2004/03/10 Council Agenda Packet

Highlights of Proposed Update to Change Order Ordinance (977-83) Changes frequently occur in construction projects, such as an additional few feet of curb and gutter should be added, or a few more feet of sidewalk are needed than originally thought. In ordinance 977-83, City Council delegated authority to the Mayor to sign change orders on public works projects up to 10% or$50,000, whichever was smaller, without Council approval. The ordinance has not been updated for twenty years and the limits of change order authority are the same no matter the size of the original contract value. An interdepartmental group conferred and agreed on new limits. 1. Council Will Be Informed Regarding Change Orders. Directors will brief the Budget Committee for change orders that: A. Reflect a change in scope from the original project,regardless of dollar amount; B. Represent a 10% cumulative change from the original budget or exceed $50,000, whichever is less. Directors will use their judgment to bring forward other change orders that fall below this criteria. (e.g.,high profile projects) 2. Council Will Continue To See Final Accounting. Council will continue to see a final accounting of all change orders when Council is asked for Final Acceptance of the project, even if the total amount of change orders does not exceed the"pre-approved"limit set by Council under this Ordinance. Council therefore does not lose supervision or control 3. Council May Review the Ordinance After One Year. The ordinance explicitly states that Council may review the ordinance after a year, as suggested by the Budget Committee. 4. Updated Limits Of Change Order Authority. In the updated ordinance, Council "pre-approves" change orders within the following limits (based on original contract value): Original Contract Value Pre-Approved Change Order Authority < $500,000 20% (up to $100,000) $500,000-$1 million $100,000 plus 15% of amount over$500,000 ($175,000 maximum) $1M-$5M $175,000 plus 10% of amount over$1 million ($575,000 maximum) Over$5M Established by separate resolution on a per project basis Examples: $400,000 contract=$80,000 of change order authority $800,000 contract=$145,000 of change order authority(20% of$500,000 plus 15% of the amount over$500,000) $1,200,000 contract=$195,000 of change order authority(20% of$500,000, plus 15% of the next $500,000,plus 10% of the amount over$1M) 5. Work May Proceed Without Council Action If Within Ordinance Limits. The ordinance will explicitly authorize the extra work to proceed without express Council approval if the cost of the extra work does not exceed the change order limits. 6. Council May Authorize Additional Change Order Authority Limits For A Particular Project If Needed. The new ordinance will expressly authorize staff to seek an increase in authority for a particular 1�7