City of Alexandria, Virginia
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MEMORANDUM
DATE: FEBRUARY 6, 2013
TO: THE HONORABLE MAYOR AND MEMBERS OF CITY COUNCIL
FROM: RASHAD M. YOUNG, CITY MANAGER
DOCKET TITLE:
TITLE
Consideration of a Resolution to Approve Change Orders to the City's Contract with Lane Construction Corporation to Procure Additional Services for the Route 1 Transit Project. [ROLL-CALL VOTE]
BODY
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ISSUE: Consideration of an action to authorize the City's Purchasing Agent to issue change orders for additional services to the City's contract with the contractor for the Route 1 Transitway project, up to a total contract amount not to exceed $13,098,460.
RECOMMENDATION: That City Council, by adopting the attached resolution, authorize the City's Purchasing Agent to issue change orders to procure additional services within budget to the contract with Lane Construction Corporation for construction of the Route 1 Transitway, not to exceed $1,922,000 for changed field conditions, $1,734,000 for final design elements, and $1,400,000 for Transitway stations and amenities and $600,000 for transitway fare and real time equipment, signage and station furnishings. The maximum contract amount for the project including all change orders is expected to be $13,098,460, which is significantly below the original 95% State and federally funded project budget of $16,172,138.
BACKGROUND: The Route 1 Transitway (Transitway) is the first segment in a five-mile high-capacity transit corridor connecting Pentagon City and Braddock Road Metrorail stations. Much of the service will operate in dedicated transit lanes, providing residents, workers, and visitors with a fast, convenient, and comfortable connection to the regional Metrorail network, the emerging Potomac Yard developments, and key employment nodes.
The initial segment of the corridor is under construction along Route 1 between Potomac Avenue and East Glebe Road. As part of its development obligations, the Potomac Yard Development widened Route 1 to add two new northbound lanes. The transitway is being constructed in the median (former northbound lanes). Transit vehicles will operate in an exclusive right-of-way along this segment. The project includes enhanced stations, off-board fare collection, transit signal priority, and real-time information signage. While other jurisdictions in the Washington, D.C. metropolitan area are planning for this type of rapid transit service, this five-mile segment of transitway service will be the first in the region to be constructed and operational.
In April 2006, City Council acted to amend the Transportation Master Plan to include a median-running transitway on Route 1. On April 12, 2011, City Council formally approved construction of the Transitway and approved in concept the future operation of a busway in the Crystal City/Potomac Yard corridor. 95% of the $16.1 million Transitway budget is funded by federal and State grants, as depicted in Table 1.
TABLE 1. Available Project Funding for Design and Construction
Sponsoring
Type of Funding Agency Amount
Transportation Investment Generating Economic
Recovery (TIGER) Federal $8,500,000
Regional Transit System Plan (RSTP) Federal/State 300,000
Congestion Mitigation and Air Quality (CMAQ) Federal/State 3,785,000
Section 5309 Federal 1,247,138
New Starts Federal 1,490,000
Transportation Improvement Funds City 600,000
Stormwater Management Fund City 250,000
Total $16,172,138
In the fall of 2010, the City received $8.5 million in funding from the Transportation Investment Generating Economic Recovery (TIGER) Discretionary Grant program for the design and construction of the Transitway. Due to the compressed timeframes associated with the TIGER funding, the City chose to utilize a design-build contract to reduce the time for completion of the project.
On November 30, 2011, after a successful competitive process that included evaluation, selection, and contract negotiation, a design-build contract was awarded to Lane Construction Corporation (Lane or Contractor) for $7.4 million. The scope of the design-build contract included the design and construction of the Transitway and the station platforms. As is consistent with a design-build process, the Lane contract was based on preliminary 30% design plans and known field conditions at that time. Construction began in July 2012.
DISCUSSION: Since the design-build contract was awarded to Lane, several changes to the contract have been identified as necessary or desirable. These changes can be categorized as (1) necessary modifications due to changed field conditions that could not have been anticipated at the 30% design level; (2) final design elements that have been incorporated to improve the pedestrian environment and enhance the passenger experience; (3) addition of the transitway stations construction and installation; and (4) addition of transitway fare and real time equipment, signage and station furnishings to the Lane contract.
