Agenda - Public Works Committee - 09/16/2008

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CASE # l~Ep'(aE.T t~iV'E~TENDI~D WAI~RA~iTEES Ql~! NEW l~'AVEMElr1'pS A~1D 4VE~.A'YS Dy Steven Jankowski, City Engineer Background: Staff was asked to research and consider requiring contractors to provide.an extended warrantee on paving work such as new bituminous pavements and bituminous overlays. Item 24 of the General Specification included in the contract documents used by the City is an industry standard prepared by the American Society of Architect and Engineers and reads as follows: 24.3 ~ If, after the approval of final payment and prior to .the expiration of one (1) -.year after the date of Substantial Completion or such longer period of time as may be prescribed by law or by the terms of any applicable special guarantee required by the Contract Documents, any Work is found tai be defective, tl~e Contractor will, promptly, without cost to the Qwner and in accordance with the Owner's .written instructions, either correct such defective Work, or, if it has been rejected by the Uwner, remove it froth the Work site and replace it with non-defective Work. If the Contractor does not promptly comply with the terms of such -instructions, the Qwner may have the defective Work corrected or the rejected Work removed and replaced, and all direct and indirect costs of such removal and replacement, including compensation fox additional professional services, will be paid 'by the Contractor. The Minnesota Department of Transportation conducted a pilot program with an extended warrantee period beginning in 2000 which was .discontinued after two to three years.. The extended warrantees were designed to protect against catastrophic failures for a period of three years, The primary cost impact was that of extended bonding which was passed on to the owner: The main reason for the program being terminated was the conclusion .that the extended bond costs were being paid for an occurrence which very rarely occurred: It was also notable in talking to the MnDQT official associated with, this program that the Highway 2i2 project in the southwest metro was considering a five year warrantee. MnDot decided against including this as a requirement of the project after surety companies advised that the risk associated with. such. a large project over that period of time would cause the premiums to be very- expensive: There was also discussion of a twenty year warrantee period, but MnDOT concluded.. that the cost of applying an overlay after that period would be less expensive .than the extended surety expense. The other issue associated with the extended warrantees was the need for periodic 121