Loading...
HomeMy WebLinkAbout04.e. Review draft Position Paper to authorize the General Manager to amend two existing professional engineering services agreements with: 1) Black & Veatch Corporation in an amount not to exceed $1,050,000 for design and bid period services; and 2) MWH Page 1 of 7 Item 4.e. CENTRAL SAN BOARD OF DIRECTORS . , , . POSITION PAPER . , DRAFT MEETING DATE: AUGUST4, 2020 SUBJECT: REVIEW DRAFT POSITION PAPER TO AUTHORIZE THE GENERAL MANAGER TOAMEND TWO EXISTING PROFESSIONAL ENGINEERING SERVICES AGREEMENTS WITH: 1) BLACK & VEATCH CORPORATION IN ANAMOUNT NOTTO EXCEED $1,050,000 FOR DESIGNAND BID PERIOD SERVICES; AND 2) MWH CONSTRUCTORS, INC. I N AN AMOUNT NOT TO EXCEED $450,000 FOR CONSTRUCTABILITY REVIEW, BIDAND RECORDS VERIFICATION SUPPORT FOR THE SOLIDS HANDLING FACILITY IMPROVEMENTS, DISTRICT PROJECT 7348 SUBMITTED BY: INITIATING DEPARTMENT: NATHAN HODGES, SENIOR ENGINEER ENGINEERING AND TECHNICAL SERVICES- CAPITAL PROJECTS REVIEWED BY: EDGAR J. LOPEZ, CAPITAL PROJECTS DIVISION MANAGER JEAN-MARC PETIT, DIRECTOR OF ENGINEERING AND TECHNICAL SERVICES ISSUE Board of Directors' (Board) authorization is required for the General Manager to execute an amendment to a professional engineering services agreement for amounts greater than $200,000. BACKGROUND The Solids Handling Facility Improvements, District Project 7348 (Solids Project) design began in 2017 when the Board approved an agreement with Black& Veatch Corporation (BV)for pre-design services. This project combined five separate capital projects from the Fiscal Year 2016-17 Capital Improvement Budget and three additional projects due to the interdependency for each of the solids processes. The Solids Project represents one of the largest and most complex construction projects since the treatment plant, as we know it, was built in the 1970s. Since the Board approved the addition of final design services on April 26, 2018, staff and BV have made significant design progress of the following major elements: • Sludge blending and storage - new optimized and energy efficient mixing systems; • Sludge dewatering - centrifuge and cake pump equipment selected and incorporated into design; • Incinerators - burner upgrades, new center shaft drives, and combustion air blowers; August 4, 2020 EOPS Regular Committee Meeting Agenda Packet- Page 52 of 69 Page 2 of 7 • Solids Conditioning Building (SCB) and incinerator seismic modifications; • New air pollution control equipment-selected and incorporated into the design; • Ash Handling Facility- new enclosed facility adjacent to the Emergency Sludge Loadout Facility (ESLF); • ESLF upgrades -completed under separate project; • Emergency stairway-for the safety of the occupants and will start construction under a separate project soon; and • Electrical, Instrumentation and Controls (E I C) coordination and replacement. Current Design Status and Items Needed for 100-Percent Completion Staff received the 90-percent complete design submittal (drawings and specifications)from BV in late November 2019. Since that time, staff submitted extensive comments, including feedback from the construction management(CM)team, MW H Constructors, I nc. (MW H), regarding the constructability of the project. Over the past six months, the major focus to complete the design has been on the El C and constructability of the proposed work and its impact on the estimated construction schedule and cost. Many of the existing E I C systems in the SCB are outdated and very complex. Staff and the design team have been concerned about the accuracy of the record information related to these systems since the project was developed. Staff recognized that the E I C was going to be a significant challenge in the design and increased BV's proposed design budget for this effort as the final design agreement was negotiated. A project of this magnitude and complexity, which includes replacing nearly all power and control wiring in an operating building, requires a strong understanding of the existing systems, system limitations, sequencing, detailed information so that a bidder is able to appropriately assign costs and that the project can be built as identified in the contract documents.A unique challenge of the Solids Project is that the construction schedule is driven by building a significant portion of the EI C and a new electrical room located at a new space on the SCB second floor within the first 18 months. Under most construction projects, the El C is typically completed later or closer to the end of the project. The Solids Project requires this work to be completed up front since the building will continue to be in operations 24-hours a day and it allows for safe transitions to new equipment or starting new systems while minimizing risks of unintended equipment and process power shutdowns. The estimated E I C for this project is currently valued at over$20 million (M), which accounts for one-fifth of the total $107M construction estimate. Constructability Review Due to the complexity and the risks inherent in making such significant improvements while maintaining operation of all processes, staff determined it necessary to re-evaluate the decisions made earlier in the design, especially for the timing of the incinerator shutdowns. A workshop was held in January 2020 where key Central San staff and consultants considered whether is was feasible to shut down the