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3) The current contract with Carlson Management, Inc. was based on timing and cost savings for the I-580/Foothill Interchange Improvement project and the I-680/Bemal Avenue Interchange Improvement project due to consultant staff efficiencies because of the overlap of the two construction projects. The I-680/Bernal Avenue project has been delayed and the estimated overlap time reduced from six months to less than two months which is a significant change requiring additional costs as stated on the Professional Service Agreement. 4) Additional quality assurance testing service was needed because the contractor elected to utilize on site materials that were ground and crushed instead of using a quarry product as anticipated. The additional testing required has resulted in an increase in testing costs. Additional costs for retesting of non-compliance material, including a second source inspection of non-compliance electrical mast arm, were also incurred during construction. 5) Carlson Management, Inc. has provided additional time and effort in negotiating a number of force account change orders, review time for complicated value engineering proposals, as well as time to resolve Storm Water Risk Level and traffic controller issues, etc. Staff has reviewed the justifications and noted that the original cost proposal by Carlson Management, Inc. was based on the Engineer's estimate of $3.6 million for the project while the actual low bid was $5.3 million. The current contract amount of $411,582.85 (for the 1-580 project only) represents 11.4% of the construction cost based on the engineer's estimate of $3.6M. The requested additional compensation of $87,000 would bring the total construction management, inspection, and testing service fee to complete the I-580/Foothill Interchange Improvement project to $498,582.85. This new requested total fee of $498,582.85 equates to 9.4% of the actual construction bid received of $5.3M, which is reasonable. It is the opinion of staff that an increase is justified and the Council should approve a new not-to-exceed limit of$753,377.62 to the current Professional Services Agreement with Carlson Management, Inc. With this First Amendment, the total service fee for the I-580/Foothill Road Interchange Improvement project increases to $498,582.85 and the total service fee for I-680/Bemal Avenue Interchange Improvement project remains at $254,794.77. In addition to the total compensation increase provided for in Amendment No. 1, the contract termination date is being revised. Due to the delayed start of the I-680/Bernal Avenue Interchange project, the termination date is being pushed back from September 2014 to April 30, 2015. The construction is near completion and most of the major work and components have been completed. Staff does not anticipate any major changes for unforeseen conditions that will require the full construction contingency; therefore there are sufficient funds in the project contingency to pay for Amendment No. 1. Page 3 of 4