A 鈥淐OVID-19 premium鈥� is ratcheting up the budget for Nanaimo鈥檚 new fire station, adding $3 million to the cost, for a total of $20 million.
Nanaimo鈥檚 finance and audit committee meets today to consider a staff recommendation to proceed with the construction plan, despite the new sticker shock.
Other options are to cancel the tender and defer the project.
鈥淥bviously no one is happy about the increased cost but frankly, as late as January, our experts told us the budgeted amount was appropriate,鈥� Mayor Leonard Krog said Tuesday.
But COVID-19 appeared and all bids were then required to plan to complete construction following virus safety protocols, including physical distancing, he said.
鈥淭hat鈥檚 what鈥檚 done it. There鈥檚 no ifs, ands or buts,鈥� Krog said.
As a consequence of COVID-19, 鈥淚f you need a new fire hall and we certainly do, it was the community wish to do it, then the end result is you鈥檙e going to end up with a situation like this.鈥�
Krog does not want to postpone the project.
鈥淲e need it. It鈥檚 got to get done.鈥�
If a disaster struck, emergency staff and equipment the community would need could be unavailable if a new building was not in place, Krog said.
He said he will listen to discussion of options. 鈥淏ut certainly my inclination is that 鈥� given the community鈥檚 need and public safety, public health 鈥� I don鈥檛 really see any other reasonable choice.鈥�
One citizen suggested delaying the project. Krog asked, 鈥淲hen does delay become virtually negligent?鈥�
Citizens voted in 2018 in favour of a $17-million budget to replace Fire Station No. 1 with a 17,039-square-foot (1,583 square metre) building. It is to be built to post-disaster structure standards, serve as the city鈥檚 emergency co-ordination centre, and house firefighting services, fire administration and dispatch.
The existing station is at the end of its useful life, does not meet seismic standards and requires ongoing maintenance, a staff report to the finance committee said.
If council agrees to the higher budget, that will keep the project on track to open as planned in fall 2022.
Nanaimo issued a public construction tender in January and as the closing date neared, the pandemic was announced. The city extended the tender closing date to May 12 and told bidders that all the safe work regulations due to COVID-19 would exist for the length of the contract.
Nine construction tenders came in. The lowest bid was $15.4 million and three others were close, the staff report said.
But that low bid was still $2.8 million higher than allowed within the $17-million budget allocated for the overall project.
Project costs consist of more than construction alone. They include 鈥渟oft鈥� expenses such as architects, engineering and other consultants.
A cost consultant examined the plans and said that the 鈥淐OVID premium, seen across building projects in the Lower Mainland, could be up to 20 per cent for complex projects such as this one,鈥� the report said.
The city did not allow for an extension of the construction time line to accommodate issues relating to the pandemic, which may have put on additional cost pressure, the report stated.
Costs driving the COVID premium could include supply chain disruption, labour availability resulting in higher costs, labour productivity and scheduling pressures, and uncertain health and safety overhead costs. Staff hope for more certainty on overhead costs in coming weeks.
Nanaimo has until Aug. 10 to decide on whether to accept a submitted bid.
The plan recommended by staff would boost the third year of the project by $3 million to $6.7 million, using funds from the city鈥檚 general capital reserve and its general asset management reserve.
Nanaimo chief administrative officer Jake Rudolph said there are implications if the building does not go ahead.
If the work was put out to tender again in a relatively short period of time, that could lead to fewer bidders next time and that decreased competition could result in higher costs.
If Nanaimo decided to delay the new fire station, it would take four to five years to get it back on track, Rudolph said.
That is because Nanaimo is looking at its options for all its properties in that area, including taking action on the undersized police station, he said. 鈥淚t gets built into a bigger process that takes longer to finish.鈥�
