Contract - Brown & Caldwell - 2010-09-08 •
• AGREEMENT FOR CONSULTANT SERVICES
Asset Management
THIS AGREEMENT is made and effective as of 5 , 2010, between the
Costa Mesa Sanitary District, a sanitary district (°Distric ") and Brown and Caldwell, a
California corporation (°Consultant"). In consideration of the mutual covenants and
conditions set forth herein, the parties agree as follows:
1. TERM
This Agreement shall commence on J, '../,c,,,13 , 2010, and shall remain and
continue in effect until tasks described herein are completed, but in no event later than
, 2010, unless sooner terminated pursuant to the provisions of
this Agreement.
2. SERVICES
Consultant shall perform the tasks described and set forth in Exhibit "A",
attached hereto and incorporated herein as though set forth in full. Consultant shall
complete the tasks according to the schedule of performance which is also set forth in
Exhibit "A".
3. PERFORMANCE
Consultant shall at all times faithfully, competently and to the best of his/her/its
ability, experience, and talent perform all tasks described herein. Consultant shall
employ, at a minimum, generally accepted engineering standards and practices utilized .
by persons engaged in providing similar services as are required of Consultant
hereunder in meeting its obligations under this Agreement.
4. DISTRICT MANAGEMENT
District's General Manager shall represent District in all matters pertaining to the
administration of this Agreement, review and approval of all products submitted by
Consultant, but not including the authority to enlarge the Tasks to be Performed or
change the compensation due to Consultant. The General Manager shall be authorized
to act on District's behalf and to execute all necessary documents which enlarge the
Tasks to be Performed or change Consultant's compensation, subject to Section 5
hereof.
5. PAYMENT
(a) The District agrees to pay Consultant forty thousand nine hundred thirty eight
dollars ($40,938) for services rendered in accordance with this Agreement. This
amount shall not exceed the total sum during term of the Agreement unless additional
payment is approved as provided in this Agreement.
(b) Consultant shall not be compensated for any services rendered in connection
with its performance of this Agreement which are in addition to those set forth herein,
unless such additional services are authorized in advance and in writing by the General
Manager. Consultant shall be compensated for any additional services in the amounts
and in the manner as agreed to by the General Manager and Consultant at the time
District's written authorization is given to Consultant for the performance of said
services. The General Manager may approve additional work not to exceed ten percent
(10%) of the total contract sum. Any additional work in excess of this amount shall be
approved by the Board of Directors.
(c) Consultant shall be paid monthly for properly performed services rendered by
Consultant the previous month . Payment shall be made within 30 days thereafter.
6. SUSPENSION OR TERMINATION OF AGREEMENT WITHOUT CAUSE
(a) The District may at any time, for any reason, with or without cause, suspend
or terminate this Agreement, or any portion hereof, by serving upon the Consultant at
least ten (10) days prior written notice. Upon receipt of said notice, the consultant shall
immediately cease all work under this Agreement, unless the notice provides otherwise.
If the District suspends or terminates a portion of this Agreement such suspension or
termination shall not make void or invalidate the remainder of this Agreement.
(b) In the event this Agreement is terminated pursuant to this Section, the District
shall pay to Consultant the actual value of the work performed up to the time of
termination, provided that the work performed is of value to the District. Upon
termination of the Agreement pursuant to this Section, the Consultant will submit an
invoice to the District pursuant to Section 5.
7. DEFAULT OF CONSULTANT
(a) The Consultant's failure to comply with the provisions of this Agreement shall
constitute a default. In the event that Consultant is in default for cause under the terms
of this Agreement, District shall have no obligation or duty to continue compensating
Consultant for any work performed after the date of default and can terminate this
Agreement immediately by written notice to the Consultant. If such failure by the
Consultant to make progress in the performance of work hereunder arises out of causes
beyond the Consultant's control, and without fault or negligence of the Consultant, it
shall not be considered a default.
(b) If the General Manager determines that the Consultant is in default in the
performance of any of the terms or conditions of this Agreement, he/she shall cause to
be served upon the Consultant a written notice of the default. The Consultant shall have
ten (10) days after service upon it of said notice in which to cure the default by
rendering a satisfactory performance. In the event that the Consultant fails to cure its
default within such period of time, the District shall have the right, notwithstanding any
other provision of this Agreement, to terminate this Agreement without further notice
and without prejudice to any other remedy to which it may be entitled at law, in equity or
under this Agreement.