Under the City's procurement regulations (Section 3-3-50 of the Alexandria City Code), the City's Purchasing Agent is authorized to issue change orders to firm, fixed price contracts for an amount totaling up to 25 % of the original contract price. However, the Purchasing Agent may issue change orders that exceed 25% of the original contract price if authorized by the City Council.
It should be noted that the City's 25% change order threshold was established at a time when construction services were customarily procured on a design-bid-build basis. In design-bid-build, contracts are executed when project designs are 100% complete and field conditions are well known. Given the certainty involved, design-bid-build projects do not usually generate change orders in excess of 25% of the contract price.
In contrast, the design-build process generates larger numbers of change orders because construction is able to commence and progress as the designs are being finalized. Since the scope of the project changes as the designs are completed, change orders are more prevalent because as the project progresses, conditions are better understood. Because of the propensity for changes during construction, the current 25% change order threshold is not consistent with design-build principles and practices. It should be noted that the City only recently started using design-build contracting for large projects and uses it when it provides a benefit to the City and is in the City's best interest.
Because the total amount of the proposed change orders for the Transitway project will exceed the 25% threshold, staff is requesting that City Council authorize the Purchasing Agent to approve and issue the additional change orders. The costs provided herein and detailed in Attachment 1 are maximum budgetary estimates. If authorized to issue the change orders, the Purchasing Agent will negotiate the cost of these elements as the design is completed and the extent of changed field conditions has been determined. The final cost of the change orders is expected to be below the budget estimates.
Changed Field Conditions
The Contractor has encountered several changed conditions in the field, including unsuitable subsurface and contaminated soils and unidentified utility conflicts. These conditions require change orders to allow work to progress. Given Potomac Yards' history as an industrial site, these discoveries are not uncommon. In addition, a Dominion Virginia Power 230 kV underground electrical transmission line has been encountered that was installed by Dominion at a shallower depth than was anticipated for this type of line. Modifications to the design of the transitway are required to avoid negatively affecting this critical infrastructure. Based on what has been encountered to date, staff anticipates additional contaminated soil and utility issues as work progresses. The known and projected costs for these contract changes are $1.9 million. This projected cost includes a contingency to allow for additional unforeseen conditions that may arise. Attachment 1 provides a summary of these additional costs.
Finalization of Design
The accelerated nature of the TIGER grant did not allow for sufficient internal staff or community dialogue necessary to complete the Transitway design prior to advertising and awarding the contract. In addition, the City had to utilize a design-build contract for the project in order to meet the tight implementation deadlines associated with the TIGER funding. A design-build contract, unlike the traditional design-bid-build contract, enables a project to be completed more quickly because of the overlapping of the design and construction phases, but construction begins before designs are 100% complete and site conditions are completely known.
Over the last year, City staff has worked with the Contractor's design team and community stakeholders to finalize the design. As part of this effort, a number of elements have been incorporated into the final design that improve the pedestrian environment, develop a signature brand for the Transitway, enhance the user experience, and improve rider and pedestrian safety. Examples of these design elements include colored concrete crosswalks, audible pedestrian signals, and a multi-use trail north of East Glebe Road. Incorporation of these final design elements will ensure that the City is building a premiere, high-capacity transit facility that is a model for other City transitway corridors, as well as the rest of the region. This level of design detail, however is not typically developed prior to the 30% design. The total cost of these design elements is $1.7 million. A list of recommended design elements can be found in Attachment 1. The estimates reflect the maximum price for each element. Both Planning Commission and City Council discussed and approved the design of the Transitway on May 1, 2012, and May 12, 2012.
Transitway Stations
At the time the design-build contract was advertised and awarded, the design for the seven transitway stations was still under development. Since that time, staff has reviewed station options, held a public meeting, and conducted a survey to solicit input on the station design. The preferred design is the custom station recently designed by Arlington County for its portion of the Crystal City/Potomac Yard Transitway. The station will be a signature element of the transitway, creating a unified experience for riders throughout the corridor.
