HomeMy WebLinkAbout10. Authorize increase in cost ceiling for Emtec agreement, part of ERP Replacement Project, and adopt amendments to FY 2019-20 Budget to incorporate funding for ERP Project Page 1 of 14
Item 10.
CENTRAL SAN BOARD OF DIRECTORS
POSITION PAPER
MEETING DATE: JUNE 20, 2019
SUBJECT: AUTHORIZE AN INCREASE IN THE AMOUNT OF $80,000 TO THE EMTEC
CONSULTING SERVICES LLC PROFESSIONAL CONSULTING SERVICES
AGREEMENT (A COMPONENT OF THE ENTERPRISE RESOURCE
PLANNING (ERP) REPLACEMENT, DISTRICT PROJECT 8250)APPROVED
AT THE LAST BOARD MEETING, FORA NEW COST CEILING OF
$2,365,000; AND (1) CONCURRENTLY INCREASE THE TOTAL COST FOR
THE ERP PROJECT BY$80,000, BRINGING THE ERP PROJECT TOTAL TO
$5,205,000; AND (2)ADOPT AMENDMENTS TO THE FISCAL YEAR 2019-20
DISTRICT BUDGET ADOPTED AT THE JUNE 6, 2019 BOARD MEETING TO
INCORPORATE CHANGES ASSOCIATED WITH FUNDING FOR THE ERP
PROJECT
SUBMITTED BY: INITIATING DEPARTMENT:
PHILIP LEIBER, DIRECTOR OF FINANCEAND ADMINISTRATION-FINANCE
ADMINISTRATION
REVIEWED BY: ANN SASAKI, DEPUTY GENERAL MANAGER
Roger S. Bailey
General Manager
ISSUE
At the last Board meeting on June 6, the Board authorized the Enterprise Resource Planning (ERP)
Replacement, District Project 8250 (Project). At the same meeting, the Board adopted the Fiscal Year
2019-20 District Budget; however, the Budget did not include the appropriate transfers from the Capital
Improvement Budget (CI B) project contingency fund to cover the Project costs. The Board asked staff to
bring back for approval at this meeting amendments to the Budget to incorporate the needed CI B
contingency fund transfers necessary to fund the Project.
Additionally, due to project phasing changes, the cost estimate for the implementation component of the
Project was understated by$80,000. An increase in that amount is necessary to reflect total Project
costs.
June 20, 2019 Regular Board Meeting Agenda Packet- Page 63 of 120
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BACKGROUND
During the development of the FY 2019-20 Budget, which commenced in January and resulted in the
presentation of a draft budget book to the Board on May 2, 2019, certain assumptions were made
regarding the scope and cost of the Project.As negotiations with the vendors involved in this project
continued through late May, certain updates were required to the cost projection. These cost updates
were reflected in the recommended Project budget presented to and approved by the Board on June 6,
2019. However, they were not reflected in the draft budget.
Additionally, the final proposed Emtec Consulting Services LLC contract amount should be $2,365,000,
which is $80,000 higher than the $2,285,000 that was included in the Project budget of$5,125,000 and
approved by the Board on June 6. This additional $80,000 was due to the use of a prior cost estimate not
reflective of the latest phasing approach discovered when putting the final contract together. There is no
change to the scope of work.
Staff proposes to fund this by an additional $80,000 transfer from the FY 2019-20 Cl B contingency.
While a funding increase of this magnitude could be permitted without Board approval under Board Policy
No. BP 037 - Delegation ofAuthority to General Manager(which allows changes of up to ten-percent or
$200,000 for professional services contracts greater than $1,000,000), for transparency and the fact that
this contract has not yet been executed and was only approved by the Board at the last meeting, staff
believes it would be appropriate to obtain approval of this change.
The cost change affecting the FY 2019-20 Budget is limited to the transfer of$1,105,000 from the CI B
contingency to the Project. This, along with the transfer of funds ($500,000)from DP 8240 (IT
Development) in FY 2018-19, will bring the Project budget to $5,205,000. Redlined changes to the
six pages affected in the FY 2019-20 Budget document included as Attachment 1. The amendment
reallocates funds within the Cl B; no changes to other budgets, or the overall revenue requirement are
proposed.
