CITY COUNCIL MEETING SUPPLEMENTAL MATERIALS 1-20-26

SUPPLEMENTAL MATERIAL 2 how the Task Authorization and milestone structure manages cost and risk, rather than suggesting that a time-and-materials (T&M) contract inherently results in lower costs. Under the proposed agreement, Task Authorizations define a specific scope, budget, schedule, assumptions, and delivery milestones. Payment is withheld until defined milestones and quality standards are met, providing the City with strong cost and performance controls. While milestone-based payment structures are often associated with lump-sum contracts, the use of a not-to- exceed T&M model allows the City to pay only for actual labor and materials incurred to complete each milestone and to retain any unused budget. The cost benefit to the City is achieved through: • Avoidance of contractor contingency pricing, typically embedded in lump-sum contracts for tasks with uncertain scope or quantities; • Reduced change-order risk through clearly defined, short-duration Task Authorizations; • Increased flexibility to adjust scope or sequencing, or cancel Task Authorizations if delivery expectations are not met; and • Payment only upon successful completion of defined deliverables and quality standards. Accordingly, the benefit of this approach is best characterized as enhanced cost control, flexibility, and risk management, rather than direct cost savings attributable solely to the T&M payment methodology. 4. Was $5M the amount we estimated to spend for these services when we completed the water rates? For clarity, did we anticipate it to be $5M or did we think / budget $6M or less? A: The Water Rate Study approved by Council included funding for resources to deliver the utility program. Similar analysis is also performed under the sewer system management plan. These resources may be provided either through additional in-house staffing or through professional consulting services. Given the current labor market challenges and the high level of specialized technical expertise required in water and wastewater operations, engineering, and regulatory compliance, the City determined that using consulting services is the most prudent and timely approach to ensure continuity and successful delivery of the capital and operational programs. This approach allows the City to move forward without delay on critical projects, maintain regulatory compliance, and manage workload fluctuations, while continuing active recruitment and development of an internal utility engineering and project management team for long-term capacity building.