2005/05/04 Council Agenda Packet

restrictions to limit all "in-water activities" (such as installing/removing piles) to within a period between August 1 and October 31. At the time the permits were issued late in design, the impacts of this constraint were not fully recognized; 5 however, the impacts now appear to be significant. The majority of steel piles cannot be installed until after September 9th because Pipelines No. 2 and 3 can only be removed after the summer high water demand season is over. This would limit the pile installation and removal to a period of approximately 47 working days in 2005. Due to this time constraint some bidders had to resort to double 10-hour shifts each day and 6-day work weeks, requiring extensive overtime, night illumination and increased shift inefficiencies. Two of the bidders proposed installation of a totally separate temporary work platform requiring a high quantity of temporary steel piles in-lieu of using the permanent piles. These two bidders indicated the temporary work platform would remain in place until the following year when they would come back after August 1, 2006 and remove the temporary platform. This approach results in a substantially longer construction duration, which increases project costs due to the higher material rental costs and associated contractor overhead costs. The timing restriction also resulted in additional costs associated with overtime work, shift differentials, and inefficiencies associated with night work. Finally, the contract documents require that the contractor pay for all overtime inspection costs. Additional overtime inspection costs would result from the permit restrictions on in-water work and these costs were not anticipated in the original engineer's opinion of probable cost. 2. Production rate: A production rate of 60-foot/10-hour workday was anticipated by MWH for installation of the permanent pile bent system. It appears that given the complexities of the work, this production rate was significantly optimistic. For example, based on discussions with the low bidder a production rate of 60-foot/20- hour workday (two 10-hour shifts per work day) was used, thus requiring twice the crew time. 3. Steel costs: There is a large amount of steel incorporated into the project for steel piles, pipelines, and steel beams for the temporary access platform, and steel prices have risen sharply over the past 18 months. Mill prices for structural and other types of steel have increased well over 60% during this time period. Updates were made in the cost opinion of probable cost shortly before bidding to attempt to account for these steel price increases. However, although prices have recently shown signs of stabilizing, the project contract documents require the bidder to absorb any future price volatility in their hard bids. Due to the large quantities of permanent steel piling and pipeline material (approximately 6.1 million pounds) this market volatility represents a significant risk, requiring the bidder to increase the bid price to reflect this higher level of uncertainty. Furthermore, approximately 4.8 million pounds of steel is necessary for temporary piles and the temporary work platform. The salvage value for this steel is very difficult to predict since it can vary substantially depending on the size and selection of structural steel members and the specific market economics for used steel materials. 4. Risk associated with work near the existing pipelines: The work requires that the contractor drive piles very close to the City's existing pile supported pipelines. These MWH-TECHNICAL MEMORANDUM Page 4 TRANSMISSION LINES 2&3-PHASE 6&7 APRIL 22,2005 ASSESSMENT OF BIDDER'S PRICE PROPOSALS 16