Construction inflation is majorly affecting Quesnel city projects, the city’s council heard during their Tuesday, May 3 meeting.
Council approved adding an additional $500,000 to the Fire Hall No. 1 renovation budget, making the total project cost $5 million, split evenly between municipal funds and grant money.
City manager Byron Johnson told council that construction inflation is going up by two per cent per month.
“Council is going to hear a lot of this in the next little while,” Johnson said while reading a report written by Jeff Norburn, the director of community services for Quesnel.
“Cost escalation has been very, very extreme… For this project it reflects $80,000 per month.”
The project was awarded to Fresno Construction, a local company. Despite initial interest from contractors, Fresno was the only company who ended up bidding on the project.
Their bid price of just under $4.2 million, when added onto other costs, put the project over the $4.5 million council had previously approved for the fire hall.
Earlier this year, city council approved expanding the budget for the fire hall renovations to include more amenities beyond what the $2.5 million in grant money would fund.
The new project budget includes a 8.5 per cent contingency of over $350,000, over the five per cent recommended by the architect.
“Anyone who has done any home renovations will know that things come up,” Johnson said when advocating for a big contingency fund.
“This should be good unless something really ugly comes up.”
The funding for the updated budget came from the city’s capital reinvestment reserve. While Johnson said on paper there was enough in the reserve to not affect any future planned projects, in practice, because of the extreme increase in construction costs, Quesnel’s reserves could be quickly drained.
“Every project we have in our five year capital plan is probably undervalued,” he said.
“It’s something we need to think about… That’s the current reality.”
Johnson added if council approved a brand new fire hall, the cost might exceed $20 million.
The equipment from the fire hall has already been moved to the old public works yard near the Johnston Bridge Loop.
Do you have something to add to this story, or something else we should report on? Email: email@example.com
Like us on Facebook and follow us on Twitter.