05-09-2022 Council Packet - Laserfiche WebLink

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Mr. Adam Edwards, As you know, we experienced a high level of interest from bidders on this project. The QuestCDN plan holders list included (13) Prime Bidders and the project received (7) bids on bid day. The bid spread was relatively tight at $1,448,000. More importantly, the bottom two bidders were within $330,000 (1.8%) of each other. This bid spread, coupled with the total number of bids received, is a strong indicator that the low bidder was competitive, and that the true marketplace value was around $18,500,000 +/-. The construction industry is in a very unpredictable place right now. Both from a pricing and material availability standpoint. In discussions with various general contractors, the sub-contractor coverage on this project was good with a few exceptions. One notable example was the bid for the electrical scope. The general contractors were only able to secure 2-3 electrical contractor bids. I would expect this number to be in the 6-8 range, similar to the number of mechanical contractors who provided bids. The reasoning given by the electrical contractors for not bidding was a high volume of work, including several large infrastructure projects. Overall, the high impact bid numbers were as expected: Precast Concrete, Concrete/Masonry, Mechanical, Electrical, and Site Work. The apparent low base bid for your project has been identified as Rochon Corporation. Their base bid was $18,447,000. With the deduct alternates, the total is $18,382,000. Rochon has 85+ years of experience, 30-40 full-time employees, and approximate annual sales of $100 million. They are located in Osseo, MN. The contractor has provided us with their Responsible Contractor form per Minnesota Statute 16C.285, subdivision 3. Oertel Architects has completed several similar projects with Rochon, ranging in size and scope, over the last several years. The project is significantly over the City’s budget and available bonding money. My preliminary thoughts on moving forward include the following: 1. Delay the project The current marketplace is feeling the deep effects of worldwide inflation. Several larger construction firms have released data that indicate construction costs have risen by as much as 35% over the last 12 months. Inevitably, some of these costs will stabilize while others will continue to increase. In general, the predictive metrics point to costs not dipping significantly over the scope of a typical construction project. If the City chooses to re-bid the project, I would anticipate a slight increase in cost over the next 8-12 months followed by a more typical 4%-5% annual escalation factor in subsequent years. The delay and re-bid would allow the City to identify potential funding sources and to plan for the increased expenditure as part of the overall City budget. DATE: Wednesday, April 27, 2022 To: Adam Edwards, P.E., City Administrator/City Engineer City of Orono RE: Public Works Facility Bids Attachments: None