O2019-529 ORDINANCE authorizing the transfers of $174,440,411.40 from the NEWPP Expansion–Swift Fund and $78,601,476.60 from Water & Sewer System Consolidated Construction Fund into the HPW-NEWPP Construction Fund, appropriating $253,041,888.00 from HPW-NEWPP Construction Fund, and approving the expenditure of said sum from HPW-NEWPP Construction Fund for services associated with the Northeast Water Purification Plant (“NEWPP”) Expansion Project (“Project”); appropriating $672,753,212.00 from Water Authorities Capital Contrib-NEWPP Fund and approving the expenditure of said sum from Water Authorities Capital Contrib-NEWPP Fund for Northeast Water Purification Plant Expansion Project; approving and authorizing an eighth amendment to the Amended and Restated Design-Build Agreement between the City of Houston and HOUSTON WATERWORKS TEAM, a joint venture between CH2M HILL ENGINEERS, INC and CDM CONSTRUCTORS INC (approved by Ordinance No. 2015-1260, as amended) for the Project; amending Ordinance No. 2015-1260 to increase the maximum project amount - DISTRICT E - MARTIN

Subject:  Eighth Amendment to the Amended and Restated Design-Build Agreement (Contract) between the City and Houston Waterworks Team (HWT), a joint venture between CH2M Hill Engineers, Inc. and CDM Constructors Inc. for the Northeast Water Purification Plant (NEWPP) Expansion Project Balance of Plant Facilities.

Recommendation: Adopt an Ordinance amending Ordinance No. 2015-1260 to approve the Eighth Amendment to the Amended and Restated Design-Build Agreement between the City and Houston Waterworks Team for the Northeast Water Purification Plant Expansion Project approving the Guaranteed Maximum Price with phased appropriations and appropriate funds.

Project Notice/Justification: This project is required to meet regulatory mandates of the Texas Commission on Environmental Quality and the Groundwater Reduction Plans for the Harris-Galveston Subsidence District and the Fort Bend Subsidence District.

This project will be completed in two phases. The first phase of 80 million gallons of water per day will be substantially complete no later than December 31, 2022 and the second phase of 240 million gallons of water per day will be substantially complete no later than June 30, 2025 for a total of 320 million gallons of water per day. This project was described and briefed to the Transportation, Technology, and Infrastructure Committee on June 24, 2019.

Location: This project is located at 12630 Water Works Way, Humble, Texas 77396. Key Map Grids 377 U & 377W.

Description/Scope: The planning and final design of the expansion facilities are 90% complete. HWT will now finish the Balance of Plant construction for the NEWPP Expansion Project by furnishing equipment, labor, and materials necessary to complete the scope of work in accordance with City requirements and terms of the Contract. The scope of work consists of eleven remaining construction packages that have not been fully funded by the Early Work Packages, permitting, construction supervision, material testing/quality control package, inspection, integration, commissioning building and system components, meeting regulatory requirements, professional services during construction, project closeout, and all general conditions costs. Details can be found in Exhibit A.

Procurement: Competitive Sealed Proposal Method was used for the procurement packages; except for the Central Plant. HWT evaluated each proposal independently. Each prospective contractor was then interviewed by HWT with the City and an Authority representative as observers. Following the interviews, HWT and the City convened for a final evaluation and scoring of the proposals on a consensus basis. Procurement details can be found in Exhibit B.  

Project Cost: The total project cost is $1,936,644,764.50 which includes the contract Guaranteed Maximum Price of $1,765,532,834.00, Management Reserve of $161,111,930.50, and CIP Cost Recovery of $10,000,000.00. Funding for this project will be appropriated in phases through 2021, as described in the table below, for ongoing expenditures through 2025:

The contract Guaranteed Maximum Price of $1,765,532,834.00 includes the previously appropriated contract amount of $449,726,330.00 for Early Work Packages (pre-construction services, preliminary services through final design, clearing of site, and early construction work packages) and $1,315,806,504.00 for the construction of the Balance of Plant. The Balance of Plant cost includes $876,940,751.00 for direct construction costs, $338,165,753.00 for indirect construction costs, $60,000,000.00 for the Design-Builder contingency and risk, and $40,700,000.00 for construction allowances.

