Ontario Construction News staff writer
Construction costs have escalated massively for the Ottawa Public Library (OPL) – Library and Archives Canada (LAC) Joint Facility, with PCL Construction Canada Inc. submitting the lowest of two bids, 73 per cent more than originally expected.
The city expects the project will now cost $336.14 million, $141million higher than the original $192.9 estimate in 2018.
In a report to city council last Friday, Stephen Willis, general manager of the Planning, Infrastructure and Economic Development Department, says PCL is expected to start work on the project in November, once contracts are signed.
City and OPL costs will increase by $36 million and $28 million respectively. “The Library and Archives Canada portion of the cost increases are fully funded by the Federal Government,” Willis says.
“The increase in costs can be attributed to the escalation in the Ottawa construction market since the estimate was developed in 2016,” Willis says. “The initial estimate developed in 2016 included a 10% escalation contingency but actual observed construction inflation in Ottawa, as outlined by Statistics Canada to mid-point construction is currently in excess of 65%, which has been confirmed by (a) third-party quantity surveyor. The 55% difference in anticipated inflation versus actual cots is the cause of the increase from the original project estimate and the original project costs.”
The cost increases are despite $100 million in value engineering, which won’t affect library programming, the city says.
The project’s completion date – influenced by the COVID-19 delays and inflation challenges – has been pushed back with a scheduled official opening in the spring of 2016, about a year later than originally planned.
PCL was one of three contractors who qualified for the work. In the end, only it and EllisDon submitted bids. Pomerleau had qualified, but did not end up bidding the project.
The library, named Ādisōke, will be located at 555 Albert St. The city has spent $30 million on site preparation.
Ottawa’s Chief Financial Officer/Treasurer, working with the city and OPL staff, has confirmed that the revised and much higher cost “is affordable within the council-imposed debt ceiling of 7.5% for tax supported debt servicing as a percentage of own source revenues with the recommended funding strategy of a combination of retiring debt, increased OPL capital contribution, taking advantage of preferential interest rates and servicing the debt over 40 years, which aligns to the life of the building,” Willis said.
The Ottawa Citizen reports that parking revenues from the structure’s underground garage would pay specifically for the debt associated with constructing the parking structure, whose costs alone are $27.8 million, an increase from the previously estimated $18.1 million.
The city expects to borrow money at a 3.86% interest rate (for 40 rather than 20 years) compared to the originally anticipated rate of 4.5%.
LAC would pay $136 million for its share of the structure’s costs, compared to the previously planned contribution of $70.6 million.
The project team has added elements to design to make it a net-zero carbon LEED Gold facility over the past year, thanks to an extra $20 million in federal funding that wasn’t accounted for in the original estimate but announced earlier this year, The Citizen reports.
“The extra cost that we’re looking at today is entirely attributable to inflation. We expected when we first put the report out (to see) 10-per-cent inflation. We’re looking at 65%,” Coun. Matthew Luloff, chair of the Ottawa Public Library board, told the newspaper.
“What we have right now is an accurate snapshot of what this is going to cost and…extending the timeline out again and going out to tender again, what we risk is not having two bids even to look at and perhaps upsetting the contractors that put all the effort into this tender process,” Luloff said.
“I’m confident that what we have here is the best that we can get under the circumstances the we currently face.”