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CITY COUNCIL MEETING
'DECEMBER 4,',1985
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C " ORDER
FOLICY ADJPTE
By COUNCIL
RES. NO. 85-173session of
Council was reminded that at its work study
November 19, 1985 the City Council discussed the topic
of developing for use by all City
order a more
provai. departments
formalized policy regarding c
A draft policy was presented for Council's perusal.
Requests for change orders are not unconnion in City
1 construction projects, particularly the involved
undertakings. The City's auditing firm has reconmended
that the City Council adopt a policy of scxne kind to
formaiize the process.
Following discussion, Council, on motion of Mayor Pro
Tempore Reid, Olson second, adoOpa� Resolution
solution No.
85-173 adopting a City ChangF=
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"gUNCIL COMMUNICATIC,l
TO: THE CITY COUNCIL DATE
FROM: THE CITY MANAGER'S OFFICE November 26, 1985
SUBJECT: CHANGE ORDER POLICY
RECOMMENDED ACTION: That the City Council adopt the Change Order
Policy as set forth in the attached Exhibit A.
BACKGROUND INFORMATION: At its work study session of November 19, 1985 the
City Cclancil discussed the topic of developing for use by all City
departments a more formalized policy regarding change order approval.
Attached for the City Council's information and review is the final draft
of such a policy as refined by the City Council. Requests for change
orders are not unccnrmn in City construction projects, particularly the
involved undertakings. Our auditing firm has recommended that the City
Council adopt a policy of some kind to formalize the process. We have
discussed this draft with our auditors and they have advised us that it
satisfactorily addresses their concerns.
The staff will be pleased to answer any questions Coancil.members may have
on this subject. Following adoption by the City Council, the staff will
put in place an appropriate mechanism to insure the policy is adhered to
correctly and accurately.
Res lly s ted,
Thomas A. Peterson
City Manager
TAP/lh
NO.
Exhibit "A"
RECOMMENDED POLICY & PROCEDURES
CONTRACT CHANGE ORDERS
Purpose
To establish formal policy and procedures to govern contract
change orders.
Policy
. Definition
As used in this policy, a change order shall mean a written
order to change the amount of work to be done on a formal contract
awarded by the City Council which is anticipated to result in an
increase or decrease in contract price. Change orders may not
increase or charge the scope of the project specified in the contract
plans and specifications approved by the City Council.
. Department Head Authority
The responsible Department Head shall be authorized to
approve and issue individual change orders to increase the contract
price up to $5,000 or 10% of the formal contract, whichever is
larger. The aggregate total of all change orders to eacil: contract
may not exceed $25,000.
Authority of the City Manager
The City Manager may authorize change orders in excess of
10% of the formal contract or in excess of $25,000 to avoid
extraordinary delay of work or to protect the safety of human life
and the environment at or near the work site. The City Manager shall
report the change orders and the amounts to the City Council at its
next regular meeting.
Procedure
Written change orders shall be submitted to the Finance
Department to be added to the construction contract and encumbered
against the specific appropriation prior to payment to the
contractor. In the event unencumbered funds are not available a
special allocation must be processed to increase the applicable
appropriation.