HomeMy WebLinkAbout2019-10-22; Municipal Water District; ; Termination of the Public Works contract with Ferreira Coastal Construction Company for the Recycled Water Phase Ill Pipeline Expansion Segment 5, Capital Improvement ProOctober 22, 2019
9. TERMINATION OF PUBLIC WORKS CONTRACT WITH FERREIRA COASTAL CONSTRUCTION
COMPANY FOR THE RECYCLED WATER PHASE Ill PIPELINE EXPANSION, SEGMENT 5-That the
Carlsbad Municipal Water District (CMWD) Board of Directors consider the following: Option
1.) Adoption of a CMWD Resolution terminating the public works contract with Ferreira
Coastal Construction Company (Contractor) for the Recycled Water Phase Ill Pipeline
Expansion Segment 5, CIP Project No. 52082, and the Miscellaneous Pipeline Replacements,
CIP Project No. 39041; or Option 2.) Adoption of a CMWD Resolution approving an increase
to the change order authority for the contract with Ferreira Coastal Construction Company
for a not to exceed amount of $2,600,000 for construction of the Recycled Water Phase Ill
Pipeline Expansion Segment 5, CIP Project No. 52082, and the Miscellaneous Pipeline
Replacements, CIP Project No. 39041; or Option 3.) Provide staff direction to suspend the
Project and complete remaining redesign of entire Project scope; or Option 4.) Adoption of a
CMWD Resolution approving an increase to the change order authority for the contract with
Ferreira Coastal Construction Company for a not to exceed amount of $3,9727,000 for
construction of the Recycled Water Phase Ill Pipeline Expansion Segment 5, CIP Project No.
52082, and the Miscellaneous Pipeline Replacements, CIP Project No. 39041 (Staff contact:
Ken Knatz and Babaq Taj, Public Works)
THIS ITEM WAS
CONTINUED TO
A DATE UNCERTAIN
(SEE MINUTES
FOR DETAILS)
redesign and price one-third of the contracted work. Based on this pricing, staff has determined
the remaining approved contract contingency funds are not sufficient to construct the Project.
Based on estimated projections using the updated Contractor pricing, there is a potential need
for an additional $4.6 million to complete the Project under the current contract. Although
CMWD has sufficient funds available for an appropriation and contingency increase, projections
of this magnitude are best vetted through a competitive bidding environment.
The Contractor is entitled to be compensated for costs incurred during pre-construction
activities, and this will be negotiated under the current agreement. Re-bidding of the work will
delay completion of the Project by approximately one year. Staff anticipates the Project could
be rebid in early 2020 with contract award in spring 2020. Public outreach activities to
previously notified individuals regarding the Project status will be undertaken. The
recommended action provides the best means possible for transparent management of CMWD
ratepayer funds .
Staff is presenting four options for completing the Project for the CMWD Board's consideration.
Staff recommends that the CMWD Board adopt Option 1, a Resolution terminating for
convenience the Public Works contract with the Contractor for the Project. Although this option
delays completion of the work, staff believes it is the most prudent because it:
1) provides a transparent means of expending additional public funds by way of a
competitive bidding environment
2) eliminates unknown costs for contractor standby charges and allows time for needed
engineering redesign prior to re-bidding
3) does not jeopardize State Revolving Fund Recycled Water Project (SRF) funding.
Discussion
CMWD is performing the contracted work to achieve two objectives: 1) reduce demands on the
potable water system by providing approximately 180 acre-feet per year of recycled water to
customers for non-potable use by replacing 79 potable meters; and 2) replace potable water
mains within the Carlsbad Palisades and Flower Fields (HOAs) to current CMWD standards.
On July 17, 2018, the CWMD Board adopted Resolution No. 1601 approving plans and
specifications and authorizing the secretary of the Board to advertise and receive bids for the
Project.
On Oct. 16, 2018, the CMWD Board adopted Resolution No. 1606, awarding a contract to
Ferreira Coastal Construction Company for construction of the Project . The construction
contract is valued at $9,487,655, with an additional 10% construction contingency of $948,766
for a total of $10,436,421 . Bids received for the project ranged between $9.49 million to $15.65
million .
