Memorandum 16-072 2016 Street Repaving Project

Memorandum 16-072

To:                   Katie Koester, City Manager

From:               Dan Gardner, PW Superintendent

Date:                April 20, 2016

Subject:            2016 Repaving Project

                        Whole Project vs. Partial Project Analysis

At the last council meeting, it was discovered that there was an error in the cost estimate spreadsheet and the following requests were made:

Provide a corrected estimate for the original proposal.
Provide an estimate for a reduced project with prioritized streets along with cost ramifications.
Address maintenance cost increases due to not paving the less prioritized streets.

Item 1: The original estimate for design/construction/admin was $578,788 and the Ordinance included a 10% overall contingency for a total of $638,000.  The corrected estimate for design/construction/admin is $668,489.  If a 5% overall contingency is added, it brings the total to $700,000.

So, the original ordinance requests a “not to exceed” amount of $638,000, and the revised estimate would require a “not to exceed” amount of $700,000.  It is likely that the 5% contingency will not be required, but the request is there to provide a means of dealing with abnormalities or omissions. Spreadsheet attached.

Item 2:            Bunnell Street/Beluga Place, and Clover Lane/Clover Place/Hillview Place were identified as the highest priority of the listed streets to accomplish first.  The remaining, lower priority streets are Early Spring Street, Mark White Street, Mullikin Street, and the small stretch of Kachemak Way.

The total estimate for the prioritized streets, with 5% overall contingency is $374,391

In speaking with Bill Nelson, owner of Wm. J. Nelson and Associates (design consultant), he said that it is difficult to put a number on just how much more the city might pay to break the project up and delay construction of some of these streets.  This is due to changing costs of products and fuel, and simply due to the times as budget climates and competition change.  He did say that generally, one will pay a bit more due to the fact that bidding the work in two sections requires two designs, two mob/demob costs, two storm water plans, and the fact that generally the cost per foot goes down as the project size increases.  He stated that in the current bidding climate, the biggest argument to doing a more comprehensive project now is that project funds are disappearing and bidding is becoming more competitive.  He cited a project that just bid in Kenai where the estimate was 2.4 million dollars, the high bid was 2.45 and the three lowest bids were all at about 1.98.  He attributed it to the current tight and competitive bidding climate. 

Item 3: Establishing cost numbers related to having to maintain the streets that don’t get paved is especially difficult to nail down.  It would be difficult to say that the city will save more money in maintenance costs than it would cost to repave these streets.  The issue is that for every day personnel and equipment is on a street, it is time and resources that can’t be used doing other maintenance items.  Delaying these few streets for another three years will not make or break Public Works operations.

Recommendation

Option 1          Approve original streets with revised “not to exceed” amount of $700,000.

Or,

Option 2          Approve downsized, prioritized streets with “not to exceed” amount of $374,391.