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Town awards Tottenham sewage plant construction contract

Posted June 18, 2014

Bennett Mechanical Installations Ltd has won the contract to build a new wastewater treatment plant in Tottenham at a lowest bid of $16,607,000 (not including HST). But a $2.5 million contingency factor, and $358,000 in construction administration costs, raises the total budget to $19.45 million.

Brendan Holly, Director of Technical Services told councillors Monday night the contingency, which typically on a project this size is between 5-6 per cent, is approximately 14 per cent here because Bennett has worked in a low profit margin, and the Town's project consultant, Conestoga-Rovers, recommends the higher rate to protect against expected change orders.

"With a contractor who has bid with a very low profit margin, the frequency, the quantity, and the aggregated magnitude of change orders tends to increase, and can result in double or even triple the normally anticipated range," according to Conestoga-Rovers. "As a result, there is potential that requests for change orders by the Contractor can escalate up to and beyond 10 to 15 percent of the original contract value, since the low-bidding contractor has less profit, or risk margin, in their price."

The new sewage plant is being built on site of the current facility, which will be decommissioned. The Mill Street pumping station has also been upgraded as a companion to the construction, which is to service the Tottenham Secondary Plan, which will double the community's propulation.

The Town expects to spend about $8.5 million in 2014, and the remainder spread over 2015, and 2016 when it's expected to be substantially complete. While its eventual financing will be covered by development charges, there are not enough funds in DC wastewater reserves to avoid long term financing.

Ward 3 councillor Paul Whiteside wants the Town to negotiate front-end financing deals with the developers, which Mr. Holly suggested would occur as they come forward with subdivision agreements.

"The recommendation for this report is really to award the contract," said Mr. Holly. "I would also note the developers have invested and front ended significant infrastructure money for the Mill Street pumping station, which goes hand and hand with this project to provide servicing for Tottenham. The financing option would be at another time."

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