To date, the Contractor has completed a majority of the pre-construction investigation
activities and obtained field information which has been utilized to redesign and obtain pricing
for one third of the Project. The total additional funding required to construct this one-third
portion of the Project is estimated at $1,652,000 and includes all overhead, standby costs and
additional contingency needed to successfully realize this portion of the project construction.
October 22, 2019 Item #9 Page 2 of 15
The redesign and pricing for the remaining two-thirds of the Project is in progress and is needed
to precisely estimate how much additional funding will be required to complete the entire
Project scope. Staff estimates the remaining redesign work and updated pricing will be
completed in three months and may require an appropriation of approximately $4.6 million in
total additional funding. Detailed cost projection information is provided in the Fiscal Impact
section of this Staff Report.
Staff has considered the following options for the CMWD Board's review and direction and
recommends that the CMWD Board proceed with Option 1:
Option 1-Terminate the contract for convenience, complete remaining redesign and rebid the
entire scope
If selected, the CMWD Board will adopt a Resolution to terminate the current contract for
-convenience under General Provisions section 6-5 of the contract . Staff will negotiate with the
Contractor to compensate the Contractor for work performed including overhead and standby
costs. Staff will proceed with the remaining redesign work that is being performed under an
existing design contact with another firm. The redesign work is anticipated to be completed in
December 2019. Staff will then return to the CMWD Board for acceptance of the revised plans
and specifications and authorization to advertise and receive bids in early 2020. After the bids
are reviewed, staff will return to the CMWD Board to award a new contract and the Project
would restart under the new contract, expected to be in spring 2020.
Based on the magnitude of the current revised pricing changes for only one-third of the work,
there are still many unquantifiable cost unknowns for remaining work to be redesigned. With
the known cost projections exceeding staff's change order authority, the Contractor cannot
proceed with production work and will incur time-based standby costs estimated at $120,000 a
month. Although re-bidding of the Project does not guarantee lower costs than currently
projected due to various factors such as additional redesign scope, inflation and commodity
prices, revising the plans and specifications and rebidding the Project will eliminate many of the
unknowns and provide the benefit of improved cost control by testing the market to obtain
competitive pricing for CMWD customers.
Pros
• Halts further accrual of time-based
standby costs
• Provides known cost for remaining 2/3
Project
• Allows the Project to be priced in a
competitive bidding environment
Cons
• Separation compensation for
Contractor (unknown)
• Delays Project completion by
approximately one year
• Does not impact SRF funding
----'---------------------------~---~--------------------------------
CMWD Board Action for Option 1: Adopt a Resolution (Exhibit 1) to terminate the current
Public Works contract for convenience under General Provisions section 6-5 of the contract.
October 22, 2019 Item #9 Page 3 of 15
Option 2 -Authorize $1,652,000 in additional funding for staff to proceed with construction of
a portion of the Project with currently known updated scope and pricing.
If selected, the CMWD Board will authorize a Resolution to increase change order authorization
by $1,652,000 for a total change order contingency of approximately $2,600,000. Staff will
direct the Contractor to begin work on pipeline segments that have been redesigned and
repriced. These funds will be utilized to complete approximately one-third of the original
Project's scope which, when built, can serve as a stand-alone project should the CMWD Board
decide not to move forward with the remainder of the work after receiving the final cost
estimate. Staff will also continue to redesign the remaining two-thirds of contract work. Once
redesign is completed, staff will negotiate pricing for the redesign with the Contractor and
determine how much funding will be needed to complete the remaining Project scope . Staff
would then anticipate returning to the CMWD Board in January 2020, to ask for additional
funding and may require an appropriation projected at approximately $4.6 million inclusive of
the $1,652,000 appropriated through this action.
Pros
• Least impact to overall Project schedule
• Halts further accrual of time-based
standby costs
• A stand-alone portion of the Project can
be completed
• Does not impact SRF funding
• No Contractor separation compensation
Cons
• Remaining scope revisions are unknown
and cannot be accurately quantified and
projected at approximately $4.6 million
• No competitive bid environment
CMWD Board Action for Option 2: Adopt a Resolution (Exhibit 2) to increase change order
authority in an amount not to exceed $2,600,000 for the construction of the first phase of the . .
