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Council hears plan to add contingency allowances to water-construction contracts to reduce delays
Summary
Water Resources staff proposed adding owner's contingency and specific allowances (2–5% typical) to construction contracts to handle unforeseen conditions and avoid costly project delays; council and the public-works committee urged a phased rollout and a follow-up report.
Will Huggins, Water Resources engineer, presented a proposal to incorporate two types of allowances into Water Resources construction contracts: (1) owner's contingency allowances to address known unknowns and unforeseen conditions and (2) specific allowances for items such as building permit fees, startup chemicals and equipment that are not fully specified at bid. Huggins proposed a typical owner's contingency range of 2–5% (no more than 5% of the engineer's opinion of probable construction cost) and provided examples in which an allowance could avoid an $80,000 change order and days of delay on a project.
Huggins explained the process would include disclosing planned allowances during the bid approval process, delegating authority to the EPWA director to approve allowance spending as items arise, quarterly reporting of allowance logs to the Public Works Committee and EPWA, and returning unused allowance funds to EPWA at project closeout.
Council members and committee participants praised the idea as a standard risk-management practice that could prevent minor changes from stalling major projects. One councilor asked for a follow-up report to Public Works 60–90 days after rollout to ensure the process is operating as intended.
Outcome: Council treated the item as discussion and consideration (no vote required at this meeting) and asked staff to proceed with committee-level follow-up and to return with an implementation status report within roughly two to three months.