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8. OWNERSHIP OF DOCUMENTS
Upon completion of this Agreement and after payment in full to Consultant, a
Replacement Planning Model:populated with District data and all other documents
prepared in the course of providing the services to be performed pursuant to this
Agreement shall become the sole property of the Districtand may be used or reused by
the District without the permission of the Consultant, except as otherwise provided
herein. The Replacement Planning.Model is and shall remain the property of
Consultant, and all rights belonging to Consultant are hereby reserved. District shall
have a perpetual, nonexclusive royalty-free license to use the Replacement Planhing
Model provided by Consultant under this Agreement, but District shall not disclose,
distribute or sublicense the Replacement Planning Model or any portion thereof to any
third party. Upon District's acceptance of the Replacement Planning Model, Consultant
has no further obligation to modify the Replacement Planning Model, correct any errors
in data or operation once accepted, nor to update the model for future system changes
without additional compensation.
9. DISCLAIMER
TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, CONSULTANT
DISCLAIMS ALL WARRANTIES, EXPRESS OR IMPLIED, INCLUDING UBT NOT
LIMITED TO THE IMPUED WARRANTIES OF MERCHANTABILITY AND FITNESS
FOR A PARTICULAR PURPOSE , WITH RESPECT TO THE REPLACEMENT
PLANNING MODEL. UNDER NO CIRCUMSTANCES SHALL CONSULTANT BE
LIABLE FOR ANY INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES OF
ANY KIND (INCLUIDNG, BUT NOT LIMITED TO, DAMAGES FOR LOSS OF
BUSINESS PROFITS, BUSINESS INTERRUPTION, LOSS OF INFORMATION OR
OTHER MONETARY LOSS) ARISING IN ANY WAY IN CONNECTION WITH USE OR
INABILITY TO USE THE REPLACEMENT PLANNING MODEL.
10. INDEMNIFICATION
(a) Indemnification for Professional Liability. When the law establishes a
professional standard of care for Consultant's Services, to the fullest extent permitted
by law, Consultant shall indemnify, protect, defend and hold harmless District and any
and all of its officials, employees and agents (indemnified Parties°) from and against
any and all losses, liabilities, damages, costs and expenses, including reasonable
attorney's fees and costs to the extent same are caused in whole or in part by any
negligent or wrongful act, error. or omission of Consultant, its 'officers, agents,
employees or subconsultants (or any entity or individual that Consultant shall bear the
legal liability thereof) in the performance of professional services under this Agreement.
Regardless of any other term of this Agreement, in no event shall either party be
responsible or liable to the other for any incidental, consequential, or other indirect
damages.
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(b) Indemnification for Other Than Professional Liability. Other than in the
performance of professional services and to the full extent permitted by law, Consultant
shall indemnify, defend and hold harmless District, and any and all of its employees,
officials and agents from and against any liability (including liability for claims, suits,
actions, arbitration proceedings, administrative proceedings, regulatory proceedings,
loses, expenses or costs of any kind, whether actual, alleged or threatened, including
attorneys fees and costs, court costs, interest, defense costs and expert witness fees),
where the same arise out of, are a consequence of, or are in any way attributable to, in
whole or in part, the performance of this Agreement by Consultant or by any individual
or entity for which Consultant is legally liable, including but not limited to officers,
agents, employees or subconsultants of Consultant.
(c) General Indemnification Provisions. Consultant agrees to obtain executed
indemnity agreements with provisions identical to those set forth here in this section
from each and every subconsultant or any other person or entity involved by, for, with or
on behalf of Consultant in the performance of this Agreement. In the event Consultant
fails to obtain such indemnity obligations from others as required here, Consultant
agrees to be fully responsible according to the terms of this section. Failure of District to
monitor compliance with these requirements imposes no additional obligations on
District and will in no way act as a waiver of any rights hereunder. This obligation to
indemnify and defend District as set forth here is binding on the successors, assigns or
heirs of Consultant and shall survive the termination of this Agreement or this section.
11. INSURANCE
Consultant shall maintain prior to the beginning of and for the duration of this
Agreement insurance coverage of at least One Million Dollars ($1,000,000.00) for
commercial general liability, and any automotive coverage. Applicants shall also provide
proof of workers compensation coverage. The commercial general liability coverage shall
name the District and its officers, agents and employees as additional insureds and District
reserve the right to require an endorsement naming District as an additional insured. Such
coverage must provide that it is not to be cancelled except upon thirty (30) days notice to '
District. District also reserves the right to require that the insurance company providing the
commercial general liability policy has a Best Key Guide rating of at least A-:VII and is an
admitted carrier in the State of California.
