Sewer plant project comes in $5 million over estimate

   As promised, an engineer from Snyder & Associates, the City of Monticello’s engineer, was present at the June 5 city council meeting to provide an update on the wastewater treatment facility (sewer plant).

   Bids were opened on June 1, with three bids received.

   City Administrator Russ Farnum shared the unfortunate news right off the bat.

   “Our bids are $6 million to $8 million over our approved financial cap,” he informed the council.

   Farnum said other communities are also facing similar circumstances with increases in costs for major projects like this.

   “If we had bid in January like we originally anticipated, it might be a little bit of a different story,” continued Farnum. “But with permit delays from the DNR and USDA delays, that pushed us into May and June.”

   Nick Eisenbacher with S&A provided the council with a rundown…

   “I spoke with Russ, the city attorney, and USDA to try and figure out what your options are. It’s not a small chunk of change to be able to come up with right away,” he said.

   With the USDA, Eisenbacher offered that the city could ask for additional funding.

   “But because the city received a wavier to keep the funding that was allocated under the AIS (American Iron and Steel) requirement, the additional funding would void that waiver,” he explained. “The whole project would have to follow the new Build America Buy America Act (BABAA) requirements.”

   He said going this route, noting that a lot equipment is needed inside a new sewer plant, it would significantly increase the cost of the project.

   “Then you’re starting the project with a change order, and that would cause an issue with the subsequent bidders.”

   Eisenbacher took it upon himself to reach out to equipment companies and contractors to see “if there is a smoking gun” when it comes to the bids.

   “Until there is a formal decision made by the city council, they’re not really willing to open their books up quite yet,” he said of getting some concrete answers.

   However, he was able to grab at some “breadcrumbs” to find out that the lead time on the equipment, which is a year-plus out, did not correlate with the project deadline of two years.

   “That could also be where we have to extend the completion date so the contractors don’t have to add additional labor in to cover liquidated damages,” he offered.

   “Are there some things we can eliminate from the project?” asked Council member Tom Yeoman.

   Eisenbacher said he’s talking with Water/Wastewater Superintendent Jim Tajden and his staff on this matter.

   S&A’s recommendation to the city, as well as the USDA’s, is to reject all bids and rebid the entire project in the fall.

   Council member Brenda Hanken asked if prices will continue to increase the later it gets.

   “That’s always a possibility,” noted Eisenbacher.

   He also plans to speak with contractors regarding when they feel a project like this should go out to bid for their schedules and what a realistic construction timeline might be “based on the current lead times.

   “I spoke with contractors before we put it out for bid; I spoke with contractors afterwards,” continued Eisenbacher. “It seemed like we were in line with our budget and our timeframe. But something occurred during the bid process that sent it haywire.”

   Yeoman asked if there would be an issue with the USDA and the DNR to delay the sewer plant project. Eisenbacher said the DNR would have to be notified of the situation and new schedule. But the USDA did not see a problem in a delay.

   “They’re recommending when we do rebid to have an alternate to include the BABAA in case, and that way, it’s all out in front. It’s all legal.”

   Mayor Dave Goedken asked if there was a wide range among the bids.

   “The three bidders were within 5 percent of each other,” shared Eisenbacher. “Our estimate was $5 million lower. If there is one silver lining, that means we put out good bid documents because everybody bid the same thing; all of the bids were together.

   “It’s frustrating on our end because we do a lot of due diligence to make sure our estimates are really good, and to have to something like this occur really frustrates me,” Eisenbacher concluded. “But it’s hard to say what we could have done differently.”

   The council was not in a position to take any action during their meeting. Action to reject the bids will take place at the next council meeting.