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HomeMy WebLinkAbout03. Lessons learned from La Espiral, flood lossJuly 25, 2016 Central Contra Costa Sanitary District TO: ADMINISTRATION COMMITTEE VIA: ANN SASAKI, DEPUTY GENERAL MANAGER fr FROM: SHARI DEUTSCH, RISK MANAGEMENT ADMINISTRATOR`S SUBJECT: LESSONS LEARNED FROM THE 69 LA ESPIRAL, FLOOD LOSS On November 7, 2014, a District contractor broke a 10 -inch diameter East Bay Municipal Utility District water line while pipe bursting in the hills of Orinda. As a result, water cascaded down the hill into the backyard and residence at 69 La Espiral resulting in a claim for property damage and related expenses. The matter was resolved with the participation of the District, the contractor, and two insurance companies. As part of the District's commitment to continuous improvement, staff was asked to summarize the lessons learned, to describe the procedural and operational changes implemented since this event, and to provide opportunities for further improvement that should reduce the likelihood of a similar loss occurring in the future. Design Phase: The first issue to come to staff's attention after this loss was the absence of the water line on the District's drawings. The plans showed a dotted line easement along the property line of 39 Los Dedos which crossed the path of the pipe bursting work. However, the water line itself was not shown inside that easement. District practice includes requesting updated utilities information as part of each project, using a utility locating subcontractor during the design phase and using a potholing contractor to verify utility locations at critical junctions or crossings with its projects. As a result of these efforts, the water line information was available to the District but was inadvertently left off the drawing. To prevent this from happening again, the Capital Projects Division has implemented a more rigorous internal review procedure to ensure that all known utilities are included on drawings and show their size, type, and location based on best available information. This also includes a second construction review by a different project manager and a final review before issuing the plans for bid. All utility checks throughout the design process and reviews are signed -off and documented. 3. Administration Committee Page 2 of 4 July 25, 2016 Construction Management: State law requires contractors to verify the location of existing utilities before beginning any excavation work. The flood at La Espiral was caused by the contractor's failure to locate utilities in the easement areas of the project. Although District drawings note that not all utilities may be shown and the project specifications repeatedly state that the contractor is required to call USA at least 48 hours before beginning any excavation, the contractor did not include the project area between Los Dedos and La Espiral in its USA requests. To further remind contractors of their obligation to locate utilities, staff has added the "Call 811" logo and phone number on all drawings and has added reminders at its preconstruction meetings for contractors to contact USA for all excavations, not just those occurring in public rights of way. In the course of the claim investigation, it became clear that in the years preceding this event, there had been significant turnover among the Capital Projects staff. The group of Engineers then working as construction inspectors had, as a whole, fewer years of experience than those previously serving in this capacity. While this fact cannot be cited as a cause of the loss, it is a matter of concern. The Capital Projects Division is assigning experienced inspectors and third party inspectors on projects while training newer staff and updating inspection templates and procedures. Insurance and Indemnity: Before the final contract was signed, staff had reviewed the contractor's insurance submittals and found that they complied with the insurance requirements in the specifications. Since the District experienced some challenges getting the contractor's insurer to participate in the initial claim response, staff revisited the indemnity and insurance sections of the specifications and the current insurance document submittal and review process. The following summarizes the issues identified during this project and the actions to address future concerns: Issue The specifications included language limiting a contractor's obligation to indemnify the District only for its own negligence There were communication problems and scheduling delays arising out of the insurance deficiencies Overall contractor non-compliance with insurance requirements Action/Response This limitation was removed from the specification language Staff improved internal coordination and will provide assistance to smaller contractors in resolving insurance deficiencies Conducted overall review of insurance requirements in construction projects and updated Administration Committee Page 3 of 4 July 25, 2016 Coverage gaps arising from insurance company proprietary additional insured endorsements language where appropriate Initiated development of an internal process for rejecting an award based on the scope of insurance non-compliance. Initiated an ongoing discussion regarding the District's risk tolerance and costs of compliance regarding non-compliant insurance submittals Adverse impact of a $1 million self- Lowered self-insured retention to insured loss on cash flow $500,000 as of 7/1/15 Contractor Selection: The District does not currently pre -qualify contractors on every project but staff is reconsidering this in light of the La Espiral loss. Staff is also considering other forms of performance measurements that could be implemented to improve our contractor selection process. In summary, District staff has: • Implemented a more rigorous internal review procedure to ensure that all known utilities are included on drawings; • Added the "Call 811" logo and phone number to all drawings as an additional reminder to contractors of their obligation to locate utilities; • Provided additional training for less experienced Engineers working as construction inspectors; • Continued to evaluate and improve the Capital Project Division's construction management efforts and hired third party experienced inspectors and at times Construction managers for more complex projects; • Revised specification requirements to remove negligence as a condition to providing defense and indemnity to the District for claims or losses arising out of a contractor's work; • Initiated development of an internal process for rejecting an award based on the scope of insurance non-compliance; • Initiated an ongoing discussion regarding the District's risk tolerance and costs of compliance regarding non-compliant insurance submittals; • Improved internal coordination and provided assistance to smaller contractors in resolving insurance deficiencies; Administration Committee Page 4 of 4 July 25, 2016 • Conducted an overall review of insurance requirements in construction projects and updated language where appropriate; and • Lowered the District's self-insured retention from $1,000,000 per occurrence to $500,000 per occurrence as of July 1, 2015.