12. INDEPENDENT CONSULTANT
(a) Consultant is and shall at all times remain as to the District a wholly
independent Consultant. The personnel performing the services under this Agreement
on behalf of Consultant shall at all times be under Consultant's exclusive direction and
control. Neither District nor any of its officers, employees, or agents shall have control
over the conduct of Consultant or any of Consultant's officers, employees, or agents,
except as set forth in this Agreement. Consultant shall not at any time or in any manner
represent that it or any of its officers, employees, or agents are in any manner officers,
employees, or agents of the District. Consultant shall not incur or have the power to
incur any debt, obligation, or liability whatever against District, or bind District in any
manner.
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(b) No employee benefits shall be available to Consultant in connection with the
performance of this Agreement. Except for the fees paid to Consultant as provided in
the . Agreement, District shall not pay salaries, wages, or other compensation to
Consultant for performing services hereunder for District. District shall not be liable for
compensation or indemnification to Consultant for injury or sickness arising out of
performing services hereunder.
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13. LEGAL RESPONSIBILITIES
The Consultant shall keep itself informed of State and Federal laws and
regulations which in any manner affect those employed by it or in any way affect the
performance of its service pursuant to this Agreement. The Consultant shall at all times
observe and comply with all such laws and regulations. The District, and its officers and
employees, shall not be liable at law or in equity occasioned by failure of the Consultant
to comply with this Section.
14. UNDUE INFLUENCE
Consultant declares and warrants that no undue influence or pressure is used
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against or in concert with any officer or employee of the Costa Mesa Sanitary District in
• connection with the award, terms or implementation of this Agreement, including any
method of coercion, confidential financial arrangement or financial inducement. No
officer or employee of the Costa Mesa Sanitary District will receive compensation,
directly or indirectly, from Consultant, or from any officer, employee or agent of
Consultant, in connection with the award of this Agreement or any work to be conducted
as a result of this Agreement. Violation of this Section shall be a material breach of this
Agreement entitling the District to any and all remedies at law or in equity.
15. NO BENEFIT TO ARISE TO LOCAL EMPLOYEES
• No member, officer, or employee of District, or their designees or agents, and no
public official who exercises authority over or responsibilities with respect to the Project
during his/her tenure or for one year thereafter, shall have any interest, direct or indirect,
in any agreement or sub-agreement, or the proceed thereof, for work to be performed in
connection with the Project performed under this Agreement.
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16. RELEASE OF INFORMATION/CONFLICTS OF INTEREST
(a) All information gained by Consultant in performance of this Agreement shall consider
confidential and shall not be released by Consultant without District's prior written
authorization. Consultant, its officers, employees, agents or subconsultants, shall not
without written authorization from the District Manager or unless requested by the
District Counsel, voluntarily provide declarations, letters of support, testimony at
depositions, response to interrogatories, or other information concerning the work
performed under this Agreement or relating to any project or property located within the
. District. Response to a subpoena or court order shall not be considered "voluntary"
provided Consultant gives District notice of such court order or subpoena.
Notwithstanding the foregoing, Consultant shall have no confidentiality obligation with
respect to information that:
1) becomes generally available to the public other than as a result of disclosure
by Consultant or its agents or employees;
2) was available to Consultant on a non-confidential basis prior to its disclosure
by Client;
3) becomes available to Consultant from a third party who is not, to the
knowledge of Consultant, bound to retain such information in confidence.
(b) Consultant shall promptly notify District should Consultant, its officers,
employees, agents or subconsultants be served with any summons, complaint,
subpoena, notice of deposition, request for documents, interrogatories, requests for
admissions, or other discovery request, court order, or subpoena from any person or
party regarding this Agreement and the work performed thereunder or with respect to
any project or property located within the District. District retains the right, but has no
obligation, to represent Consultant and/or be present at any deposition, hearing, or
. similar proceeding. Consultant agrees to cooperate fully with District and to provide the
opportunity to review any response to discovery requests provided by Consultant.
However, District's right to review any such response does not imply or mean the right
by District to control, direct, or rewrite said response.
