Discussion:
The city's Capital Improvement Plan (CIP) contains the 2019 Trail Rehabilitation Project CIF19-001 and 2019 Trail Reconstruction Project PA-19-01. On May 7, 2019, the City Council adopted Resolution R2019-054 approving the plans and specifications, and authorizing bidding of the project.
In accordance with Minnesota Statute Section 471.347 Uniform Municipal Contracting Law, bids were solicited and opened on May 30, 2019. Three bids were received. During tabulation of the bids, it was discovered that Northwest Asphalt Inc, had a summation error on their bid proposal form. After further review, Northwest Asphalt, Inc., from Shakopee, Minnesota, has been confirmed as the low bidder in the amount of $169,385.98 (see the attached resolution for the bid tabulation summary).
Based on the low bid, the updated total estimated project cost is as follows:
Construction Cost $ 169,385.98
Contingency (~5%) $ 8,500.00
Subtotal $ 177,885.98
Eng/Admin/Legal $ 15,500.00
Total Estimated Project Cost $ 193,385.98
The updated project cost of $193,385.98 exceeds the $145,000.00 CIP budget by 33.4 percent. The high bids are due to higher than anticipated construction costs, most notably related to increased bituminous asphalt and concrete work costs. It should also be noted that this project was bid a little later than usual and many contractors' schedules are already full, increasing the labor costs to deliver the project.
Based on the higher than expected bids, staff recommends to reject all bids at this time. The budget will then be carried over to next year and the reconstruction of the trails will programmed with next year's trail project. It is expected that next year's trail project will then be bid out earlier in the spring with the goal of obtaining lower bids.
Also, by combining projects and doubling the size of the project in 2020, it is likely that we could also experience a reduction in project cost due to economies of scale with having a larger project.