City Manager Matthews' project update focused on the most recent financial report, a copy of which was distributed to the City Council at the February 27th meeting. The City Manager highlighted certain aspects of the financial report in her remarks. (Financial Report attached.)
Project revenues were decreased by $12,000. The prior report assumed proceeds in the amount of $400,000 from the sale of two City-owned properties located on Piney Branch Road. On February 21, 2006, the City Council authorized the sale of these properties for a combined sale price of $388,000.
City Manager Matthews advised the City Council that the execution of Change Order No. 25 increased the value of the contract between the City and James F. Knott Construction Company by $46,778. The various Proposed Change Orders (PCOs) included in Change Order No. 25 had a value of $205,535 as submitted by the contractor. Estimated future expenditures reflect the balance not yet paid on James F. Knott Construction's contract, less the amount of liquidated damages payable as of October 23, 2005. The City Manager noted that the amount of liquidated damages ultimately withheld may vary from this amount, as the architect’s issuance of the Certificate of Substantial Completion is pending. Additionally, the contractor has requested an extension of the contract completion date.
Future expenditures include $200,000 to be paid to Lawrence Abell & Associates, the project architect. As of the date of the financial report, the firm had billed the City for work performed through December 2005; the City has formally expressed its concern to Lawrence Abell & Associates about the timeliness of its billings. The City has requested that the firm submit additional information to substantiate certain previously submitted charges.
Due to the expected duration of the Phase Two construction, the salary and benefit costs of the City of Takoma Park’s project manager have been increased to reflect 11 months of activity in the fiscal years. The prior report reflected nine months of salary and benefit costs.
Cith Manager Matthews noted a new cost reflected in the financial report. As the City Council had been previously apprised, James F. Knott Construction filed a request for mediation of certain PCOs. The parties have reached agreement on a mediator. No date has been set for the mediation session. The projected cost of the mediation process is $15,000.
The PCO log provided as part of the financial report reflects all items submitted by the contractor as of the date of this report. The remaining items total $341,243 based on the values submitted by the contractor. The City’s analysis of the remaining PCOs reflects a significant difference between the amount submitted by James F. Knott Construction Company ($341,243) and the amount deemed reasonable by the City’s representatives. This financial report shows this amount as a potential add-back of $273,519. The final amount at which the remaining PCOs are resolved will depend on the outcome of continued negotiations between the parties.
City Manager Matthews commented that the significant value of the PCOs that remain unresolved makes it difficult to determine the ultimate financial status of the project. Assuming all outstanding PCOs are resolved at the amounts stemming from the City’s analysis, an additional $236,349 would need to be appropriated from the General Fund for the project. The increase in this figure from the prior financial report is primarily attributable to the projected cost of mediation, design and contract administration fees, and salary and benefit costs for the City’s project manager.