July 05, 2011

Project No. 06-0027

Monterey Peninsula Water Management District
Post Office Box 85
Monterey, California 93942-0085

Attention: Mr. Joe Oliver

Subject: Budget Recommendations for the Santa Margarita ASR Facility Contract #3 – Permanent Electrical Upgrade Project

Dear Joe:

In accordance with our discussions, this letter outlines the general schedule and budgetary needs for the next phase of improvements at the District’s Santa Margarita ASR Facility. As you know, the project has been implemented in phases to allow the completion portions of the facility in the “off season” while maintaining the operability of the site during injection periods, and to better coincide with the timing of District funding cycles for the project. Previous contracts to date have included the following:

1. Site grading and installation of underground utilities (2006)

2. Construction of the Chemical / Electrical Control Building (2010 – 2011)

This next contract work, Electrical Upgrades – Contract #3, provides for the installation of District pre-purchased electrical metering, switchgear, and control equipment, and associated ventilation and cooling equipment to be installed in the recently completed Chemical / Electrical building. The pre-purchased equipment is now on site and ready for installation. This phase of work will accomplish three major goals:

I. Provide upsized PG&E service to operate larger well pumps and simultaneous pumping operations

II. Consolidate all electrical equipment indoors in a climate-controlled room

III. Eliminate the need for generator rental to operate the ASR-2 well, saving approximately $50,000 annually in rental costs.

Construction drawings for the work have been completed and have been submitted to the City of Seaside for review and permit acquisition. Bid documents (plans and specifications) are ready for distribution to qualified contractors, with an anticipated bid opening date of August 5^th.

As noted above, it is important that this work be completed by December 1^st to ensure that the facility is ready to inject water as soon as the Carmel River water rights permit takes effect. As you know, the District was able to inject over 1,000 acre-feet of water this year because facilities were ready and operable when the permitted operating window started.

We have developed an updated opinion of construction costs for the work, which supersedes the reconnaissance-level estimate provided for the project in 2008, and is based on the final design components and current materials costs. We believe the contract will bid at approximately $406,500 , and be completed within 3 months of authorization. In addition to the above totaled estimate of $406,500, we recommend a budget contingency of 10% or $40,650 be added for unanticipated issues, yielding a total recommended budget of $447,150.00

An additional important note for this project is that our recent work on the District’s ASR-3 project at Seaside Middle School has made us aware of a pending nationwide shortage of special shielded motor cabling of the type needed for both ASR projects. Although this cabling is currently specified as part of Contract #3, it is possible that the limited supply of this cable will be depleted by the time the selected contractor seeks to order these materials in August / September. The cost for this cabling is substantial (estimated at $101,000 for this contract) , and the factories initiate runs of this only 2-3 times per year based on demand. To ensure that the contractor (and the District) are not subject to a 3-5 month delay in acquiring this cable, we recommend that the District pre-purchase this material now, and notify the potential bidders that the cable has been pre-purchased as the District has done for the other major switchgear equipment for this project. This will avoid a potentially significant delay in completing the work, and will likely result in an overall cost-savings to the District, as the contractor will not mark up this significant materials expense in their bids.

We recommend that your Board authorize the recommended budget, and authorize District Staff to contract for the purchase of these materials and services with the stipulation that bids received fall within the above-estimated costs for the work., and are based on competitive bids from qualified and responsible contractors and vendors. We also recommend that the Board authorize Staff to pre-purchase the shielded motor cable based on competitive bids from cable vendors.

We hope this letter adequately addresses the need for, and costs associated with the implementation of this contract bid. If you require additional information regarding this or other matters, please contact us.

Sincerely,

Pueblo Water Resources, Inc.

Stephen P. Tanner, P.E.

Principal Engineer

RCM:SPT

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