Agenda - Council - 01/18/1994 - Laserfiche WebLink

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CASE # REVIEW CI~ANGE ORDER POLICY FOR PUBLIC IMPROVEMENT PROJECTS ~ BY: Steven Jankowski, City Engineer Background: At the Decemb,r 14, 1993, Council meeting, Councilmember Beyer suggested that all Change Orders should bg approved prior to the actual work taking place. Change Orders are formal amendments to [ contract which may be caused by a number of factors including omissions, errors, or conflicts within the original contract document~, additions to or reductions in the scope of the work, and ~hanged or unforeseen conditions. A Change Order will entitle a conlx'actor to an adjustment in tho project cost, an extension of the contract period, or both. A Change Order is considered a forfiaal amendment to the contract and it, therefore, should be authorized by both parties in advanc6 of the work. In practice, however, achieving prior authorization on many public improvement pro~eets is problematic. Often times a decision on a change needs to be made within a period of hourg or days while the City Council meets on two, and occasionally three, week intervals. Since aiconstruction crew will typically cost several hundred dollars per hour, the cost of delaying a decision or ceasing an operation and causing the contractor to remobilize at a later date, can easily exceed the cost of the change being considered. Ramsey is not unique in dealing with this issue. In surveying a number of other communities I have enumerated below some alternatives used in those communities to deal with this issue. · Identify a dollar limit, possibly in the range of $2,000 to $3,000, for which the engineer may autho~ze Change Orders for work which is consistent with the scope of the project as authorized by the City Council. · Call an eme~rgency meeting of the City Council to authorize all Change Orders. However, even an emergency meeting may require a number of hours of delay which may result in some claim bY the contractor. · Allow the engineer in consultation with the City Administrator and the Mayor or designated member of Ox)until to authorize emergency Change Orders. As you can see from~ the options above, there is generally a trade off between cost effectiveness and expediency and Oversight. Council Action: Based upon Council~discussion, the Council may wish to direct an informal or formal written policy on the procedure for processing Change Orders on public improvement projects. Reviewed by: City Engineer Finance Officer City Administrator City Attorney CC: 01/18/94 /jmt