http://almanacnews.com/print/story/print/2012/02/08/atherton-big-cost-overrun-on-drainage-road-project


Almanac

News - February 8, 2012

Atherton: Big cost overrun on drainage, road project

by Renee Batti

A project to fix drainage and roadway problems in an area of Atherton crossed the finish line with a price tag that's 83 percent over the projected cost, thanks to some $768,000 in change orders.

While the project has been officially accepted by the Atherton City Council, council members have made it clear: They will not accept most of the additional costs without a fight.

The project to fix drainage and roadway problems in the area of Fletcher Drive and Ridgeview Drive was begun in mid-2010. The town budgeted $922,055 for the project, with a 10 percent contingency of $92,205 for unforeseen problems that could legitimately boost the original projected cost. The final cost came in at about $1.69 million.

Mike Kashiwagi, the town's interim public works director, told the council at its Jan. 18 meeting that the staff's analysis of the cost overruns indicates that, while some added costs were the results of legitimate factors that aren't unusual for such projects, numerous other extra costs resulted from "design errors and omissions" on the part of the design contractor.

"If they screw up, they should pay for it," said Councilman Jim Dobbie, adding that he wants the town to "go after" the firm responsible for the overruns.

The council approved the official "notice of completion" so that the main contractor, Gallagher and Burk, can be paid, but City Attorney Bill Conners said that engineering firm Wilsey and Ham, the project's design contractor, has been put "on notice that they should talk to their insurance carrier because this (the cost overruns) is a very serious matter."

He noted that Gallagher and Burk "didn't do anything wrong that we can ascertain" and that the town's gripe is with the engineering firm.

The first change order for $140,300 was brought before the council in September 2010, followed by $305,108 in April 2011. The council was asked to approve a third change order of $322,483 at the Jan. 18 meeting as part of signing off on the project.

Mr. Conners explained that accepting the project is necessary to claim damages, which the town is poised to do.

In a report to the council, Mr. Kashiwagi wrote that the town sent a letter to Wilsey and Ham in June, "notifying them that due to the type and amount of change orders, the Town would immediately begin investigating the cause and damages to the Town resulting from what we believed to be design errors and omissions."

In November, after the town's investigation, staff met with Wilsey and Ham representatives to review the town's analysis of the change orders, Mr. Kashiwagi wrote.

Mr. Kashiwagi said last week that the engineering firm had not yet responded to that analysis.

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