The St. Albert 50+ Club is already $1.5 million over budget before a shovel has hit the ground. Council was asked to dish out another $600,000 Monday for the 50+ renovation project, after the city received a number of higher-than-anticipated bids. The project was already allocated an additional $900,000 in July, after a pre-tender estimate revealed that the original $2.37 million budget prepared by the city was inadequate.
The St. Albert 50+ Club is already $1.5 million over budget before a shovel has hit the ground.
Council was asked to dish out another $600,000 Monday for the 50+ renovation project, after the city received a number of higher-than-anticipated bids.
The project was already allocated an additional $900,000 in July, after a pre-tender estimate revealed that the original $2.37 million budget prepared by the city was inadequate.
The request, which was begrudgingly approved, brings the total cost of the renovations up to $3.87 million.
After receiving the higher-than-anticipated bids, administration conducted an investigation into the price variation.
The investigation found that while the rest of the country is headed toward a technical recession, the Edmonton region is the only area not currently affected by the economic slowdown, due to a number of construction projects already underway – namely in the downtown Edmonton arena district and Stanley Milner Library projects.
This construction bubble has created a non-competitive market and is driving up costs, Build St. Albert manager Monique St. Louis told council.
The investigation also found that renovation work has seen an escalation of two to three per cent. Prices for trades such as drywall, roofing and framing have also experienced a 10- to 20-per-cent increase.
“This is a significant cost factor since most of the 50+ building project is drywall, roofing and framing,” reads the report.
Coun. Cathy Heron questioned whether it was wiser to wait for Edmonton's construction bubble to pop before going ahead with the project.
St. Louis told council that through tender law, a municipality cannot simply reissue the same tender. Waiting would require a change of scope and thus a redesign – delaying the project a year.
She also noted that the 50+ Club had already moved out and sold off much furniture.
Coun. Sheena Hughes was upset that council was put into a “yes or yes” position and questioned why the additional funding request did not come before council prior to the club's temporary relocation to Grandin Mall and Cornerstone Hall.
“To undo would be costly and of poor consequence,” Hughes said, before giving administration a stern warning about working within allocated dollar amounts.
“When council approves a project it is not regardless of funds,” she said.
Following the meeting, St. Louis told the Gazette that it came down to unfortunate timing and unforeseen labour market trends.
“What we were trying to do is time it really tightly so we didn't disrupt (the 50+ Club's) operations,” she said. “We timed their move to tender close so that the contractor could mobilize on the spot. Certainly our intent wasn't to set up council and force them to a yes vote.”
The tender process closed on July 28, while council was on summer break.
St. Louis noted that although the city kept an ear to the ground as best it could, this is the first building project since Fire Hall No. 3 in 2008.
“We don't do a lot of buildings. We have much better industry metrics about our roadways and our sidewalk constructions. We were watching the market closely, but we didn't know it was this significant,” she said, linking market trends to the change in government – when many school projects that were up in the air received confirmation.
“What happened was we got that pre-tender estimate before the change in government. So there are a lot of external factors,” she said.
Karin Debenham, the 50+ Club executive director, expressed her relief at council's approval. She was worried that a change of scope to the project might cut into the club's fundraising opportunities.
Many of the services to seniors, such as Meals on Wheels, transportation and seniors outreach services, are dependant on grants, which do not cover overhead or infrastructure costs, she explained.
“The fundraising opportunities that the building provides us – the kitchen, the large open spaces that we can rent out – and the revenues that generates starts becoming very restricted if our square footage starts going down,” said Debenham. “Those are critical to supplementing and stabilizing the funding that is so dependent on grants.”
