Public Utilities Revenue Bond Oversight Committee

MINUTES

Monday, March 10, 2008
   9:30 a.m. – 11:30 a.m.
San Francisco Public Utilities Commission
1155 Market Street (between 7 & 8th Streets) 11h Floor, GM’s Conference Rm.
San Francisco, CA 94103

1. Call to Order and Roll Call
 
Chair Aimee Brown called the meeting to order at 9:35 a.m. and roll call was taken. Present: Ms. Brown, Kyle Rhorer, Patrick Sweetland, David Sutter and Stan Jones; Brian Browne arrived at 9:40 a.m. Lisbet Sunshine was not present. There was a quorum.

Chair Brown requested and the Committee agreed to take Item 6 out of order.

6.  Discussion and possible action relating to the Contracting Group Subcommittee’s RFQ work scope on PUC’s indirect cost calculations.
 
Mr. Sweetland discussed the draft RFQ with Committee members noting that the language from the work scope was incorporated into the RFQ. Mike Brown, SFPUC staff, clarified that the dates added to the RFQ were place holders until actual time frames were set. Mr. Brown added that he was sending information requests out to academic institutions as sending proposals to universities had been discussed during the last Subcommittee meeting.  Mr. Sweetland explained that the universities were being added in order to broaden the horizon for quote availability and would be used in addition to the Controller’s and the Human Rights Commission LBE list.  Mr. Brown stated that if the quotes are under $29K they would only need to meet the Civil Service Commission approval. If the quote comes in over $29K, vendors would be required to meet HRC compliance. Mr. Sweetland noted that Mr. Brown previously stated that it would take approximately four weeks to get the RFQ out. Mr. Brown requested that Mr. Sweetland send the latest electronic version of the work scope which includes Mr. Sutter’s amendment so that final edits can be made and the timeline can be kept.

Mr. Sutter noted that the comments he submitted to amend the work scope during the previous RBOC meeting did not appear to be added to the RFQ. Mr. Brown stated that he would capture Mr. Sutter’s comments in the next draft of the RFQ. Mr. Sweetland assured Mr. Sutter that his comments were added to the last work scope which was adopted, whether it was added to the RFQ will be investigated by PUC staff.
Mr. Brown stated that he was waiting for information from the schools he contacted. He added that Brian Browne made solicitations to academic groups and contacted members from the Board of Supervisors and they would be contacting staff directly with additional information regarding the RFQ possibilities.

Staff confirmed that once information is received from the universities and BOS members the RFQ could be completed in a few weeks for final publication.

There were no members of the public present

2. Report from SFPUC Management on status of WSIP and recent changes

Surinderjeet (Jeet) Bajwa, WSIP Program Manager, reviewed the new alignment of WSIP which was adopted February 26, 2008. The WSIP changes include program schedule, budget and scope realignment.  Leading up to the adoption, Julie Labonte, WSIP Executive Management, gave three workshops and presentations to the Commission.  The three workshops reviewed WSIP’s structure, progress, timing, risk mitigation, lower cost options, construction management, overall approach, budget and control systems and finally to come up with an implementation plan. The final result is a new Construction Management Plan which has been posted on the PUC’s website, sfwater.org.

Parsons and CH2M Hill created the Risk Management Plan and came up with ten risks categories: certification of the PIER, contracting requirements, system and facility shut downs, construction management organization, right of way acquisition, project controls process, public outreach and program organization and management. Mr. Bajwa then reviewed the risk categories and changes with the Committee. Mr. Bajwa noted that in there have been project changes to the Peninsula Region and the SF Region, while no changes have been made to the San Joaquin, Sunol Valley or Bay Division Regions. The Recycled Water programs reporting and funding have been aligned with WSIP while the execution is done by the Water Enterprise. He explained the format of the Recycled Water Project is more closely aligned with the wastewater and water supply format.

Mr. Bajwa stated that right of way and construction shut downs were not initially thought of as major factors during the planning phase. The initial construction management plan had four tracking phases within planning. He stated that due to diligent review, the new plan has nine tracking phases: Project management, planning, environmental, right-of-way, design, bid and award, construction, construction management and closeout. Mr. Bajwa explained that using these nine phases allows more accurate representation and tracking of actual performance and project activities and allows ease in identifying where problems arise.  Regarding schedule, Mr. Bajwa added that the overall program completion date has changed from June 2014 to December 2014.  Three elements critical to schedule: 1.) Environmental Review and permitting 2.) System shut downs and 3.) Land acquisition and right of way acquisition.  He noted that according to the Parsons Risk Assessment Report, the certification of the PEIR is one of the single largest schedule risks to the WSIP.

In response to a question asked by Mr. Sutter, Mr. Bajwa stated that Project Management is considered a phase because not all PM’s stay on until the end of a project. He stated that in general the Regional Project Managers stay on until the end of a project while in order to control costs, the other Project Managers leave once the Construction Managers come on. The costs of Program Managers include program controls, operations and in some cases, city attorney charges.  Mr. Sutter asked how this phase affects the Change Order process. Mr. Bajwa stated that there is a procedure in place where the PM’s manage the contract and negotioate the change orders and are supervised, supported and coached by the Regional PM’s. Mr. Sutter added that since the key role for a Program Manager is to provide a single point of responsibility and continuity, risks are involved with breaking up the management particularly during construction. Mr. Bajwa stated that this was a concern to him initially, but this process establishes clear accountability and maintains continuity and knowledge during the transition of management. He noted that the Construction Management Plan explains step by step how this process works.

