Agenda Packets - 2008/06/23 - Laserfiche WebLink

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Actions Available to City: Following are the primary options available to the City at this time: Reject All Bids, Re-Advertise the Project, and Receive New Bids In 2008 The City Council could reject all bids since they exceeded the Engineer’s Estimate, re-advertise the project, and receive new bids in approximately one month. This would be the appropriate action if there was reason to believe that lower prices would be received with the new bids. The seal coat work to be performed as part of the 2008 Street Maintenance Project is fairly specialized work, and there are only a limited number of contractors who perform the work. It is therefore unlikely that the amount of competition would greatly increase under a re-bid scenario. Only three bids were received on the 2007 Street Maintenance Project, and the two bidders on the 2008 Street Maintenance Project were the two lowest on the 2007 project. Furthermore, if the price of crude oil were to drop at all during 2008, it would almost certainly not happen until after Labor Day. MnDOT specifications recommend that seal coat operations be completed by August 31st. Therefore, it is unlikely that the price of the oil used in the seal coat operation would be lower if the project were re-bid. Given these facts, Staff does not recommend rejecting the bids and re-bidding the project in 2008. Reject All Bids, Cancel the 2008 Street Maintenance Project and Reschedule the Project for 2009 or 2010 The City Council could reject all bids since they exceeded the Engineer’s Estimate, and simply cancel the 2008 Street Maintenance Project. The streets scheduled to be seal coated in 2008 could be delayed until 2009 or possibly even 2010 without significant detriment. Therefore, this may be a viable option if there was reason to believe that oil prices will drop within the next 12 to 24 months. However, there are two noteworthy drawbacks to this action. First, the City is speculating as to whether the price of oil and other construction materials will fall over the next 12 to 24 months. Staff has not seen any indications in the economic forecasts to expect that to be the case. Second, there would be no tangible or physical benefit achieved from the amount the City has invested in developing the project to date, which is approximately $16,500. Accept the Bids, Award the Construction Contract, and Proceed With the Work The City Council could accept the bids and recognize that while the low bid is higher than anticipated, the estimated total project costs will still be within the approved 2008 budget. In addition, this work would complete all seal coat operations within Mounds View until 2012 or 2013. Finally, immediate physical return on the funds invested in the project development would be achieved.