Project Budget Increase

Following information received at their Special Closed Committee of the Whole Meeting on February 24, 2021, Council has made the recommendation to increase the project budget for the Creston Emergency Services Building to $7.0 million from the $5.4 million that is budgeted in the Town of Creston’s current Five Year Financial Plan.

The original project budget for the Creston Emergency Services Building (CESB) was established in 2016 and reconfirmed in 2018 through a Class ‘C’ estimate, comparisons with recently built fire halls in British Columbia, analyses of construction costs in BC and the Altus Construction Guide. After an unsuccessful referendum for borrowing in December 2017, the Town of Creston received voter permission in October 2018 to borrow a maximum of $4.5 million for the construction of a new fire hall. At that time, Council also committed to contributing $1.0 million from reserves towards the project. In November 2019, a Request for Information & Qualifications (RFIQ) was issued for general contractors for the project with five general contractors invited to participate in the tender process.

Subsequent to the finalization of the land purchase for the CESB in January 2020, the Town was able to proceed to the final design drawings which were expected to be issued for tender in March 2020. Due to the COVID-19 pandemic, there were resulting delays in the tender process and following the receipt of only two tender bids in August 2020 which exceeded the funding available for this project, Council directed staff to cancel the tender process for the CESB and evaluate project options including the timeline and budget. After Council’s recommendation in October 2020 to issue a Request for Proposal (RFP) for construction management services, they consequently made the recommendation to engage Chandos Construction Ltd. for such.

“As with countless other building projects, the COVID-19 pandemic has seriously disrupted the work on the Creston Emergency Services Building project”, said Ernie Polsom, Firewise Consulting. “There have been major impacts on costs on all aspects of the project from building materials such as lumber and steel, mechanical systems and labour. There have also been changes to the BC Building Code with respect to energy efficiency. The availability of materials has been severely affected, and there is no indication that this will be alleviated any time soon”, he continued. “One example that Council reviewed related to the cost of lumber for the CESB. Pre-COVID, the cost of lumber for the facility was estimated at $350,000 whereas now, the cost of lumber for the building is estimated to exceed $1 million. Clearly, changing the building envelope to utilizing products other than lumber will most certainly benefit this project”, added Mr. Polsom.

“A large part of the pre-construction work that has been completed so far by both Chandos and Johnston Davidson Architecture, with support from the Town of Creston has been to evaluate all viable project options which includes everything from building materials, to redesign of certain building elements while maintaining the intended use and functionality of the facility”, said Michael Moore, Chief Administrative Officer. “After engaging in their own value engineering processes and evaluations with other construction professionals, Chandos has indicated that it is clear that there is extreme instability in today’s building market, with suppliers unable to guarantee prices for anything more than short durations. In addition to the significant impacts of COVID-19, Chandos has advised that construction costs have increased by approximately 20% since 2016. Unfortunately, this all means that the existing design for the Creston Emergency Services Building cannot be built within the 2016 approved budget of $5.4 million.”

Council’s recommendation to increase the project budget for the Creston Emergency Services Building from $5.4 million to $7.0 million was made after establishment that the project budget increase could be achieved utilizing surplus and reserve funds, with no increases to borrowing or taxation.

“When Council chose to cancel the tender process for the CESB back in August, 2020, we knew that there was uncertainty in the market conditions created by the COVID-19 pandemic, and that there would be impacts to the overall project”, said Mayor Ron Toyota. “This does not change the fact that we need to replace our fire hall. Our focus has always been, and continues to be, building a facility for our emergency responders and the community that is based upon current service levels and needs, and one that will fit with our emergency services now and into the future.”