Departments of Finance & Utilities
Reference: Water Treatment Plant Expansion Project
To: Mayor Gregory Mills and Members of City Council
Through: Michael P. Martinez, City Manager
Prepared By: Scott Olsen, Director of Utilities
Date Prepared: January 24, 2024
PURPOSE
To request City Council approval of a Resolution for an Amendment to the Contract between the City and Garney Companies, Inc. for the Water Treatment Plant project. This item was initially presented to City Council during the January 23, 2024, City Council Study Session.
BACKGROUND
In early 2022, City Council provided staff direction to move forward with the design and construction of a new water treatment plant, including water softening treatment processes. The City contracted with Brown and Caldwell to design the new water treatment plant. The City also moved forward with a Construction Manager at Risk contract (CMAR) with Garney Construction to complete Phase 1 construction of the new facility. The main impetus for the design and construction of the new plant is: 1) to comply with the Colorado Department of Public Health and Environment (CDPHE) discharge permit related to the discharge of brine from the current Reverse Osmosis (RO) treatment process; and 2) to expand capacity for future growth.
A groundbreaking ceremony for construction was held in July of 2022, as design of the facility reached 60%.
Design Background and Update
Design of the new 20 million gallon-per-day facility was completed in November of 2023. The facility will include several treatment processes including biological denitrification, pellet softening, greensand filtration and granular activated carbon (GAC) filtration.
Biological denitrification will remove nitrate from the source water, which was one of the main reasons for constructing the RO plant in the 1990s. This treatment process is typically used at wastewater treatment facilities and will be implemented for the first time in the State of Colorado at Brighton’s water treatment plant. Pellet softening will be implemented at the plant to reduce the hardness of the water and remove manganese. Greensand filtration, a process currently used in conjunction with RO at Brighton’s water treatment plant, will be implemented to further remove manganese, microorganisms and iron from the source water.
GAC filtration was added to the plant design due to the rising concerns and anticipated regulations related to PFAS in drinking water. Brighton found a unique opportunity to be able to add a process to the treatment plant that was already in design to ensure compliance with state and federal PFAS regulations. Many other jurisdictions throughout the nation are struggling to find funding to design and construct facilities to remove PFAS. Some of these jurisdictions have found themselves in unfortunate financial situations having recently constructed new water treatment plants without PFAS removal capabilities.
The CDPHE provided their approval of the final design for the water treatment plant in November of 2023.
Construction Update
Following the groundbreaking ceremony in July of 2022, Garney Construction began work on mobilization and site preparatory work. For such a large project, this effort can take many months and thousands of staff hours. Since completion of mobilization and preparatory work, Garney has been working on construction of the foundations for several of the new facilities that make up the new treatment plant. If you drive by the facility or view updated aerial imagery in the City Manger’s Weekly Update, you will see the large amount of concrete that has been placed and large construction vehicles moving about the site.
To date, 250 of the approximately 1,400 days of construction have elapsed, 9.3% of the earned value (dollars spent) has been completed, 6,600 of the total 17,000 cubic yards of concrete have been placed and over 66,000 labor hours have been completed without incident!
The facility is expected to move into the final construction stages in Q4 2026 and into start up and commissioning in Q1 2027. The facility will be treating and providing water to all our customers for the Summer of 2027.
Phase 2- Guaranteed Maximum Price (GMP) Contract Amendment
The Phase 1 contract for the Water Treatment Plant between the City and Garney Construction was signed in August of 2022 for $50,755,402. The Phase 1 contact allowed for mobilization, site grading, early procurement of long lead items and limited foundation work to commence prior to a final design being completed. As set forth in the Phase 1 contract, a contract amendment would be proposed for Phase 2 (GMP) following submittal of a complete plant design (Issue for Permit). A complete plan set allows the construction manager to provide pricing and seek competitive bids from subcontractors.
The Phase 2 (GMP) Contract Amendment will be in the amount of $116,513,822. The total value of the Garney Contract (Phase 1 and Phase 2) will now be $167,269,224. The accounting is shown in the table below.
** Includes Beebe Well D
Project Contingency
The Guaranteed Maximum Price moniker reflects the price that is guaranteed to the City is the price given for the Scope of Services in the contract. This does not mean that the project is without risk to the parties to the agreement. Garney Construction assumes the risk that they did not include pricing or included inadequate pricing to cover the Scope of Service in the contract. The City assumes the risk of unforeseen changes to the Scope of Services. To account for this risk, a contingency in the amount of $15,000,000 has been included in the City’s project budget. This contingency is not included in the Phase 2 contract amount because Garney is not guaranteed this amount of money and would require a contract amendment or change order in order to access those funds.
The Owner’s Representative (Carollo Engineers) has subcontracted with Canterbury Construction Management Services (CCMS) to provide input on this contingency to the City. The project contingency suggested by CCMS has evaluated three types of project risk: 1) systemic; 2) project-specific; and 3) escalation.
As another means of overall project cost control, the City has opted to maintain control over the majority of the budget associated with project risk. Garney Construction will have to request and justify use of project contingency funding, and requests will be vetted by the Owner’s Representative team. However, the Phase 2 contract amendment proposes to allow Garney Construction to control a $2,000,000 contingency. Any unused portion of this contingency remaining at the end of the project will be split 50/50 between the City and Garney Construction. This contractor-controlled contingency has been proposed as an incentive for Garney Construction to control the cost of the project since Garney will benefit financially from not using the project contingency toward construction. The total contract amendment amount ($116,513,822) includes the $2,000,000 contingency discussed above.
Cost Review
CCMS has also performed an independent cost review of the GMP on behalf of the City to ensure further cost control. CCMS has concluded the following in its review of the GMP submitted by Garney Construction:
- The lump-sum CMAR fee is reasonable and below the contractor’s fee submitted on several other similar projects;
- Rates used in Garney Construction's Basis of Estimate are reasonable; and
- CCMS recommends moving forward with the Phase 2 (GMP) contract amendment as presented in Garney Construction’s Basis of Estimate.
CRITERIA BY WHICH COUNCIL MUST CONSIDER THE ITEM
The GMP submitted to the City has been deemed reasonable and appropriate by professional consultants working on behalf of the City of Brighton. Strategies and innovative project approaches have been implemented at all levels to ensure cost control. It is in the best interest of the City of Brighton utility customers to move forward with the Phase 2 (GMP) amendment to the Garney Construction CMAR contract as presented. Approval of such an amendment will allow for compliance with CDPHE regulations and provide water supply for the continued growth of the City into the future.
FINANCIAL IMPACT
Adequate funding for the Phase 2 (GMP) contract amendment has been included in the budget and financial models for the City.
STAFF RECCOMENDATION:
City staff recommend the proposed Resolution be approved by City Council to ensure continued construction of this important project for the City.
OPTIONS FOR COUNCIL CONSIDERATION:
- Approve Resolution as presented
- Reject Resolution as presented
- Request modification to the Resolution
Attachments:
- Resolution
- Presentation