CEDAR RAPIDS — Nearly $1 million in change orders, or costs above original contracts, are quietly being sought for one the city’s most frequent construction contractors.
City staff is recommending the Cedar Rapids City Council on Tuesday approve four change orders worth $975,229 for Rathje Construction, of Marion.
The change orders are on the council’s consent agenda during its Tuesday meeting — noon at City Hall, 101 First St. SE — meaning it won’t get public discussion unless requested by a council member.
Contractors bid to win city contract work, and the city typically awards a contract to the lowest responsive bidder. Change orders are fairly common in construction to account for unforeseen circumstances, such as environmental or design issues.
In fact, 10 change orders are on the consent agenda for the meeting on Tuesday. But the four Rathje contracts have grown dramatically, up to 89 percent above the original value, compared to the 9 percent or less of other change orders.
Cedar Rapids City Council member Scott Overland said he is not alarmed because the city staff vets change orders to ensure they are justified. Sometimes the scope of a project changes, necessitating additional payments, he said.
“I don’t think this is raising any concerns,” Overland said. “The staff keeps us pretty well-informed ... Many times change orders are because of additional work involved or issues not discovered when the bid was put out.”
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That’s the case for the Czech Village Utility Relocation project, which was modified to include the reconstruction of the C Street SW and Bowling Street SW intersection, he said.
That project’s third change order, worth $755,960, is being requested Tuesday. The contract, originally at $3.2 million, has grown 24 percent to $4 million.
“Due to the extensive underground utility work, specifically the large box culvert extension, we decided to reconstruct the intersection now to avoid two major road closures one year apart,” according to supporting notes for the request.
Ralph Russell, a City Councilor with an engineering background, said 3 percent to 5 percent in charge orders is reasonable for a well defined contract. On the other hand, a project with a high degree of unknowns, such as underground utility work, could see 15 to 20 percent increase, and that too could be reasonable.
City staff explained the rationale behind the other change orders:
• $51,128, plus two calendar days, for 14th Avenue SE roadway and utility improvements, from 36th Street to 42nd Street SE. This is the project’s second change order, increasing the original contract from $2.2 million to $2.4 million. Costs increased on this project because of unforeseen underground conflicts while replacing the storm and sanitary sewer, according to Emily Muhlbach, a spokeswoman for the public works departments.
• $52,945 for 2017 tree and vegetation removal project. This was the third change order, increasing the original contract from $117,510 to $221,681. Costs rose because of additional tree removals not on the original list and additional work associated with a flood control and trail project, Muhlbach said.
• $115,197, plus four calendar days, for the Northwood Drive NE reconstruction from south of Brookland Drive NE to 42nd Street NE. The contract would increase from $779,706 to $894,903. Since the contract was awarded, the city changed the design standards for concrete pavement, requiring it to be thicker with a thicker rock base, Muhlbach said.
Rathje did not return a message seeking comment.
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Paul Hanley, associate professor of civil and environmental engineering at University of Iowa, said change orders are often an inevitability in construction work. They shouldn’t come as a surprise, he said, for complex, one-of-a-kind projects, such as flood protection.
“If it’s a straight up, honest deviation from the design, it makes sense because a contractor shouldn’t have to eat the cost because an engineer or general contractor didn’t foresee something,” Hanley said.
Still, some contractors take advantage of change orders, which is why it is important to examine them closely, he said. In some cases, contractors will intentionally underbid a project and win the contract with the intention of making up the difference through change orders, he said.
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