Project. Funding is available within the Project budget and will not require additional
appropriations from the Recycled Water Connection Fee Fund at this time.
Staff will return to the CMWD Board to request funding and/or additional appropriations for
the remaining design and construction Project phases.
Option 3 -Suspend the Project and complete remaining redesign of the entire Project scope.
If selected, Staff will suspend work on the Project and proceed with the remaining redesign.
Staff will then return to the CMWD Board with updated Contractor pricing in approximately
three months and ask the CMWD Board for additional funding. This option allows the CMWD
Board to consider the entire scope, but CMWD will incur time-based costs under the contract
estimated at $120,000 a month for the suspension time period.
October 22, 2019 Item #9 Page 4 of 15
TABLE 1-RECYCLED WATER PHASE Ill PIPELINES PROJECT, CIP PROJECT NO. 52082
Construction Contract with Ferreira Coastal Construction Company $7,330,816
Change Order No. 1 $80,082
Change Order No . 2 $118,528
TOTAL AUTHORIZED CONTRACT FUNDING FROM CIP No. 52082 $7,529,426
TOTAL CONTRACT EXPENDITURES TO DATE FROM CIP No. 52082 $463,319
(through Payment No. 6)
TABLE 2 -POTABLE MISCELLANEOUS PIPELINE REPLACEMENT PROJECT,
CIP PROJECT NO. 39041
Construction Contract with Ferreira Coastal Construction Company $2,156,839
Change Order No. 1 $0
Change Order No. 2 $0
TOTAL AUTHORIZED CONTRACT FUNDING FROM CIP NO. 39041 $2,156,839
TOTAL CONTRACT EXPENDITURES TO DATE FROM CIP NO. 39041 (through $90,816
Payment No. 6)
Table 3 includes Project encumbrances to-date:
TABLE 3 -ENCUMBRANCES TO DATE, CIP PROJECT NOS. 52082 AND 39041
Design $1,119,122
Construction management, inspection, and material testing (estimated) $1,023,047
Engineering support for contractor shop drawings, requests for information $64,079
meetings, and community outreach (estimated)
TOTAL ENCUMBRANCES TO DATE $2,206,248
AVAILABLE UNENCUMBERED BALANCES, CIP PROJECT NOS. 52082 AND 39041
Recycled Water Phase Ill-Pipelines -52082 $4,067,423
Miscellaneous Pipeline Replacement -39041 $3,880,507
TOTAL AVAILABLE UNENCUMBERED BALANCES $7,947,930
Of the total authorized contingency of $948,766, approximately $198,610 has been authorized
for Change Orders Nos. 1 and 2. Approximately $750,000 has not yet been authorized.
However, if the Board were to choose Option 2, staff has now calculated that an additional
$1,652,000 is needed to complete one-third of the Project.
If the Board were to choose Option 4, Table 4 shows that following a redesign of the
construction Project, additional Project construction costs are estimated to be approximately
$3,927,000, made up of $1,652,000 for one-third of the Project, $1,800,000 for the remaining
two-thirds of the project and an increase in contingency of $475,000.
October 22, 2019 Item #9 Page 6 of 15
TABLE 4 -ANTICIPATED CONSTRUCTION EXPENDITURES, CIP PROJECT NOS. 52082 AND
39041
Estimated Change Order for Option 2 (1/3 of project) $1,652,000
Estimated Change Order for remaining 2/3 project $1,800,000
Increase Project Contingency by an Additional 5% $475,000
ESTIMATED TOTAL CONTINGENCY REQUIRED TO. COMPLETE OPTION 4 $3,927,000
Since both Option 2 and Option 4 exceed the current available contingency authorization, staff
is requesting guidance from the CMWD Board. There are sufficient available funds in the CIP
Project balances to accommodate any of the options.
Next Steps
Staff will implement the CMWD Board's direction .
