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WS — Item 6 WORK SESSION STAFF REPORT Work Session Item No. 6 Date: March 7, 2016 To: City Council From: Michael Grochala, Community Development Director Re: 2015 Mill and Overlay Project Background The 2015 Mill and Overlay Project was authorized by the City Council on February 23, 2015 as part of the City's annual pavement management program. The project was originally designed with a Base Bid and two alternatives. The intent behind the bidding strategy was to potentially take advantage of aggressive contractor pricing and optimizing the City's construction program (matching the construction phasing to the programmed budget). In other words, if the contractor's bid came in high, we would not award the bid alternative and postpone their construction until 2016. If the contractor's bid was low, then we could expand the project scope to include the entire neighborhood. The programmed project budget for the 2015 Mill and Overlay Project was $850,000. Based on the bids that were received, it was recommended to award the complete program (base and both alternatives) to Valley Paving in the amount of $668,676.92. This was believed to be the best decision at the time because we were within the City budget and the entire neighborhood would be completed with a single construction season. In August of 2015 the City Council accepted a quote from Valley Paving in the amount of $55,905, to include replacement of roadway culverts within the project area. This increased the total construction contract to $724,582. The total project cost, with construction and engineering, was $813,000. During the construction operation, it was discovered that there was an error in the estimated bituminous material quantities established in the bidding documents (the quantities were underestimated by WSB). Upon becoming aware of this issue WSB informed staff and the item was discussed at the September 28, 2015 City Council work session. WSB provided an additional cost of $175,000 based on the adjusted quantities. Two options were discussed with the City Council: Option 1, stay within the existing programmed budget by reducing the scope of the 2015 project and complete the remaining neighborhood as part of the 2016 Overlay project; or Option 2, complete the entire project in 2015 thereby exceeding the original programmed budget for 2015.