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HomeMy WebLinkAbout08.a.1)b) Debrief on recent La Espiral/Vogel flood loss 8 . a. 1 )b) 1 1 Central Contra Costa Sanitary District August 18, 2016 TO: HONORABLE BOARD OF DIRECTORS VIA: ANN SASAKI, DEPUTY GENERAL MANAGER FROM: SHARI DEUTSCH, RISK MANAGEMENT ADMINISTRATOR SUBJECT: DEBRIEF ON 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 the most recent 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. Honorable Board of Directors August 18, 2016 Page 2 of 4 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 Action/Response The specifications included language This limitation was removed from limiting a contractor's obligation to the specification language indemnify the District only for its own negligence There were communication problems Staff improved internal coordination and scheduling delays arising out of and will provide assistance to the insurance deficiencies smaller contractors in resolving insurance deficiencies f Honorable Board of Directors August 18, 2016 Page 3 of 4 Issue Action/Response Overall contractor non-compliance Conducted overall review of with insurance requirements insurance requirements in construction projects and updated language where appropriate Initiated development of an internal process for rejecting an award based on the scope of insurance non-compliance. Coverage gaps arising from insurance Initiated an ongoing discussion company proprietary additional regarding the District's risk tolerance insured endorsements 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 July 1, 2015 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; Honorable Board of Directors August 18, 2016 Page 4 of 4 • 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; • 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. 08/10/16 4 LA ESPIRAL FLOOD- LOSS NOVEMBER 2014 Board of Directors Meeting r ry August 18, 2016 _. Shari Deutsch Risk Management Administrator 1 BACKGROUND • Contractor broke EBMUD water line during excavation in easement area • Contractor had not contacted USA to locate the water line before excavating • Pressurized water flowed downhill into the house at 69 La Espiral, causing significant property damage 1 08/10/16 BACKGROUND • The District fronted emergency response costs and advanced living expenses to the homeowner • Contractor's insurance company initially denied responsibility • Delay from contractor's insurance company impeded resolution with homeowner • Claim settled at mediation in excess of SIR LESSONS LEARNED - DESIGN • Easement shown on plans, but water line was left off in error • Engineering implemented a more rigorous internal review of plans: Another Project Manager reviews plans - Utility checks now require sign-off 2 08/10/16 LESSONS LEARNED - CONSTRUCTION • Contractor failed to call USA • Enhanced locating efforts - Added Call 811 logo to all drawings - Added topic to pre-con meeting agendas • Additional training for Engineer-Inspectors • Updating inspection template procedures PM tr LESSONS LEARNED - INDEMNITY • Specifications only required Contractor to indemnify the District for negligent acts or omissions • Amended the indemnification section to cover all contractor's acts or omissions • The prohibition against contractors indemnifying the District for its own active negligence or willful misconduct remains as it is required by law 3 08/1.0/16 LESSONS LEARNED - INSURANCE • Insurance brokers often provide insufficient or incorrect documents • Communications problems - contractors don't speak `insurance' • Staff will offer to work directly with insurance brokers t' sem_ LESSONS LEARNED - INSURANCE • Time Constraints • Submittals don't arrive until after the Board awards the contract • Errors and deficiencies delay projects • Ongoing discussions regarding contract award and submittal review process • When to move on to the next bidder 4 08/10/16 LESSONS LEARNED -- RISK TOLERANCE • Self Insured Retention — Amount of District funds at risk from a single loss Reduced from $1 M to $500K as of July 1 , 2015 • Ongoing discussions Impact of unmet insurance requirements (proprietary endorsements, etc.) Uninsured Risks (indemnification obligation is L broader than insurance coverage) r 5 8 . a. l )C) BRIEFING ON IFAT 2016 INTERNATIONAL TRADE FAIR FOR SEWAGE TECHNOLOGY MUNICH GERMANY Jean-Marc Petit Director of Engineering & Technical Services August 18, 2016 1 IFAT 2016 CONFERENCE • IFAT - 2016 (Internationale Fachmesse fur Abwasser Technik or International Trade Fair for Sewage Technology) • I FAT is the World's Leading Trade Fair for = Water, Sewage, Waste and Raw Materials Management. 1 08/10/16 IFAT 2016 CONFERENCE • IFAT 2016 took place at the Messe Munchen, Germany trade-fair center from May 30 to June 3, 2016. - • FAT was celebrating - its 501h anniversary, � :3 having started in 1966. IFAT IS AN INTERNATIONAL TRADE FAIR WITH A GLOBAL IMPACT • Approximately 138,000 visitors from over 170 nations F- g•..� • 3,097 exhibitors from 59 countries _ -- • 230,000 square r r , meters (2.476 million sq. ft.) of exhibition space l' z