Council skeptical about high bids for Cal Ave work

Palo Alto officials question contractor's estimates, reduce budget for 'unforeseen' costs

Chastened by recent experiences with the Mitchell Park Library, Palo Alto officials on Monday questioned the unexpectedly high bids for the soon-to-commence reconstruction of California Avenue before agreeing to reduce the amount budgeted for unforeseen costs.

The City Council voted 8-0 on Monday, with Pat Burt absent, to approve a $6.2 million construction contract with Redgwick Construction Company for the dramatic reconstruction of California Avenue, a project that includes reducing lanes, creating two new plazas, replacing water infrastructure, widening sidewalks, installing new street lights, and adding benches, newsracks and various landscape improvements. But the council balked at approving a staff request for another $931,700 in unforeseen (or "contingency") costs, a number that totals 15 percent of the construction budget. Instead, members lowered the amount to 10 percent, or $621,133.

The vote came after several council members, most prominently Larry Klein, questioned the discrepancy between the cost estimates submitted by the engineer and the ones in the winning bid submitted by Redgwick. Overall, the Redgwick bid was about $1.2 million higher than the staff had estimated.

Chief Transportation Official Jaime Rodriguez attributed the high bids to both the expansion of the project's scope (most notably the replacement of water mains on California Avenue that will take place concurrent with the streetscape work) and changes in the construction climate, which he said has heated up.

"The bid climate has really changed when the project first started three years ago and even form where we finalized the engineer's estimate in the fall," Rodriguez told the council.

Even so, members were surprised by the divergence between bid numbers and city estimates. Klein observed that for replacement of the fountain on California Avenue, the city's estimated cost was about $70,000, while the contractor's was $647,000. In the "general" category, Redgwick's estimate of $952,000 towered above the city's projection of $190,000. As for the water line, Redgwick's estimate of $1.2 million was roughly three times what the city had expected.

The explanation from Rodriguez -- that Redgwick is still waiting for information from its subcontractors in these categories and had "just dumped" the cost estimates into the bid for further refinement later -- did little to comfort the council.

"I'm more concerned now than ever that they'll just dump things in the general category," Klein said. "That's almost a $750,000 differential."

Is staff satisfied, Klein asked, that it is "fair and appropriate" for a company to "just drop a number in there?"

"Are we OK with the idea that they might end up making a pretty good profit in that category?"

The council's approval came after Mayor Nancy Shepherd and and Vice Mayor Liz Kniss made a case for reducing the contingency amount. Kniss cited the city's frustrating experiences with the construction of the new Mitchell Park Library and Community Center, a project that is far behind schedule and that has been hobbled by a years-long dispute between the city and its recently fired contractor, Flintco Pacific.

"I'm particularly concerned about this, knowing that Mitchell Park is on the minds of everyone in this community and they're wondering what happened," Kniss said. "It's up to us, who hold taxpayers money, to make sure that we hold the contingency to what we believe is a reasonable amount on this."

Shepherd, who made the proposal to reduce contingency funding, said that 10 percent corresponds to what was in the city engineer's estimate. She said staff can always come back to the council if more funds are needed.

Her colleagues agreed, especially after Rodriguez said he expects the contractor to change up the estimates during the course of the construction, with funding going up in some categories going up and down in others. Staff, he said, was more focused on the total budget for the project, which was lower in Redgwick's bid that in the three others that the city had received. Klein said this uncertainty only reinforces the need to keep an eye on contingency.

"Contingency might be less appropriate here than it might be in some of the other contracts," Klein said.


Like this comment
Posted by Midtown
a resident of Midtown
on Feb 26, 2014 at 10:23 am

Want to bet which gets done first, the $10M sidewalk project on California or the $20M soccer fields at the golf course?

Like this comment
Posted by Brian
a resident of Evergreen Park
on Feb 26, 2014 at 10:33 am

"Are we OK with the idea that they might end up making a pretty good profit in that category?"

The City should be. The trouble starts on jobs when the contractor isn't making a profit. As a customer you should be happy if they finish the job at the agreed upon price,assuming the city has provide enough information to prevent any "significant" unknowns.

If the documentation provided is complete and accurate the City should have enough information to prevent costly change orders. If not, it's Hell to pay.

Being in the field it always seems cheaper to not spend the money up front on a good set of specifications and drawings but it always cost significantly more during construction because , Time = Money.

I hope the City has learned for the library experience.

