Agenda Index City of Vancouver

ADMINISTRATIVE REPORT

TO:

Vancouver City Council

FROM:

General Manager of Engineering Services

SUBJECT:

Award of Contract No. 9812 - Construction of the New Asphalt Plant and Aggregate Handling Facility

 

RECOMMENDATION

COUNCIL POLICY

Construction contracts over $300,000 are to be awarded by Council.

PURPOSE

This report seeks Council approval for the award of a $11,756,933.76 Construction Services Contract (Contract No. 9812), to Spantec Constructors Ltd. and an overall project budget increase of $800,000.

BACKGROUND

On June 26, 1997, Council approved the acquisition by Engineering Services of a portion of the property at 900 East Kent Avenue from the Property Endowment Fund and development thereon of an Asphalt/Aggregate Facility. Council also approved funding of $15,482,000 for the construction of the New Asphalt Pant, Aggregate Handling Facility, Materials Testing Laboratory and related consultant services and internal staffing.

The site has been remediated and the buildings demolished. The site warehouse that was to remain, completely burned on April 19, 1998. Risk Management are pursuing an insurance settlement for this loss. Construction of the marine works, barge ramp and upland densification is nearly complete.

In January 1998, the Asphalt Plant and Aggregate Stacker were tendered as two separate equipment supply contracts. The resulting bids for the Asphalt Plant were mainly from American companies and were substantially overbudget. Staff believe, at that time, the American firms required a significant premium to carry the risk of being paid in Canadian funds. The Aggregate Stacker received only one bid, which was also over budget. Resulting
comments from interested contractors indicated the contract was too small to do the required design work to bid.

In an effort to get a more competitive bid, staff retendered the Asphalt Plant and Aggregate Stacker with most of the remaining work, as Contract No. 9812, and allowed the contractors to bid in both currencies. In that way, the City would assume the risk of the falling Canadian dollar, but would not pay extra costs to an American firm predicting a lower Canadian dollar.

The construction of the Materials Testing Lab has also been tendered and came in over budget. After a cost cutting exercise, the negotiated price still remains slightly over budget. Staff intend to pursue a construction management option and still believe that the Lab can be constructed within budget.

Staff continue to have discussions with the City of Richmond, who are interested in a small partnership and cost sharing in our Asphalt Plant and Aggregate Handling Facility. Should Richmond forward a firm offer, staff will advise Council.

DISCUSSION

Four bids were received August 27, 1998 for Contract No. 9812 for the Asphalt Plant and Aggregate Handling Facility. This contract required the construction of a new asphalt plant, truck scales, aggregate stacker and conveying system, grading and drainage, wastewater treatment facility, civil works, site servicing and associated small buildings.

To compare submitted tenders, the contract identified the use of the currency conversion rate identified the day prior to tenders closing, which was 1.5655. The tender results are summarized as follows:

Tenderer

Can. Dollars Tender Price

U.S. Dollars Tender Price

Total (Can. $)
Tender Price

Spantec Constructors Ltd.

$7,866,433.00

$2,485,149
($3,890,500 Can.)

$11,756,933.76

KWH
Constructors Ltd.

$6,919,643.00

$3,755,700.00
($5,879,548 Can.)

$12,799,191.35

Monad
Contractors Ltd.

$8,956,885.00

$ 3,166,502.00
($4,957,158 Can.)

$13,914,043.88

The Gisbourne Group

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non compliant bid

The Tender submitted by Spantec Constructors Ltd. is the low, fully compliant bid and meets all contract requirements, including bonding, schedule and past experience. Spantec Constructors Ltd. is well qualified to complete this work, having demonstrated significant experience with constructing large, complex, industrial projects in a satisfactory and timely manner.

FINANCIAL IMPLICATIONS

The original budget of $15,482,000 was approved by Council June 26, 1997. At that time, the Canadian dollar was much stronger and a conversion rate of 1.4 was used in converting the cost of U.S. supplied equipment to Canadian currency. When tenders for Contract No. 9812 closed, that conversion was 1.5655, which added a cost of over $400,000 to the project. Staff are hopeful that the Canadian dollar will continue stronger when it comes time to pay for the U.S. supplied portion of the project and that will result in less borrowing required from the Capital Financing Fund.

The original budget only identified $20,000 to remediate the site, as staff believed that the City was purchasing a clean site from the Province. Although the Province remediated the soils, there remained significant amounts of hazardous liquid waste in the buildings in various sumps and pits. Furthermore, as building demolition began, additional amounts of asbestos were discovered. This remediation resulted in a $430,000 budget over run.

Westmar Consultants Inc. have now completed all the design work for the project and will continue with the general engineering and inspection services during construction. Due to the civic strike last fall and the retendering of both the Aggregate Stacker and the Asphalt Plant, the project has required additional consultant services to those originally estimated. Therefore, an additional $200,000 is requested for the consultant's general engineering and inspection services to deliver and commission the project.

Due to the above, an additional $800,000 is required to complete the project. The source of these funds is the Capital Financing Fund.

It can be noted that had the Canadian dollar remained near the level of June 1997 and had the remediation been completed within budget, this project would be proceeding on budget.

CONCLUSION

The General Manager of Engineering Services recommends that Council authorize the award of Contract No. 9812 to Spantec Constructors Ltd. and approve the additional $800,000 funding required.

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ag980929.htm

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