BOARD AGENDA MEMORANDUM
Government Code § 84308 Applies: Yes ☐ No ☒
(If “YES” Complete Attachment A - Gov. Code § 84308)
SUBJECT:
Title
Approve a Budget Adjustment in the Amount of $5,000,000 and Approve an Increase of $4,500,000 to the Construction Contract Contingency Sum for the Anderson Dam Federal Energy Regulatory Commission Order Compliance Project, Coyote Creek Stream Augmentation Fish Project Measure: Chillers Plant Project, Project No. 91864008, Contract No. C0701 (Morgan Hill, District 1).
End
RECOMMENDATION:
Recommendation
A. Approve a Fiscal Year 2025 budget adjustment in the amount of $5,000,000 to the Coyote Creek Stream Augmentation Fish Protection Measure: Chillers Plant Project; and
B. Approve an increase of $4,500,000 to the construction contract contingency sum, bringing the total contingency sum to $5,304,592 for the Coyote Creek Stream Augmentation Fish Project Measure: Chillers Plant Project.
Body
SUMMARY:
The objective of the Coyote Creek Stream Augmentation Fish Project Measure: Chillers Plant Project (Project) is to decrease the temperature of imported water and deliver the chilled water to the Coyote Creek functional cold-water zone.
Project Background
The Project is being undertaken as part of the Anderson Seismic Retrofit Project. Santa Clara Valley Water District (Valley Water) is undertaking the Anderson Dam Seismic Retrofit Project (ADSRP) Federal Energy Regulatory Commission (FERC) Order Compliance Project (FOCP) as a result of the February 20, 2020, directive from the FERC to implement interim risk reduction measures at Anderson Dam. In addition to lowering the reservoir at Anderson Dam to its lowest point, Valley Water collaborated with environmental regulatory agencies to develop additional measures to reduce impacts from the lowered reservoir. One of those measures is the Coyote Creek Stream Augmentation Fish Protection Measure, which is intended to maintain suitable aquatic habitat for native species, and to provide habitat sufficient for rainbow trout (Oncorhynchus mykiss) survival within the Creek’s functional cold-water zone, during the implementation of this FOCP measure.
The Project entails installing a Modular Chillers Plant (MCP), at the southwest corner of the existing Coyote Pumping Plant, which consists of three 1,500-ton capacity water-cooler packaged chillers, with one of the three being used as a redundant chiller unit. The Coyote Pumping Plant is located at 18300 Peet Road, Morgan Hill as shown in the Project Map (Attachment 1). A new 24-inch pipe will be installed to connect to an existing 36-inch nozzle on the Cross Valley Pipeline, to allow the chillers to receive imported water. The imported water would be chilled by the chiller system to the required temperature, before being released into the creek to maintain the suitable aquatic habitat.
Previous Board Actions
On June 9, 2020, the Board adopted Resolution No. 20-57 setting the time and place of the public hearing on the Engineer’s Report and CEQA exemption determination for the Anderson Dam Federal Energy Regulatory Commission Compliance Order Project.
On June 23, 2020, the Board approved the CEQA emergency exemption determination for the FOCP; adopted Resolution No. 20-59 approving the Engineer’s Report for the FOCP; and approved the Project.
On July 12, 2022, the Board adopted Plans and Specifications and authorized advertisement for bids for construction of the Anderson Dam Federal Energy Regulatory Commission Order Compliance Project, Coyote Creek Stream Augmentation Fish Protection Measure: Chillers Plant Project, Project No. 91864008, Contract No. C0684, per the Notice to Bidders; and authorized the Designated Engineer to issue addenda, as necessary, during the bidding process.
On October 11, 2022, the Board ratified Addenda 1,2, 3, 4 and 5 to the Contract Documents; received report of bids; and rejected all bids for construction.
On June 27, 2023, the Board adopted the Plans and Specifications and authorized advertisement for bids for the construction of the Anderson Dam Federal Energy Regulatory Commission Order Compliance Project, Coyote Creek Stream Augmentation Fish Protection Measure: Chillers Plant Project, Project No. 91864008, Contract No. C0684, per the Notice to Bidders; and authorized the Designated Engineer to issue addenda, as necessary, during the bidding process.
On September 12, 2023, the Board ratified Addenda No. 1 through 4 to the Contract Documents for the Coyote Creek Stream Augmentation Fish Protection Measure Chillers Plant Project (Project); awarded the Contract to AES Industrial, located in San Leandro, CA in the sum of $5,363,944; approved a contingency sum of $804,592 and authorized the Chief Executive Officer or designee to approve individual change orders up to the designated amount.
Valley Water-Furnished Modular Chillers Plant Units and Electrical Substation
To expedite Project construction, Valley Water elected to procure and supply to the Contractor, the Modular Chillers Plant, and an associated electrical substation. This decision was made due to the long lead times associated with the design and fabrication of this specialty equipment.
Engineering design consultant, Kennedy Jenks (Engineer of Record), was retained by Valley Water to design all elements of the Project, including the owner-furnished equipment, and to coordinate the equipment’s technical aspects to ensure compatibility with the overall design intent of the Project. It should be noted that at the time of advertisement for bids and award of the Contract, the final product specifications of the owner furnished MCP units and electrical substation were not fully complete. The suppliers were required to coordinate with the design team on the final product details. The challenges related to synchronizing this work led to unanticipated and significant design revisions that are detailed below, that ultimately resulted in schedule delays and cost increases, also detailed below.
Project Design Revisions
Soon after construction began in January 2024, it became apparent that significant design changes to many elements of the Project were needed. While design changes relating to the specialized equipment were being coordinated between Kennedy Jenks and the vendors, the Contractor was forced to pause work.