The indirect construction cost of $338,165,753.00 includes the cost of $191,026,304.00 for professional services during construction, the cost of $32,650,000.00 for insurance and performance bonds, the cost of $92,591,949.00 for Design-Builder fee, the cost of $18,100,000.00 for the Start-up Commissioning & Acceptance Testing of the facility, and the cost of $3,797,500.00 for transition services.

Although the total Balance of Plant appropriations will occur in three phases, the City of Houston will contribute its entire share of 16% of the contact Guaranteed Maximum Price and the oversize cost in the July 2019 appropriation to assist HWT minimize risks associated with phased appropriations.

Pay or Play Program: The proposed contract requires compliance with the City’s ‘Pay or Play’ ordinance regarding health benefits for employees of City contractors. In this case, the consultant provides health benefits to eligible employees in compliance with City policy.

MWSBE Information: The overall MWSBE goal for the entire contract Guaranteed Maximum Price ($1,765,532,834.00) is 13.5%. (Memo from Office of Business Opportunity is attached.)

a. Direct Construction Cost: MWSBE participation for direct construction is based on Market Studies for each specific construction work package. The Market Studies identified divisible work and evaluated the capacity available within the MWSBE contracting community. For direct construction costs during the Early Work Packages, HWT has been authorized $174,023,504.00 and has been paid $45,905,323.00 (26.4%) to date of which $16,120,338.00 (35.1%) has been paid to MWSBE subcontractors. Assuming the approval of the contract Guaranteed Maximum Price, the authorized amount for direct construction cost will increase to $1,050,964,255.00. HWT proposes a MWSBE plan of $157,298,936.00 (14.97%) as described in Exhibit C.

b. Construction Allowance: Included in the direct costs is the construction allowance of $40,700,000.00 for items that are in the design phase such as the site civil work, the construction of an off-site sanitary force main, the storage of major equipment, the cost of permits, and the import of suitable soils for construction.  However, although the final amount to be expended against this construction allowance is not yet determined, it is anticipated that the overall MWSBE goal of 13.5% for the entire GMP can be met with the use of these funds.

c. Professional Services: The M/WBE participation goal for Professional Services is 24.0%. HWT has been authorized $102,792,709.00 for professional services and has been paid $92,745,687.00 (90.2%) to date of which $20,303,609.00 (21.9%) has been paid to M/WBE sub consultants. Assuming approval of the GMP, the authorized amount for professional services will increase to $293,819,013.00. HWT proposes the plan to meet M/WBE participation of $70,516,768.00(24.0%) as described in Exhibit D.

d. Indirect Construction:  The indirect construction costs for insurance and performance bonds, Design-Builder fee, the Start-up Commissioning & Acceptance Testing of the facility, and the cost for transition services have no divisible components and therefore have no MWSBE goal as approved by Office of Business Opportunity.

FISCAL NOTE: No significant Fiscal Operating impact is anticipated as a result of this project.

July 2019 Appropriation: The amount of $925,795,100.00 is to be appropriated as follows: $900,000,000.00 for HWT contract services, $23,298,800.00 for Management Reserve, and $2,496,300.00 for CIP Cost Recovery. City of Houston will contribute $253,041,888.00. The Water Authorities will contribute $672,753,212.00.

$174,440,411.40 Transfer from Fund 8434 – NEWPP Expansion – SWIFT into Fund 8506 – HPW NEWPP Construction Fund and appropriate from Fund 8506 – HPW-NEWPP Construction Fund.

$78,601,476.60 Transfer from Fund 8500 – Water and Sewer System Consolidated Construction Fund into Fund 8506 – HPW NEWPP Construction Fund and appropriate from Fund 8506 – HPW-NEWPP Construction Fund.

$672,753,212.00 Appropriate from Fund 8505 – Water Authorities Capital Contribution-NEWPP Fund.

Rajinder Singh

Phone: 713-725-9759