17. NOTICES
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Any notices which either party may desire to give to the other party under this
Agreement must be in writing and may be given either by (i) personal service, (ii)
delivery by a reputable document delivery service, such as but not limited to, Federal
Express, which provides a receipt showing date and time of delivery, or (iii) mailing in
the United States Mail, certified mail, postage prepaid, return receipt requested,
addressed to the address of the party as set forth below or at any other address as that
party may later designate by notice:
To District: Costa Mesa Sanitary District
628 West 19th St
Costa Mesa, CA 92627
Attn: District Clerk
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To Consultant: Brown and Caldwell
400 Exchange, Suite 100
Irvine, CA 92602
Attn: Ken Harlow
18. ASSIGNMENT
The Consultant shall not assign the performance of this Agreement, nor any part
. thereof, nor any monies due hereunder, without prior written consent of the District. .
Because of the personal nature of the services to be rendered pursuant to this
Agreement, only Ken Harlow shall perform the services described in this Agreement.
Ken Harlow may use assistants, under its direct supervision, to perform some of
the services under this Agreement. Consultant shall provide District fourteen (14) day's
• notice prior to the departure of Ken Harlow from Consultant's employ. Should he/she
leave Consultant's employ, the District shall have the option to immediately terminate
this Agreement, within three (3) days of the close of said notice period. Upon
termination of this agreement, Consultant's sole compensation shall be payment for
actual services performed up to, and including, the date of termination or as may be
otherwise agreed to in writing between the Board of Directors and the Consultant.
19. LICENSES
At all times during the term of this Agreement, Consultant shall have in full force
and effect, all licenses required of it by law for the performance of the services
described in this Agreement.
20: GOVERNING LAW
The District and Consultant understand and agree that the laws of the State of
California shall govern the rights, obligations, duties and liabilities of the parties to this
Agreement and also govern the interpretation of this Agreement. Any litigation
concerning this Agreement shall take place in the municipal, superior or federal district
court with jurisdiction over the Costa Mesa Sanitary District.
21. ENTIRE AGREEMENT
This Agreement contains the entire understanding between the parties relating to
the obligations of the parties described in this Agreement. All prior or contemporaneous
agreements, understandings, representations, and statements, oral or written, are
merged into this Agreement and shall be of no further force or effect. Each party is
entering into this Agreement based solely upon the representations set forth herein and
upon each party's own independent investigation of any and all facts such party deems
material.
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22. CONTENTS OF REQUEST FOR PROPOSAL AND PROPOSAL
Consultant is bound by the contents of the proposal submitted by the Consultant,
Exhibit "A" hereto.
23. AUTHORITY TO EXECUTE THIS AGREEMENT
The person or persons executing this Agreement on behalf of Consultant
warrants and represents that he/she has the authority to execute this Agreement on
behalf of the Consultant and has the authority to bind Consultant to the performance of
its obligations hereunder.
24. INTERPRETATION
In the event of conflict or inconsistency between this Agreement and any other
document, including any proposal or Exhibit hereto, this Agreement shall control unless
a contrary intent is clearly stated.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed the day and year first above written. .
COSTA MESA SANITARY DISTRICT CONSULTANT
General Manager Sign ture
ATTEST: TyplyaLne
11in (G; lIMMIKtOUL PE
"~
Title Ent
Di ct Clerk.
APPROVED AS TO FORM:
1.‘-tuL.cx„.,
District Counsel
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Exhibit "A"
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SECTION 3
• APPROACH AND METHODOLOGY •
• Beotroadaocjuoan4
The Costa Mesa Sanitary District(CMSD)has requested a proposal for
an Asset Replacement Funding Model.The purpose of this project is to
• • • I help CMSD better understand the magnitude of its long-range Replacement
and Refurbishment(R&R)needs and to obtain a tool to help define sound
`The Replacement Planning long-term financial policies to meet these needs.
The need to periodically refurbish and replace CMSD's infrastructure
Model has helped usfocus assets represents a large potential liability. For this reason,CMSD is
on replacement and considering the need for specific financial policies addressing system asset
refurbishment needs in years R&R.Such a policy must be based on a reasonably accurate assessment of
future R&R needs and a sound methodology to analyze these needs in
well beyond our normal support of a long-range financial policy.
planning horizon. It has This section of our proposal is organized as follows:
also heped broaden our • Approach—A technical overview of our proposed approach.
