[BIRMINGHAM waren WORKS Drectors/ofncors avn. ee, Fiat vee airy ‘rte escort erg Mucus, mo. ‘Sere ear Ste) WL ‘Asst Sr Teaswer ‘cenera Manager Assent Dam ones PE patos an Tec! Tm ons Pe rane aa Matec Pravda July 28, 2016 a jrman Ronald A. Mims ‘Birmingham Water Works Board Re: Information Request ~ July 13, 2016 (Chairman Mims: [As requested in your July 13 2016 leter, Lam providing an update on: 1) pending issues including capital projects, SAP Customer Billing and Relationship Implementation and Budget Amendments; 2) 2016 projets or strategies; and 3) 2017 Operating & Maintenance cost reduction measures. Pending Issues ‘2016 Capital Projects - Attachment “A” is a spreadsheet of ongoing projects from the 2016 Capital Budget which shows the project category of project number, project description; approved 2016 capital ‘budget and expenditures year-to-date, As you will se, almost all projects have started; except for some tank painting projects scheduled for fall 2016 and the Carson Loop Phase 6C which is pending duc to right-of- way issues (condemnation of right-of- way is required to complete the project). ‘Attachment “B” is a 2016 Capital Project Description document with the current status of the larger projects. This document clearly shows that engineering consultants oF in-house engineers are assigned to each project to ensure the projects ate completed in accordance with the engineered specifications and on time. Therefore, thee is no need to assign additional consultants on any of these projets Implementation of Customer Billing and Relationship Module (SAP Phase 2 Implementation) - This project was awarded to Utegration in October 2015 with a [2-month project completion date. Also, ARCADIS was awarded a scope of services agreement to manage this project in October 2015. Utegration and ARCADIS are finishing up system testing and will start training in the next couple of weeks. ‘Therefore, we will set an implementation date within the next couple of ‘weeks and start using the new system at that time, Managers, supervisors and key employees worked diligently over the past 12. months ‘with both companies to get the system to this point. We hope to finalize nd implement the system within the next 60 to 90 days. Budget Amendments/Additional Cost - The Board has approved several contracts this year that were not included in the 2016 operating budget; therefore, the 2016 operating budget should be amended to cover the additional cost for these contracts: a) Ragsdale, LLC. b) Attomey David ‘A. Sullivan, c) Fleenor & Green, LLP, and e) Russell Management Group, LLC forthe following estimated costsSly 28,2016 Page? 2016 Company Monthy Total @ Ragsdale, LLC. $10,000 $ “60,000 b. Atfomey David A. Sullivan $10,000 $70,000 © Pleenor & Green, LLP. $10,000 $70,000 4d. Russell Management Group $10,000 $60,000 ‘Total Amount $40,000 $260,000 {A review of the legal and consultants cost through June 30, 2016 indicates that we expect to fully expend the $1,177,000,00 budgeted for legal cost and the $1,000,000.00 budgeted for consulting cost in 2016. Therefore, I recommend the operating budget be amendment by $260,000.00 for the ditional legal and consulting cost 2016 Projects or Strategies We use various management techniques to help ensure that the current year’s operating expenditures are under budget. We will continue using such techniques through the remainder ofthe year (August through December 31, 2016) to further reduce operating costs including: 1. 2016 Bond Refunding - We are in the process of refunding thre (3) series of BWWB. existing bonds which will produce net present value savings of approximately $67M and reduce the annual debt service cast by $3M annually. This is @ substantial saving which will impact the debt service requirements for 2016 and 2017. This refunding will also allow us to release S27M in debt service reserve funds that can be used for capital projects in 2016 and 2017. As of June 30, 2016, we have $34.2M in Reserves for “Capital/Paygo" needs that are available for capital projects. Therefore, after we refund the bonds, we will have S61.2M available for capital projects which will allow us to delay the issuance of 2017 new money bonds for several months until the S61.2M is flly expended. 2. Hiring Freeze— Salaries and fringe benefits costs account for approximately 53% of our operating and maintenance budget (O&M Budget). One approach would be to place a hiring freeze in effect for the remainder of the year (August through December 2016) which ‘would save approximately $600,000.00 in salaries and fringe benefits through the end of the year. Under this approach, we are proposing to only ill “Required Positions” which would the the positions necessary to provide treated water to our customers. This would not affect any existing employees and it would allow us to continue serving our customers with no impact to their services. If we implement the hiring freeze approach, I would also recommend ‘that we not hire any additional consultants during this same time period. 3. Management of Utility Cost ~ The utility est accounts for approximately 9% of our ‘O&M budget. The Operations and Technical Services Division is in charge of the raw water intakes, water treatment plants and pump stations which account for the majority of our utility coat, These frcltien re operated ta minimize utility coat hy filling tanks and reservnis ‘during off peak hours. Alabama Power has peak utility rates from 10:00 arm. until 7:00 pm. which means uty cost is higher during ths time period; therefore, we fill raw water tanks, finished water tanks and use more power cost during off peak hours between 7:00 p.m. and 10:00 am. which helps minimize power cost. As a result of this management technique, our power cost is under budget $630,000.00 year-to-date. Please note that power cost could Increase if consumption increases significantly which may reduce or eliminate the projected savings, ‘a1 Fint Avenue Nath Hoe OT «Bumingham AL 35236110 « Phone 284400 Web: wa bangSuly 28,2016 Page3 4, Management of Chemical Cost ~ The chemical cast accounts for approximately 5% of our O&M budget. The Operations and Technical Services Division is in charge of the water treatment plants and the treatment process which accounts for all the chemical cost. These facilites are operated so that finished water meets all EPA and ADEM regulations at the lowest possible cost. The chemical cost 4s under budget $177,967.00 year-to-date, Please note tht chemical cost could inerease if consumption increases significantly which may reduce o eliminate the projected savings. 2017 O&M Cost Reductions ‘When considering O&M cost reductions, one ofthe first things to consider is any item or project that ‘was recently added to the budget. Therefore, | recommend eliminating one (1) distribution erew and ‘the full implementation of LED Light Fixtures for the 2017 O&M Budget L. Distribution Crew — In 2016 budget, we added an additional distribution crew at an estimate cost of $320,000.00, The board member that recommended the additional crew is no longer with BWWB. The positions could be eliminated through attrition (as postions become vacant, we would not fll them and the additional crew could be eliminated); therefore, no employees would be affected and customer service would not he affected. 2, Installation of LED Light Fixtures — Engineering and Electrical & Maintenance Departments have determined that a reasonable amount of savings in power cost ean be generated by replacing updating al existing exterior light fixtures with LED light fixtures at all locations. The Engineering and Electrical & Maintenance Departments are using any available capital funds annually to replace existing light fixtures with LED Light Fixtures, We have met with Mr. Je Kaufinan (LED Solutions) several times, and he indicates that his company could expedite this process by installing all of the light fixtures before the end of 2016 at no cost to the Board, They would arrange financing for the project which would be pid through cost savings, We can authorize LED Solutions to count the lights (Non-LED Lights at all facilities and they can provide us with an estimated cost savings for this project After we receive their report, we ean negotiate an agreement with LED Solutions and ‘complete this project by the end of 2016 or atleast by the end of the first quarter of 2017, [As you are aware, we have started the 2017 budget review process which may generate additional cost savings ideas. Ifso, we will provide additional comments during the budget process. Please let me know if you have any questions or need any additional information, Sincerely, Lo ocband General Manager Enclosures 2600 Fin Avene No.0 Box O10 «minha AL 305010 «Phan 25) 244-0 Wea we nagAttachment A ‘The Wate Werks Sosa the Cy! Semin 2016 Capital Budget Shes siPraerimgrowmerts Poe 259109. sAPimplereton ase) 6534 Conon loop Mase se e612 Later Dom Saneaton Poet [nr 4 Psodum iypacharte Pee Be62t32 Waive Modeaton 5732 SFP Rs Suge Dewaterng Mess esis srr oes ez Mole at Pt epaconant besiss2 nnd Cam Marna Repr/neacenrt e636 Reprstosiney Pumas Becte36 Restos Pumps 1.6436 Med Gury provements 51522 land Late ys et Och Ve Repco (Coser Fied Projects om revues) AMsntenace nd Rei Pract trie cnet mar roc whi te managed by BWA tat) 1A New Duster Mans ra Myra Aes Hew Deemer) § % —_Ditrouion ais rans iow Comer Tap Fact. Teele ig eres Reverse Water Ony Xe wetesandMcterngTecnaages 10 Regie Dstrtion Mars Syste Deveney” SE epi Dstrbiton eves Sytem Dewoprert nN 16 Pacha ire Propet 1H Taner and ep BI fepfhesc Pumps, Mat, Cenerers 12 Serene Resoenents-Osibuton Depsinet Oy AL RepfRepeDstrbucen Wyre Vaves 1M Gitand cap Prag. Hg IE 2 Otlen ura keane 3 —_Tarmaraton quent Geert tgupmene 5 Meno Reps esting Fotis © outer Terma aed Oprtin & anance‘Attachment B 2016 Capital Project Description General Capital, Technology, Security, and Distribution Projects 'SMEP iter improvements Project Project was designed by Arca U.S, Inc. and the project includes new fiers, new backwash pumps, and back-up generators. Project has been bid and the construction management consultant contrat awarded to Arcadis US, In. with Monumental Contracting a HUB, providing some services on the projec. Two specialty consutant contracts will ned Board approval. They ar Birmingham Engineering ‘and Construction Consultants, nc, # HUB, which will provide engineering materials testing and Inspection services and Multvista Construction Documentation, which wil provide a specialized {documentation sytem of the project under construction ‘SAP implementation Phase 2.0 This stage of the SAP development was awarded to Utegration developing or programming the sytem and Arcadis US, In. proving support services This stage of the project is nesring completion and anticipated to go lve by the end of the year. Consultants’ works nearing completion forthe project ‘hich includes programing for Bling and Customer Service. Tis projects being managed by BWWB PMO office, ‘carson Loop Phase &¢ Project consists of 5,900 feet of 36” buried ductile iron pipe and fitings along USK right-of-way from Grand River west to Floyd Bradford Road. Projects being designed by Volkert, nc. and they wil also provide construction management service, itis ati)pated that we will be condemning property inthe next few months to support the project. ke Purdy Oam Rehabilitation & Spllvay Capacity Upgrades Project includes the design and construction of stability improvements to Lake Purdy Dam to address the inspection findings, which have been completed. Arcadis US, Inc. is curently designing the Improvements. In-house engineers are managing the project. PEP Sodium Hypochlorite Project Pisin the middle ofa neighborhood and therefore, risk managements high priority. A bulk quid sodium hypochlorite fality is indesign by in-house engineers to mitigate the chlorine risk. Design and construction willbe managed by BWWE Engineering Department. Specialty engineering services for construction materials testing and inspection services will be required 1m Moni valuation Program Projects to provide a monitoring sytem with instrumentation and procedures to colect and transmit {round and hydrologe data tothe BW/WB SCADA system. Avcadis US, Inc. i preparing bid documents‘Attachment 8 {or the monitaring system instrumentation installation. Construction management wil be performed by Inhouse engineers. WEP 480V System Modification Project addresres a low voltage lsu Inthe plant 480 vol electrical 2ystem and wil provide backup power generator set. Project was designed by in-house engineers and is currently out forbids. Construction management wl be performed by in-house engineers. Specialty engineering services wl provide construction materials testing and inspection services willbe required ‘MEP Residuals Sludge Dewatering Press Project replaced a 38-year-old falling plate and frame system with two new 26inch solids dewatering centrifuges. Projet was designed by the in-house engineering sttf and is near completion. Ancillary equipment needs to be upgraded and iscurenty in design by in-house engineers. Design and construction is being managed by in-house engineers. SMEP Dredge ‘The SMFP dredge is outdated and does not keep up with sludge production. tis often out of service for repairs. The replacement of the dredge will alow SMEP to remove settled “sludge” from the ‘sedimentation basin so that SMEP does not get turbicty violations on settled water. In-house ‘engineering staff designed the project and wil be managing the instalation. Mobile Plot Plant Replacement Plant is use to test potential water treatment methods for upcoming regulated contaminants. In-house ‘engineers designed and managed the construction of the unit. This projects near completion In-house engineers operate the side-by-side treatment plants contained inside the Mobile Plt Plant. Inland Dam Marina Repr/Replacement Project replaces the existing marina which was damaged beyond repair due to severe corrosion and storm damage. it willhave new floating walkways, boathouse, and anchoring. Design was completed by In-house engineers and construction Is being managed by inhouse desgn/construction engineers, WEP Fite Rehabilitation Project ‘Te Backwash Pump Station was built during the construction ofthe project. The recycle line ofthe ‘Backwash Pump Station has some cavitation causing degradation and holes inthe piping. Arcadis US., Inc. is currently designing the changes that need to be made and installed. -house engineers are ‘managing the project.‘Attachment 8 ‘ahaba Pumo Station Root Replacement. Museum, #1, Pits ‘The roof needs tobe replaced on the front ofthe museum, on pit #, and on pt #2 atthe Cahaba Pump Station Museum. The projects being designed and replacement willbe managed by in-house engineers. Repairs to Sipsey Pump #6 During inspection of Purp #6 at Sipsey Intake Station it was found that repairs needed to be made for the pump to continue to operate. Pump repairs are underway. Project is being managed by in-house engineers. Repairs to Cahaba Pump Station - Pump fi CCahaba Pump station Pump #16 is in need of repair and refurbishing. The work is underway and the project is being managed by in-house engineering staf. ‘Miatetd Quarry improvement Regulations have changed and now requir that fei sulfate sludge and alum sludge waste from water Lreatment be disposed of in a permitted Cand Olan, improvements are belng made to the quarry to bring it upto standards so It can be permitted asa C and O landfil,Allthe improvements and the permit application preparation are belng done bythe BWWB Engineering and Distribution Departments. Specialty engineering materials testing engineering wl be requlre on the project. lnfand Lake Service Spay The spillway needs tobe repaired. The design report was completed by Arcadls US, Inc. and AMEC. ‘The repair and rehabilitation construction willbe managed by in-house engineers Maintenance and Repair Projects (Categories 1A thru 7 consists of smaller projects, which are managed by BWW staff or as noted(%92'L) }@6pnq 49A0 LOL'0Z$ SI EWEN © ‘e}ep-0}-4e9A yoHpng Jepun g1.9'6Z8$ S}S0D JoGe] @ “ayep-0}-se9K yaBpng Japun J96'2/1$ SISCD|EOIWEYD @ “ajep-o}-seaf yaBpng Jepun Z9G'09$ SIS0D JaMod @ “ejep-0}-see4 JoBpnq sepun Lop'zpss UleW UoRNgUysiq — sebueYD Buined @ “ejep-o}-seak Ja6pnq sepun LE 1'LZL$ UIE UoRNUIsiq| — saBeYD Jo}eNULD @ soz'oszs _ eB png apuN FOTVZ— qwiey ss07 dors 66's 869g 1949 Tere Temov GLA goe'ees'es —eBPNAGLA “ayep-o}-4eK JeBpNq JepUN 60L'06ZS $1180 WWIEAH eeKo|dWy @ wSS9OUBHEA | 9 O e6se7water Works Boaro July 13, 2016 prectos/omiers - VIAHAND DELIVERY AND E-MAIL ‘Mac Underwood — General Manager The Water Works Board Yew Mase, 3600 Frst Avenue North "Rteeescer Birmingham, AL 35222 sean may Dear Mae lease meet wit Jerry Jones to discus all pending issues relative to the Water summers th Works Board. I would like to get your sound advice and position on these issues. In addition, please: |. identify and recommend four (4) cost reduction measures from the 2017 O&S budget without any impact to customers and employees: and 2. identify three (3) key projets or strategies that BWWB needs to start Fore ‘before the end of 2016 and note the value of such projects or strategies ener Managers 1 our customers and employees. Please report back 1o me by July 28, 2016, relative to the above-referenced Dany Jnes PE items, pon and Fc Seow Sincerely, Tes PE ‘eng aa artennce vocrarens, Qmald,d, Nong emcee annstoton Ronald A. Mims ‘Chairman President RAM:gea 5400 Firs Avene Noth, PO, Box 80110 Bnninghan, AL 3243-0110 Phone (205) 214-4000 Website: wwcbwwhons