The adoption of a motion to increase Emtec Consulting Services LLC contract funding by$80,000, and
the adoption of a budget amendment to reflect the revised Project funding of$5,205,000 will align the final
contract amount and Project budget as reflected in the amended CI B.
ALTERNATIVES/CONSIDERATIONS
With respect to whether the $80,000 of additional Emtec Consulting Services contract funding should be
authorized, the alternative would be to keep the contract at the $2,285,000 level. This would not provide
adequate funding for the phased approach at the level of implementer support that is recommended and
reflected in the project plan. Accordingly, this option is not recommended.
With respect to whether the projects in the Cl B can be aligned with the required funding level for the
project prior to the start of the fiscal year(recommended), or alternatively, funds could be transferred
subsequently from project close-outs at the end of FY 2018-19. 1 t is not presently known whether funds
from project close-outs are adequate to meet the required $1,105,000 funding addition required, so this
alternative is not recommended at present. Should project close-outs have adequate funding, the Cl B
contingency could be restored to the $2 million level during FY 2019-20.
FINANCIAL IMPACTS
No overall change to Central San's revenue requirement for FY 2019-20 is proposed; only a reallocation
of funds within the CI B.
June 20, 2019 Regular Board Meeting Agenda Packet- Page 64 of 120
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COMMITTEE RECOMMENDATION
No Committee review of this issue was undertaken due to the timing between the June 6, 2019 meeting at
which the Project and the FY 2019-20 Budget were approved, and the need to approve a final budget for
FY 2019-20 in June before the start of the new fiscal year on July 1.
RECOMMENDED BOARD ACTION
Staff recommends that the Board authorize:
1. An $80,000 increase to the Emtec Consulting Services LLC professional consulting services
agreement approved at the June 6, 2019 Board meeting, for a new cost ceiling of$2,365,000;
2. A concurrent$80,000 increase in the total cost for the ERP Replacement, District Project 8250,
approved at the June 6, 2019 Board meeting, bringing the Project total to $5,205,000; and
3. Amendments to the Fiscal Year 2019-20 District Budget adopted on June 6, 2019 to incorporate
changes associated with funding for the ERP Replacement, District Project 8250.
Strategic Plan Tie-In
GOAL THREE: Be a Fiscally Sound and Effective Water Sector Utility
Strategy 2- Manage costs
GOAL SIX: Embrace Technology, Innovation and Environmental Sustainability
Strategy 3- Encourage the review and testing of technology to optimize and modernize business operations
ATTACHMENTS:
1. Revised FY 2019-20 Budget pages (in strikeout)
2. Presentation
June 20, 2019 Regular Board Meeting Agenda Packet- Page 65 of 120
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Attachment 1
Table 13 below is a summary of the projected FY 2019-20 Sewer Construction Fund revenues and
expenditures. Further details are included in the Capital Improvement Program section.