understanding of the financial • Benefits of the Replacement Planning Model (RPM)—Why our
proposed approach is the right one for CMSD
commitment to existing
• Methodology—A detailed task-by-task description of the way we
assets, not just new concrete propose to execute the approach
and steel for increasingflow." ° Anticipated Schedule and Timeline
Gary Streed
Chief Financial Officer Approach
Orange County Sanitation Our proposal describes a proven methodology that can help CMSD
District estimate the costs of future R&R needs and develop financial policies to•• • —j address these needs.The methodology includes three principal steps:
1. Develop a database of CMSD's system assets,to include estimated
replacement costs,refurbishment needs,and useful lives;
• 2. Using a computer program(see below),help CMSD test a variety of
R&R funding options to define funding policies and specific funding
mechanisms that can best meet its replacement needs;and
3. Place the computer program and the system asset database in the hands
• of CMSD staff and provide training so that staff can update the R&R
analysis in future years as the physical system continues to develop. •
In using this methodology,we will take advantage of the existing
computer application (RPM),which is described in detail in Appendix B of
this proposal.
Throughout this project,to maximize the value of work already done at
CMSD,we will rely heavily on existing databases and other information
developed by CMSD.
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Section 3 Approach and Methodology
Benefits-of the RPM
Brown and Caldwell's RPM simulates asset R&R needs over a very long
period and allows easy testing of a wide range of financial policy options for
funding the resulting financial needs. It meets all specification in CMSD's
• ---- -- RFP and offers the following benefits as well:
o. The RPM is a proven methodology. Prior development across a large
'Brown and Caldwell's number of agencies will save CMSD money and improve the quality of
the final product.
Replacement Planning Model
of The RPM allows considerably more sophisticated financial analyses than
is a highly credible tool that CMSD specifies in its RFP.CMSD will find this additional functionality
will support the Director by quite useful as staff interacts with the Board during policy formulation.
demonstrating the need for Also,the added functionality will mean far less additional expense when
the Board requests analyses of types not foreseen in the RFP.
ourfunding package to City
0 As the project proceeds,CMSD may desire functionality not currently in
Council. It validates the need the RPM.The RPM's functionality is easily expansible at a very low cost.
for funding levels that were New reports and financing options can be added quickly and easily in
most cases.
previously recommended by
O The RPM is presentation-oriented.All exhibits in Appendix B were
staff but lacked supporting taken directly from the RPM's data entry or presentation screens.This is
data." a tremendous aid to communication.
o The RPM's logging facilities will provide Engineering and Operations
Gary Jones with prioritized reports on asset replacements that they can consider in
Engineering their infrastructure planning.
City of Virginia Beach
Department of Public Utilities o The RPM allows easy sensitivity analysis of assumptions regarding useful
lives,which arc key determiners of the timing of future replacement
• • • costs. •
o The RPM allows simulation of in-fund bond issuances,a very useful
approach to smoothing"peaks"in the costs of replacement needs that
may vary dramatically from year to year.
0. The RPM's central reports can all be viewed in either inflated or current
dollars,and smoothed or unsmoothed.This makes presentation and
understanding far easier and more effective.
v. Finally,the RPM aggregates and presents the reproduction cost new of
CMSD's infrastructure system,either with depreciation (RCNLD)or
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without(RCN). In this regard,the RPM distinguishes between
reproduction cost(replacement with same-kind asset)and replacement
cost (e.g., fire flow regulations now require a larger diameter of pipe).
In summary,through use of the RPM,Brown and Caldwell offers an
approach that many agencies have found quite successful in developing and
gaining approval for funding policies for long-term R&R needs.CMSD will
gain the advantage of a rich set of features that have been developed
specifically to meet the stated needs of utility managers and policy makers.
Browlluc Ca(dWelt
1012100/1W 010 3-2
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Section3•__ - ._ Approachand Methodology
afethbdOli0jy
• Our methodology includes fifteen tasks.Each task is described below.
Task 1: Facilitate Kick-off Meeting
We will meet with the CMSD staff to finalize study understandings and
review information needs and facilities to be inventoried. Areas to be
• • • • I covered at this initial meeting include:
G! Purpose and time frame of the study; •
`The Replacement Planning o Information sources;
Model enabled us to take a • Specific CMSD managers to be interviewed to determine quality of
rational approach to existing asset inventories;
determining the replacement a Arrangements for provision of data to the consultant;and
needs of our infrastructure a. Consultant's interim reporting requirements.
system as it ages, and to At this meeting,we will provide: •
formulate effective funding a Overview of methodology,schedule,etc.
polices." • Demonstration of the RPM.
