CR 97-19 Approve Contract CO Polict 6-D
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January 30, 1997
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Council Report 97-19
APPROVE CONTRACT CHANGE ORDER POLICY
LEGISLATIVE POLICY #6-D
Proposed Action.
Staff reconnnends adoption of the following motion: Move that Council
Adoot Resolution 97-11. Resolution Aoorovinl!: a New Lel!islative Policy
l!:overninl!: contract chanl!:e order orocessinl!: and aooroval.
Overview.
On occasion, City Council has raised questions and expressed concerns
regarding the timing and/or amount of various change orders that periodically
are processed for Council approval. Change orders are necessary on virtually
all construction contracts and occasionally on professional service contracts.
Therefore, staff felt it woul? be beneficial to enact a change order policy
which provides for continued Council oversight and approval while allowing
limited staff approval authority.
Primary Issues to Consider.
. What is the proposed staff approval authority?
City staff would have the authority to approve change orders up to 5% of the
construction contract award amount or approved engineering services
agreement amount. After the cumulative change order amounts exceed 5%,
City Council must approve each subsequent change order. Staff would be
required to notify City Council of all change orders.
. What is the recent history of change orders on City projects?
See the attached 1995 and 1996 project sunnnary.
Suooortinl!: Information.
. 1995/1996 Project Sunnn~es
. Proposed Policy #6.
,
. e olution 97-1
Steven J. Stadler
Public Works Director
1995 PROJECT TOTALS
1.) Project 95-04 Random Sidewalk Repair
2.) Project 95-02 Alley Reconstruction
3.) Project 95-03 Alley Reconstruction
4.) Project 95-06 Jaycees Parking Lot
(Jaycees increased size of parking lot during construction under
written request to city with full knowledge of cost increases)
1995 Project Totals
Page 1 of 1
Contract Amount:
Final Amount:
Net Change:
Percent of Change:
Contract Amount:
Final Amount:
Net Change:
Percent of Change:
Contract Amount:
Final Amount:
Net Change:
Percent of Change:
Contract Amount:
Final Amount:
Net Change:
Percent of Change:
Contract Amount:
Amount of Payments:
Net Change:
Percent of Change:
$79,723.48
$88.069.74
$8,346.26
10.47%
$24,847.13
$26,486.01
$1,638.88
6.60%
$30,291.25
$30,942.94
$651.69
2.15%
$4,292.15
$5,276.24
$984.09
22.93%
$139,154.01
$150,774.93
$11,620.92
8.35%
1.) Project 96-04 Random Sidewalk Repair
2.) Project 96-05 Alley Reconstruction
3.) Project 96-05 Alley Repair
4.) Project 96-06 Alley Reconstruction
5.) Project 95-05 Hopkins Wellhouse No.1
6.) Project 95-09 Lot 500 Expansion
7.) Projects 95-16 & 95-17
1996 Residential Street Improvements
1996 Project Totals
Original Contract Amount
1996 PROJECT TOTALS
Contract Amount:
Final Amount:
Net Change:
Percent of Change:
Contract Amount:
Final Amount:
Net Change:
Percent of Change:
Contract Amount:
Final Amount:
Net Change:
Percent of Change:
Contract Amount:
Final Amount:
Net Change:
Percent of Change:
Contract Amount:
Projected Final Cost
Net Change:
Percent of Change:
Contract Amount:
Final Amount:
Net Change:
Percent of Change:
Contract Amount:
Change Orders:
Estimated to Actual Quantity Adjustments:
Revised Contract Amount:
Net Change:
Percent of Change:
Percent of Change Orders:
Contract Amount:
Amount of Payments:
Net Change:
Percent of Change:
Page 1 of 1
$39,467.75
$39,960.19
$492.44
1.25%
$39,131.68
$37,803.59
-$1,328.09
-3.39%
$48,472.80
$46,336.92
-$2,135.88
-4.41%
$29,996.00
$31,219.41
$1,223.41
4.08%
$631,900.00
$645,059.00
$13,159.00
2.08%
$40,096.10
$39,868.94
-$227.16
-0.57%
$581,329.80
$64,694.46
-$82,820.63
$563,203.63
-$18,126.17
-3.12%
11.13%
$1,410,394.13
$1,403,451.68
-$6,942.45
-0.49%
PROPOSED POLICY #6-D
CONTRACT CHANGE ORDER POLICY
1. PURPOSE
1. OlIn order to establish a consistent policy for administering contracts, it is desirable to establish
procedures for administering contract change orders, cost overruns and final contract acceptance
and initiation of contract warranty periods.
2. POLICY
2.01 When the City Council awards a construction contract, a 5-10"/0 contingency item will also be
added to the project financing to pover change orders. A percentage range is used as each project
differs in its susceptibility to potential change orders, i.e., some projects are much more
straight-forward and more easily and accurately specified. A 5% limit on change orders will be
established. No council action will be required if the total value of contract change orders
processed does not exceed 5% of the original contract award amount. If construction contract
change orders exceed the 5%, council review and approval of each change order is required.
2.02 When the budget is established for an approved professional services agreement, a 5%
contingency will be used. Similar to construction contracts, no council action would be necessary
as long as additional engineering services fees are within 5% of the original agreement amount.
2.03 The following procedure will be used for final approval of a construction project:
I) After the project has been reviewed in the field with the engineer and contractor and all
final "punch list" items have been corrected, the Public Works Director shall certify to the
council that the work has been completed in accordance with the plans and specifications.
A recommendation for final payment will also be made.
2) The council shall consider a resolution which would accept the work and authorize final
payment. ,
3) The date on which the council adopts this resolution will be used as a date for the city's
final acceptance of the project and initiation of the normal one-year contract warranty.
4) After adoption of the resolution, final payment shall be made to the contractor.
3. COUNCn.. NOTIFICATION OF CHANGE ORDERS
3.01 City staffwill provide notice of all contract or service agreement change orders via the weekly
Council Update.
Established 2/4/97
City of Hopkins
,
CITY OF HOPKINS
HENNEPIN COUNTY, MINNESOTA
RESOLUTION NO. 97-11
WHEREAS, the City Council of the City of Hopkins has approved a document entitled the
Legislative Policy Manual to provide guidelines on City policies so that actions taken are
consistent and fair, and
WHEREAS, additions and revisions to this manual may be implemented by resolution of the City
Council; and
WHEREAS, the Hopkins City Council has determined that a Legislative Policy needs to be
created which establishes a consistent policy for administering contracts including procedures for
contract change orders and final contract acceptance.
NOW, THEREFORE, BE IT RESOLVED, that the City Council of the City of Hopkins hereby
adopts the attached Legislative Policy #6D.
Adopted by the City Council of the City of Hopkins this 4th day of February, 1997.
By
Charles D. Redepenning, Mayor
ATTEST:
Terry Obennaier, City Clerk