Table 13-Sewer Construction Fund Revenues and Expenditures
FY r2018-19 FY 2018-19 FY 2019-20 Budget-to-Budget %
Budget Actual Budget Projected Budget— Variance Variance
Revenue
Capacity Fees $5,900,000 $7,937,754 $5,900,000 $5,750,000 $5,750,000 ($150,000) -39/
Pumped Zone Fees $513,000 $1,301,061 $600,000 $600,000 $291,000 ($309,000) -52%
Interest Income $386,000 $777,226 $570,000 $570,000 $674,000 $104,000 18%
Ad Valorem Taxes $12,100,000 $13,918,715 $13,300,000 $13,300,000 $14,520,000 $1,220,000 9%
Sewer Service Charge $13,967,300 $14,060,789 $27,926,268 $28,311,000 $32,219,130 $4,292,862 15%
Reimbursements
City of Concord $6,000,000 $6,364,725 $7,150,000 $7,150,000 $11,630,000 $4,480,000 63%
Recycled Water Sales $38,500 $0 $0 $0 $0 $0 0%
Developer Fees and Charges $423,000 $519,072 $443,000 $443,000 $514,000 $71,000 16%
Total Revenue $39,327,800 $44,879,342 $55,889,268 $56,124,000 $65,598,130 $9,708,862 17%
Expenditures
Treatment Plant Program $15,045,000 $15,681,067 $16,565,000 $18,300,000 $25,631,000 $11,766,000 70%
Collection System Program $15,492,000 $20,291,192 $19,347,000 $19,500,000 $27,129,000 $7,782,000 40%
General Improvements Program $4,277,000 $2,222,593 $4,750,000 $3,900,000 $4,264,000 (-$486,008) 14695369000 000 -1031%
Recycled Water Program $460,000 $1,309,754 $2,857,000 $2,300,000 $4,152,000 $1,295,000 45%
Contingency $1,500,000 $0 $1,500,000 $0 $2,000,000 $500,000 60500 33%40
$895,000 1
Total Expenditures $42,774,000 $39,504,606 $45,319,000 $44,000,000 $66,176,000 $20,857,000 46%
Carryforward $3,700,000 $6,968,827
Total Expenditure Authority $46,474,000 $52,287,827
Sewer Construction Funds Available
Projected Revenue $56,124,000 $65,598,130
Projected Expenditures*** $44,000,000 $66,176,000
Reserves Contribution/(Draw) $12,124,000 ($577,570)
*Projection as of April 2019.
**The FY 2019-20 budget amount does not include any carryforward from past fiscal years;the Board will be notified of any
carryforward amount after the close of the current fiscal year.
***Reserve calculation assumes difference between FY 2018-19 budget and projected spending will be spent in FY 2019-20.
Impact of Capital Improvement Budget on Ongoing Operations&Maintenance Budget
Central San's Capital Improvement Budget and the extent to which FY 2019-20 nonrecurring capital
investments will affect the proposed or future years'operating budget are described later in this
document. In general,given the nature and composition of the FY 2019-20 Capital Improvement
Budget,these effects are minimal. Future capital projects could have more substantial impacts(e.g.,
additional personnel costs,additional maintenance costs,or additional utility costs or,conversely,
anticipated savings such as reduced utility costs or lower maintenance costs)that would be specified
further in the year such projects are budgeted.
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June 20, 2019 Regular Board Meeting Agenda Packet- Page 66 of 120
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FY 2019-20 Capital Improvement Budget
The CIB Budget to date is approximately$67.8 million. The budget needed for all ongoing and new
projects in FY 2019-20 is $66.2 million. The future year estimated budget for these projects is at
$335.4 million. Combined the total estimated budget for the identified projects in the FY 2019-20 CIB
is $469.4 million. The 2019 Ten-Year CIP is projected to be $867.2 million as shown below in Table 1:
Table 1 — FY 2019-20 CIB per Program
Budget to Date FY 2019-20 Future FYs Total Estimated FY 2019
Budgets
Collection System $11,649,970 $27,129,000 $97,770,000 $136,548,970 $349,511,000
Treatment Plant $42,250,451 $28,631,000 $188,522,000 $259,403,451 $413,202,000
General Improvements $8,695,483 $4,264, 8 $10,400,000 $23,359,483$24, $24,893,000$25,
$5,369,000 464,483 998,000
Recycled Water $5,239,894 $4,152,000 $28,717,000 $38,108,894 $55,119,000
$z?99A 9A8 895 �000,8AA 10 $24300,000 23
CIB Contingency $0 000 $10,000,000 895,000 395,000
Totals: $67,835,798 $66,176,000 $335,409,000 $469,420,798 $867,225,000
FY 2018-19 Capital Improvement Budget Construction Commitments
As of April 30, 2019, the total construction commitments authorized by the Board in FY 2018-19 or
previous is $55.8 million. This includes all construction contracts, purchase orders, construction
management, and supporting services to complete the construction phase within the CIB.