Staff recommends incorporating the manufacture and installation of the preferred station design into the Lane contract. Otherwise, the manufacture and installation of stations would have to be advertised for construction as a separate contract. The cost of the seven stations is estimated at $1.4 million. Allowing this work to be constructed by Lane provides for several benefits for the City:
· The design of the station can be more fully integrated into the platform design, simplifying the construction, saving money on design and construction overall.
· Two contractors will not have to share the same work area at the same time, reducing construction management needs and the potential for claims to the City.
· The Contractor is already mobilized, and thus installation of the stations by the Contractor will save money on mobilization costs. If the work is done by a different contractor, additional mobilization costs would be incurred.
· Coordination of the platform construction and station installation will consolidate work and minimize lane closures.
The total cost for adding the transitway stations to the Lane contract is $1.4 million. Since the stations would be funded using federal grant funds, the change order for the stations, if approved by the City Council, would also need to be approved by the Federal Transit Administration.
Staff recommends that Council authorize the Purchasing Agent to approve the change orders to the Lane contract referenced in this document. Pursuant to Section 3-3-50 of the Alexandria City Code, the change orders totaling more than 25% of the original contract price must be approved by the City Council. As discussed herein, the known and anticipated changed field conditions, as well as the recommended final design elements, are anticipated to result in change orders in excess of 25% of the original contract price.
Station Equipment
In order to make the transitway fully operational and to optimize the rapid transit intent of this service, it will be necessary to install off-board fare equipment at the transit stations, as well as electronic real time information equipment. In addition, transitway signage and station furnishings (benches, trash cans, etc.) will be needed. The cost of all of this station equipment and installation is estimated at $0.6 million. As is the case with the transit stations, the most cost efficient and timely way of procurement would be for this equipment package to be added to the Lane contract.
FISCAL IMPACT: The original design-build contract with Lane totaled $7,442,460. If all of the $5,656,000 in change orders described above are approved, the total amount of the engagement with Lane would increase to $13,098,460 (see Table 2). Change orders up to this new maximum would be approved by the Procurement Officer using the same requirements as change orders under the current contract. This new contract price would be within the original budget of $16,172,138 for the Route 1 Transitway project, but would be in excess of the 25% change order threshold that requires City Council approval. The remaining budget balance after accounting for these proposed change orders is $3,073,670. The change order would be fully funded using available federal grants dedicated to this project. The remaining funds in the budget are available and are required for project elements that are not part of the Lane contract, such as construction management. If there are unspent funds when the project is completed, staff will return to the City Council to request the reallocation of the remaining federal and State grant funds to other transportation purposes.
TABLE 2. Change Order Scope Items and Maximum Prices
Description Amount
Original design-build contract $7,442,460
Changed field conditions 1,922,000
Final design elements 1,734,000
Manufacturing/installation of custom stations 1,400,000
Transitway fare and real time equipment,
Signage and station furnishings 600,000
Total $13,098,460
TABLE 3. Project Balance
Description Amount
Total project budget $16,172,138
Less total anticipated contract amount (13,098,460)
Remaining project budget balance $ 3,073,678
ATTACHMENTS:
Attachment 1 - Cost Breakout of Transitway Changed Field Conditions, Final Design Elements, and Transitway Stations
Attachment 2 - Resolution
STAFF:
Mark Jinks, Deputy City Manager
Laura Triggs, Chief Financial Officer
Richard J. Baier, P.E., LEED AP, Director, T&ES
Morgan Routt, Acting Director, OMB
Stephen Taylor, Acting Purchasing Agent
Sandra Marks, AICP, Acting Deputy Director, T&ES
Antonio Baxter, Division Chief, T, &ES Strategic Management Services
Marti Reinfeld, Division Chief, T&ES Transit Services
Susan Gygi, Potomac Yard Projects Manager, T&ES Transit Services
Malik Williams, Fiscal Operations Manager, T&ES Strategic Management Services
Shawn Brooks, Contract Specialist II, T&ES Strategic Management Services