entire SCB in order to more safely and efficiently construct the project. While it is was determined that shutting down the SCB entirely was technically possible and would require less construction challenges under the project, the economics and additional time that would be required to duplicate all the systems temporarily was determined to be too cost and time consuming. Therefore, the concept of providing system alternatives far outweighed the benefits. However, this exercise yielded options for backing up critical power, steam, and solids processes in the event they were accidentally impacted during construction. Three recent efforts to provide additional redundancy and resiliency to the plant and minimize impact from unintended shutdowns were recently presented to the Board: 1) Electrical Blower I mprovements Project as a back up to steam to continue providing aeration for the secondary treatment process; 2) ESLF upgrades to provide a reliable means to load solids into trucks for off-site disposal; and 3) a solids maintenance and emergency agreement to haul and dispose of solids. One main area of concern remains with the incinerators which operate at high temperature and have associated complex equipment and utilities (i.e., gas, power, ash, heat, steam)which all pose concerns during the construction if they remain in service. Staff is considering a shutdown of both incinerators for a August 4, 2020 EOPS Regular Committee Meeting Agenda Packet- Page 53 of 69 Page 3 of 7 period not to exceed 12 months.All other SCB systems will remain in operation, including the Cogeneration System and auxiliary boilers. Efforts continue to refine the costs and construction schedule impacts. The costs associated with providing alternative sludge disposal will be compared to the potential construction cost and schedule savings, as well as mitigating some of the risks working adjacent to an online incinerator. BVAgreement Status While the base scope of the Solids Project has not changed significantly since the final design effort started, as the design progressed, BV's claim of additional effort increased. Each design submittal (30- percent, 50-percent, and 90-percent) included numerous staff comments, with the 90-percent submittal also including MW H comments. BV submitted several requests to increase their design fee to address the effort resulting from review comments and to finalize the design to meet Central San's standards. Back in February of 2019, BV requested over a million dollars of extra fees associated with the project claiming changes in scope and additional effort to complete the project design. Staff addressed that request and, following extensive reviews and meetings, concluded that staff did not agree with BV's overall assessment and the significant fee request. Staff did agree on three items that required additional fees and an agreement revision was executed in the amount of$200,000, with the majority written for sub- consultants. To date, a total of six contract revisions to the BV agreement have been executed.A summary of the agreement and revisions history is attached. Staff received another BV fee request in February 2020, which was significantly higher than the original amount request in 2019, totaling over$2.4M. With this latest request, BV claims that the feedback provided by Central San and MW H on the 90-percent submittal and the detail requested are outside their understanding of the agreement scope of work or not within their standard practice.After numerous correspondence and meetings, including multiple detailed technical sessions, and in consultation with District Counsel, staff has offered a settlement in the amount of$700,000 to finalize the design. It should be noted that BV does not have any remaining fee available to finish the design as of the end of January 2020. This settlement will be all encompassing and resolves all BV pending requests and claims made to date. The final design deliverable will also include the level of detail Central San typically receives from design consultants, especially in EIC. Staff has compiled a list of the items to be included in the final design and constructability comments needed for a project of this magnitude. BV has acknowledged that the settlement will resolve all pending requests and that the 100-percent design submittal will include the agreed items defined in writing by Central San.Also, as part of the settlement, Central San will release upon design progress approximately$1.1 M of disputed invoices that have been withheld since last year. The BV final design is now scheduled to be submitted by September 2020 and will include an intermediate E I C submittal, with the goal to complete the bid package by mid-October 2020. The project is expected to be presented to the Board for award in early 2021. The schedule is critical to have this project ready to construct in the first half of 2021 and remain eligible for State Revolving Fund (SRF) funding. I n addition, staff is proposing to include bid support services to be performed by BV for answering questions from bidders on plans and specifications, issuing clarifications or changes that would be included in the construction contract by addenda. Staff is proposing a cost ceiling of$350,000 for these services. Bid services were not included in the initial design agreement and were deferred by staff until the project was ready