City Approves $5.2 Million Cost Overruns by Engineering Firm Grading Potrero Canyon Park 

Potrero Canyon Park extends below the baseball fields at the Rec Center. Grading costs overruns for the park could be as high as $5 million.

The engineering firm OHL USA, Inc. has been approved for up to $5,275,366 in cost overruns as it completes the final grading in Potrero Canyon Park. This is 39 percent of the original contract amount: $13,526, 579.

The five-member L.A. Board of Recreation and Park Commissioners voted in favor of the latest change order (totaling $917,763) at a Zoom meeting on May 7.

During the course of construction in Potrero Canyon (which initially began in 1989), more than $40 million has been collected from the sale of City-owned residential lots along the canyon’s rim. This money was placed in a Potrero trust fund and has been dedicated towards completion of the 46-acre park, including grading, landscaping and the building of a pedestrian bridge across PCH to Will Rogers State Beach. Money is also needed to refurbish and expand the Recreation Center parking lot as part of the Park requirement.

Last October, about $16 million remained in this fund, but that was before the last change order was requested by the Bureau of Engineering (BOE) on behalf of the grading contractor, OHL.

Homes can be seen along the west rim of Potrero as grading continues in Potrero Canyon.

David Card, president of the Pacific Palisades Community Council, told the  Recreation and Park (RAP) Commissioners at last Thursday’s Zoom meeting, “This contractor has already overrun the contract by 34 percent and is now asking for contingencies that would be up to 39 percent.”

The RAP Staff recommended that the commissioners approve the extra funding, writing: “The increased contingency ceiling will allow BOE to continue to issue change orders that are needed for the successful completion of the project up to the stated, not to exceed amount. . . .To date, 29 change orders have been executed in the amount of ($4,357,603 million) or 32.22 percent of the original awarded contract.”

Some of the approved changes were $50,000 in overtime in December 2019, $50,000 in January and the same amount in February. Curb and gutter repairs next to the tennis court were estimated to cost $50,000. Existing fence removal in June was budgeted for $5,000, but the City estimated it would be $10,000 and that became the agreed upon price.

It was estimated that $200,000 would be needed to process the stockpiled dirt along PCH, but the City agreed to $166,855. Traffic control per Caltrans requirements was supposed to be $50,000, but the City agreed to $98,912. (The Change Order Log is below.)

RAP Commissioners were told that these latest cost overruns would have no fiscal impact on the City.

Card said that contrary to what the RAP Commissioners were told, “There is a huge fiscal impact. The money is in a trust fund to pay for this park. Right now it’s just a pile of dirt that’s graded. How much money will be left for landscaping that will turn it into a park?”

“This a trail to nowhere and the money in the fund keeps shrinking,” Card said. “The price keeps going up and there is no negotiation with the contractor. Some of these changes go back to 2018.”

OHL’s initial bid, approved in June 2018 included: 1) clearing and grubbing, 2) demolition of disposal and of existing concrete access road, 3) grading – cut and fill from existing stockpiles, 4) construction of wet riparian zone through the center of the canyon, 5) construction of soil cement access road, 6) erosion control, 7) construction of terrace drains, 8) construction of a 6” PVC force main to supply water for riparian zone, 9) construction of approximately 2,000-linear feet of 12” to 24” storm drain line, 10) construction of a concrete stairway, 11) extending maintenance shafts to proposed grade, and 12) construction of two storm-drain maintenance holes.

In October 2019, BOE asked the RAP Commissioners to approve an almost $4 million change order. Three reasons were given for the cost overruns: the heavy rains during 2018, which produced excessive drainage into the canyon; the fill dirt was undocumented; and there were boulders and rocks throughout the site.

During the public comment session at last October’s hearing, Card (an original member of the Potrero Canyon Community Advisory Committee) said, “They bid $13.5 million and fifteen months later, they [BOE and the contractor] are finding out there’s water and undocumented fill?”

During public comment on May 7 this year, Lou Magur reminded RAP Commissioners that he and one other rim resident had raised concerns about the fill being used from Caruso’s Palisades Village project. “I requested reasonable oversight of the dirt being imported into Potrero Canyon,” he said. At an October 2016 L.A. City Council Planning and Land Use Committee hearing, he asked that they not rely on a an outdated report (which they still used).

“My concern was any issues be rectified before the dirt was put in the canyon, because it would have been cheaper to rectify,” Magur told Commissioners on May 7. “My request for independent oversight was denied.”

Magur said that the change order last October was prompted in part because the fill was undocumented. He asked the RAP Commissioners to deny the additional funding to the contractor because “You are in effect giving them a blank check.”

Last Thursday, Card urged the commissioners to ask the Bureau of Engineering to negotiate with the contractor. “The price keeps going up,” he warned.

But the commissioners proceeded to approve the change orders, paid for out of the Potrero Canyon Park fund.

“I don’t think we have any choice,” Commissioner and Pacific Palisades resident Joe Halper said at the hearing. “The BOE is a responsible organization.”

He suggested that in the future, the bidding process should have a built-in cap for contingencies so that contractors “can’t come in and continually escalate the cost of the project.”

The Commissioners then voted on other related change orders regarding Potrero.

Three items that were initially in the grading scope (about 4 percent of the total bid by OHL, or $628,930) were removed. The company, which had initially bid on them, would now no longer be responsible for those items.

The Commissioners were told that it was a savings for the park—but in reality, those tasks will simply be pushed to the landscaping budget, which is already short-handed.  (Visit:https://www.laparks.org/sites/default/files/pdf/commissioner/2020/may07/20-066.pdf)

Potrero Change Order

This entry was posted in City/Councilman Mike Bonin, Parks. Bookmark the permalink.

3 Responses to City Approves $5.2 Million Cost Overruns by Engineering Firm Grading Potrero Canyon Park 

  1. Paul Glasgall says:

    Incompetence really doesn’t even begin to fully describe what we have here and for the last 40 years. It would be comforting to add corruption because that would be easier to explain or swallow.

  2. Paula H Deats says:

    I may be imagining this, but I recall that the OHL bid for the Portrero Canyon Project was accepted because it was $600,000 lower than the next-highest. I wonder if OHL knew that was a bogus bid all along? I remember the day when they were refused the huge overcharge needed when they “discovered” there was additional, heavy material in the landfill and removal would bring the cost to…gee…the almost exact dollar amount the other bidder had declared. When OHL was refused the overrun, I also remember watching – almost the next day – as their trucks lined up and left the site in a tidy caravan that took less than an hour. “Hey, it’s just business.”

  3. Sue says:

    Paula,

    You were remembering correctly that OHL was the lowest bid. At the time the three bids were: Los Angeles Engineering, Inc. bid $14,137,117; OHL USA INC bid $13,526,579; and Sukut Construction, Inc. bid $13,777,777.

    Sue

Comments are closed.