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June 20, 2019 Regular Board Meeting Agenda Packet- Page 67 of 120
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All projects in the General Improvements Program are summarized; including all past, current, and
planned budgets required to complete each project as shown on the following Table 4:
CIB TABLE 4— FY 2019-20 General Improvements Program Budget/Project Summa
Project Project Budget-to- FY 2019-20 Future FYs Total Project
Number Date Cost
8207 General Security and Access $134,977 $150,000 $100,000 $384,977
8230 Capital Legal Services $178,665 $20,000 $40,000 $238,665
8236 District Easement Acquisition $258,047 $75,000 $150,000 $483,047
8240 IT Development $2,7938,794 $500,000 $1,260,000 $4,4598,794
8243 Server Room Relocation $2,000,000 $0 $0 $2,000,000
8249 Collection System Operations Dump $60,000 $0 $0 $60,000
Pad Modifications
Enterprise Resource Planning $6§00000 $2088;09 500000
83,1 $4,G99;9985,2
8250* Replacement , 05,000 $1, , 05,000
8251* Capital Improvement Program and $0 $350,000 $950,000 $1,300,000
Budget Improvements
8516 Equipment Acquisition $876,000 $100,000 $1,000,000 $1,976,000
8517 Vehicle Replacement Program $1,849,000 $1,069,000 $5,400,000 $8,318,000
$23 pro n4�
Total Program $8,695,483 $41,2641,000
$10,400,000 $24 '483
*New project in FY 2019-20
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Table 3 Ten-Year Program:General ImprovementsFiscal Year 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
Project# Project Name 10 Year Total 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
8207 General Security and Access 250,000 150,000 100,000 0 0 0 0 0 0 0 0
8230 Capital Legal Services 200,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000
8236 District Easement Acquisition 750,000 75,000 75,000 75,000 75,000 75,000 75,000 75,000 75,000 75,000 75,000
8240 IT Development FY 2016-26 2,900,000 500,000 500,000 380,000 380,000 380,000 380,000 380,000 0 0 0
8250 ERP Replacement 4,605,000 3,105,000 1,200,000 300,000 0 0 0 0 0 0 0
8251 ICapital Improvement Plan&Budget 1,300,000 350,000 150,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000
8516 Equipment Acquisition 850,000 100,000 250,000 250,000 250,000 0 0 0 0 0 0
8517 Vehicle Replacement Program FY 2016-26 6,469,000 1,069,000 900,000 900,000 900,000 900,000 900,000 900,000 0 0 0
TBD Document Management 1,272,000 0 212,000 530,000 530,000 0 0 0 0 0 0
TBD Security Improvements Study(10-Year) 600,000 0 0 0 0 100,000 100,000 100,000 100,000 100,000 100,000
TBD Security Improvements Study(5-Year) 212,000 0 0 106,000 106,000 0 0 0 0 0 0
TDB Equipment Acquisition FY 2023-33 1,500,000 0 0 0 0 250,000 250,000 250,000 250,000 250,000 250,000
TDB Future Property Repairs and Improvements 1,250,000 0 0 200,000 150,000 150,000 150,000 150,000 150,000 150,000 150,000
TDB IT Development FY 2026-36 1,140,000 0 0 0 0 0 0 0 380,000 380,000 380,000
TDB Vehicle Replacement Program FY 2026-36 2,700,000 0 0 0 0 0 0 0 900,000 900,000 900,000
General Improvements Total: $ 25,998,000 $ 5,369,000 $ 3,407,000 $ 2,861,000 $ 2,511,000 $ 1,975,000 $ 1,975,000 $ 1,975,000 $ 1,975,000 $ 1,975,000 $ 1,975,000
Table 4-Ten-Year Program:Recycled WaterFiscal Year 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
Project# Project Name 10 Year Total 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
7306 Zone 1 Recycled Water 1,256,000 100,000 53,000 53,000 150,000 150,000 150,000 150,000 150,000 150,000 150,000
7361 Filter Plant and Clearwell Improvements-Phase 1A 30,463,000 3,452,000 8,000,000 10,000,000 7,100,000 1,911,000 0 0 0 0 0
7366 Recycled Water Distribution Systems Renovations Program 21300,000 500,000 200,000 200,000 200,000 200,000 200,000 200,000 200,000 200,000 200,000