Environmental Evaluation (CEQA)
The CMWD Board adopted Resolution No. 1455 approving a Mitigated Negative Declaration
(MND) and Mitigation Monitoring and Reporting Program (MMRP) for the Phase Ill Recycled
Water Project (EIA 12-02). This Project is a sub-component (ES 5) of the Phase Ill Recycled
Water Project and is subject to the Mitigation Measures (MM) that are identified in the MMRP
on Nov. 27, 2012.
The·CMWD Board adopted Resolution No. 1601 approving an Addendum to the MND and
Supplemental Environmental Package which included extensions to Segment 5, the Segment 7
reach and the Potable Water Project that were not originally analyzed in the MND prepared for
the Program on July 17, 2018.
The revised Project is within the scope of the prior environmental documents and no further
environmental documentation is required per California Environmental Quality Act (CEQA)
Guidelines Section 15162. All applicable mitigation measures contained in the prior
environmental document have been incorporated into the construction documents.
Public Notification
This item was noticed in accordance with the Ralph M. Brown Act and was available for public
viewing and review at least 72 hours prior to the scheduled meeting date. The public impacted
by the Project have been notified of construction activities. The public can be updated on the
revised Project schedule once the CMWD Board provides direction.
Exhibits
1. CMWD Board Resolution -Option 1-Terminating the Contract with Ferreira Coastal
Construction Company
2. CMWD Board Resolution -Option 2 -Increasing the Change Order Authority to $2,600,000
3. CMWD Board Resolution -Option 4-Increasing the Change Order Authority to $3,927,000
4. Location Map
October 22, 2019 Item #9 Page 7 of 15
RESOLUTION NO.
A RESOLUTION OF THE BOARD OF DIRECTORS (BOARD) OF THE CARLSBAD
MUNICIPAL WATER DISTRICT (CMWD) OF THE CITY OF CARLSBAD,
CALIFORNIA, TERMINATING FOR CONVENIENCE THE CONTRACT WITH
FERREIRA COASTAL CONSTRUCTION COMPANY FOR THE RECYCLED WATER
PHASE Ill PIPELINE EXPANSION SEGMENT 5, CAPITAL IMPROVEMENT
PROGRAM {CIP) PROJECT NO. 52082, AND MISCELLANEOUS PIPELINE
REPLACEMENTS, CIP PROJECT NO. 39041
EXHIBIT 1
WHEREAS, on Oct. 16, 2018, the CMWD Board adopted Resolution No. 1606, awarding a
$9,487,655 contract (Contract) to the Ferreira Coastal Construction Company (Contractor), for
construction of the Recycled Water Phase Ill Pipeline Expansion Segment 5, CIP Project No. 52082, and
Miscellaneous Pipeline Replacements, CIP Project No. 39041, (Project) that includes a 10% construction
contingency ($948,766); and
WHEREAS, on June 11, 2019, the Executive Manager approved Change Order No. 1 in the
amount of $80,081, which was for labor and equipment to pothole additional wet and dry underground
utilities not shown on the plans; and
WHEREAS, on Sept. 19, 2019, the Executive Manager approved Change Order No. 2 in the
amount of $118,528, which was for further labor, material and equipment to pothole additional
underground utilities due to design conflicts and patch and repair said potholes; and
WHEREAS, as can be seen in the above change orders, during pre-construction activities, the
Contractor identified numerous utilities that are in conflict with vertical and horizontal alignments of
the proposed recycled water pipelines and discovery of such conflicts continued as they progressed
along the alignment; and
WHEREAS, the Contractor has completed the majority of the pre-construction investigation
activities and obtained field information that can be used to redesign the contracted work; and
WHEREAS, staff recommends terminating the construction contract for convenience under
General Provisions section 6-5 of the Contract with Ferreira Coastal Construction Company for the
Recycled Water Phase Ill Pipeline Expan,sion Segment 5, CIP Project No . 52082, and Miscellaneous
Pipeline Replacements, CIP Project No . 39041, so that the redesign can be completed and the Project
can be re-bid at a future date.
NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of the Carlsbad Municipal Water
District of the City of Carlsbad, California, as follows:
October 22, 2019 Item #9 Page 8 of 15
1. That the above r ecitations are true and correct.
2. That the contract with Fe r reira Coastal Construction Company for the Recycled Water
Phase Ill Pipeline Expansion Segment 5, CIP Project No . 52082, and Miscellaneous Pipeline
Replacements, CIP Project No. 39041, is terminated under General Provisions section 6-5 of the
Contract.
PASSED, APPROVED AND ADOPTED at a Special Meeting of the Board of Directors of the
Carlsbad Municipal Water District of the City of Carlsbad , California on the_ day of ___ ~ 2019,
by the following vote, to wit:
AYES :
NAYS :
ABSENT:
MATT HALL, PRESIDENT
BARBARA ENGLESON, SECRETARY
(SEAL)
October 22, 2019 Item #9 Page 9 of 15
RESOLUTION NO.
A RESOLUTION OF THE BOARD OF DIRECTORS (BOARD) OF THE CARLSBAD
MUNICIPAL WATER DISTRICT (CMWD) OF THE CITY OF CARLSBAD,
CALIFORNIA, APPROVING AN INCREASE TO THE CHANGE ORDER AUTHORITY
FOR THE CONTRACT WITH FERREIRA COASTAL CONSTRUCTION COMPANY
FOR A NOT TO EXCEED AMOUNT OF $2,600,000 FOR CONSTRUCTION OF
THE RECYCLED WATER PHASE Ill PIPELINE EXPANSION SEGMENT 5, CAPITAL
IMPROVEMENT PROGRAM (CIP) PROJECT NO. 52082 AND MISCELLANEOUS
PIPELINE REPLACEMENTS, CIP PROJECT NO. 39041.
EXHIBIT2
WHEREAS, on Oct. 16, 2018, the CMWD Board adopted Resolution No. 1606, awarding a
$9,487,655 contract to the Ferreira Coastal Construction Company (Contractor), for construction of the
Recycled Water Phase Ill Pipeline Expansion Segment 5, CIP Project No. 52082, and Miscellaneous
Pipeline Replacements, CIP Project No . 39041, (Project) that includes a total 10% construction
contingency ($948,766); and
WHEREAS, on June 11, 2019, the Executive Manager approved Change Order No . 1 in the
amount of $80,081, which was for labor and equipment to potho l e add itional wet and dry underground
utilities not shown on the plans; and
WHEREAS, on Sept. 19, 2019, the Executive Manager approved Change Order No. 2 in the
amount of $118,528, which was for further labor, material and equipment to pothole additional
underground utilities due to design conflicts and patch and repair said potholes; and
WHEREAS, the Contractor has completed the majority of the pre-construction investigation
activities and obtained field information to be used to redesign the contracted work; and
WHEREAS, staff recommends inc r easing the change order authority for the contract for a not
to exceed total amount of $2,600,000 to complete the first phase of the construction Project.
NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of the Carlsbad Municipal Water
District of the City of Carlsbad, California, as follows:
1. That the above r ecitat i ons are true and correct.
2. That the change order authority for the contract is increased to a not to exceed total
amount of $2,600,000 to complete the first phase of the construction Project.
October 22, 2019 Item #9 Page 10 of 15
PASSED, APPROVED AND ADOPTED at a Special Meeting of the Board of Directors of the
Carlsbad Municipal Water District of the City of Carlsbad, California on the_ day of ___ ~ 2019,
by the following vote, to wit:
AYES:
NAYS:
ABSENT:
MATT HALL, PRESIDENT
BARBARA ENGLESON, SECRETARY
(SEAL)
October 22, 2019 Item #9 Page 11 of 15
RESOLUTION NO.
A RESOLUTION OF THE BOARD OF DIRECTORS (BOARD) OF THE CARLSBAD
MUNICIPAL WATER DISTRICT (CMWD) OF THE CITY OF CARLSBAD,
CALIFORNIA, APPROVING AN INCREASE TO THE CHANGE ORDER AUTHORITY
FOR THE CONTRACT WITH FERREIRA COASTAL CONSTRUCTION COMPANY
FOR A NOT TO EXCEED AMOUNT OF $3,927,000 FOR CONSTRUCTION OF
THE RECYCLED WATER PHASE Ill PIPELINE EXPANSION SEGMENT 5, CAPITAL
IMPROVEMENT PROGRAM (CIP) PROJECT NO. 52082 AND MISCELLANEOUS
PIPELINE REPLACEMENTS, CIP PROJECT NO. 39041.
