The City of Estevan has released a letter from Associated Engineering (AE) detailing the costs of the Downtown Revitalization Project and the reasons for an increase in budget.
Michael Walker, the manager of regional infrastructure for AE, sent a letter to City Manager Jeff Ward discussing the increase.
Walker says that the initial estimated cost back in 2021 was $8.3 million. When the final design documents were being finished in the fall of 2023, AE said it was clear the scope of the project needed to expand due to details of the underground tie-in points and the condition of the existing system.
The construction funding at that time had not been approved but was scheduled to be approved in November 2023.
That resulted in a revised cost estimate at the 60 per cent design stage of approximately $9.8 million.
Following the change, the City of Estevan successfully applied for a revision of the grant from PrairiesCan, getting an increased funding commitment from the federal government. The final amount of federal funding was secured at $8.5 million, with the City of Estevan contributing an additional $1.5 million to complete the project.
After securing those funds AE then moved on to the tendering process for the underground and streetscape work which needed to be finished quickly as the funds were only valid for 2024. In doing so AE used their 60 per cent designs to tender for a qualified contractor.
That contract was awarded to ASL Paving for $7.8 million which would include the underground and surfacing work.
With a 60 per cent design being the one used, the site furniture and electrical work would be added in an addendum, letting the project move forward and adjusting the scope of that project.
Walker says that at the time, it was expected that the site furniture and electrical work costs would cost around $2.2 million, which would have brought the overall project cost to around $10 million.
This would have met the requirements of the project, which were to stay within budget at the expense of scope and schedule. An additional grant was applied to assist in the accessibility of the project at that time but was not successful.
When the project's design was completed, the grant for construction was officially approved in March of 2024. ASL then issued tenders for the site furniture and electrical work, with Walker stating that those bids came in significantly higher than anticipated, which upon inspection he says was a symptom of the inflation that the industry has been experiencing, coming in at a total cost of $4.2 million for these components.
The project received an updated cost based on the 2024 pricing with the 100 per cent design, coming in at $12 million, necessitating a decrease in scope to keep the budget at $10 million.
Discussions were had with the Saskatchewan Ministry of Highways that said the province may be able to partially fund the roadwork portion of the scope, letting the project stay within the budget if some items were removed.
Following the rise in cost, the City Council reduced the overall project scope to bring the budget in line with available resources. The city lowered the cost by $1.3 million through these adjustments with a final cost of $10.7 million.
The city increased borrowing for the year by $500 thousand to cover the overage, with the remaining costs covered by the city's cash reserves.
Walker notes that these costs are not associated with the $750 thousand associated with engineering and administrative expenses. Those funds will be addressed by the city council reallocating funds from the Canadian Community Builds Fund in 2025.
Walker says that AE has held to their word that the engineering portion of the project budget would stay within 10 per cent of the original budget and not be increased, as would usually be done when the scope of a project changes.
He states that the project has faced several challenges including inflation, schedule pressures and delays from the federal grant, and higher-than-expected bids.
Walker states that the city should be applauded for their proactive measures to control expenses and keeping cost inflation below that of the overall industry.
A question has been raised about how the project will meet the original design intent of the project after the scope has been reduced, and AE has had many discussions with the city about how they can both meet the intent of the design while keeping to the budget.
Walker says that the deleted items, such as garbage cans, benches, and some planters can be added in at a later date without impacting safety or functionality.