The following City of Phoenix response to ABC15's investivative report "ABC15 Investigation reveals how $7M sidewalk project cost taxpayers over $1M more than expected" was sent to ABC15 the afternoon of November 16, 2011 prior to the station's airing of the story.
DETAILED RESPONSE TO Media Inquiry About the Centennial Way Federal Aid – Transportation Enhancement Project
The media inquiry received about this project states, in part, that “The project was originally put out to bid with the intentions that it would cost less than $5M but today the price tag is over $7M.” That statement is incorrect and this report provides background information on the project in response to the statement.
The message fails to recognize that this project uses a non-traditional method called “Design-Build.” Due to the tight timeframe to deliver the project, the decision was made to use the Design-Build (DB) approach. Using DB one team is selected to do both the design and construction activities. The project is then expedited by overlapping the two major activities. For example, construction can begin on simpler, more straightforward elements while design of more complicated elements is completed. The traditional Design-Bid-Build approach would have required us to design the entire project 100%, then put it out to bid, and then construct it in a very linear process which would have extended past the Centennial celebration date.
This project was not “bid” as was suggested by the message. A “best value” approach which considers both qualifications and price was used to select the Design-Build team which is led by Achen-Gardner Construction. At the time of selection, the project had not been designed so the price competition was based on a listing of minimal required features like sidewalk improvements, pavement, accessible ramps, landscaping, and street lights. Achen Gardner provided a price proposal of $5M for those known elements which was used for their initial contract approved by Council on September 15, 2010.
As soon as they were under contract, the DB team immediately finalized the design of these simpler features and began construction activities. One early construction item was the planting of trees which didn’t require extensive design and needed to be done at the right time of the year. At the same time, the team also began a series of stakeholder meetings to gather input on the more complicated, signature elements of the project such as the 15 county displays and the 22 tribal monuments. After receiving that input, they then began the detailed design process for these additional features. Once the design was completed to the satisfaction of all stakeholders, a price was negotiated for construction of the remaining project features.
What was described in the message you received as a “change order” was actually the contract amendment to add $1.3M to Achen Gardner’s contract to provide these additional elements. The amendment was approved by Council on June 22, 2011, some 9 months after approval of the initial contract amount and after all of the project features were fully designed. This was a planned incremental increase in the work and not a mistake as was suggested. We had no idea what these features would look like at the time of the original contract. To try to price those features at that time would have been inefficient and irresponsible. By waiting until those elements were fully designed, we can ensure that the final project meets stakeholders’ expectations and represents the best return on the public’s investment in the project.
The message also suggests that there have been cost overruns on the project. That is not true. The project budget was set at $7.2M to cover all project costs, with approximately $6.8M from the Federal government and $409,000 from City funds. The $6.3M design and construction contract with Achen-Gardner is still within the total federal aid authorized budget. This project will also create 70 new high-paying jobs in the metropolitan Phoenix area where construction unemployment far exceeds the national average. See the attached report for more details on the funding for this project.
The project will provide upgrades to the street, the sidewalk, and other infrastructure components, as well as elements to commemorate the State’s Centennial on February 14, 2012. The approach that the City has taken in executing this project attempts to maximize the value of all of the elements provided while still meeting the firmly fixed deadline for completion of the project.
CENTENNIAL WAY TRANSPORTATION ENHANCEMENT PROJECT – FISCAL FACTS
The Centennial Way project (Washington Street from 7th Ave to 19th Ave) has received a total federal aid authorization of $7,184,635. This type of federal aid requires a 5.7% local agency match that equals a $409,424.20 contribution in City of Phoenix funds from Arizona Highway User Revenues (gas taxes). The result is a leveraging of $6,775,210.80 (94.3%) in federal aid transportation enhancement funds that has been specifically assigned to the Centennial Way project and can not be used for other projects or uses such as General Fund expenditures.
A breakdown of the total authorization budget amount is as follows:
$390,000 for project development, prelim engineering, and environmental clearances
$4,999,999 for the initial Design-Build contract (based upon less than 30% design plans)
$1,302,280 for a contract amendment to add project elements from stakeholder meetings
$492,356 for City project administration and construction inspection expenses
$7,184,635 Total project authorization budget
To date, this budget remains intact with no “cost overruns” having occurred. The listed contract amendment for $1,302,280 was an anticipated addition to the base project amount to include elements from the extensive stakeholder involvement process that was unidentified at the time of the base contract award. The amendment was executed approximately 8 months after the base contract award to allow time for the overall design to progress and to include stakeholder requested elements including additional curb & gutter replacement, pavement mill & overlay, enhanced crosswalks, LED pedestrian & street lighting, shade structure and wayfinding display upgrades, enhanced sidewalk treatments, tribal monuments, and upgraded audible pedestrian signals for crossing Washington Street.
Additionally, there has been some confusion regarding the merits of this project and the City’s involvement in this State of Arizona initiated project. The enhancement elements intended to create an improved approach to the State Capitol may not be appreciated by all; however, the benefits of the associated civil infrastructure improvements should not be discounted. Outside of the enhancement elements, the project will replace and widen degraded sidewalk, eliminate accessible barriers for persons with disabilities at all crosswalks, address minor drainage issues at intersections, renovate adjacent bus stops, provide new street lighting along the corridor, and install a new pavement surface and roadway striping within the project limits. These infrastructure items total over $2 million (excluding design and administrative costs that can exceed 40%) of direct investment into the Washington Street corridor that the City would have had to construct eventually. Finally, the quality of the infrastructure improvements will establish a corridor that will not require major maintenance for more than 10 years.
In conclusion, the total federal aid budget of $7,184,635 that was authorized for this project remains in tact with the construction phase proceeding on schedule. Due to the design-build delivery method that was used for this project, the construction will be completed in time for the State of Arizona’s centennial with no cost overruns or delay claims.