7368 Water Exchange&Filter Plant and Clearwell Improvements Phase A 100,000 100,000 0 0 0 0 0 0 0 0 0
TDB Filter Plant and Clearwell Improvements-Phase 113 21,000,000 0 0 0 0 1,600,000 2,400,000 6,000,000 5,500,000 5,500,000 0
Recycled Water Total: $ 55,119,000 $ 4,152,000 $ 8,253,000 $ 10,253,000 $ 7,450,000 $ 3,861,000 $ 2,750,000 $ 6,350,000 $ 5,850,000 $ 5,850,000 $ 350,000
Table 5 Ten-Year Program:Totals by ProgramFiscal Year 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
Programs 10 Year Total 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
Collection System 349,511,000 27,129,000 36,732,000 37,713,000 40,298,000 35,432,000 32,660,000 37,215,000 27,812,000 29,993,000 44,527,000
Treatment Plant 413,202,000 28,631,000 45,801,000 52,895,000 53,492,000 46,429,000 43,750,000 44,170,000 33,094,000 40,100,000 24,840,000
General Improvements 25,998,000 5,369,000 3,407,000 2,861,000 2,511,000 1,975,000 1,975,000 1,975,000 1,975,000 1,975,000 1,975,000
Recycled Water 55,119,000 4,152,000 8,253,000 10,253,000 7,450,000 3,861,000 2,750,000 6,350,000 5,850,000 5,850,000 350,000
Subtotal 843,830,000 65,281,000 94,193,000 103,722,000 103,751,000 87,697,000 81,135,000 89,710,000 68,731,000 77,918,000 71,692,000
Contingency 23,395,000 895,000 2,500,000 2,500,000 2,500,000 2,500,000 2,500,000 2,500,000 2,500,000 2,500,000 2,500,0001
Total with Contingency $ 867,225,000 $ 66,176,000 $ 96,693,000 $ 106,222,000 $ 106,251,000 $ 90,197,000 $ 83,635,000 $ 92,210,000 $ 71,231,000 $ 80,418,000 $ 74,192,000
(Note:All costs in 2019 dollars)
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Information Technolo Develo ment- District Project 8240
Program Phase Priority Rank Ranking Score
General Improvements Construction Critical 70
Purpose: Project Drivers
To replace and upgrade Information Technology (IT) infrastructure
and software as needed. Aging Capacity
Infrastructure
Drivers:
An IT Development Plan was developed to centralize efforts and Regulatory Sustainability
funding in the development of computer and telecommunication
technology within Central San. Central San budgets IT on an
annual basis.
The IT Master Plan was approved in 2015 and its
implementation is within the Capital Improvement Program
(CIP) and the Ten-Year Capital Improvement Plan.
Description:
This project is the implementation of the IT Master Plan which
includes the following major elements:
• Network infrastructure upgrades
• Disaster recovery/business continuity
• Cloud based technology improvements
• Business application suite improvements
• Increasing mobile presence
• Desktop technology refreshment
• Web redesign and enhancement
• Cyber security
Operating Department Impact and Funding Source:
The impacts to the operating budgets have not yet been determined. Project expenditures are funded
from Capital Revenues.
Location(s): Central San-wide
Project Budget
Phase Budget-to-Date FY 2019-20 FY 2020-21 Future FYs Total
Planning $0 $0 $0 $0 $0
Design $0 $0 $0 $0 $0
Construction $2,7938,794 $500,000 $500,000 $760,000 $4,4§98,794
FY Total $2,7838,794 $500,000 $500,000 $760,000 $4,43598,794
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June 20, 2019 Regular Board Meeting Agenda Packet- Page 70 of 120
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Enterprise Resource Plannin Re lacement— District Project 8250
Program Phase Priority Rank Ranking Score
General Improvements Construction Critical 65
Purpose:
To replace our legacy Enterprise Resource Planning (ERP) system Project Drivers
that manages Central San's finances, budget, human resources,
procurement, payroll and other related resources. Aging Capacity
Infrastructure
Drivers:
The existing SunGard ERP system uses outdated technology that Regulatory sustainability
does not meet the current and future Central San business needs.