Despite the Project Team’s efforts to accelerate completion of the required design changes, the complexity of having multiple parties, working independently of each other, proved too difficult to accomplish an expedient manner. During this time, multiple strategy meetings and an informal owner/Contractor Partnering session were held to determine if the Contractor should demobilize from the site until the critical design changes were finalized and issued. Upon favorable schedule commitments from Kennedy Jenks and the vendors of the owner-furnished equipment, a decision was made to keep the Contractor mobilized and working as much as possible to avoid additional demobilization and remobilization costs.
Schedule Delays and Impacts
By September 2024, most of the design changes were finalized and issued to the Contractor to develop cost proposals and to advise on the schedule impacts. To minimize further schedule delays and associated impact costs, it was mutually agreed to have the Contractor prioritize focusing on the design changes which involved the procurement of long lead time equipment and materials, and those which would allow them to recommence work. Contract Change Order No. 5 was executed to accommodate this strategy and Contract Change Order No. 6 is being finalized for signatures in order to further progress construction. Once the remaining design changes currently in progress are finalized, additional change orders will be necessary for them to be implemented. The estimate for additional change orders is $425,000 and is included in the recommended contingency increase and budget adjustment.
The construction schedule was also delayed due to the unanticipated presence of contaminated soil which had to be addressed with additional handling and disposal requirements. Despite this unanticipated delay, the Contractor was able to complete the critical pipeline connections on the Santa Clara Conduit.
Because of the current schedule delays and the recently issued design changes, the Contractor is estimating Project completion in late May 2025, approximately one year later than the original Project completion date. Along with the financial impact of the estimated one-year schedule delay, the Contractor has also submitted an estimate of overhead and other costs associated with the extended schedule.
The Project team has reviewed the Contractor’s estimate of approximately $3,500,000, and determined further detailed analysis of the forecasted schedule and delay costs will be required to respond and negotiate an acceptable amount; this effort is underway.
Contract Change Orders
A total of five (5) Contract Change Orders, totaling a net increase of $778,059, have been executed to date for this contract to address various issues, including unforeseen site conditions, Valley Water requested changes, and post-design clarifications.
Table 1 presents a summary of the current construction contract and contingency amounts.
TABLE 1
SUMMARY OF CONSTRUCTION CONTRACT
AND CONTINGENCY AMOUNTS
Budget Adjustment Recommendation
The delayed Project completion is forecasted for May 2025 and necessitates additional funding for Valley Water staff labor, services and supplies costs, and anticipated further change orders including for the Contractor’s delay impact costs. Staff recommends a budget adjustment as detailed in the Financial Impact below.
Increased Construction Contingency Recommendation
The remaining contract contingency of $26,533 is not sufficient to complete the Project as designed. To compensate the Contractor for negotiated Contract Change Order No. 6 ($258,969), future known change order work, future unknown changes that may occur during construction, and the estimated delay cost impacts, staff recommends the Project contingency be increased to the amount of $5,304,592. The recommended incremental increase to the contingency is $4,500,000, with no revisions to the previously approved delegated authority in designated amounts for the Engineering Unit Manager, Deputy Operating Officer, Assistant CEO, and the Chief Executive Officer, up to the full amount of the increased contingency amount. This will allow staff to advance the work without adding administrative delays in order to complete and close out this Project in time for operation in the summer of 2025.
An increase of $4,500,000 in the contingency sum would allow staff to immediately fund the negotiated Contract Change Order No. 6; fund the known, future change orders to be executed; and quickly address any additional unanticipated occurrences during construction without causing unnecessary delays or consequential costs to the Project.
Following a comprehensive evaluation of the Contractor’s forecasted schedule, delays to date, and associated delays costs, staff will negotiate the value and execute associated contract change orders to complete the work and close out the Project as quickly as possible.
ENVIRONMENTAL JUSTICE AND EQUITY IMPACT:
There are no environmental justice impacts associated with this item. This action is unlikely to or will not result in adverse impacts and is not associated with an equity opportunity.
FINANCIAL IMPACT:
The Coyote Creek Steam Augmentation Fish Protection Measure: Chillers Plant Project, Project No. 91864008, as part of the Anderson Dam FOCP, is included in the Capital Improvement Program (CIP) FY 2025-29 Five-Year Plan and in the FY 2024-25 Adopted budget.
Approval of Recommendations A and B would increase the Total Project Cost (TPC) reflected in the CIP’s FY 2025-29 Five-Year Plan by approximately $5,000,000. An FY 2024-25 Budget Adjustment of $5,000,000 is recommended to transfer funds from Operating and Capital Reserve to accommodate the increase to FY 2025 planned expenditures. Funding from the budget adjustment will allow adequate funds to increase the labor budget by $400,000; services and supplies budget by $100,000; and construction contract contingency by $4,500,000 to pay the proposed and potential change orders needed to complete the Project. These updates will be incorporated into the CIP’s Draft FY 2026-30 Five-Year Plan.
The Project is funded by the Water Utility Enterprise Fund (Fund 61) with 81.37% of the Fund 61 costs allocated to Zone W-2 (North County), 7.85% to Zone W-5 (South County), and 10.78% to Zone W-7 (South County).
CEQA:
The recommended action does not constitute a project under CEQA because it does not have a potential for resulting in direct or reasonably foreseeable indirect physical change in the environment.
ATTACHMENTS:
Attachment 1: Map
UNCLASSIFIED MANAGER:
Manager
Ryan McCarter, 408-630-2983