Title
Staff Report for a City of San Leandro City Council Resolution to Authorize the City Manager to Execute Construction Change Orders with DeSilva Gates Construction to Add Work to the Annual Street Overlay/Rehabilitation 2018-20; Project No. 2019.0050
Staffreport
SUMMARY AND RECOMMENDATIONS
This request would increase the maximum value of change orders that may be executed on the contract for construction of the Annual Street Overlay/Rehabilitation 2018-20; Project No. 2019.0050.
Staff recommends authorizing the City Manager or her designee to execute cumulative change orders up to 33% of the original contract amount.
BACKGROUND
The City Council awarded the contract for construction of the Annual Street Overlay/Rehabilitation 2018-20 project to DeSilva Gates Construction, LP (DGC) and authorized Staff to execute cumulative change orders up to 25% of the original contract amount on July 6, 2020.
Attached is a table listing existing and potential contract change orders for DGC. The total estimated value of the identified items represents 29% of the original contract amount. The most significant items are as follows:
Potential change order - $420,000 to adjust paving prices for increases in crude oil prices: Crude oil is used in the production of asphalt concrete and has a direct relationship to the cost of producing the material. Bids were opened in May 2020 which coincided with the lowest crude oil prices of the last few years. There was a price depression that was likely driven by a drop in demand due to COVID 19 safety measures. The low crude oil price contributed to a bid that was 25% below the Engineer's estimate; however, crude oil prices quickly returned to normal levels. As is standard in the industry, the contract has provisions for adjustment to paving prices when the crude oil price changes by more than 10%. Crude oil prices fluctuate by month and are currently about 370% above the price at bid. This change represents 5.3% of the origin...
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