City, contractor agree to delays, increases in water project costs
Agreement avoids lawsuit over extended timeline for completing the Lake Oswego-Tigard Partnership's water treatment plant
Lake Oswego has issued a change order and thereby avoided a potential lawsuit to its agreement with the general contractor for the Lake Oswego-Tigard Water Partnership project.
The City Council unanimously agreed to the change order with Slayden Construction Group Inc. in late July, after significant delays stretched the timeline for completion of the projects expanded water treatment plant.
What caused the delays?
Thats not an easy question to answer, Lake Oswego-Tigard Water Partnership Project Director Joel Komarek told The Review this week. It depends on whether youre the contractor or the owner. Everybody had a role to play in that to some degree.
We all recognize that trying to prove one party had more responsibility than the other party was going to be difficult and expensive, Komarek added. We had some delays in getting equipment purchased, the contractor was a little slow getting started early in the project. We all recognized that in our best efforts to do the right thing, sometimes things didnt turn out quite right.
Mayor Kent Studebaker presented the idea of a change order to the Lake Oswego City Council during the last session before its August recess.
Weve talked with the contractor and looked at our situation as well, he said. Based on the advice of legal counsel, we think a settlement would result in the least cost to our rate payers, and it would avoid an uncertain outcome in cost associated with litigation.
It would also avoid the distraction and costs of building a legal defense at a critical time in the construction schedule, Studebaker added, and it would satisfy our contractual requirement to deliver Tigard water by July 1, 2016.
The city of Tigard was asked to formally consider the change order July 21, and officials there agreed to give Lake Oswego the go-ahead.
In response, City Manager Scott Lazenby negotiated an amendment to the contract, which recognized that due to delays on the project, the contractor would continue to incur additional costs for work on the water treatment plant, which is located at 4260 Kenthorpe Way in West Linn. Fourteen previous change orders resulted in additional payments totaling nearly $897,000 to cover overtime and additional supervision costs, as well as additional equipment and weather protection expenses.
That brings the price of the contract with Slayden Construction to nearly $67 million.
The latest change order allows for a significant change in project deadlines as well. The deadline for Milestone B the phase which doubles the treatment and pumping capacity at the plant to 32 million gallons per day in order to provide a sufficient water supply to Tigard was moved from Oct. 18, 2015 to April 22, 2016. Milestone C establishes the ozonation process a new treatment process we dont currently have, Komarek explained. Under the amended agreement, the deadline for that phase is adjusted from April 15, 2016 to March 13, 2017.
Ozonation improves the taste and can be used to reduce tastes and odors that frequently occur in the late summer when algae blooms in the water supply create kind of a musty, earthy taste or odor in the water, Komarek said.
The date of final completion was moved from June 4, 2016 to April 7, 2017.
The contract durations were extended to account for the delay, and in exchange, the contractor agreed that if it did not meet the new contract deadlines, the city could impose increased liquidated damages, Komarek said.
During the phase leading up to Milestone B, those liquidated damages are estimated to be about $15,000 a day, according to the change order.
Among other things, this settlement will provide for wavering release of all claims by SCG Inc. for additional compensation, schedule delays and any other potential claim for work performed to date, City Attorney David Powell told the City Council. It provides for waiver and release of the citys liquidated damage provisions for failure to meet the original contract schedule.
There was no threat of a lawsuit, Komarek said, although that could potentially have been the next step in the process had we not mutually agreed to execute this change order. The contractor at our request was informally telling us what they thought their costs would be for the delay.
This is not the first time Slayden had considered turning to the courts for relief from unforeseen expenses on infrastructure projects. The group, along with Sundt Construction Inc., is also the general contractor on the Sellwood Bridge replacement project. In January, Slayden and Sundt sued Multnomah County for more than $1.54 million, alleging breach of contract. The two contractors claimed the county failed to pay for additional work necessitated by differing site conditions.
With the signing of the change order on July 22, Lake Oswego and Tigard have avoided such an impasse.
The good news is, despite the challenges of this project and the added cost of the delay, the project still remains on budget, Studebaker told the council.