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Item 4K - Final Item 4K M E M O R A N D U M (January 16, 2018) To: Shana Yelverton, City Manager From: Rob Cohen, Director of Public Works Subject: Approve a change order with Haydon Building Corporation (HBC) for the Champions Club construction project in an amount of $1,714,400. Action Requested: Approve a change order with Haydon Building Corporation (HBC) for the Champions Club construction project in an amount of $1,714,400. Background Information: Approving this change order will revise the contract’s Guaranteed Maximum Price (GMP) from $32,988,686 to $34,703,086. This is a 5% increase. Contract Sum was $32,988,686 Total amount of change order $ 1,714,400 Revised GMP $34,703,086 This change order will reimburse HBC for additional costs incurred while constructing Champions Club. The majority of these costs are attributed to two noteworthy issues that arose during the first several months of the project. These events are found in Exhibit A and identified with ‘green’ text. The first issue involved the significant redesign of essential project elements due to the need to meet fire code requirements. Over 1,300 additional design sheets were issued. These revisions altered more than 2,000 work items that were required to be incorporated into the contract documents. These work items were added to the scope of work. The second issue occurred shortly after the contractor started the project and began drilling the piers. They encountered higher than expected water levels at the site. This subsurface discovery required revisions to the concrete mix design, placement method and a redesign of all of the concrete piers. Item 4K Page 2 of 6 The discovery of the water also led to the decision to install an underslab drainage system. This system was not originally part of the project’s scope of work or within the GMP. The changes since project inception until June 7, 2017 have been categorized and are shown below. Each category is identified and accompanied by an estimated cost and the contributory amount of this cost to the total cost. Design completion $1,694,594 (50 %) (Exhibit B) Subsurface conditions $1,256,899 (37 %) BRS clarifications $ 284,253 ( 8 %) Owner changes $ 163,578 ( 5 %) Total Cost Impact: $3,399,324 (100%) These noteworthy items negatively impacted the project cost and schedule. Most, if not all of the costs associated with the redesigns have already been identified, quantified, negotiated and categorized. Financial Considerations: The total change order amount is summarized below: Row A is the sum of the contingency budget ($2,566,381 within the GMP) less the total cost impact ($3,399,324) from project inception to June 7, 2017. (The total cost impact is the sum of all of the prospective changes to the original contract.) The result is a contingency shortfall in an amount of $832,943. Contingency Budget: $2,566,381 Total Cost Impact: $3,399,324 ($832,943) ($832,943) Credit to Contingency: $118,545 ($714,398) ($714,398) Change Order: $1,714,400 Contingency $1,000,000 Row A Row B Row C Item 4K Page 3 of 6 Row B is a credit to the project contingency in an amount of $118,545. This credit is added to the contingency shortfall, thus reducing the shortfall to $714,398. Row C is the contingency shortfall plus the use of approved funds from this change order ($1,714,400). This action overcomes the contingency shortfall and replenishes the project contingency to a new balance of $1,000,000. This contingency is expected to be adequate for the remainder of the project, barring any unforeseen conditions. Note that approval of the change order will increase the contingency as the project goes vertical. It authorizes staff to utilize funding that was approved in the FY 2018 CEDC Budget. Prior to funding approval, Staff held discussions with the CEDC and City Council. These discussions focused on the need to identify several courses of action to improve the project’s cash flow. Staff developed and discussed several cost mitigation courses of action with the CEDC and Council last summer during the FY18 budget development process. The chosen course of action reallocated a number of items from the capital budget to the operating budget. These items were FF&E expenditures for purchases that do not have a capital-item useful life. It is important to note that most of the work has already been completed. The team has conducted numerous reviews and negotiations over the past 13 months, finalizing the scope, cost and allowable reimbursements. The team confirmed the scopes of work and costs were reasonable, within industry standards and were in accordance with the contractual terms and conditions. Strategic Link: CEDCF1 Invest to provide and maintain the Marq as a high- quality public asset in accordance with defined financial performance and service guidelines (F2). CEDCF2 Ensure expenditure of CEDC and Economic Development Investment Funds in accordance with established economic development goals, policies and master plan recommendations (F2). Citizen Input/ Board Review: N/A Legal Review: N/A Alternatives: The City Council may approve or deny this requested action. Supporting Documents: Attachment A: Time Line of Events Item 4K Page 4 of 6 Attachment B: Design Completion Costs Staff Recommendation: Approve the change order authorizing the use of pre-approved funding to replenish the project contingency. Staff Contact: Rob Cohen, Director of Public Works Item 4K Page 5 of 6 Exhibit A – Champions Club Time Line Sept 1, 2015 The City Council amended the design services agreement with Barker Rinker Seacat Architecture (BRS) to complete design services for Champions Club. Sept 6, 2016 The City Council approved the contract for Construction Manager at-Risk services with Haydon Building Corp (HBC), and the Guaranteed Maximum Price (GMP) Amendment in the amount of $32,988,686 for the construction of The Marq Southlake Phase 2. Sept 29, 2016 Design documents provided by BRS and sent to subcontractors were labeled as 100% Construction Documents (CD), but were missing information. Additionally, this drawing package failed to meet code requirements. Oct 2016 – Apr 2017 The CDs were developed with scopes of work, estimates, negotiated and executed within a six month period. Each of these documents added information to and corrected information on the 100% CD set issued for subcontractor bidding. Jan 25, 2017 A subsurface issue were discovered. Apr 2017 – Present The project team has worked for more than 13 months reviewing, negotiating and completing the work that was changed with the revisions to the CDs. Item 4K Page 6 of 6 Exhibit B – Design Completion Costs Fire Code Separation Issue #1 $419,511.40 Relocated existing location of 2 hour fire wall from the west side of the gym to the east side. Included modifications to piers, grade beams and masonry walls. Fire Code Separation Issue #2 $33,862 Demolition of the Phase I exterior wall and construction of a new fire rated drywall separation wall along with temporary bracing and shoring of the temporary wall. Under Slab Drainage $64,681.24 Costs for the design of the underslab drainage system by the Plumbing Subcontractor. Foundation & Structure Design $905,825.20 Final design completion of the pool, pool foundations, structural steel and concrete foundations. Interior Finishes & Millwork Detailing $81,007.89 Final completion of the interior signage, floor finishes and millwork locations and elevations. Request for Information/Submittal/Review $28,976.45 Answers provided to subcontractor and Haydon questions as well as rejection of as equal material listed in the specification and request to use only the basis of design. HVAC, Plumbing & Electrical Design $78,365.23 Final completion of the design of the mechanical, plumbing and electrical systems to catch up to the architectural changes. Site Paving, Landscaping & Other Site Changes $59,336.09 Changes in the sidewalks, entrances from Shady Oaks, landscaping modification as well as utility and drainage revisions. Other Scope Changes $23,028.44 Changes to the ceilings, wall and floor finishes. Sum of items:$1,694,593.94 Costs of the items in this Exhibit are included in the total cost impact of $3,399,324.00.