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2012-031-1626- Construction Contract Addendum with Skanska USA Building Inc 1515 NW 167 Street, Building 5 Suite 200 Miami Gardens, Florida 33169 City of Miami Gardens Agenda Cover Memo Council Meeting Date: February 8, 2012 Item Type: (Enter X in box) Resolution Ordinance Other x Fiscal Impact: (Enter X in box) Yes No Ordinance Reading: (Enter X in box) 1st Reading 2nd Reading X Public Hearing: (Enter X in box) Yes No Yes No Funding Source: N/A Advertising Requirement: (Enter X in box) Yes No Contract/P.O. Required: (Enter X in box) Yes No RFP/RFQ/Bid #: Amendment City Hall Sponsor Name Danny Crew, City Manager Department: City Manager Short Title: A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF MIAMI GARDENS, FLORIDA, AUTHORIZING THE CITY MANAGER AND CITY CLERK TO EXECUTE AND ATTEST, RESPECTIVELY THAT CERTAIN ADDENDUM TO THE CONSTRUCTION CONTRACT BETWEEN THE CITY OF MIAMI GARDENS AND SKANSKA USA BUILDING, INC., ATTACHED HERETO AS EXHIBIT “A”; PROVIDING FOR INSTRUCTIONS TO THE CITY CLERK; PROVIDING FOR THE ADOPTION OF REPRESENTATIONS; PROVIDING FOR AN EFFECTIVE DATE. Staff Summary: In November, City Council awarded a Contract to Skanska USA Building, Inc., for construction of the City’s new City Hall Complex. The award included an award for the earthwork (Guaranteed Maximum Price #1 or GMP #1), and a provision for the awarding of a GMP #2 for the main buildings and related work. Since that date, Skanska has commenced GMP #1 activities, while Skanska and the City have been meeting on the award of GMP #2. These talks/negotiations are on-going. As part of the process, the parties discovered there are some minor changes that should be made to the basic Contract. Some are for clarification and some are being made at the request of City staff for purposes of cost savings. These changes are as follows: ITEM K-17) CONSENT AGENDA RESOLUTION New City Hall Contract 1515 NW 167 Street, Building 5 Suite 200 Miami Gardens, Florida 33169 1. The current contract provides for unlimited liquidated damages from delay by the contractor. Damages for late completion amount to $3,000 per day. Currently, damages are to be paid from Skanska’s profit line-item up to the maximum in that line-item ($900,000). After that, Skanska would have an umbrella insurance policy to cover any additional damages. The cost of this insurance policy is almost $250,000, which will be charged to the City as part of their GMP. By capping the damages at $900,000, Skanska (and thus the City), will save the $250,000. Thus lowering the GMP price. The current $900,000 amount represents almost a year’s delay. This amount should be sufficient, considering that unlimited damages are costly and unnecessary. 2. The current Contract provides for an early completion bonus for the contractor. Because of delays experienced to date, it is clear that the City will not make the original move-in date. Because of this, City staff believes that the approved early completion bonus is not in the City’s best interest. City staff proposed, and Skanska has agreed, to revert to an earlier version of an early completion bonus that matches early completion bonuses with late fees. Completing early is still important; however, this change will equalize the incentive monetarily and will serve the City better. 3. The original bid called for the contract to include a “Project Contingency.” This is a sum of unallocated money to be used to cover certain changes in costs as the construction proceeds. The language in the existing Contract should be clarified as to just how the contingency works. The revision does this by tying the use of the contingency to the plans and specifications and giving the City review and approval right on requests from the contractor to use these funds. Any funds left in this account at project end are split by the City and Contractor on a 75%/25% basis, which is not a change from the existing Contract. 4. The final item is a housekeeping item. The City’s RFQ called for a minimum of $1,000,000 in liability insurance. Skanska has provided a policy with $2,000,000, twice our requirement. This change will acknowledge the additional protection as a contractual requirement. Recommendation: That City Council approves the attached resolution. Attachment: Addendum