Soaring costs for construction material have city on alert as 'super library' bids to arrive in spring
Jon Willing, Ottawa Citizen
Publishing date: Mar 08, 2021 • 8 minutes ago • 4 minute read
Skyrocketing costs for construction material are coming at the worst time for the City of Ottawa as the municipality prepares to take bids on the super library eyed for LeBreton Flats.
While staff at city hall are warning council about an increase in prices in the construction industry, they still intend to soon issue a request for proposals on building the joint Ottawa Public Library/Library and Archives Canada facility at 555 Albert St.
Simon Dupuis, the manager of design and construction for the project, said the main construction tender will be issued in the spring with a contract award and start of construction scheduled for fall. A design is expected to be finished in April.
“The project team continues to monitor the impacts of the COVID-19 pandemic and market pressures on the project’s budget and timelines,” Dupuis said in a response sent Monday through the city’s communications department.
“At this point in time, we are still planning a release of the main construction tender in the spring and are in ongoing discussions with the pre-qualified general contractors regarding overall schedule.”
EllisDon, PCL and Pomerleau have been prequalified to submit bids on the super library construction.
The city has estimated the project at $192.9 million, but the true cost isn’t certain until the bids come in.
The library tender will be issued at a time when managers in the local construction industry have voiced concerns about the rising prices of materials, especially steel, and insurance.
The Ottawa Construction Association (OCA) sent a special warning to buyers that prices were rising, which in turn prompted a rare warning issued to city council from the head of the municipal government’s infrastructure services branch.
City staff “have not yet had the opportunity to assess the validity and the impacts of these alleged issues,” Carina Duclos, the city’s acting director of infrastructure services, told council in a memo.
“However, for projects at the procurement stage, these market perceptions may be relevant to the City, depending on the contracting model chosen and the allocation of risk under that model,” Duclos’s memo said. “For projects under construction, the City will continue to enforce the relevant contractual provisions which apply to those individual projects.”
OCA president and general manager John DeVries said contractors first saw a price increase in concrete last fall that was largely resolved by Christmas, but now the concern centres on the price of steel and metal, on top of changes to insurance rates.
Price increases for steel reported by members are as high as 40 per cent.
High demand and delivery delays for materials could be at the root of the increase in steel prices. For example, the association representing steel fabricators in Ontario has warned members about extended periods for producing steel, impacting prices.
DeVries said procurement staff opening up bids could be encountering “sticker shock” because of the pressure on the construction industry.
There was a conference call with industry representatives in January about supply issues and contractors trying to manage fixed-price contracts under increased prices.
“We all sat around the table saying we’ve got to spread the word,” DeVries said.
Mary Gauthier, general manager of the Mechanical Contractors Association of Ottawa, said costs for steel and insurance are “through the roof.” She started to notice a price hike on materials beginning last fall.
“It was small increments at first, and now in the last several months it has become a huge issue,” Gauthier said.
Mechanical contractors who placed bids on projects two years ago are seeing escalating costs for materials dip into their thin profit margins, Gauthier said. One only has to consider how much sheet metal is required to do duct work in a large building.
Another major procurement to watch is the first phase of the Ottawa Police Service’s south campus on Lodge Road, which was estimated to cost $81 million. The police service released the tender to three prequalified bidders in December and the deadline was in February. The bid results are still under evaluation and the police services board is expected to receive an update at its April meeting.
Shifts in construction pricing could have implications for municipal projects and budgets.
City hall on Monday listed several construction projects currently taking bids, including new bikeways in Lowertown, parking lot repairs at the Walter Baker Sports Complex, renovations at the east-end splash wave pool, viewing platforms at the Bob MacQuarrie Recreation Complex and steel siding for a fire station on Viewmount Drive.
There are high-profile projects that could soon be added to the list, like the retrofit of the Prince of Wales Bridge deck for a multi-use pathway. The pre-tender estimate has been $10.5 million and the city expects the federal government to make a major contribution to the project.
The $4.6-billion Stage 2 O-Train expansion has fixed-price contracts, but city staff have warned there could be delays for the Trillium Line project, subject to their review of a revised schedule submitted by contractor SNC-Lavalin. A partnership of Kiewit and Vinci, which is expanding the LRT system, indicated schedule pressures that the city said were “resolved.”
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