Discussion and possible action to award a contract amendment for an amount not to exceed $5,536,500 to Willmeng Construction (ACON14720) for a Guaranteed Maximum Price contract for construction of the Jomax Water Reclamation Facility Operations Building, located at the Jomax Water Reclamation Facility at Jomax Road and 126th Drive.

In April 2020, the City of Peoria administratively awarded the design and preconstruction services agreements for the design of a new wastewater plant operations building at the Jomax Water Reclamation Facility (WRF) in north Peoria. The 10,090 sf single story operations building replaces a temporary doublewide modular operations building that was constructed in 2004. Highlights of the new operations building design include; a public meeting room for community meetings and special interest classes, staff office environment for plant and field staff, a plant operations control room, a testing laboratory, and a plant equipment maintenance shop. Site improvements will include hard and soft public parking, security fencing, a desert showcase garden, water harvesting features, and improved site security. The project is pursuing gold level LEED certification.

In April 2021, staff requested the permission of the Mayor and Council to enter into a pre-award contract amendment to execute the relocation of utilities and the doublewide modular building. This pre-award was sought to enable a swift progression into the construction of the Jomax WRF Operations Building after the Mayor and Council’s approval of the final construction GMP in June 2021.

World and domestic supply chain events have foiled this plan and have presented an unprecedented challenge to the construction of the new operations building. The structural steel joists and steel decking materials necessary for the roof structure of the new building face supply chain lead times in excess of forty (40) weeks. These materials are typically needed within the first ten weeks of building construction. All domestic building projects with these steel components who are in the bidding phase are lining up to secure their manufacturing slots. Small projects are competing with larger projects, in particular a boom in new large warehouse/industrial construction.

The award of a contract amendment for the Guaranteed Maximum Price (GMP) construction contract establishes the cost guarantee between the City of Peoria and Willmeng Construction for the total construction cost. Immediately upon the award of the contract, time critical steel fabrication drawings will be prepared by the steel subcontractor. Upon technical verification by the structural engineer, the order for the building’s steel components will be solidified and a manufacturing slot obtained. Based on the current market demand, an award and approval of the steel components in June 2021 should solidify delivery of the steel in March 2022.

All other building subcontracts and building materials orders will be solidified starting in June 21.  The start of physical construction will be deferred until October 2021, timed relative to the forecasted steel delivery timeframe. The building is scheduled to be completed and occupied by Fall 2022.

While the domestic construction market has experienced prior spikes in product demand, the impacts have largely been cost related. Materials delays of this magnitude are unprecedented within recent decades. Developers, Owners, and Contractors are validating lead times across multiple suppliers, are consulting economic forecasts and the volume of work in the development pipeline, and are arriving at the conclusion that adjusting construction schedules in response to the delay is more advantageous than deferring the project. Market projections forecast robust construction cost escalation in the coming year at above five percent (5%+).

Total project expenditures for the construction phase of the project, including the authorization of city-paid project expenses are as follows:

The design and preconstruction agreements were awarded administratively in April 2020.

An authorization to enter into a pre-award contract amendment for the relocation of utilities and a modular building was approved by the Mayor and Council in April 2021. Due to the change in market conditions, no further action was taken by staff on this authorization.

Staff recommends that Council award of a contract amendment to Willmeng Construction for an amount not to exceed $5,536,500 for a GMP contract for the construction of the Jomax WRF Operations Building.

Funding for this award and city paid expenditures is available in the following funds within the approved FY 2021 and FY 2022 CIP: