The city will be dipping into its reserve funds after the lowest bid for the Thomas Brook water project came in at 24 per cent more than expected.
Jake & Jay Contracting was awarded the contract to extend the city’s water and sewer lines to the Thomas Brook neighbourhood near Revelstoke Mountain Resort with it’s low-bid of $1,084,816 at Tuesday’s council meeting.
That’s actually only slightly more than the $1,008,000 the city has available for the project, but a staff report says additional engineering costs and contingencies set aside to cover unforeseen costs – a common budget item for any construction project – means the work could cost up to $1,250,000.
To cover the shortfall, council voted to allocate $242,000 from the gas tax reserve.
They also asked questions about why so many projects were coming in over budget; in April, the lowest bid received for phase one of the Big Eddy water project was 28 per cent over budget.
“I recognize it’s really difficult to figure out estimates for some of these big projects, especially the big ones that involve so much detail, but I also notice we’re out of line by 24 per cent for the estimate for this one,” said councillor Connie Brothers. “My concern is, is there a way to do something better to make sure we don’t run into these difficulties? For budgeting purposes, if we’ve not budgeted for these extra 24 per cent, then we have to make it up somehow. If we’ve got two or three of these projects, it could be difficult.”
Allan Chabot, the city’s chief administrative officer replied, saying there could be several reasons for the bids being higher than expected. Once reason could be that the engineering companies preparing the contracts are based in Kelowna or Kamloops, and they don’t factor in the higher cost of doing business in Revelstoke.
“We have noticed the unit prices have been a fair bit higher than say Kamloops or Kelowna for similar projects. They’re basing it on that,” he said. “The more work they do here, they should get it dialled in more on the cost of doing business here.
“Another thing that has happened in the current construction year is that earlier this year there was so many senior government grants awarded,” Chabot continued. “This created a run on demand for contractors and for equipment and that has increased price of work.”
He noted the highest bid was $500,000 more than Jake & Jay’s.
The Thomas Brook project will see water & sewer extended to 22 properties that joined the city at the start of the year to receive those services. They were ordered to come up with a new water source after Interior Health found issues with their old one, which came from a brook on the resort. They agreed to pay for sewer services at the same time.
The Columbia Shuswap Regional District contributed $300,000 for the project and neighbourhood property owners will be paying $708,000.
A staff report says the city has about $900,000 in its gas tax reserve. It says if the council didn’t approve dipping into the reserve to cover the extra costs, the Thomas Brook residents would have to approve extra borrowing. “This would likely add complexity and delays to the project,” stated the report by Mike Thomas, the city’s director of engineering.
“We don’t want to overestimate budget costs and overtax people, but we don’t want to be unable to complete projects as well,” Chabot told council. “We’re at the mercy of the market and who bids.”
Council approved the contract and the gas tax funding unanimously.