In response to a question asked by Mr. Jones, Mr. Bajwa stated that the Construction Management team is approximately 55% City employees and 45% Consultants while the Project Managers are 100% PUC employees. Mr. Bajwa explained that the new scheme was created to control costs and to streamline the process, making it more effective. He added that the mix utilizes the knowledge of people that have managed tunnels and dams in the past, have the talent and know-how as well as utilizing in-house talent.

In response to a question asked by Mr. Rhorer, Mr. Bajwa stated Tuolumne River project poses the greatest risk in terms of environmental lawsuits.

In response to a question asked by Mr. Browne, Mr. Bajwa stated that the planned additional 25 million gallons of water per day from the Tuolumne River is a sensitive issue and asked that Mr. Browne wait a month or two before questioning the details of logistical plans.

Mr. Bajwa stated that the program budget has increased by $49 million which makes up approximately 1% of the budget. Budget includes Construction, LOS, soft cost and finance cost. Escalation was kept at 3.5%. He noted that 2% of construction cost of any project that is above ground goes to the Arts Commission. He concluded by stating that the current status includes the construction management plan being implemented, finishing the risk analysis and in six months to a year revisiting the escalation rate.

Mr. Bajwa added that Julie Labonte has issued a memo addressing Steve Lawrence’s questions and concerns regarding WSIP changes. Staff will distribute Ms. Labonte’s memo to the Committee members.

 There were no comments from the public.

3. Report from SFPUC management regarding 5-Year CIP budget and schedule

Manfred Wong, Project Manager SFPUC, reviewed the second quarter report for the Wastewater Enterprise 5-year CIP dated September 2007. He noted that the 5-year CIP is divided into two major categories: 1) Sewer Improvement Projects and 2.) Aging Infrastructure and Oder Control Projects. There are 16 projects under the Sewer Improvement category and 23 projects under the Aging Infrastructure and Odor Control category. Mr. Wong stated that although the numbers of projects have not changed, there have been budget adjustments made in order to consolidate the remaining budget to fund the most critical projects. Over 65% of the projects are currently in construction or have been completed. He stated that supplemental funding has been requested to provide additional improvements and allow for the initiation of key projects before the implementation of the Master Plan. Mr. Wong then reviewed individual projects under each category, noting which projects were in design, construction,   completed or going out for re-bid. He added that the treatment facility projects have experienced high bid prices and a limited number of bidders which is resulting in delays. These projects will go out to re-bid after scope changes are implemented. He added that the 5 Yr CIP is slated to end in 2010 but there may be a gap between the completion of the CIP and the beginning of the Master Plan due to its extensive environmental review. He stated that a list of additional projects has been identified but no decisions will be until after the new SFPUC General Manager comes on. 

The Committee decided to defer detailed questions to the next meeting. Mr. Sutter will send a list of detailed questions to staff before the next scheduled meeting.

4. Public Comment: Members of the public may address the RBOC on matters that are within the RBOC’s jurisdiction and are not on today’s agenda.

There were no members of the public present. 

5. Chair’s Report
             a. Discussion and possible action relating to RBOC activities during the 2008 term
             b. Discussion and possible action relating to WSIP project site visits

Ms. Brown asked, and the remaining Committee members agreed, to defer this item to the next meeting as Committee members had to leave early.  Regarding project site visits, Ms. Brown requested staff to send three date options to all of the Committee members via email.

7. Discussion and possible action to approve the minutes from the meetings held on December 10, 2007 and February 11, 2008.

Mr. Browne stated the minutes from the December 10, 2007 may be inaccurate He stated that he did not recall making the statement noted in line 54 and 69-70 and would need to listen to the audio recording in order to confirm that he said these words. Ms. Brown stated that she will defer the approval of the minutes until the next meeting to give Mr. Browne another opportunity to send adjustments to staff.

Mr. Browne stated that he had questions relating to the February 11, 2008 minutes as well. He clarified that on lines 75-76 he was specifically speaking to retirements and possible resignations of experienced senior management in the wastewater enterprise. He stated that in lines 125-128 he was requesting legal clarification on what would trigger defining something as an illegal expenditure in the context of Prop P and doesn’t feel that the minutes reflect that clearly. He added that lines 141-147 show that he did use the word “process” yet he is not sure if he used the term “hooks in the process”.

Mr. Browne requested that in the future staff use voice to text translation software to aid in the transcription of meeting minutes.

8. Discussion and possible action relating to RBOC members requests for information from SFPUC staff

There were no requests at this time.

9. Discussion and possible action regarding future agenda items

Presentation by Barbara Hale relating to $1.6 billion planned expenditures for Hetch Hetchy Water Power under the 10 year Capital Plan; Continued discussion regarding 5-year CIP presentation by Manfred Wong; Discussion and possible action relating to direction of future RBOC activities during the 2008 term; Discussion and possible action to approve the minutes from the 12/10/07, 2/11/08 and 3/10/08 meetings; Discussion and possible action to reschedule WSIP project site visits.

10. Adjournment

Ms. Brown adjourned the meeting at 11: 15 a.m.