Atherton will redesign its civic center | June 27, 2018 | Almanac | Almanac Online |

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News - June 27, 2018

Atherton will redesign its civic center

by Barbara Wood

Atherton's City Council has voted to redesign its civic center in an attempt to bring costs down to about $41 million, after the lowest bid for the complex came in at $56.4 million, 40 percent more than consultants had estimated.

The redesign means the project will be at least six months behind schedule. Construction was to have begun this month, with the estimated time of completion two years.

The June 20 council vote was 3-0, with council members Rick DeGolia and Bill Widmer abstaining. DeGolia said he favored a redesign that includes the option to build the library separately from the rest of the project, and Widmer said he wanted the redesign to cut the cost even further. DeGolia had also suggested that the town look at raising more donations to help pay for the project.

City Manager George Rodericks said the town will investigate how much it would cost to separate out the library project, allowing the council to take another look at that option.

All council members agreed that whatever they do, they don't want to find themselves unable to award a bid in six months. "We don't want to be in this situation again," Mayor Cary Wiest said.

What happened?

Before the council voted, it heard from Paul Beamer of Mack5, the consultants who have been providing cost estimates for building a complex that will include a new library and offices for town administration, police, building and planning. The current plans also included renovation of the historic building the town uses as council chambers and a new council chamber.

Beamer said receiving bids so much over estimates was unprecedented for Mack5. "We've been estimating in this market for 17 years, and we've never seen this," he said.

"We'd like to acknowledge there's something wrong here. We made a mistake."

"Since bid day we've scratched our heads and talked to these bidders — what happened?" he said.

Beamer offered several theories for the extreme mismatch between the estimate — which was supposed to take into consideration factors such as the local construction market and the cost and availability of materials and subcontractors — and the bid. One was simply the fact that the customer was Atherton.

"I got a feeling maybe people said, well it's Atherton and they want their civic center," Beamer said. "That could have been an unquantifiable factor."

Backfire from prequalifying bidders

He also acknowledged that the strategy of allowing bids only from a small pool of prequalified contractors may have backfired when three of the five prequalified contractors backed out, leaving minimal competition.

"Our strategy was to come up with a short list to minimize the number of contractors coming in, but in this market that was probably not the right strategy," Beamer said.

He said that in its bid, C. Overaa & Co. "doubled their overhead and profit ... just because they could."

The fact that Atherton planned to have the project built in phases, completing some facilities and moving in workers while other facilities were still under construction, also increased the price of the project. "Overall, they saw a hassle factor because the public was going to be in the middle of their construction," Beamer said.

Overaa "said if we could simplify the phasing we could save $2 million," Beamer said.

Timing also worked against the town, he said. Bids were originally supposed to go out in January, but weren't ready until May, he said, when many contractors had already bid on other projects and were too busy to participate.

The council agreed to try to get the redesign approved by December, so the project could go out to bid in January, and to drop the prequalification requirement.

"If we can put a project on the street in January, it's going to be a lot more competitive," Beamer said.

Mack5 plans to talk to the bidders and their subcontractors to find out what aspects of the project resulted in the higher-than-expected bids and to use that information in the redesign, Beamer said.

He mentioned items such as teak windows and rammed-earth construction in the library, and the costs of solar power and storage batteries.

Market uncertainties, including tariffs or proposed tariffs on lumber, photovoltaic panels, aluminum and steel "may have an influence on the bottom line" as well, Beamer said.

No more 'nice to haves'

"My primary concern is that we cannot take the chance of this happening again," said council member Mike Lempres, who was participating in the meeting remotely. "We should make some hard decisions on this project now and recognize there's a lot of nice-to-haves that we'll have to skip at this time," he said.

"I believe the priority ought to be a project that we can get built."

Other council members agreed. "We need to make some hard decisions. We need to make them very, very quickly," said Widmer.

Council members asked for updates on the progress of the redesign at all of their upcoming twice-monthly council meetings and asked that Mack5 work with a "peer reviewer" knowledgeable about the local construction market.

The only member of the public to speak at the meeting was Walter Sleeth, who is on the board of the Friends of the Library. He urged the council to make the library a separate project. "Move ahead with the new library plans," he said.

In its bid, Overaa said it would build the library for only $10 million, below the Mack5 estimate of $11.8 million. Later, however, Overaa told the town that while its overall bid amount was correct, it had not divided the costs correctly. Overaa said it would cost $19 million to build the library and $29 million for the administration/police building, plus an additional $8 million for site improvements.

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