MAPLETON – Skyrocketing prices for materials have driven up the cost of constructing a water tower in Drayton.
Township council has awarded a contract to Landmark Structure Co. to put up an elevated tank in Drayton.
The Burlington-based company submitted the only tender for the project with a bid of $6,149,000 including HST.
A report from engineering consultants CIMA, presented to council during a June 30 meeting, indicates the bid price is about 30 per cent higher than an earlier design cost estimate of around $4 million provided by the consulting firm.
“The significant price difference is predominately driven by the recent escalation in construction material costs sustained globally, and throughout Canada,” states the report, which notes the price of steel rebar increased by approximately 76% between May 2020 and May 2021, and approximately 30% just within the six-week tendering period for the Drayton elevated tank.
“The prices of other construction materials including wood, copper and stainless steel are currently at their all-time high price, further complicating the bidding process,” the report adds.
“These increases in material costs, coupled with supply-chain issues resulting from the COVID-19 pandemic, have resulted in a significant impact to the overall tender price.”
A report from Mapleton CAO Manny Baron points out that, based on the final bid price, the project will increase the yearly cost of water and wastewater services to water system users by $282 annually, or $0.77 per day.
“This is an exciting report, but it’s bittersweet as well,” said Baron.
“We were just getting to the point where we needed to come out for tenders and, as everyone knows, COVID hit. And with COVID, commodity prices rose significantly and put a lot of pressure on the materials that we’re looking to use for a water tower.”
Baron noted that while engineering firms typically receive a percentage of the final bid price, CIMA has agreed to base their fee on the original $4 million estimate.
“But regardless, it’s not just the cost that worries staff. There’s also an excerpt from the MOECC (Ministry of Environment and Climate Change) that is basically saying we’re teetering on the danger zone when it comes to fire flows,” said Baron.
“We’re growing fairly substantially, year over year, and it’s a fear of ours that if we don’t do something with the water tower, the elevated tank, we’re going to run out of water pressure at some point.”
“It’s really a tough pill to swallow for all of us,” said Mayor Gregg Davison.
“It’s going to be really hard for us to, to pass on these costs to the community once again.
“We just raised our rates thinking that we had everything covered and now … the cost (is) going way up.”
Councillor Marlene Ottens said, “Since a big component of needing the water tower is water for fire suppression, would it not be logical to spread the cost amongst all the residents of Mapleton since we all benefit from the fire department, rather than just putting all the costs on the water users, the urban residents?
“I say that as a rural resident.”
Mapleton Fire Chief Rick Richardson explained fire trucks are seldom refilled from urban fire hydrants when fighting fires in rural areas in the township.
“Years ago we had no outside water sources, but now with the help of the building department, we have 35 or 36 water sources in the township t that we go to first. The only way we come back to Drayton to a hydrant, or to the firehouse, is if we’re really close to town,” Richardson stated.
Ottens also asked if it would be possible for any future drop in construction material costs to be factored into the end price of the project.
“It’s uncertain as to whether the price of the steel commodity is going to reduce in the near to medium future,” replied Stuart Winchester, a partner in CIMA and the company’s manager of municipal infrastructure.
“We do know that there are some significant infrastructure programs in the U.S. and in China, which are really demanding a lot of steel.”
Winchester also pointed out no such provision was included in the original tender document “so that would be goodwill on the part of Landmark Structures.”
“The problem that I would anticipate … on this is that, due to volatility in the price of commodities right now, the contractor is going to secure the products as quickly as he can, as soon as he’s advised of the award of contract,” Winchester added.
“So he’s going to be fixing his prices tomorrow, if we award the contract tonight.”
Councillor Dennis Craven noted only one tender was received for the project, even though about 20 companies picked up tender documents from the township.
“Because of that, should or could we re-tender, hoping that more would tender and maybe you get a better price on it?” Craven asked.
Winchester replied, “The construction of composite elevated tanks is a very specialized construction process and there really are very few constructors … certainly very few in Canada, and very few across North America actually.”
He also noted a number of companies taking plans were suppliers and subcontractors that would have provided bids to Landmark Structures.
“It’s unfortunate we’re in the situation we are in timing wise, but I think I’m supportive of moving forward with it as tendered,” said councillor Paul Douglas.
“We have been looking at this for a long time and, you know, I don’t want to run the risk of re-tendering, later on this year or next year with the uncertainty of what’s going to happen.”
Davidson stated, “If we don’t do something then, at some point in time, the ministry will come in and force us to do it anyway and we won’t be as prepared to do it as we are now.”
Councillor Michael Martin noted, “This tower, when it was proposed back in the beginning of last term of council, was sitting between like two-and-a-half or three million dollars … so sitting back has done us no favours.”
“I commend council on this because this is not an easy decision,” said Baron.
“I do know that there’s a lot of concern, a lot of questions in the background that were posed. There’s a great deal of concern for the ratepayers from all council. So I just want to make sure that the public understands that it’s a situation we’re faced with … there’s some folks that have benefited a great deal from things like this.
“Unfortunately, we’re on the other side of that. We have to spend extra to get what we want so it’s a hard decision by council but I think you’re on the right track.”
The motion to award the tender to Landmark Structure Co. was approved unopposed.
The project is expected to be completed by the end of August 2022.
