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Agency Takes Action to Further Reduce Water Supply Project Cost

DAVIS, CA – The Woodland-Davis Clean Water Agency (Agency) took several important actions to further reduce surface water project costs, living up to its commitment to soften the associated rate impacts to water utility consumers in Woodland and Davis.

Earlier today, the Agency’s Board adopted an amendment to its request for proposals for a Design-Build-Operate (DBO) contractor. The DBO process, already determined to be the least-costly means to implement the project, will result in a single contractor that will design and build the water treatment plant and pipelines, and then operate the facility for a fixed price for a specified number of years, currently set at 15.

Generally speaking, the amendment modifies some of the terms and technical aspects of the proposal request document. Most significantly, it includes: 1) a 10 percent reduction in the maximum project cost; 2) a requirement that competitive bidding be used for the selection of construction subcontractors and equipment, which is expected to account for 70 percent of all work; and 3) a requirement that the contractor allow for “open book” reviews by the Agency of profit and overhead margins for the 30 percent of the work the contractor will perform directly.

“With this amendment, we’ve set a very aggressive maximum price by driving down the cost of these project elements to $151.5 million. That’s a 20 percent decrease from original engineering estimates,” said Bill Marble, Chair of the Agency and a member of the Woodland City Council. “This will directly translate into costs savings and lessen pressure on rates over the long run.”

Under the amended request for proposals, proposers will be deemed responsive if they can, among other things: demonstrate an ability to meet or beat the Agency’s maximum project cost; outline a plan for the competitive subcontracting of approximately 70 percent of construction work, which is expected to include materials and the construction of the pipelines and water treatment facility; and specify a process for an “open book” review of costs for the roughly 30 percent of the work they will perform directly, such as project design.

“Today’s actions continued the Agency’s work to fiercely protect ratepayers’ financial interests by lowering project costs,” said Joe Krovoza, Vice-Chair of the Agency and Mayor of Davis. “In addition, we’ll satisfy our requirements for absolute transparency and better ensure the contractor’s pricing is competitive and comparable to industry norms.”

According to the Agency’s General Manager Dennis Diemer, the total costs for the water treatment facility, pipelines and the Agency’s share of the intake facility is now $234.75 million in 2013 dollars, which is down from the 2012 estimate of $245 million. On other fronts, the Agency continues to pursue state and federal assistance in the form of grants and low-interest loans, again with a goal of reducing the costs for water utility ratepayers. Word on the status of an application for the State Revolving Fund program, which provides very low-interest loans to municipal agencies, is expected within the next few weeks.

For more information, please contact WDCWA General Manager Dennis Diemer at (530) 747-8299.