EXHIBIT3
WHEREAS, on Oct. 16, 2018, the CMWD Board adopted Resolution No. 1606, awarding a
$9,487,655 contract to the Ferreira Coastal Construction Company (Contractor), for construction oft he
Recycled Water Phase Ill Pipeline Expansion Segment 5, CIP Project No. 52082, and Miscellaneous
Pipeline Replacements, CIP Project No. 39041, (Project) that includes a total 10% construction
contingency ($948,766); and
WHEREAS, on June 11, 2019, the Executive Manager approved Change Order No. 1 in the
amount of $80,081, which was for labor and equipment to pothole additional wet and dry underground
utilities not shown on the plans; and
WHEREAS, on Sept. 19, 2019, the Executive Manager approved Change Order No. 2 in the
amount of $118,528, -which was for further labor, material and equipment to pothole additional
underground utilities due to design conflicts and patch and repair said potholes; and
WHEREAS, the Contractor has completed the majority of the pre-construction investigation
activities and obtained field information to be used to redesign the contracted work and complete
construction; and
WHEREAS, staff recommends increasing the change order authority for the contract for a not
to exceed total amount of $3,927,000 to complete all phases ofthe construction Project.
NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of the Carlsbad Municipal Water
District of the City of Carlsbad, California, as follows:
1. That the above recitations are true and correct.
2. That the change order authority for the contract is increased to a not to exceed total
amount of $3,927,000 to complete all phases of the construction Project .
October 22, 2019 Item #9 Page 12 of 15
PASSED, APPROVED AND ADOPTED at a Special Meeting of the Board of Directors of the
Carlsbad Municipal Water District of the City of Carlsbad, California on the_ day of ___ ~ 2019,
by the following vote, to wit:
AYES:
NAYS:
ABSENT:
MATT HALL, PRESIDENT
BARBARA ENGLESON, SECRETARY
(SEAL)
October 22, 2019 Item #9 Page 13 of 15
Hector Gomez
From:
Sent:
To:
Cc:
Subject:
Attachments:
James A. Black <JBlack@ferreiraconstruction.com>
Monday, October 21, 2019 10:40 AM
City Clerk
Council Internet Email; Attorney; Anna Carno; Brandon Pensick; Valerie Airey; Babaq Taj;
Ken Knatz; Attorney; Brandon Pensick; Scott Johnson
Review of CBMWD Staff Report, Dated October 22, 2019 -
Agenda review letter -Ferreira .pdf
Please find attached Ferreira review of the CBMWD staff report dated, October 22, 2019 . We believe that a delay in the
agenda item will benefit the City.
If you have any questions, please contact Ferreira.
Thank you for your consideration.
James Black
Utilities Division Manager
P 909 .606.5900 F 909.287.3655 M 909 .256.9915
10370 Commerce Center Drive, Suite B-200
Rancho Cucamonga, CA 91730
FerreiraConstruction.com r:I
PBRIIEIIIA
Building the Future with Pride
All Receive -Agenda Item# q
For the Information of the:
CITY COUNCIL
Date l~/llf'f CA .K_CC X
CM ~ COO X--DCM (3) K
DISCLAIMER: This e-mail may contain information that is confidential, privileged or otherwise protected from disclosure .
If you are not an intended recipient of this e-mail, do not duplicate or redistribute it by any means. Please delete it and
any attachments and notify the sender that you have received it in error. Unintended recipients are prohibited from
taking action on the basis of information in this e-mail. E-mail messages may contain computer viruses or other defects,
may not be accurately replicated on other systems, or may be intercepted, deleted or interfered with without the
knowledge of the sender or the intended recipient. By using email to communicate, you are accepting the risks
associated with e-mail messages . Our organization reserves the right, to the extent and under circumstances permitted
by applicable law, to retain, monitor and intercept e-mail messages to and from its systems.
