Nearly $500K in engineering fees triggers Menahga City Council to seek out new firm
Council members hope to save tax dollars after reviewing underestimates for proposed city water/sewer projects by Ulteig Engineering and $468,825 in engineering fees.
Aiming to find a better deal for taxpayers, the Menahga City Council is seeking proposals from engineering firms for proposed sewer and water main projects.
Quotes higher than estimate
Brian Hiles, city engineer from Ulteig Engineering, met with the council at their Feb. 13 meeting. He said the original design on 800 feet of water main replacement on State Hwy. 87 was estimated to cost $135,000.
After making upgrades with Menahga Public Works Director Ron Yliniemi, Hiles said the revised estimate is $155,000 to $160,000.
“So we’re still under the state statute for having to go out for bids versus just being able to get quotes,” Hiles explained. The threshold is $175,000.
Hiles said five quotes were requested. Three contractors declined to make an offer, while two did. The low quote was $232,292 from Schrupp Excavating, LLC of Pine River. “They’ve come in higher than the estimate,” he added.
Noting the lowest quote was 151.85% of the estimate, council member Mike Netland asked Hiles why Ulteig’s estimate was so low.
“We’ve been seeing this a lot in our industry. Prices are all over the place right now,” Hiles replied.
Ever since COVID and supply chain issues, Hiles said prices are changing daily. “It’s really difficult to have any certainty on the estimating. We do the best that we can based on the information that we have.”
City doesn’t have financing in place
Council member Durwin Tomperi commented that Hiles caught the council off guard last month by requesting quotes on the Hwy. 87 project for which the city doesn’t have funding. He asked who gave Hiles that authority.
“I got ahead of the process there, with not having to go through the bidding process,” Hiles replied.
Tomperi said Hiles should have communicated with the city administrator and council before garnering quotes. “Look at all the time and effort these two companies wasted because we’re probably not going to go forward with that, at this point,” Tomperi continued.
Mayor Liz Olson asked if Ulteig assists with finding infrastructure grants, pointing out there is some available through the state and federal government.
“We really don’t have the funding set aside for this,” she added.
Hiles apologized to the council.
He recommended not doing anything with these quotes.
Last year, the city’s First Street SW and Second Street N. sewer and water replacement projects were submitted to the Minnesota Drinking Water and Clean Water revolving funds for inclusion on the fiscal year 2023 project priority list. Both made the list, according to Hiles. He suggested the city request that this 800 feet of water main be added to the larger projects.
The next step, he continued, is for the city to ask to be placed on the intended use plan.
Tomperi asked who authorized Ulteig to move forward with planning on that project, noting that their fees are estimated at $468,825.
“When you’re talking that kind of money, wouldn’t it behoove the council to have another engineering firm take a look at it as well?” Tomperi asked.
Yliniemi said the First and Second street projects were in the mix of the five-year capital improvement plan (CIP), which was approved by the council in Jan. 2022.
Tomperi said he didn’t realize the city was locked into Ulteig when it approved the CIP. He suggested requesting proposals from other engineering firms.
Since it involves taxpayer money, council member Jody Bjornson said it wouldn’t hurt to acquire more engineering proposals.
Netland agreed. “At half a million dollars, prudency on behalf of the taxpayer, who are paying the bill, requires us to get RFPs.”
The motion to do so passed unanimously.
Tomperi asked Hiles how far off the engineering estimate might be on the First and Second street projects.
“Because it was a far-ranging plan, there’s a 20% contingency built into that estimate for the state,” Hiles replied. “As you further define the project and hone in on that scope, then that contingency amount typically goes down.”
In other business, the council did as follows:
- Approved a change order for construction of the new water tower, at no cost to the city. Due to weather, Maguire Iron, Inc. of Sioux Falls, S.D. asked to adjust the substantial completion date from Dec. 2 to Jan. 7.
- Discussed Greenwood Administrator Laura Ahlf’s authority to communicate with the city attorney regarding the facility’s hiring practices. Tomperi said that Ahlf answers directly to the city council, so there is no need for her to get approval from the city administrator in order to contact the attorney. Netland agreed that he saw no reason for the council to not grant Ahlf authority, plus Greenwood Connections pays for those related legal bills. The council unanimously agreed to give Ahlf permission.
- Approved placing “no parking” signs, at Minnesota Department of Transportation's earliest convenience, at the Hwy. 87 and 71 intersection.