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Cost snags stall Terrytown water project

November 3, 2018 GMT

TERRYTOWN — Terrytown’s water project has temporarily stalled as bids for major improvements came in far over budget.

City Engineer Jeff Wolfe said the city only received one bid for internal improvements to the water system and one bid for installing water meters on all residential and commercial buildings.

Paul Reed Construction bid $1,188,494 to do the major improvements while the engineer’s estimate was $783,552, about a half million over budget.

The major improvements are mainly installing new water mains in the Bellevue Addition.

“A lot of items are associated with that,” Wolfe told council members. “When you put in mains, you have to put in new hydrants, new valves and make new service connections.”

Hennings Construction submitted a bid of $1,089,031 to install the water meters while the engineer’s estimate was $881,860, about $200,000 over budget.

“We only had two bids totaling $700,000 over our budget,” Wolfe said. “We have about $240,000 in contingency money built into the entire project. If we use 100 percent of our contingency, we’re still a half million dollars short.”

Several calls were made to the state and the USDA to see if additional funding was available, but there’s been no response so far.

“We also have the ability to negotiate the price, but we need state and federal approval to do it,” Wolfe said. “We haven’t talked to the bonding company yet.”

Terrytown also contacted companies that didn’t submit a bid to get an explanation. Both were out-of-town companies and cited the difficulty of the project with so many unknowns that it made the risk beyond their ability to assume.

Some of those unknowns included placement of underground utilities, level of the groundwater and weather delays.

“Our recommendation to the council is take no action on awarding the bids,” Wolfe said. “Both bids are good for 60 days so we have plenty of time before the next meeting to make a decision.”

Wolfe said he recommended tabling the award because they don’t have enough information from the state, USDA and the contractors. Plus, the city will need to maintain a contingency fund in case of future change orders or unforeseen problems that could hike the price of the project.

“If you approve these bids and the state didn’t concur, you’d be on the hook for a lot of money, which we don’t have,” he said.

Another possibility is what Wolfe called value engineering, where the city would meet with contractors and discuss what modifications could be made to the contracts that would reduce the cost.

Council members agreed to table awarding of bids on the water project until Wolfe can gather more information and report back to them at the Dec. 6 meeting.