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Up and Up: Mitigating risks drives Johnson Street Bridge project costs higher
Ten days after Victorians learned they’d received an extra $16.5-million federal grant for the Johnson Street Bridge replacement, the cost of the project rose by approximately the same amount.
City staff announced earlier this week that the estimated cost has jumped from $77 million to $92.8 million.
Mayor Dean Fortin called the revised budget “surprising, and frustrating and disappointing.”
“It’s lost opportunity on the funding we received from the federal government,” he said.
This morning, after the News’ press deadline, council is considering options for proceeding with the project.
Back in 2010, engineering firm MMM Group assured council that a 15-per-cent contingency would be ample to cover any unknown construction costs.
It turns out, there were many unforeseen costs of other kinds that pushed the project estimate higher.
“There are a number of significant risks on the project that we understand better now than we did two years ago,” Joost Meyboom, an engineer with MMM Group. “Those risks need to be mitigated and the cost of that mitigation is the cost increase that we’re talking about.”
Take the Telus duct relocation project announced in October, for example. MMM negotiated with the utility to move the communications duct to avoid the very expensive risk of cutting it during construction.
The new, more cautious plan had an estimated budget of $2.4 million. Now that the city’s portion of the work is complete, the actual cost has proven quite a bit higher: $3.7 million.
Another pricey addition to the budget resulted from a geophysical survey conducted by MMM in early 2011. It mapped out the floor of the Inner Harbour and discovered the bedrock varies much more widely than expected. The survey, however, is only a snapshot.
“To go to construction with that level of information is risky,” said Meyboom.
“If it’s wrong … you’re going to have a contractor out there for $3,000 an hour standing by while they figure out where the bedrock really is.”
Therefore, MMM recommends spending more money up front on a detailed drilling map.
Other rising costs include environmental mitigation strategies, archeological monitoring, the change back to GST and PST and more city support, including communications.
The new $92.8-million estimate includes a 10-per-cent contingency.
The escalation isn’t the first time taxpayers have been hit with this kind of news.
In June 2010, Meyboom announced the project’s estimate had jumped from $63 million to $89 million. Council responded by removing the rail portion of the new bridge to cut costs.
Critics of the bridge project question whether this latest increase in cost estimates will be the last.
“We’re very early on in the design process. We’re a long way from starting construction,” said Paul Brown, who ran unsuccessfully for councillor in a 2010 byelection and for mayor in the 2011 election.
The risks in these types of projects tend to escalate as they progress, he added.
So, are the biggest risks mostly behind us?
“We would like to think that given the level of due diligence that we’ve done, that we have identified all the major risks on this project,” said Meyboom. “That being said, you never know what you don’t know.”
Please visit www.vicnews.com for updates on council’s discussion of the bridge project.