to be advertised. BV will be paid on an as-needed basis and managed by Central San staff during the two-to three-month bidding duration. Contractor Prequalification Prequalification of general contractors, E I C, and incinerator sub-contractors have been identified as an important tool to ensure qualified bids are submitted and that contractors are sufficiently aware of the August 4, 2020 EOPS Regular Committee Meeting Agenda Packet- Page 54 of 69 Page 4 of 7 complexity of the Solids Project improvements. Subsequent discussion has resulted in the decision to potentially include seismic as part of the evaluation. Staff is in process of preparing the contractor prequalification documents. This process will be very similar to that used for the Pump Station Upgrades Project. Prequalified contractors will be determined prior to the project being advertised for bids. M WH Agreement Status for Construction Management MWH was hired to provide constructability review and assist with pre-bid services for the Solids Project. MWH reviewed BV's 90-percent submittal, conducted constructability reviews, performed schedule analysis, and provided detailed cost estimates for the project and for alternative SCB shutdown scenarios. MWH also participated in the January 2020 workshop to discuss the feasibility of a SCB shutdown. To date, MWH has provided invaluable support and expertise to the project. This effort has been critical in confirming the construction cost estimate and providing comments to improve the construction documents for contractor bidding and constructability. MW H has estimated the construction cost to be $107M based on the 90-percent submittal. One challenge has been estimating the EIC since this discipline, in staff's opinion, has not made the design progress as compared to the other major project elements. MWH and BV have taken different approaches in estimating this scope of the project and, depending on the bidders understanding and details on the plans, it could have a significant cost impact to the project. Additional authorization is needed for MWH to continue their pre-bid support services. The identified services needed at this time are for: 1. Review of prequalification documents from general contractors and E I C subcontractors; 2. Review of intermediate and 100-percent Design submittal for constructability and to update the cost estimate, especially for E I C; 3. Review front-end contract documents; 4. Finalize schedule analysis and project sequencing for potential incinerator shutdowns; 5. SRF support services. This support is needed both during the pre-bid and bid phases to ensure bid documents are properly prepared. Support will also include review of submitted bids for conformance to SRF requirements; and 6. Assignment of Start-Up support staff to assist in verifying record drawings for control wiring on existing process systems that will connect to new instrumentation and control components. The completion of this work is critical prior to start of construction so that valuable construction time is not spent while existing systems are confirmed. This effort will also prepare staff to respond quickly and accurately in the event equipment or processes are inadvertently impacted during construction. Existing electrical systems that are to remain under the project will also be verified. ALTERNATIVES/CONSIDERATIONS The Board could consider the following alternatives, or provide other direction. With regard to BV consultant agreement amendment.- 1. mendment.1. Alternatives to complete the Solids Project EIC design would include retaining BV but request that August 4, 2020 EOPS Regular Committee Meeting Agenda Packet- Page 55 of 69 Page 5 of 7 the E I C be designed by another consultant, which would not settle the disputed invoices, or possibly terminate the BV agreement and find another consultant to finish the design. Central San has obtained from BV the project 3D model, CAD files, specifications, and other critical project information. This would likely result in arbitration from a third-party to determine the amount due to BV. However, both design options are not recommended as this introduces new consultants that would cost Central San more than the current revision amount and would extend the completion of the project up to a year. 2. Another alternative to complete the Solids Project would be change the project delivery course. BV's agreement could be suspended or terminated, and staff would issue a design-build (DB) bid proposal using the current 90-percent design submittal as the basis for a Guaranteed Maximum Price construction contract. The designer would be working for the contractor under a DB effort. Staff has been evaluating this option extensively as it presents advantages that could be extremely beneficial for this project, especially for its complexity, E I C, and construction sequencing since the contractor would be involved in development of those major components. While this alternative may not save engineering cost or reduce construction cost, it would reduce and shift some of the risks to the DB team and may shorten the construction timeline significantly. The main elements of the design of the project that have been developed to date would be maintained. The DB team would review the design, complete the E I C design and evaluate the most cost-effective construction sequencing, including incinerator