REPORT TO THE CITY COUNCIL
June 18, 2015
FROM: THOMAS C. ESQUEDA, Director
Department of Public Utilities
BY: MICHAEL CARBAJAL, Division Manager
Department of Public Utilities - Water Division
SUBJECT
Title
Approval of Amendment No. 3 to the Professional Consultant Agreement with CH2MHILL Engineers, Inc., for an amount not-to-exceed $7,100,000 for Fiscal Year 2016 Program Management Services (Citywide).
Body
RECOMMENDATION
Staff recommends that Council approve Amendment No. 3 to the Professional Consultant Agreement (Agreement) with CH2MHILL Engineers, Inc., in the amount not to exceed $7,100,000 for Fiscal Year 2016 Program Management Services to support implementation of the City of Fresno's five-year, $429 million water capital plan and develop a Capital Project Management Delivery System.
EXECUTIVE SUMMARY
On October 31, 2013, the City Council appropriated $6,993,000 for the first-year (FY 2014) of a three-year agreement (with the option of two one-year extensions) with CH2MHILL for professional Program Management Services to support the Water Division's implementation of a five-year, $429 million water capital plan to provide a safe, reliable, and resilient water supply system for the community; expand intentional groundwater recharge; repair and replace aging pipelines and wells; comply with the requirements of the recently-enacted Sustainable Groundwater Management Act, and comply with soon-to-be-adopted groundwater quality regulations for 1,2,3-trichloropropane ("1,2,3-TCP" or "TCP"). The term date for the first year appropriation was June 30, 2014, and Amendment No. 1 was executed with CH2MHILL to extend the term date of the first year appropriation to July 31, 2014.
On August 5, 2014, the City Council appropriated $6,900,000 for the second-year (FY 2015) of the three-year agreement with CH2MHILL for professional Program Management Services to support the Water Division's implementation of the five-year, $429 million water capital plan, and develop a Capital Project Management Delivery System. The term date for the second year appropriation is June 30, 2015.
The Agreement requires that the compensation for Program Management Services be negotiated annually based on the forecasted workload and support needs of the Water Division. Staff has completed the negotiations with CH2MHILL for Fiscal Year 2016, and the value of Amendment No. 3 has been established with a not-to-exceed value of $7,100,000.
BACKGROUND
The Water Division has developed a $429 million water capital plan that will be implemented throughout the City's service area through FY 2019. The Water Division does not have sufficient project management processes and systems, or technical staff, to successfully deliver planned capital improvement projects. Accordingly, on October 31, 2013, the City Council approved a three-year professional consultant agreement (with the option of two one-year extensions) with CH2MHILL to provide professional Program Management Services to support the Water Division's implementation of a five-year, $429 million water capital plan and develop a Capital Project Management Delivery System for the Water Division.
The overall objective of the Capital Project Management Delivery System is to deliver high quality capital projects on schedule and on budget for the community. The Capital Project Management Delivery System has been developed by the City and CH2MHILL in such a manner that it can be used by Water Division staff independently to deliver major capital projects, and can be readily applied to capital projects in the Wastewater Management Division as well as other Departments of the City that deliver capital projects.
The base three-year Agreement has been planned to be implemented in the following sequence.
Year 1 (FY 2014): CH2MILL staff worked with City staff to plan, design, build and test new project management processes and systems to deliver both small and large water capital projects. In addition, CH2MHILL reviewed and validated the City's recommended capital projects, identified opportunities for capital cost savings, and provided technical staff to provide project management support for current capital projects. Year 1 activities are complete, and CH2MHILL has successfully delivered the essential building blocks of the Capital Project Management Delivery System.
The most critical project management processes and systems planned, designed, built and tested during Year 1 included, but are were not limited to, project management and administration; project engineering and design management; project cost estimating; project scheduling (planning, permitting, and design); project financial accounting, monitoring, and reporting; project document control; project construction management and administration; permitting and land acquisition management; and public outreach and education.
City Council appropriated $6,993,000 for Year 1 of the Program Management Services Agreement. Actual expenditures during Year 1 (8 months) averaged approximately $754,000 per month.
Year 2 (FY 2015): CH2MHILL staff worked with City staff to apply the new Capital Project Management Delivery System for specific projects. For FY 2015, there were approximately 90 active capital projects being managed in the Water Division using the project management processes and systems developed during FY 2014. For FY 2015, the program management focuses for CH2MHILL staff and City staff were in the areas of project management and administration; engineering, planning and design; permitting and land acquisition; program and project controls, including project scheduling, financial accounting, monitoring and reporting; and community relations and public education. Year 2 activities are nearly complete, and CH2MHILL has successfully delivered services as listed above. There are several projects that have been, or will be, bid for construction during FY 2015, but most of the construction activity on large capital projects is currently scheduled to start during FY 2016 and FY 2017.
City Council appropriated $6,900,000 for Year 2 of the Program Management Services Agreement. Actual expenditures during Year 2, including carryover funding from Year 1, averaged approximately $655,000 per month.
Year 3 (FY 2016): CH2MHILL staff will work with City staff to continue to implement the Capital Project Management Delivery System for specific projects. Similar to FY 2015, CH2MHILL staff and City staff will apply learned program management techniques in the areas of project management and administration; engineering, planning and design; permitting and land acquisition; program and project controls, including project scheduling, financial accounting, monitoring and reporting; and community relations and public education. As currently scheduled, two large capital projects will be bid for construction starting in FY 2016. The two projects going to construction are the Friant-Kern Raw Water Pipeline ($~23 million) and the Southeast Surface Water Treatment Facility (~$186 million). Two other major capital projects will be in final design during FY 2016. The two projects that will be under final design are the Finished Water Transmission Mains (~$55 million) and the Kings River Pipeline (~$75 million). Accordingly, during FY 2016, increased emphasis will be placed on applying program management skills in the areas of project cost estimating; construction scheduling; project document control; and project construction management and administration.
City staff has negotiated a fee of $7,100,000 for Year 3 of the Program Management Services Agreement. Projected expenditures during Year 3 average approximately $592,000 per month. Amendment No. 3 has been "approved to form" by the City Attorney's Office, and is ready for Council consideration.
Year 4 (optional amendment for FY 2017): City staff will work with CH2MHILL to develop a workload forecast for Program Management Services for FY 2017, and submit that to City Council for consideration in approximately May/June 2016.
Year 5 (optional amendment for FY 2018): City staff will work with CH2MHILL to develop a workload forecast for Program Management Services for FY 2018, and submit that to City Council for consideration in approximately May/June 2017.
ENVIRONMENTAL FINDINGS
Approval of the consultant service agreement amendment is not a "project" within the meaning of Public Resources Code Section 21803 (CEQA Guidelines ยง 15378) because the organizational and administrative activities as identified in the consultant agreement will not result in direct or indirect physical changes in the environment.
LOCAL PREFERENCE
Local preference was not implemented because this action pertains to an amendment of an existing service contract.
FISCAL IMPACT
The amendment will not have any impact to the General Fund. Funds are included in Water Division's proposed Fiscal Year 2016 Capital Improvement Program budget within the Water Enterprise Fund (40101), and various other project funding sources. Program Management Services were included in the water rate model used to create the five-year utility rate plan and subsequently adopted by City Council on February 26, 2015. No additional funding is required for these services.
Attachments:
Amendment No. 3
Exhibit A - Scope of Services (original agreement)
Summary Report of Program Management Activities for FY 2015
List of capital projects to be delivered with Capital Project Management Delivery System