City councillors voiced shock and surprise Tuesday night at how much over-budget the cost will be to connect three groundwater wells at the Water Treatment Plant No.1.
The cost of connecting the wells will be over a half-million over budget. That will be paid direct out of the city reserves.
In the end the tender was awarded to Miners Construction Ltd., for an amount of $1,092,106.05, GST included. The project was a necessary one, and as a result the tender passed unanimously at council - but not before councillors gave officials an earful about the costs.
In and Oct. 3 memo, Public Works Director Stewart Schafer explained $800,000 had been allocated in the 2011 Utility Capital Budget to connect the three wells. Approximately $236,000 had been spent on the hydro-geological study, well drilling, well development and engineering costs.
The budgetary issues arose because the location of the new wells is a half-kilometer north of existing wells. That created an unanticipated development, said Schafer: a main water line would need to be taken out to the area half a kilometer way, and the controls unit and a roadway to inspect the wells would be needed.
"That is why the cost was extremely high," he said, up to $1,092,106.
Councillor Grace Lang asked how much it was over budget. Schafer responded it was over budget by $528,000.
That news prompted a reaction from Lang.
"How come every time we do something with a sewage plant or water it always ends up costing more than we expected?" she asked.
That drew a quiet reaction from the assembled administration officials present.
"Wow" was the only word Councillor Trent Houk could find express his opinion, as he raised concern over "increases, increases, increases."
"As much as I want to get this stuff online I'm flabbergasted that we couldn't get this right in the budget," said Houk.
Houk also expressed concern about the depletion of city reserves to complete the project and raised the spectre of potential tax increases to replenish them.
"I've seen these increases and increases, and I'm wondering where the money's going to come from," said Houk.
Schafer added the city spoke with the consultants to consider connecting only two of the wells, but that would not have resulted in much of a change in price, down to around $920,000. They would still have to take the main water line to the wells, house all the electronics and build the roadway, among other things. Hooking up just one well would have dropped it to $749,000, he added.
As uneasy as councillors were over the mounting costs, they still unanimously voted to award the tender to Miners Construction for $1,092,106.05, citing the necessity of completing the project.
In other business related to the Ground Water Treatment Plant, councillors got more bad budgetary news about revised plans for a much-needed project to replace actuators in the water treatment plant, as well as to reconstruct the lift station. This was another project councillors felt compelled to get done, but the costs again were well over estimates.
Originally the 2011 Utility Capital Budget had allocated $100,000 for the groundwater treatment plant actuators replacement and $150,000 for the WMF leachate lift station reconstruction, for a grand total of $250,000.
The tender was sent out, but the two bids that came back were way over that budget. The lowest bid from Ritchie Construction was $997,389.
That led administration to recommend rejecting the tender bids and to instead buy the necessary equipment and negotiate with a contractor to install the equipment.
No specific numbers provided on the cost of that proposal, leading to uncertainty among councillors. Lang questioned whether buying the equipment and hiring a contractor would be any better deal than the one on the table. Schafer responded he was confident it would be lower.
Houk again voiced disgust over yet another project going way over budget, and suggested the city review how budgets are put together.
"The bottom line is that we budgeted $250,000 for this yet again, which is unfortunate, and now we take $150,000 off of $1,000,000 - we're going up $850,000? This is huge discrepancies - these are big bucks," said Houk.
In the end council did accept the recommendation to reject the tender bids. But instead of approving authorization for the city to purchase the equipment and hire a contractor to install the said equipment, council has agreed to table the resolutions to a later meeting while the city seeks further information on the potential cost of the necessary equipment.