Norris Brandt a Data structuring methodology that will involve asset classes,locations,
General Manager and processes or sub-processes that can be used to categorize each asset.
Irvine Ranch Water District This will allow aggregation of replacement needs in several ways.
L _ • • •_ Task 2: Review Funding Pollcies•and CIP
We will review CMSD's current R&R Fund and related practices and
appropriation policies.We will also review CMSD's Capital Improvement
Plan and conduct site visits to key CMSD facilities for familiarization. •
These reviews will provide the basis for subsequent work and will serve
two other purposes:
.• Define a strategy for melding known R&R projects with the RPM's
forecasts in order to more accurately assess overall R&R expenditures;
and
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e Help determine how future financing for R&R activities and new or
improved system assets can best be coordinated.
task 3: Develop Asset Classes
We will review documents already in-hand and supplied,conduct
interviews with staff,and request further information in order to better
understand CMSD's physical systems and finalize logical units of plant(foot
of pipe,pump station facility,reservoir by type,metering station,etc.)that
will best serve for replacement planning purposes.These logical units of
plant are known as"asset classes."The proper definition of asset classes is
important because,to the extent possible,all assets in an asset class will
share common replacement and refurbishment cost formulae and
frequencies.This greatly simplifies future maintenance of the RPM.
Brown& Cal'dwelf
W210011Y9010 3-3
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Section 3 Approach and Methodology
Task 4: Inventory CNISDASsets
__ __ _ _ We will prepare a properly structured database of assets identified in
• • • CMSD's system.This database will use the existing CMSD asset databases •
as a starting point.
"Brown and Caldwell has The database will include:
been excellent to work with, o District office facilities;
prrrfessional and o Sewer lines;
knowledgeable. The Asset c Pump stations that are to be replaced;
Management Plan has shown o Manholes and other collection system appurtenances;and
immediate results with over a Other infrastructure assets owned by CMSD,if any.
$7 million in savings. They Land will not be included in the replacement analysis as it is not a
think outside the box and wasting asset.We anticipate that laterals will also be excluded as they are
not owned by the District. I.
look at problems as
opportunities. The Task 5: Develop Useful Life Estimates
Replacement Planning Model For each defined asset class,and for each specific asset where required,
we will determine an appropriate expected useful life,that is,the number of
was the tool that finally years of normal use that can be expected prior to replacement becoming
convinced our Council to necessary.We will base our estimates on our industry experience,
manufacturers'estimates,literature research,and previous work for
approve the Capital other agencies.
Improvement Fee." For the pumping stations,we will interview CMSD managers to
determine initial install year and subsequent major asset r4eplacements.
David Hanks
Director Task 6: Define Refurbishment pro rams
Asheville North Carolina 9
Water Resources Department Many asset classes require various capital refurbishments on a cyclic
basis in order to achieve desired useful lives. Pump stations,for example,
• • • I can be expected to undergo pump rehabilitations,motor overhauls,
replacements of electric control systems,and mechanical overhauls at
intervals shorter than the replacement cycle for the station itself.Where
such programs are applicable,we will define appropriate refurbishment
cycles and costs.These refurbishment programs will be capital in nature
(that is,not normal operation&maintenance).
We will document the proposed"model"refurbishment programs in
memo form along with the useful life estimates and submit them to CMSD
for review by the appropriate managers,who may wish to modify them
•based on their specific facility experience.
In most cases,the cost of each refurbishment will be expressed as a
percentage of the overall asset replacement cost in the year in which the
refurbishment is undertaken.This simplifies maintenance of the RPM.
Brown•IoCaldwell;'
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Section 3. - Approach and-Methodology
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Task 7: Estimate Base-year Replace ment
Costs and Escalatiom'Rate
For each asset class and for specific assets where required,we will
estimate the base-year(i.e.,FY 2011)replacement cost. Our estimates will
be based on the experience of our engineers,construction cost estimates we
have recently prepared for other clients,industry standards,experiences of
• • • ' other agencies,and input from CMSD's staff. For unique assets,historical
costs may be escalated to the base year using appropriate ENR construction
`The Replacement Planning cost indices.
