Agenda - Public Works Committee - 10/18/2011

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City Engineer Himmer reviewed the staff report. He highlighted contract language related to construction projects and explained how these conditions would assist the City in ensuring projects would be executed and completed in a timely and quality manner. Public Works Director Olson further discussed the time periods for contracts and explained how defective issues could be dealt with. The Committee discussed examples of construction projects completed in the City and the best language/standards that could assist with quality, ensuring projects are completed within the allotted time, and enforcement of the contract. Mayor Ramsey stated that it would not be possible to draft standards which would address every situation and noted these standards should ensure that defective or neglected projects are addressed, or corrected, as soon as possible. Public Works Director Olson explained how weather delays are taken into account for construction projects. City Engineer Himmer stated he believed the language was sufficient and noted the issue would be more with enforcement. He advised that input has been received from contractors regarding the policy of the City to not close out projects until every item is completed and explained that is affecting the ability of contractors to bond for additional projects. He questioned the appropriate time to finalize a project. Chairperson McGlone stated that in his contracts, it states final payment is due upon substantial completion of the project. Public Works Director Olson noted that only 5% of the final payment is being held, but explained that a performance bond is required equal to the total project amount. City Engineer Himmer explained the bonds that are held and used for construction projects, performance bonds and warranty bonds. He advised of three upcoming projects which are proposed to final out at the next Council meeting. He noted that if staff believes the work is substantially complete, staff would not be opposed to releasing the performance bond in return for a warranty bond. He asked if the Committee would agree to add a 3% contingency into contracts, which would provide staff with flexibility when something unexpected arises during a project. The Committee further discussed project management and the understanding that while this would assist staff, staff should still attempt to resolve issues prior to using the contingency funds. It was the consensus of the Committee to agree with the recommendations from staff regarding the close out of construction projects with minor outstanding items, and the Council can determine whether it is acceptable for outstanding items to be covered by the warranty bond for the project. Public Works Committee / August 15, 2011 Page 2 of 4