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July 13, 2009 Item No. 7F <br />Page 4 <br />In addition to engineering costs, it is also very likely that the construction cost for the <br />combined project will be lower than if the projects are bid separately, due to the greater <br />volume of work in the combined project. While this cannot be exactly determined, an <br />estimate of a 5% saving on the construction cost seems reasonable. <br />Also, with the current economic slowdown, it is reasonable to assume very competitive <br />bidding. This would mean potentially receiving better unit prices for Area C in 2010 than <br />if the project were bid in 2011, regardless of project size. <br />Other indirect project expenses will also provide a minor cost savings for the City. <br />Examples include advertising expenses, and the fee for the City Attorney to review the <br />construction contracts. Even if these miscellaneous savings only add up to a fraction of <br />a percent, for a project of this magnitude the savings would be noticeable. <br />Also one year of maintenance for the Area C streets will be eliminated by reconstructing <br />the streets in 2010 versus 2011. Adjusting previous annual maintenance cost estimates <br />to current value and allocating them over the length of streets within the Program, the <br />proportionate maintenance costs for the length of streets in Area C would be in excess <br />of $10,000 for 2010. <br />Based on the above discussion, a table showing the estimated cost savings by <br />combining the projects is shown below: <br />Estimated Project Cost Savings <br />Areas B and C Street and Utility Improvement Projects <br />Item Area B <br />Saving <br />Area C <br />Saving <br />Combined <br />Project <br />Estimated <br />Saving <br />Engineering - Fee $6,000 $12,000 $18,000 <br />Engineering - Hourly $6,500 $13,500 $20,000 <br />Construction (5%)$60,300 $126,200 $186,500 <br />Maintenance $0 $10,000 $10,000 <br />Miscellaneous (0.2%)$3,100 $6,400 $9,500 <br />Total Estimated Savings $75,900 $168,100 $244,000 <br />It is estimated the amount that could potentially be saved by the City of Mounds View on <br />a combined Areas B and C Street and Utility Improvement Project is $244,000. This is <br />an overall cost savings of 5.15%.