Disclaimer
The information contained in this communication from the sender is confidential. It is intended solely for use by the recipient and
others authorized to receive it. If you are not the recipient, you are hereby notified that any disclosure, copying, distribution or
ta king action in relation of the conte nts of this information is strictl y prohibited and ma y be unlawful.
This email has been scanned for v iruses and mal ware, and ma y ha ve been automaticall y archi ved by Mimecast Ltd , an inno vator in
Soft ware as a Ser vice (SaaS) for business. Providing a safer and more useful place for your human generated data. Specializing in ;
Security, archiving and compliance . To find out more Click Here .
1
FERREIRA ~-----= ------:-J'T""-==-=--. ..,,-~=--i.
• ,_ r'• •
',:~.: ~\. ··.
D8A FERREIRA COASTAi. CONSTRUCT/ON CO. "' ---=---=---•"------
City of Carlsbad 10/21/2019
1200 Carlsbad Village Dr.
Carlsbad, CA 92008
Re: Review of CBMWD Staff Report for recommendation of Contract Termination
Dear Staff:
Ferreira Construction understands the current unfortunate situation that Carlsbad Municipal
Water District (CBMWD) and the City of Carlsbad is up against. Public works projects are
source of revenue for Ferreira Coastal Construction (Ferreira). It is what puts food on the
table of our families so we absolutely recognize the importance of budgets to the city and
their rate payers.
We have read the Staff Report and respectfully offer the following for the board's
consideration:
The Staff Report has provided four options for the board's consideration however it
recommends that Ferreira be terminated . A factor that is crucial to keep mind is that
the recommendation to terminate the contract is not in any way, shape or form
related to Ferreira's performance. It is very important to everyone at Ferreira that the
City keep this in mind as we are confused why a recommendation was made to
terminate us when the reason for termination has nothing to do with Ferreira's
performance or commitment to the successful completion of this project. In fact, by
all accounts, the city, the city's construction management firm, Valley CM, and
everyone affiliated with Ferreira have had a very productive and amical relationship.
This is a very important factor to consider as a project's key to success is often
dependent on how well the project's team communicates and works with one
another.
-Ferreira is, and always has been, committed to delivering this project in a timely
manner at a fair price to the city and its rate payers.
-Please keep in mind that the act of terminating this contract will cause significant
harm to Ferreira. We bid this project in good faith, worked in good faith and have set
aside our most valuable assets, our people, to build this very important project for the
Corporate Headquarters:
31 Tannery Rd
Branch burg., NJ 08876
Phone: 908.534.8655
Fax 908 .534 .3656
www .fe rreiraco nst ructio n .co m
California Office:
10370 Commerce Cent er Dr.
Suite B-200
Rancho Cucamonga CA 91730
Phone: 909-606 -5900
Fax: 909-606-7711
PERREIRA --~~~ - - I -,
:;,.. : .
' .
DSA FEllffEIRA C'OAS T'lL CONS TIIU C T/0/'I CO . --~ ~~...L-.~------~ --_,
city. In doing so, we have forgone other opportunities. Terminating this project will put
an extreme financial strain on our company.
-From all information provided to us it is clear that the City clearly intents to build this
project. That alone supports the conclusion that termination is not the best option.
Even the Staff report points out many reasons why Option 1 Termination leaves
much uncertainty and risk to the city including:
o No guarantee that future cost will be lower
o Rebid of new design of project -rather than staying the course with Ferreira -
will result in higher costs
o Reb id of the project will delay completion of the Project by at least 1.5 years
beyond original completion date.
o All upfront investigations have been completed.
Ferreira also notes that the Staff Report includes conclusions that are premature as
information is still being collected. For example, the projected costs included in the Report
are based on outdated information. Allow me to explain: Ferreira believes that Staff's
projected costs are based on an extrapolation of Ferreira's initial cost estimates which were
provided to Staff sometime ago. (Ferreira provided Staff with estimated costs to implement
the anticipated design changes for the first 1/3 of the project.) Ferreira beJieves that Staff
applied the mathematical formula Ferreira used as a benchmark for the initial design
changes and applied those calculations to all remaining changes. Ferreira would not have
calculated all future costs in that fashion. Instead, based on information received to date,
Ferreira's anticipated costs to implement the redesigned Project are actually less
than the sums set forth in the Staff Report. Moreover, Ferreira is confident that the last
1/3 of the Project will be considerably less as pre-investigation plans provided by the City at
bid·ttme were significantly more accurate.