shutdowns and minimize sludge hauling cost. Having the contractor under contract and part of the design team would lower the construction risk, schedule, and changes during construction. Staff is currently comparing potential pros and cons with cost impacts to adequately evaluate this alternative. MWH would continue as the Owner's Adviser and construction management. In regards to the MWH agreement amendment: 1. There are not many alternatives for the services that would be provided by MWH under the proposed revision.Although staff has the qualifications and experience to verify the existing E I C systems, the time required to do so is substantial and would drastically take away from their current projects and normal operational duties. Staff will be involved to lead and coordinate the efforts.As for the other services, like SRF support and model/schedule analysis, staff does not have the specialized expertise required for the work; therefore, this alternative is not recommended. FINANCIAL IMPACTS The $1,050,000 BV revision amount includes $700,000 for resolution of all disputed design items and 100-percent design completion, and up to $350,000 for bid support services. As shown in attached agreement summary, BV's current agreement is valued at$8,604,636. The proposed $700,000 revision, not including the bid support services, represents a eight-percent increase to the overall agreement and a 12-percent increase to the final design costs. Including the requested $1,050,000 revision, it will increase the total BV agreement value or cost ceiling to $9,654,636. MWH's current agreement is valued at$500,000. The proposed $450,000 revision will increase the cost ceiling to $950,000. Staff will request subsequent revisions to these two agreements when the project is presented for award of the construction contract. These revisions (each has not yet been finalized)will be to include engineering services during construction support for BV for approximately$5.5-$6 million and construction management services for MWH for approximately$6.5-$7 million. Both agreements were solicited under Central San's policies and procedures for professional engineering services and include the scope of work represented in the agreement revisions and costs anticipated for the project. August 4, 2020 EOPS Regular Committee Meeting Agenda Packet- Page 56 of 69 Page 6 of 7 COMMITTEE RECOMMENDATION The Engineering and Operations Committee reviewed this subject at its meeting on August 4, 2020, and recommended RECOMMENDED BOARD ACTION Authorize the General Manager to amend two existing professional engineering services agreements under the Solids Handling Facility Improvements, District Project 7348, as follows: 1. Black& Veatch Corporation for design and bid services in an amount not to exceed $1,050,000, increasing the agreement cost ceiling to $9,534,636; and 2. MW H Constructors, Inc. for constructability review, bid, and records certification support in an amount not to exceed $450,000, increasing the agreement cost ceiling to $950,000. Strategic Plan Tie-In GOAL TWO: Environmental Stewardship Strategy 1—Achieve 100% compliance in all regulations GOAL THREE: Fiscal Responsibility Strategy 1—Maintain financial stability and sustainability GOAL FIVE:Infrastructure Reliability Strategy 1—Manage assets optimally to prolong their useful life GOAL SIX: Innovation and Optimization Strategy 2—Improve and modernize operations through technology and efficiency measures ATTACHMENTS: 1. Summary of BV Agreement and Revisions History August 4, 2020 EOPS Regular Committee Meeting Agenda Packet- Page 57 of 69 Page 7 of 7 Agreement and Revisions Summary with Black & Veatch Corporation Solids Handling Facility Improvements Project (Solids Project), District Project 7348 Agreement History: During the Solids Project, which started in January 2017, several revisions in scope and fee have been negotiated and resulted in the agreement being amended. Staff understands that changes do occur on large complex projects and, at times, revisions in scope will require amendments in either fees, schedule, or both. Central San has issued six contract revisions. Of the six revisions, three were issued after the final design was executed in May 2018. These include Revision No. 4 (Emergency Support), Revision No. 5 for Engineering Services During Construction (ESDC) for the Emergency Sludge Loadout Facility (ESLF) improvements, and Revision No. 6 for additional fees as stated above. In total, the current agreement is valued at $8,604,636. The table below summarizes the agreement history under the Solids Project. Contract and Date Awarded Contractual Type of Action Revision Amounts or Amended End Date Original Agreement Contract Amount for Preliminary Design $ 1,959,903 January 13, 2017 November 3, 2017 Revision No. 1 (1) $ 0 December 15, 2017 June 29, 2018 Revision No. 2 $ 240,097 March 7, 2018 -- Revision No. 3 (Final Design) (1) $ 5,900,000 May 7, 2018 November 2, 2019 Revision No. 4 $ 84,636 February 20, 2019 -- Revision No. 5 (2) $ 220,000 August 5, 2019 November 30, 2020 Revision No. 6 3 $ 200,000 October 23, 2019 -- Current Cost Ceiling: $ 8,604,636 (1)Includes Time Extension. (2)Time Extension and fees for ESDC associated with the ESLF only. (3)Based on District review of the February 2019 B&V Additional Scope Request. August 4, 2020 EOPS Regular Committee Meeting Agenda Packet- Page 58 of 69