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Posted by City Staff Incompetence
a resident of Crescent Park
on Feb 26, 2014 at 10:40 am

Here is another good bet. I bet the Peery Foundation gift of a new gymnasium facility at Palo Alto High School gets completed in a timely manner, will be of quality construction and comes in under budget. The Peery family will make sure that the city ineptness doesn't foul this project up!

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Posted by 35 year resident
a resident of Old Palo Alto
on Feb 26, 2014 at 10:48 am

How can you accept and award a contract when the contractor doesn't have all the information from his subs? How many bid this project?

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Posted by Silly
a resident of Embarcadero Oaks/Leland
on Feb 26, 2014 at 11:20 am

35 year resident asked the same question I would: How can you accept and award a contractor when the contractor doesn't have all the information from his subs?

And given Rodriquez's known inability to read and respond to specifics -- for which Gittelman has apologized -- one has to ask why the rush for the Council to accept and approve>?

Anyone want to bet on how much the project will REALLY cost when/if it's finished?

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Posted by What the....
a resident of College Terrace
on Feb 26, 2014 at 3:23 pm

Did they only get one bid? The city is supposed to take the lowest bid, and surely this is not it!

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Posted by Kathleen Dugan
a resident of Midtown
on Feb 26, 2014 at 3:50 pm

Please explain how the cost of the fountain could go from an estimated $70,000 to $647,000. Need more details on the entire project. Also, why doesn't the utility department replace the water lines.

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Posted by common sense
a resident of Midtown
on Feb 26, 2014 at 7:48 pm

This project was proposed in 2011, as a $1.7 million project, with grants covering $1.2 million, and the city paying $500,000. On that basis the city council approved the project.

Now we see the project is a $7 million dollars, with the city paying $5.8 million a 10 fold increase in cost. This is worse than the High Speed Rail project.

The $5.8 million would be 10% of the cost of a new public safety building that the City Council and Infrastructure Commission says is of utmost importance. It seems to me that the public safety building is always an "urgent need" when the city council wants to put another tax on the ballot, but is of low priority, when it comes to spending city money. Anyone care to explain that?

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Posted by Anonymous
a resident of Another Palo Alto neighborhood
on Feb 26, 2014 at 9:03 pm

Does Palo Alto really need a $647,000 fountain which is usually filled with laundry soap bubbles even when working? I'd rather have a grove of fruit trees over the existing fountain.

Like this comment
Posted by helene
a resident of Midtown
on Feb 26, 2014 at 10:10 pm

Please tell me what is wrong with California Ave the way it is? So much money for something so unnecessary.
Even the merchants don't want the change.

Like this comment
Posted by Gwen Luce
a resident of Barron Park
on Feb 26, 2014 at 11:12 pm

Agree with Helene!

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Posted by Gwen Luce
a resident of Barron Park
on Feb 26, 2014 at 11:13 pm

Agree with Helene!

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Posted by Wayne Martin
a resident of Fairmeadow
on Feb 27, 2014 at 10:33 am

The following article appeared in a San Francisco paper on 13 Aug. 1905:

Will Erect a Fountain.

PALO ALTO. Aug. 12. — A stone fountain to cost $500 is to be erected on the circle opposite the Palo Alto station. A committee from the Board of Trade and the Town Trustees met with J. D. McGllvray last night to consider plans for the fountain. McGilvray volunteered to donate one-fourth the cost and the balance will be raised by the Board of Trade. The fountain will be of handsome design and will be built of either Colusa or Lake stone.

Amazing how much our money has been inflated in just a little over 100 years.

$750K is a lot of money to be spending on public art. Let's hope that the Council says no to this act of highway robbery.

Like this comment
Posted by Nayeli
a resident of Midtown
on Feb 27, 2014 at 4:23 pm

Why not plant a grove of Redwood trees in place of a fountain? I'd rather have some of Mother Nature's "art" than something from a high dollar "artist."

Regardless, I can't imagine any circumstances for which a fountain should cost $750K.


Like this comment
Posted by Robot no ops
a resident of Greenmeadow
on Feb 28, 2014 at 7:20 am

Palo Alto needs to spend its money on infrastructure. We need to compensate our fire and police depts. we need more police dealing with traffic citations keeping our streets safer. No more Mitchell park library, high speed rail, California ave fiascos. Replace our city council members with people who are accountable.

Sorry, but further commenting on this topic has been closed.

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