I2. Sect 36 Pump House201 I sr Avenue East
PO Box 1997
Kalispell, MT 59903
Phone: 406-758-7720
Fax: 406-758-7831
www.kalispell.com 1public_works
MEMORANDUM
TO: Doug Russell, City Manager ��-
FROM: Susie Turner, P.E., Public Works Director
CC: Rick Wills, Finance Director
SUBJECT: Award Bid Recommendation — Section 36 Pump House Facility Project
MEETING: May 21, 2018
BACKGROUND: As continual growth occurs in the City, new water pump supplies are necessary to
meet the increasing demands and Public Water Supply (PWS) requirements of the Department of
Environmental Quality (DEQ). Section 36 Pump House Facility Project supports the City's water system
in meeting the current water supply deficiencies in the upper pressure zone. In addition to the Section 36
Well, another well will need to be added to the upper pressure zone in the near future in order for the City
to comply with DEQ's pumping capacity requirements.
Bids for the Project were opened on Thursday, May 10, 2018. Two responsive bids were received, and
reviewed for completeness by AE2S Inc. The bid result is as follows:
Contractor
Total
Diamond Construction
$1,107,000
Martel Construction
$1,287,000
Engineers Estimate
$868,000
The contractor's cost to complete the project exceeds the engineers cost estimate by $239,000. Reasons
for the differences between the engineer's estimate and contractors are summarized in AE2S's Bid
Certification letter. References for Diamond Construction were contacted and interviewed by AE2S.
Diamond Construction was determined to be a responsive and responsible contractor successfully
completing similar projects.
ACTION REQUESTED: Motion to award the Section 36 Pump House Facility Project to Diamond
Construction.
FISCAL EFFECTS: The Section 36 Pump House Facility Project is funded through the Water Fund.
The FY 17/18 budget for this project in Line Item 953-Construct Grossweiler Well was $961,746 which
included the costs associated with the inspection, design, construction, and construction engineering. The
line item amount will need to be administratively adjusted by $415,000 to reflect the construction bid cost
received for this project. There are sufficient funds within the Water Fund 5210 to cover the budget
adjustment.
ALTERNATIVES: As suggested and approved by the City Council.
ATTACHMENTS: Certified bid tabulation and recommendation from AE2S, Inc.
Tabulation of Bids
Section 36 Water Pump House Facility (Water Improvements)
Kalispell, MT
City of Kalispell Project No. 17-1116
AE2S Project No. P05610-2017-002
2:30 PM MDT, March 22, 2018
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Contractor
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Project Bid
Diamond Construction
✓
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$1,107,000.00
2 Martel Construction
✓
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$1,287,000.00
Engineer's Estimate I I I I $868, 000.00 I
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AE2S
690 N Meridian Rd Ste 218
Kalispell, MT 59405
Tel: 406-257-8990
True Tabulation of Bids
Respectfully Submitted by:
Alan Wendt, PE
,�% n
www.ae2s.com
May 15, 2018
City of Kalispell Public Works
Susie Turner, PE
Public Works Director
201 First Avenue East
Kalispell, MT 59901
RE: Bid Certification
City of Kalispell Section 36 Pump House Facility (Water Improvements)
Dear Mrs. Turner:
Sealed bids were opened utilizing Quest CDN for the above referenced project at 2:30 p.m. on Thursday,
May 10, 2018. Two (2) lump sum bids were received, with Diamond Construction, Inc. of Helena
Montana being the apparent low bidder at $1,107,000.00.
Enclosed is the certified bid tabulation which provides information regarding the bids received, including
a comparison to the Engineer's Estimate prepared by Advanced Engineering and Environmental Services,
Inc. (AUS). The bids were reviewed, and no irregularities or mathematical errors were identified.
However, as indicated on the bid tabulation form the apparent low bid is higher than the engineers
estimate and the original budget allocated from the City. This was after a significant effort by both the
City and AE2S to reduce Project costs to maintain City Budget and a re -bid process due to no -interest
about a six weeks ago.
After recent discussions with City staff and AE2S, it was decided to explore potential reasons for the bid
increases. Interviews were conducted with responsible bidders and a third contractor that did not bid,
which the following items where noted as regional economic conditions affecting bid pricing:
1. Proposed Steel Tariffs and Material Cost Increases
The proposed steel tariffs have increased costs of both foreign and domestic steel which is
causing a significant cost increase across the entire region. Vendors have indicated price
increases have occurred due to reduced steel availability, increases in demands, and the
uncertainty of steel futures. Steel price increase could increase costs of components such as
structural steel, rebar, pump components, fittings, hardware, and other steel components (all of
which are provided in this Project).
Prices of other commodities have recently increased significantly common municipal
commodities such as PVC Pipe and Ductile Iron Pipe, both of which were included in this Project.
2. Economic Boom and Reduced Competition in the Area
As many are aware, our area is currently experience an economic boom and a growing market.
Although this is generally a positive item for our community, this tends to mean higher prices
and more work around the region which in turn can reduce competition. Hot markets like
Kalispell can also mean fast moving contracting processes, especially in the private markets. In
Advanced Engineering and Environmental Services, Inc.
690 N Meridian Road, Suite 218 • Kalispell, MT 59901 • 406-257-8990
City of Kalispell
Attn: Mrs. Susie Turner, PE
RE: Bid Certification
City of Kalispell Section 36 Pump House Facility (Water Improvements)
May 15, 2018
Page 2 of 2
fact, it was explained by one of the bidding subcontractors that there was a preference for
private development market compared to municipal market, which can contract faster, have
less time uncertainty and related cost risks, and lowered entry effort compared to the municipal
market. This certainly appears to be a trend especially for vertical construction improvements.
It is our understanding that the City of Kalispell has recently had other project bids received that
were over the original budget/engineers estimate (which were not AE2S Projects). AE2S is
receiving feedback across numerous markets of significant Project increases as well. It would
appear that a trend may be developing and we recommend careful tracking of this trend moving
forward with other projects.
As noted earlier, City Staff and AE2S have already performed a significant effort to reduce Project costs
prior to bidding. Based on the bids received the Section 36 Pump House Facility (Water Improvements)
Project, we foresee 2 options of the City of Kalispell:
1. Increase Project Budget and recommend award to Diamond Construction in the amount of
$1,107,000.00
a. AE2S has already contacted its listed references. We are waiting for a final reference call
back, but initial reference indicated positive recommendations of Diamond Construction
for municipal projects such as this Project.
2. Delay award until a time which the market trends corrects and a more favorable bidding
condition is present. This would mean a delay in construction of this critical component of
infrastructure.
AE2S is committed to moving forward with the City of Kalispell with selection of either option. If you
have any questions regarding the certification of the bid, please do not hesitate to contact me at (406)
257-8990.
Sincerely:
AE2S
k��' &�;;-
Alan R. Wendt, PE
Project Engineer
CC:
Lance Lehigh, AE2S
Enclosures:
• Bid Results from QuestCDN
• Bid Tabulation
Advanced Engineering and Environmental Services, Inc.
690 N Meridian Road, Suite 218 • Kalispell, MT 59901 • 406-257-8990