TIC 2019-05-07 Item 2D - Change Order #4 - 42nd Avenue South Phase III / Gilliam Creek Culvert Replacement with Active Construction

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40th - 42nd Avenue South Phase III Project Contract Change Order No. 4 EXHIBIT A DESCRIPTION OF WORK Change Order (CO) #3 for the 40th — 42nd Avenue South Phase 3 Project, which was a compromise between the City and the construction contractor (ACI) on resolving all the outstanding construction disputes through May 20, 2018, was executed on July 17, 2018. However, three months after the execution of CO #3, ACI started to alert the City that the cost increase from CO #3 would be insufficient to pay for all the remaining contract works. As a result, the City requested ACI to provide justifications for the cost increase beyond the new contract amount from CO #3. After reviewing ACT's provided cost increase justifications, the City contended that ACI was partially responsible for causing the additional cost increase. ACI disagreed with the City's contention. After months of further monitoring of the actual project cost increase, and negotiations between City project staff and ACI, another compromise has been reached between the parties. This new compromise is herein documented in this CO #4. In this CO #4, the City and ACI have mutually agreed to work collaboratively to physically complete the project within 6 weeks after the utility conversion works were completed by all utility companies. The City also agrees to a reduction of the 14% markup rate (previously generated from CO #3) to 12.5%, of the actual overall cost of construction. The 12.5% markup is to compensate ACI's general and administrative overhead cost, and profit. The actual overall cost of this 40th — 42nd Avenue South Phase 3 Project refers to all the direct expenditures spent by ACI on this particular construction project, includes the mobilization/field overhead cost, but excludes the indirect overhead cost. However, for costs incurred after the date of this CO #4, if the expenditure was caused by ACI's own negligence, such expenditure will not be counted as part of the actual project costs to be paid by the City, and ACI will remain fully responsible for such expenditures. As for all the subcontracts among ACI and its subcontractors, this CO #4 will not apply to any subcontracts executed prior to the execution of CO #3, and all the corresponding Bid Items paying for these subcontracts. The City will just continue to pay for these subcontract costs and with the new 12.5% markup. As a result, the existing payment mechanism among ACI and it's current subcontractors will continue to be preserved. After the execution of CO #4, all new subcontracts among ACI and it's future subcontractors will be subjected to the new 12.5% mark-up as the subcontractors' direct costs. ACT's actual cost for this 40th — 42nd Avenue South Phase 3 Project will continue to be subject to a detailed review monthly before the issuance of the monthly pay estimate for such work, and before the issuance of the final payment by the City. At the option of the City, the actual cost reviews and verifications may continue to be conducted by a Certified Public Accountant or other City of Tukwila designated representatives. The current projected total cost for ACI to complete this 40th — 42nd Avenue South Phase 3 Project is $9,773,008.01, per the enclosed projected cost breakdown provided by ACI. Adding 12.5% to the projected cost of $9,773,008.01, it would result in $10,994,634.01 as the cost. Both the City and ACI agree that after the execution of this CO #4, the City's construction management team will continue to have the option of determining the means and methods of ACI in constructing this project. The execution of this CO #4 supercedes the previous COs #1 and #2 on the payment and bid item parts, but the scope issues and Contract time increase will remain in effect. This CO #4 also supercedes CO #3 on all applicable and conflicting Contract terms and conditions. Both the City and ACI agree that mutual execution of this CO #4 continues to resolve any and all outstanding disputes between the parties relating to the Project, including any claims for prior delays, and ACI and the City hereby release each other from any such claims. Both the City and ACI agree not to pursue legal action against each others if both parties strictly abide by the terms of this CO #4. The parties agree to continue to discuss and negotiate when necessary, in order to resolve any additional Contract disputes that arise after the execution of this CO #4. Page 2 of 3 33