Some major cost overruns for the 4th Ave. underpass and Cushing St. bridge along the new streetcar route:
The city bid the project using a "construction manager at risk" method,
or selecting contractors based on qualifications without regard to cost.
(photo: Kelly Presnell)
4th Ave. Underpass rises to $46M
For six years, city did not reveal additional $15M
By Rob O'Dell
Arizona Daily Star
08.09.2009
The new Fourth Avenue Underpass connecting downtown to Fourth Avenue will open in two weeks to some sticker shock: a previously undisclosed cost of $46 million. City estimates throughout the past six years have never put the cost higher than $31 million — although the city now acknowledges its wasn't revealing the entire costs for the past six years.
The city's $31 million budget included only actual construction — it left out $15 million in other costs associated with the bridge. Not previously disclosed: $2.8 million for designs that were scrapped; $3.7 million for the current design; $1 million for design work that needing fixing during the construction process; $2.3 million for city staff time, inspections and testing; and $5 million for "incidentals" such as public art, relocating railroad tracks and moving some utilities.
The total bill once all costs are disclosed: $46 million. Most of the cost was paid by Tucson's share of state gasoline tax money, and the rest came from the Regional Transportation Authority, said City Transportation Director Jim Glock. The city also overshot construction costs, going from a $26 million "guaranteed maximum price" to $31 million. That $31 million is the same cost as an earlier bid for a duel-underpass design that was scrapped as too expensive in 2005 after $2.8 million in design work. Also included in the $46 million is $4 million in add-ons requested by the city's Rio Nuevo redevelopment agency, which the Transportation Department covered because Rio Nuevo is out of available money. Rio Nuevo had originally requested $5 million in improvements, but Glock said he was able to cut out $1 million.
Using city general-fund money for Rio Nuevo requests was a driver in the City Council's firing of City Manager Mike Hein in April. Mayor Bob Walkup said the opening of the underpass should be reason for a celebration. He acknowledged the $46 million cost, but said the city's construction budget was on target, adding he didn't consider design costs part of the budget. Walkup said the added cost to pay for Rio Nuevo-requested changes was "appropriate." "We got a lot of value for the money that we spent," Walkup said. "I'm pleased with the outcome. It was money well-spent."
The city bid the project using the "construction manager at risk method," which selects contractors based on qualifications without regard to cost. The city later gets a "guaranteed maximum price" from the contractor — but that maximum can be easily increased by issuing change orders. The same process was used for the Cushing Street Bridge, which has also experienced delays, redesigns and cost increases, and for the $9 million Scott Avenue/Congress Street Infrastructure Project, originally estimated at $6 million. (See related story on Cushing Street on Page A1.) Glock said the city used that builder-selection process to get the underpass going quickly, selecting Sundt Construction Inc. and starting construction even though the design was only 60 percent completed. That led to at least $1 million in extra design costs, he said. "We probably should have waited until we were at 90 percent, but we were in a rush to get done," Glock said.
For the Cushing Street Bridge, the city also selected Sundt, on designs that were only 30 percent finished. Penny Cobey, an expert in construction law with the firm McKenna Long & Aldridge in Los Angeles, said she was surprised the city went forward with projects when designs were that incomplete. Cobey, who has worked on construction contracts for 26 years, said hiring contractors on qualifications without regard to price is unusual and isn't allowed in many states, although it is in Arizona. However, she said the bidding process isn't the necessarily the culprit, as much as the people running it. A "construction manager at risk" process, which includes cost controls, is used by the most sophisticated cities or owners for the most complex projects. If the traditional design-bid-build contracting is the four-door sedan of government contracting, Cobey said, the "construction manager at risk" process is the Maserati. If someone not sophisticated enough to drive the car crashes it, "It's not the fault of the Maserati," Cobey said.
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Costs soar for bridge's 4th redesign
Original design could cause flooding; price tag jumps from $6M to $10M
By Rob O'Dell
ARIZONA DAILY STAR
08.09.2008
A bridge to extend Cushing Street over the Santa Cruz River was supposed to cost $6 million and be open next month. Now it will cost more than $10 million and may not be completed until 2012. The bridge, approved by the City Council in 2006 to connect downtown to the west side, is being designed for the fourth time at a cost of $600,000, on top of $1 million already spent on earlier designs. Previous designs would have caused water backup and flooding upstream. Although one of the eight contractors bidding to build the bridge warned the city about the flood potential, the city awarded the job to a company that agreed to build it as designed — only to recognize after the fact that the warning was accurate.
In fact, one member of a city panel ranking the bids gave up to 35 points on a 25-point question to four firms that agreed to build the bridge as designed. The city said it was an administrative error that didn't affect firms' rankings, although the four companies that got the extra points were the same four that made the short list of bidders.It's a moot point now anyway, because even the winning bidder is out. The project has taken so long that the Rio Nuevo downtown redevelopment district, which secured legislative authority to collect an extra $500 million in sales taxes in 2006, has since committed all the money to other projects and doesn't have enough left to cover the higher bridge cost. So the city is trying to get the federal government to foot the bill.