Mode/is invaluable in our Where possible,replacement costs,like other asset attributes,will be
defined in ratio terms (dollars per foot of various types of pipe,dollars per
CIP budgeting and rate- gallon for storage facilities,dollars per square foot for buildings of various
setting processes. It has raised classes,etc.).
issues that are critical to our We will include allowances for ancillary costs such as design,site
preparation,internal administrative support,and so forth.Where such costs
Board and has opened our are unavailable,we will use percentage factors that will be reviewed by
eyes to the magnitude of the CMSD.
We will also estimate the expected cost escalation rate for future years.
funding needs we face over the To do this,we will update the ENR data already in hand and develop our
next 20yearr." best current estimate of expected long-term cost escalation rate for the
aggregate classes of fixed assets in use at CMSD.These estimates will be •
Michael Quinn reviewed by the District.The RPM will include these estimates so that they
Waterworks Fiscal Officer can be updated as the actual future indices become available through
Maui Department of publication.
Water Supply
• Task 8: ®eternilne Replacement Polldies•
• The RPM distinguishes between reproduction cost,which implies
replacement with a like asset,and replacement cost. Replacement cost may
be different because,in many cases,failing assets will be replaced with
assets that are of different materials,capacities,or designs.This is
particularly true of collection system piping. Replacements may be different
because of changes in construction standards or regulations.These
differences will affect future replacement costs.
We will interview CMSD staff to determine replacement policies for
relevant asset classes.Where such policies imply other than like-kind
replacement,we will document the policies and include the appropriate
decision rules in the RPM.
The RPM will calculate system value and initial replacement years and
costs based on the current assets,and subsequent R&R timing and needs
based on the replacement assets.
Task 9: Develop the Replacement Planning
Model
All the databases and parameters developed to this point will be
incorporated into the RPM,which will be used to project expected R&R
costs on a year-by-year basis for user-defined periods of up to 100 years.
The RPM will give CMSD the ability to test various financing programs to
BiOWnwoCaldWeLt •
ICI?I)071041010 3-5
.Section 3 _. . Approach and Methodology
fund part or all of these R&R costs.The RPM will offer CMSD the
following options:
o Define the starting year and period of analysis
o Establish a replacement fund ("R&R fund")with a specified starting
balance and internal earnings rate
o. Test various annual replenishment policies (appropriations to the R&R
Fund)including options of escalating the contributions and/or changing
contribution levels in the future
o Define the cost of borrdwing
o Modify the cost escalation rate
.o Establish an upper dollar limit for replacements or refurbishments to be .
funded from the R&R Fund
o Establish the overall percentage of replacements and refurbishments to
be funded by the R&R Fund
a Include or exclude refurbishment costs from the analysis
o Fund other"miscellaneous"costs with the financing program (e.g.,an
allowance for unidentified assets)
o Analyze the effect of varying the expected useful lives of various asset
classes
a Allow issuance of bonds in specified years to help fund replacements,
with repayment from the R&R Fund(for peak smoothing)
o Establish rate surcharges starting in specified years and at specified
levels to contribute to the replacement fund.
The RPM will allow staff to quickly analyze the effects of various
• replacement funding options,give staff the ability to advise the Board of
Directors as to replacement needs,and enable the Board to establish sound
R&R funding policies.
Task 10! ':®i volop Alternative policy Scenarios
Working with staff,we will use the RPM to generate a set of baseline
assumptions as to how CMSD might address long-term R&R funding
•
needs.This scenario will give the CMSD a starting point for their analysis
of policy options.
We will then define at least two alternative scenarios for consideration.
All scenarios will be completely documented using the RPM's Scenario
Summary feature.
Task 11: ' Prepare Drift Report
We will prepare a draft outline of the final letter report for review and
approval by staff. Subsequent to approval,we will prepare a draft report to
include an executive summary,documentation of the types of asset classes
used and their expected lives,details of replacement cost estimates,
descriptions of refurbishment programs,and a description of the RPM.
•
Brown oCaldwell
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Section 3 Approach and Methodology
This report will include descriptions of the policy options available to
CMSD with respect to financing system R&R needs.The report will be
• presented for review.
Task 12: Present RPM to CMSD Staff
We will meet with staff(and Board Members if desired) to review the
results of the analysis and to explore R&R funding policy options.To do
this,we will operate the RPM using a computer projector and facilitate a
discussion of alternatives and a real-time analysis of the financial impacts of
these options. It is our intent that,though this exercise,CMSD can better
appreciate the magnitude of future R&R needs and the suitability of various
policy options,separately or together,in meeting these needs.
