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HomeMy WebLinkAboutItem 06.jDate: 27 August 2014 Item No. APPROVAL OF A CONSTRUCTION AND PUBLIC IMPROVEMENT CONTRACT CHANGE ORDER POLICY Proposed Action Staff recommends adoption of the following motion: Move to approve a construction and public improvement change order policy. Passage of this motion approves a policy for processing change orders associated with City Improvement Projects. Overview This policy outlines a process for approving change orders associated with City Improvement projects. The policy identifies that some change orders may be approved at a staff level: A City department head may approve a change order when the change order amount falls within the budgeted contingency, for projects that have budgeted contingencies, The City Administrator may approve a change order when the change order amount is less than or equal to 10% of the contract amount for projects that do not have budgeted contingencies. The policy also allows the City Administrator to approve change orders in excess of the budgeted contingency or 10% of the contract amount, up to $50,000, in circumstances where: The impacts of not approving the change order would adversely affect public safety, traffic flow, private properties, etc., or The financial impacts to the City would be greater if staff must wait for City Council approval of the change order Staff has reviewed the change order and recommends approval. Primary Issues to Consider Why is the policy being considered? The policy clarifies which change orders can be approved at a staff level and which require Council approval. This will expedite the change order approval process and alleviate the issue of having to bring change orders to the City Council after the change order work has already been completed. ,A -ape . L✓ty�P..;,,,. Neil C. Normandin Public Works Coordinator Financial Impact: Related Documents (CIP, ERP, etc.): Notes: Budgeted: Source: CONSTRUCTION AND PUBLIC IMPROVEMENT CONTRACT CHANGE ORDER POLICY Policy SAX 1. PURPOSE: The purpose of this policy is to provide a procedure to process change orders to construction and public improvement contracts. 2. DEFINITIONS: Change Order — A written amendment to a construction or public improvement contract that is within the scope of the original contract. Supplemental Agreement — A written amendment to a construction or public improvement contract changing the scope of the original contract. 3. BACKGROUND: Change orders in construction contracts are common place. The design process cannot economically provide sufficient detail to completely identify all items of construction work. There is no 'typical' change order amount; however, there are general accepted percentages (as compared to the total construction contract amount). b. Change orders are the result of the following conditions: i) Owner Requested. Work desired that was not clearly called for in the original contract documents. ii) Changed Condition. Work involving existing conditions or construction that was not identified in the original contract documents that directly affect construction work methods, material/labor costs or time. iii) Code Change. Building Codes have changed since the design was completed. 4. PROCEDURE: Change orders require the following approval: a. Upon verification that appropriate and prudent funding is available, change orders may be processed as follows: i) City department directors may approve change orders that fall within the budgeted contingency. ii) The City Administrator may approve change orders up to 10% of the contract amount for projects that do not have budgeted contingencies. b. The City Administrator may also approve change orders in excess of the budgeted contingency or 10% of the contract amount, up to $50,000, in circumstances where: i) The impacts of not approving the change order would adversely affect public safety, traffic flow, private properties, etc. 2 September 2014 ii) The financial impacts to the City would be greater if staff must wait for City Council approval of the change order. c. The City Staff may not approve.supplemental agreements. d. City Council approval is required for all other change orders not meeting the above criteria and for all supplemental agreements.