In addition to a differing opinion on future costs, there are other statements included in the
Report that Ferreira questions. For example, the Report implies that while everyone is
waiting for the redesign to be completed, Ferreira cannot continue to work on the Project.
We disagree. Ferreira is ready, willing and able for an immediate construction start. There
is work that can be done while the redesign is completed.
Corporate Headquarters:
31 Tannery Rd
Br anchburg, NJ 08876
Phone: 908.534.8655
Fax 908.534.8656
www.ferreiraconstruction.com
California Office:
10370 Commerce Center Dr .
Suite B-200
Rancho Cucamonga CA 9 1730
Phone: 909-606 -5900
Fa x: 909-606-77 11
FERREIRA ---""" -~= .. -~,;,,....,,,-~~
-~?:" ,' i
~.!!-'! '
DBA FERREIRA C04STAL CONSTRUCTIOI-I CO. --=-~~-....._=-"-"---a... ___ .,_
I have made a few bullet points below that we have outlined:
1. City's' recommendation for Termination for cause is not related to the
performance of Ferreira Construction
2. Relationship with project team consisting of CBMWD, Valley CM and
FCC has been very productive and has taken on a team approach
3. No guarantee that future bid price will be lower
4. Rebid of new design of project will result in higher costs
5. Rebid of project completion date delayed 1.5 years beyond original
completion.
6. Costs presented are outdated FCC submitted changed costs to design
changes for 2/3 of project for approximately $1 .8 million
7. Last 1/3 of project will be considerably less as pre-investigation plans
proyided by the City at bid time were significantly more accurate
8. Project is ready for an immediate construction start
9. All upfront investigations have been completed
10. FCC to partner with city and waive 1 month of time related overhead
11 . City review of final cost of all changes
12. Change recommendation to board to approve budget amendment
Thus, Ferreira recommends that the City postpone any decision regarding terminating the
Contract until and unless Ferreira and Staff meet to review projected costs and what work
can be done in the interim.
Ferreira has always worked with the City in good faith. It is asking that the City do the
same. In furtherance of its commitment to the City to achieve the best resolution to this
issue, Ferreira is willing to Ferreira is willing to forego one month of Time Related overhead
so Carlsbad Municipal Water District and the City of Carlsbad can review updated costs to
complete this project and change their recommendation from Termination of Contract to a
budget amendment. Said another way, Ferreira is willing to waive 1 month of time related
overhead so that everyone's energy and effort can be focused on working together to
achieve the best solution possible. This way, the City may review more accurate final costs
of proposed changes. After this is done, a new, more·accurate recommendation can be
made to the Board for its approval.
If you or your staff should have any questions, please feel free to call me immediately at
909-606-5900 or on my cell at 626-710-0701.
Corporate Headquarters:
31 Tannery Rd
Branchburg, NJ 08876
Phone: 908.534 .8 655
Fax 908.534.8656
www .ferrei raconstruction.com
California Office:
10370 Commerce Center Dr.
Suite B-200
Rancho Cucamonga CA 91730
Phone: 909-606 -5900
Fax : 909-606-7711
FERREIRA
.CBA FERREIRA COASTAL CONSTRUCTION CO.
Thank you again for your time and consideration in .this matter.
Sincere! -...J-------~
Brandon Pensick
Vice President
Ferreira Construction
Corporate Headquarters:
31 Tannery Rd
Branchburg . NJ 08876
Phone: 908.534 .8655
Fax 908.534.8656
www.ferreiraconstruction .com
--------==::-~--~--
• ~.<;,
... ·(1 ... \
. ·,•~ ~-:'............_ -------
California Office:
10370 Commerce Center Dr.
Suite 8-200
Rancho Cucamonga CA 91730
Phone: 909 -606-5900
Fax: 909-606-7711