Vancouver City Council |
ADMINISTRATIVE REPORT
Date: May 22, 2003
Author/Local:TBatty/7315
RTS No. 03418
CC File No. 1805
Meeting Date: June 10, 2003
TO:
Vancouver City Council
FROM:
General Manager of Engineering Services and Manager of Materials Management
SUBJECT:
Renewal Option - Contract PS01019, Supply of Ready-Mixed Concrete
RECOMMENDATION
THAT Council approve the exercise of the renewal options and that the City enter into contracts with Lafarge Construction Materials Ltd., Ocean Construction Supplies Ltd. and Kask Bros Ready Mix Ltd. for the supply and delivery of ready-mixed concrete for an additional 12 month period from June 13, 2003 to June 12, 2004, at an estimated annual cost of $1,940,519 plus the GST (less any municipal rebate received) and PST (where applicable).
1.
Pick Up
Estimated Cost
Lafarge Construction Materials Ltd. and Ocean Construction Supplies Ltd for ready-mixed concrete picked up by City vehicles from suppliers depots.
$556,969
2.
Delivery:
Kask Bros Ready Mix Ltd. for ready-mixed concrete delivered to City job sites.
1,383,550.
COUNCIL POLICY
The Policy of Council is to award contracts for the purchase of equipment, supplies and services that will give the highest value based on quality, service and price.
Contracts with a value over$300,000 are referred to Council for award.
BACKGROUND
On May 15, 2001 Council awarded 12-month contracts to Lafarge Construction Material and Ocean Construction Supplies for ready-mix concrete picked up by City vehicles from suppliers depots. A contract was also awarded to Kask Bros Ready Mix Ltd for the delivery of ready-mixed concrete to City job sites as and when required.
The contracts provide for four 12-month renewal options, by mutual consent between the City and the contractors. The renewal options also provide for a price adjustment, at the end of each 12- month period, subject to documented proof of manufacturers raw material cost or any other factors related to this product which can be verified with an independent published source.
DISCUSSION
Kask Bros. Ready Mix Ltd. and Lafarge Construction Materials Ltd. renewed with no price increase for the first 12-month period of this contract. Ocean Construction Supplies renewed with a 2.85% increase.
This is the second 12 month renewal. Lafarge Construction Materials Ltd. and Kask Bros. Ready Mix Ltd. have both requested a price increase of $4.00 (approx 4%) per cubic metre to extend for a second 12-month period based on increased raw material, fuel and labour costs. Ocean Construction Supplies has requested a $3.00 per cubic metre increase based on increased raw material, fuel, labour, utilities and insurance costs. Ocean has also requested an increase in the environmental levy from $2.00 per cubic metre to $2.25 per cubic metre due to increased plant maintenance required to meet more stringent environmental regulations. This works out to be an approximate overall 3.25% increase. Documentation provided by all three companies has been reviewed and recommended for approval.
It is estimated that the 2003 contract extensions will result in costs of $556,969 for ready-mixed concrete to be picked up by City vehicles from Lafarge Construction Materials Ltd. and Ocean Construction Supplies Ltd., and $1,383,550 for ready-mixed concrete delivered to job sites by Kask Bros Ready Mix Ltd. The total value of the ready mixed concrete is estimated to be $1,940,519.
FLY ASH USE IN READY MIX CONCRETE
The use of fly ash as a partial replacement for Portland cement in ready mix concrete has some advantages in reducing CO2 emissions and reducing waste disposal requirements. The use of fly ash, which is a by-product of the burning of coal to produce electricity, allows some replacement of cement and a resultant reduction in CO2 emissions related to the cement manufacture. Disposal of this fly ash as a waste product is also avoided. The ready mix suppliers for the City of Vancouver have been conscious of the benefits of fly ash and have incorporated fly ash in their mixes for many years. The percentage of fly ash used is now approximately 20percent of the total cement used in the concrete. Increasing fly ash content above this amount is difficult due to two issues given the typical concrete uses in our street works. Studies have shown that a minimum amount of portland cement is required to resist the spalling of the concrete surface when de-icing salt is applied. This limits the practical percentage of fly ash use to approximately 20 percent. In addition, as we move above the 20 percent amount, it takes longer for the concrete strength to develop and this starts to present operational concerns where streets need to be put back into service as soon as possible to minimize project costs and reduce construction zone impacts.
Thus the current practise of our ready mix suppliers is to minimize cement content and maximize fly ash content to the extent possible that still provides durable concrete and operational performance to suit the typical street and sidewalk needs.
FINANCIAL IMPLICATION
The overall estimated cost for the supply and delivery of ready-mixed concrete has shown an increase from $1,811,475 in 2002 to $1,940,519 in 2003. A change to the estimated quantities and a slight price increase will result in a 7% price increase overall. Generally, ready-mixed concrete is used for Waterworks, Sewers and Streets capital and maintenance work. Ready mixed concrete is ordered on an as needed basis for each particular job site. On some occasions operating budget and capital budget funding is used for the same delivery as new capital work and maintenance work is taking place in the same location. The concrete for each is charged to specific work orders. Therefore, these purchases are funded from a variety of sources, i.e. 2003 Streets and Sewers Operating Budget, 2003 Streets, Waterworks and Sewers Basic Capital, 2003 Water Utility Fees and 2003 Sewer Utility Fees.
CONCLUSION
As Lafarge Construction Materials Ltd., Ocean Construction Supplies Ltd. and Kask Bros. Ready-Mix Ltd. have been satisfactory suppliers, it is recommended that the City exercise the renewal options and enter into new contracts with each supplier effective June 13, 2003 through to May 31, 2004 at an estimated 12-month cost of $1,940,519.
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