Task 13: Prepare Final Report
Subsequent to the meeting with CMSD staff and receipt of all
comments,we will prepare a final report.The final report will be presented
in the number of copies specified by the District.
Included with the final report will be CMSD's RPM,contained on CD-
ROM along with electronic versions of the final report and RPM User's
Guide.The purpose of supplying the documentation is to allow staff to
update the replacement analyses in future years so that CMSD can keep its
R&R funding policies current as its physical system continues to develop. •
Brown and Caldwell offers ownership of its version of the RPM to CMSD
on the understanding that Brown and Caldwell has no further obligation to
modify the model,correct any errors in data or operation once accepted,or
update the model for future system changes.
Task 14: Present to Board of Directors
If directed we will present the RPM,its analyses, and our
recommendations for R&R funding policies to CMSD's Board of
• Directors.
Task 15: 'Prepare Documentation and Provide
Staff Training
Documentation for CMSD's RPM will be included in the Final Report,
above. Using this documentation,we will provide one half day of training
for CMSD's staff tasked with maintaining the RPM.Staff must have good
proficiency with Microsoft Excel and,preferably, familiarity with Visual
Bask for Applications (VBA).Training will be provided on site or at our
offices,at CMSD's preference.
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SECTION 41
ADDITIONAL INFORMATION RELATING TO PROJECT
I08eplacenonenit Plammrouung'bVdodleO 'I nonovative
Feataired:
The current version of Brown and Caldwell's Replacement Planning
Model(RPM)has been in continuous development under the direction of
twenty dients over twelve years.As a result,it contains not only vastly ex-
panded reporting capabilities but many innovations"under the hood"that
cannot generally be found on other similar models.These innovations result
in more useful,dependable forecasts of future R&R needs,leading to fund-
ing policies that more accurately reflect the actual needs of the infrastruc-
ture.Some of these innovations are described below.
Actuarial extensions to useful life—Like people,assets that have been
in service a long time will have useful lives greater than the average for their •
asset class. For example,an 80-year pipe that has survived 70 years may
have a currently-expected useful life of over 100 years.The RPM estimates
these life extensions automatically,avoiding unrealistic early"spikes"in re-
placement needs that might lead to excessive contributions to an R&R
Fund,especially in systems with older assets.
Other factors affecting useful life—The RPM incorporates curves and
logic developed in New Zealand to modify remaining useful life based on
asset condition,utilization,and performance.To the extent that these data
are available,they are fully taken into account,adding a great deal of accu-
racy to the RPM's estimates.
Replacement policies—A utility will often have policies concerning re-
placement of pipes,valves,etc.,leading to replacements with different as-
sets. For example,8"water pipe might all be replaced with pipe of a certain
material,regardless of the current materials,or existing small-diameter pipe •
might all be replaced with pipe of a 6"minimum diameter due to fire flow
considerations.The RPM will automatically schedule replacements follow-
ing such policies when present,increasing the accuracy of future cost esti-
mates.
Distributed failures—Not all pipe installed in a given year can be ex-
pected to fail in the same year.The RPM treats failures of pipe and some
other assets according to failure curves,spreading the cost of replacement
over several years.This avoids potentially large spikes in R&R needs that
might inaccurately reflect actual future costs,again keeping R&R Fund con-
tributions to a level consistent with realistic expectations.
Replacements versus refurbishments—Refurbishments are always
scheduled with due cognizance of replacement years.Each refurbishment
has a characteristic interval.No refurbishment is scheduled within one-half
of that interval prior to a replacement year,and the next refurbishment is
always scheduled a full interval subsequent to the replacement year.This re-
flects typical actual practice and avoids overstating refurbishment costs.
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SECT` ON 5
PROJECT BUDGET AND SCHEDULE
Brown and Caldwell will perform the work described in this proposal
for$40,934 based on the following:
o Eight(80)hours of Mr.Harlow's time at$245 per hour, 160 hours of
Mr.White's time at$98 per hour,and 34 hours of administrative time at
various rates.
o Out-of-pocket expenses (local travel,etc.) at two percent of professional
fees ($770).
o Associated project charge of$6.00 per hour,covering all in-office
expenses such as copying,telephone,postage and overnight deliveries,
etc.These will not be charged separately.
Costs will be charged only if incurred and without further mark-up. It is
our practice to bill monthly for work done and to expect payment within
30 days.
Given reasonable access to CMSD staff and facilities,we will complete
the work described within 90 days of notice to proceed.
•
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