Infrastructure Projects and Engineering Costs

Earlier this year I pointed out that the way we go about infrastructure projects (roads, sewers, etc.) and the engineering work associated with it was averse to common sense business practices. There was a promise that the issues/ concerns I brought up would be considered, but at tonight' Council meeting (12/20/20) we are being asked to vote to continue operating the same way we always have.

Let me explain how we have always operated and why it deserves to be questioned.

• GPD, the City’s engineering firm, plays a major role in recommending the infrastructure project the City moves forward with, including their size and scope.

• Then the city gives GPD all the engineering work on the projects they recommend, without allowing other firms to compete for the contract and GPD basically tells the City what they should be paid on this work.

Compare this to Shaker, who also uses GPD as their City’s engineering firm, but solicits multiple firms to compete for the engineering work in a competitive process.

• First, Shaker puts out an RFP soliciting multiple firms to submit proposals that include their qualifications separate from their proposed fee for the work.

• Then they rank all the proposals on the qualification, expertise, and merits of the firm for the project.

• Finally, the highest-ranking firm is awarded the contract as long as their fee proposal is competitive. If it is not, they are given a chance to lower it.

Below are the actual comparisons between Beachwood and Shaker’s side street resurfacing project in 2020 (Click here to see Cleveland.com article).

If you look at other cities, their cost per mile of side street resurfacing is around $350k to $450k like Shaker’s. This compares to Beachwood paying well over $1M per mile with engineering costs per mile 12x greater than Shaker’s. I know the response will be that we resurface side streets better and I imagine there are some differences, but these are the questions this should raise.

• What specifically do we do differently that results in us paying 3x more in construction costs and 12x more in engineering fees?

• Does what we do differently really add enough value to justify spending 3x more? If so, why don’t other communities find it prudent to make such investments, including the 8 other cities in the region that use GPD as their engineering firm?

It is important to understand that Beachwood City Ordinance 169.02, which is almost identical to the language in Shaker City Ordinance 104.02, dictates that Engineering contracts like this over $25,000 be awarded to the best and lowest proposal submitted. Shaker follows 104.02 with the RFP process I explained above but Beachwood seems to believe that following BCO - 169.02 is optional and instead;

• One firm, GPD, is unilaterally given all the Engineering work on the projects they recommend.

• Beachwood allows GPD to tell them what they should be paid for the work, knowing that there will not be any competitive process to ensure they are the most qualified firm for the work or that their proposed fee is competitive.

As long as we are discussing Engineering costs, let’s review the actual 2020 engineering costs on our side street resurfacing program to show the absurdity of the way we operate. In early 2020, GPD originally submitted a “do-not-exceed” Purchase Order of $77,500 for engineering fees on the resurfacing of the seven side streets the City planned on doing this year. However, after the COVID outbreak, the work plan was reduced to the three-street total actually done. Yet, In October, as work was winding down, GPD had to ask for their “do-not-exceed” to be increased as it already exceeded $85,000. How does this make any sense? Imagine if you got a quote for $7,750 to change the tires on 7 cars, but only ended up changing them on 3 and instead of the total cost decreasing, it ended up increasing to over $8,500.

Abiding by the requirements in BCO 169.02 would solve many of these issues and there is no competent legal argument that this law can be ignored. However, we should not need a law to get us to recognize the following well-established and common-sense business practices.

• It is ideal if whoever recommends work does not have any benefit in their recommendations as it gives them an incentive to recommend more work than is needed.

• Awarding work in a competitive process helps ensure that the most qualified firm for the task is chosen, and their fee proposal is competitive with others.

Beachwood has laws which are too-often ignored. But, just common sense business decisions should be made, whether on roads or any other project. Just because the City of Beachwood can afford such expense, doesn’t mean we couldn’t find better uses for these funds.