But federal guidelines don't allow the bidding and procurement process used for the bridge, forcing the city to terminate its contract with Sundt Construction — paying it $57,000 in preconstruction costs — and rebid the project. And even though the new design will reduce the water backup caused by support pilings placed in the river bottom, there could still be some damming effect, forcing the city to undertake two lengthy federal permit processes to build the bridge. One permit is required from the Environmental Protection Agency and one from the Federal Emergency Management Agency.
If everything goes right, City Transportation Director Jim Glock said, construction could begin in late 2010 and be completed by early 2012. If the city misses that mark, it could impact the planned modern streetcar, which is supposed to access Rio Nuevo's museum district on the west side of the Santa Cruz via the bridge starting in 2012.
Four bridge designs
A team of designers led by AMEC Infrastructure Inc. began work in early 2007, shortly after the City Council approved $6 million for the bridge. The target date to complete the project was September 2009. But Mike Hein, then city manager, and Rio Nuevo officials rejected the group's first, basic design as "not elegant enough," Glock said. Hein and Rio Nuevo officials wanted a bridge with arches and trees to create "a grand boulevard from the Tucson Convention Center to Rio Nuevo West." The addition of the arches and the trees, and modifications required to support the extra weight, "drove the costs up exponentially," Glock said, from $6 million to $12 million — costs Rio Nuevo may have been able to cover at the time.
The killer problem, discovered further along in the design process, was that pilings large enough to support the extra weight of arches and trees could trap debris in a major storm and flood properties upstream all the way to West 22nd Street. The city would have needed flood walls on the Santa Cruz River, Glock said, which would have run the cost up to $16 million. As a result, the city designed the bridge again. But FEMA and the EPA still require federal permits because, although the new design reduces the potential for water backups, it doesn't eliminate the problem. That will delay the project for a least a year. Glock said the city will have a fourth design, to eliminate the trees and bring the construction cost under $10 million. He hopes to add no more than $600,000 to the already $1 million in design costs.
Hiring a builder
The city hired Sundt to build the bridge in mid-2008, using a process called "construction manager at risk," where builders are picked on qualifications without regard to cost. Eight builders competed. One, Hunter Contracting Co., warned there would be problems with flooding on the Santa Cruz, and the bridge's design would cause costs to explode. Hunter suggested a different design, but decision-makers graded it among the lowest of the eight bidders. In ranking them, Bill O'Malley, then Rio Nuevo construction manager, gave more points than allowed in the experience-and-qualifications category to four of the seven bidders who signed off on the city's design. O'Malley, who is no longer with the city, rated Hunter's proposal the lowest of the eight. He didn't answer questions about his ratings.
Matt Hausman, the city's principal contract officer, said the extra points were his administrative mistake, adding they did not affect the outcome. Todd Jackson, a project manager with Hunter at the time, said the city simply had its mind made up on the design. Jackson is no longer with Hunter and said his comments shouldn't be seen as coming from the company. Others involved in the bidding process refused to comment. Jackson said the city picked a firm to build its preferred design with no regard to price. And builders agreed to do what the city wanted to win the contract, he said. "We told them what the real issues were … to help them solve their problems," Jackson said. "They didn't want to hear it." The new bid procedure must include cost controls to qualify for federal funding.
More delays
Because it takes so long to get the permits required by the EPA and FEMA, city officials said everything will have to go right to finish in time for the streetcar in 2012. According to e-mails in the city's procurement files, Cushing Street Project Manager Mo El-Ali told the bridge designers he was "shocked and disappointed" about needing a FEMA permit because it "has tremendous schedule implications that can't be easily repaired." City Manager Mike Letcher, who was not in charge of Rio Nuevo during the initial bidding process, said the focus should now be on getting the bridge built on time for the streetcar in a manner that's "as cost-effective as possible." With Rio Nuevo stripped of its staff, Glock is now in charge of the project. Glock "understands the critical nature of getting this done in time for the streetcar. He's given me assurances it will be ready," Letcher said.
Cushing Street Bridge Timeline
• Dec. 2006: City Council approves $6 million for the Cushing Street Bridge as part of a larger spending package for the west side. Opening planned for September 2009.
• May 2007: The city hires AMEC Infrastructure Inc. to design the bridge.
• March 2008: City Manager Mike Hein and the Rio Nuevo office declare the first $6 million bridge design not elegant enough, causing it to be redesigned.
• April 2008: City unveils second design, with estimated cost of $12 million, complete with trees and arches. Says construction will begin within one year.
• July 2008: City learns new bridge design will cause upstream flooding on Santa Cruz River, triggering federal permitting process. City decides to move forward despite flooding, and costs escalate to $16 million.
• Oct. 2008: City approves contract with Sundt Construction to build the design with trees and arches.
• Jan. 2009: City puts the bridge on wish list for federal stimulus money twice, once for $12 million and once for a $16 million deluxe version.
• April 2009: City designs bridge a third time, but cannot totally eliminate flooding risk. Federal government still requires permits for effects on river.
• July 2009: Seeking federal money, the city terminates Sundt's contract because federal rules do not accept the city's procurement method. Bridge to be designed for a fourth time and construction contract rebid.
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