The latest generation of ERP systems have been developed to
implement modern best-practice processes that will help Central San
to streamline and optimize many business processes.
This project will eliminate the need for staff to use many manual
processes and workarounds that are currently in use to accomplish
work. It will enable more organizational transparency by providing
visibility into our financial and business data in ways that are not
currently possible and will provide the latest generation of technology
to ensure full integration with future business applications.
Description:
The following are major elements included in the project:
• Conversion of data from SunGard system to new ERP system
• Implementation of Human Resources, Finance, Payroll, and related systems
• Staff training
• Integration with related Central San systems
A replacement of Central San's permitting software functionality, currently provided by the SunGard
system, is not included in these costs but may be funded from IT Development or other project
sources.
Operating Department Impact and Funding Source:
This project is expected to have an annual ongoing impact of approximately $200,000 on the Operating
Budget. Other operating efficiencies may offset, in part, some of these direct costs. Project
expenditures are funded from Capital Revenues.
Location(s): Martinez and Walnut Creek Campuses and Cloud
Project Budget
Phase Budget-to-Date FY 2019-20 FY 2020-21 Future FYs Total
Planning $100,000 $0 $0 $0 $100,000
Design $200,000 $0 $0 $0 $200,000
$2 nnn nnn $3,700,000
Construction $3-200,000 3'100 $1,200,000 $300,000 49 00
FY Total $6-500,000 $ n�AA $1,200,000 $300,000
$3,105,000 $5,205,000
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June 20, 2019 Regular Board Meeting Agenda Packet- Page 71 of 120
Attachment 2
ERP CONTRACT APPROVA
UPDATE AND
FY 2019 =20 BUDGET AMENDMENT
Phil Leiber
Director of Finance & Administration
Board Meeting
' June 20, 2019
r3
=F
�n -
June 20, 2019 oard Mee .
�. CENTRALSAN
BACKGROUND
1 . Enterprise Resource Planning (ERP) related
contracts under District Project (DP) 8250
approved 6/6/2019
2 . FY 2019-20 Budget approved 6/6/2019
3 . Discrepancy between #1 , and #2 :
• Need to update Capital Improvement Budget to reflect
approved ERP project funding level
4 . Also now need to update DP 8250 funding
level by $80 ,000
CENTRALSAN2
BACKGROUND
• Final contract payment schedule differed by
$80,000 from the amount used in the budget
analysis presented in recent months
• Relates to Central San 's request to phase the
project to reduce risk
• Staff agrees the $80 ,000 is necessary and
appropriate
3 '
RECOMMENDATIONS AND
Recommendations: ERP BUDGET AS AMENDFr)
• Authorize an $80,000 increase to the Emtec Consulting Services LLC professional consulting services agreement approved at the
June 6, 2019 Board meeting, for a new cost ceiling of $2,365,000;
• Authorize a concurrent $80,000 increase in the total cost for the ERP Replacement, District Project 8250, approved at the June 6,
2019 Board meeting, bringing the Project total to $5,205,000; and
• Authorize amendments to the Fiscal Year 2019-20 District Budget adopted on June 6, 2019 to incorporate changes associated
with funding for the ERP Replacement, District Project 8250.
Proiect As Amended:
' • - 1 • 1 . 1 MIEMFY 1 • .
DP 8250 ERP $600,000* $3,105,000** $1 ,200,000 $300,000 $5,205,000
* Source of funding is District Project 8240 (IT Development) which has been unbundled to separately show DP 8250.
Includes the $500,000 presented in the draft budget book as of 5/2/2019.
** Includes use of$1 ,105,000 from CIB Contingency ($1,025,000 previously, and $80,000 now).
Vii. i
CENTRALSAN
QUESTIONS ?
J►Y
d
5