as far as what has caused some of the escalation of some of these construction projects. One of the first projects we out on the street was the wastewater treatment plant renovation project. put We brought that before Council in June of 05' and we awarded services to Brown and Caldwell in an amount not to exceed $ 840, 000. 00. We successfully negotiated that project with Brown and Caldwell at $ 769, 000. 00. Page 2 of 11  COUNCIL WORKSHOP 6- 12- 07 John Hofstad - The project status, we expect 100% design plans in hand any day with revised cost estimates. And, again, we' ve made this comment to you before in the past, but we cannot begin construction until we' ve resolved all the issues relative to our wastewater treatment plant operating permit which is currently being held by DEP until we review the issue with an Administrative Law Judge. The new elevated water storage tanks, in June of 05' we brought before Council a bid award for construction of two new elevated water storage tanks. That project was awarded to Chicago Bridge and Iron in the amount of $1, 969, 800. 00. Project status, we' ve completed that projects, excuse me, both of the elevated water storage tanks, we completed that in August of 06' at a cost of $1, 952, 644. 00 so we actually enjoyed a contract under run in that project of$ 17, 156. 00 so we actually had a savings over what the bid award amount was and we were able to reduce some of the steel needed for the project because of Florida wind loading requirements and enjoyed a bit of a cost savings for that project over what was awarded. The 18" water transmission main project, we brought that to Council in April of 06', Council approved the award of that effort to Hemphill Construction in the amount of 2, 723, 645. 00. That far exceeded our estimates in February of OS' for that particular project. The current status is we completed construction of the water transmission main in May of 01', we' re currently awaiting as- builts and final quantities from Fabre Engineering, who is our consulting engineer for the project and once we receive that information we will approve the fmal invoicing and we can, as soon as we get our certification of completion from DEP we can place that line in service, so we expect that to take place some time here in the next two weeks, two to four weeks. We do have, based on what we' ve seen from the final invoicing submitted by the contractor, again it's not yet been approved by our consulting engineers but we' re seeing a potential savings there of $100, 000. 00 and maybe a little more. So actually we' re having a, we' re seeing a pretty good savings with the project vs. what was originally awarded by Council. Mayor - excuse me John, Mr. Hofstad, but both these projects costing more than we originally budgeted though. John Hofstad - right Mayor - granted they' re under the bid price but they' re still more expensive than we budgeted. John Hofstad - absolutely and again, there is several variables that come into place since the time that we originally estimated; in a couple of slides I'll address those issues. Mayor - OK, thank you. John Hofstad - one of the projects that came up after we had gone to bond market and started our bond projects was the Cinco Bayou force main. Previous to September 06' we had a sub(?) force main, a force main that laid on the bottom of Cinco Bayou, in the vicinity of Cinco Bayou bridge. During both of our most recent hurricanes, Ivan and Dennis, we had some damage to that force main and we actually lost raw sewage in Cinco Bayou as a result. That force main had been on the bottom of the bayou for some forty years. We had concerns of the reliability of that line to the point we made permitting application to DEP to replace it with an aerial line under Cinco Bayou Bridge and received approval from DEP to do that project. So in May of 06' we brought forward to you a bid award to Hemphill Construction in the amount of $254,000.00 to relocate that force main underneath the bridge. Page 3 of 11  COUNCIL WORKSHOP 6- 12- 07 John Hofstad - This project was not originally programmed in the Series 2005 Bond projects but it does fall into that CIP that I referenced earlier, the sewer main rehabilitation project and we saw an immediate need, an immediate impact, environmental impact by relocating this line. We completed the construction in September of 06' at a final cost of $259, 950.00. We had a slight overrun of that project of $3, 800.00 which was within the approval authority of the City Manager, and that was due to some alignment problems on the western bridge approach, the line that was actually plum through the bridge abutment had some problems when we pressure tested it and wouldn' t hold pressure. So we had to actually route around the bridge so that increased the cost slightly. We also had the demolition of two elevated storage tanks. Now we knew all along we were going to have to demolish two storage tanks but early in 05' and late 04' when we were calling the various vendors that perform that type of work there actually was an after market for used steel tanks in rural areas to the point where there was no anticipated cost for their removal. The contractor would come in remove them and he would remove them for the resale value. That market disappeared later in the year and there was a cost to remove them. Now there is some salvage value in steel so actually to remove those things it's quite an effort and when we originally bid it our low bid was $ 64,700.00 but actually we were able to complete that project for $20,000.00 less, $ 44, 700. 00 and that was due to the City taking on some of the below ground, below grade work instead of placing that on to the contractor because that was something that we could perform in-house but we can' t do aerial demolition. So we did enjoy a bit of a savings on that but again that was not a programmed cost because there was a market at one time for those tanks. The on- going in-house Capital Improvement Programs, I touched on this earlier but I just wanted to kind of give you an overview of what we' ve done to date. Again, for the CIP 50- 32 which is the sewer system rehabilitation, the Cinco Bayou force main relocation cost us roughly $258, 000. 00. In addition to that we' ve done $ 310, 000 a little over, in cured and placed pipe rehabilitation to the tune of 24,000. 00 linear feet of 8" to 15" gravity sewer main. So we' ve lined a few miles there of actual sanitary sewer line. We' ve also done roughly, completed roughly $ 28, 830. 00 in chemical root treatment for over 19, 000 linear feet of 6" and 8" gravity sewer main. On the water side, CIP 50- 56 our total expenditure since the inception of the program is around $ 142, 000. 00 of that we' ve replaced 4, 800 linear feet of 2 W' water pipe with 6" water pipe. Our cost for us to do that work and all total to install that are manpower, our materials cost, our restoration are somewhere around $ 30 per linear foot. And that number will be, there will be some significance to that number in the next slide when I discuss some of the cost overruns in these projects. What we' re all getting to here, the reasons for the construction cost increases. First and foremost is the instability in the petroleum market. The petroleum industry drives the cost of piping materials and as the cost of a barrel of oil creeps up so does the cost of our supplies. I could not tell you next week what the cost of PVC is going to be because it changes that frequently. In August of 05' 8" PVC pipe, we could install that or a contractor if we were to contract that out, would install that for us at roughly $ 22 a linear foot and for an 8" (?) pipe $ 28 a linear foot; April of 06', not even a year later, the same installation for 8" PVC increased to 50 a linear foot and 8" (?) pipe increase to $ 66 a linear foot. So what I'm telling you is the projects we do in-house there is a significant savings, we just don' t the capability for these large scale projects doing that type of work. The Fort Walton Beach location is really not favorable for m~ or