A multi-million dollar jump in the expected price of a new treatment plant vexed trustees and sent North Salt Spring Waterworks District (NSSWD) staff digging to find funding for what will now be a $16.6-million project.
District trustees have approved the construction tender for the Maxwell Lake Water Treatment Plant from Nanaimo-based heavy civil construction company Hazelwood Construction, the lowest bid at $12.3 million; the board awarded the construction engineering contract to consultants Kerr Wood Leidal (KWL) at a cost of $925,000. The bulk of the plant’s remaining price tag comes from a $3.3-million filter and control system the district secured last year at a nearly half-million dollar discount.
But that combined total cost came in almost 14 per cent above KWL’s “Class A” estimate of $14.6 million, used thus far by the district for budgeting — a relatively high variance a Driftwood analysis suggests still understates how far off things were.
A Class A estimate is a highly detailed construction cost projection usually created just before the tendering process, made with near-complete drawings and specifications in mind — and considered nearly definitive, trustees agreed, with accuracy within five to 10 per cent of the median of competitive bids, according to Canadian Construction Association standards.
Among the seven proposals, the contractor chosen came in the lowest by a large margin, with the median bid at $17 million, according to public bid documents — more than 16 per cent above the estimate.
“We’re disappointed this is over the initial Class A estimate,” said chief administrative officer Mark Boysen. “We based our financial planning with some flexibility, but things have changed from what we anticipated.”
Trustees and staff struggled to avoid discussing the finer details of the higher costs at a special board meeting Friday, Jan. 16, due to confidentiality requirements of the bidding process; Boysen and director of operations Ryan Moray agreed a major driver of the increase was higher prices for piping and valving.
“I know with plumbing, I’ve seen over the last few years there’s probably been a 30 per cent increase in plumbing parts,” said board member Sandra Ungerson. “It has been an extraordinarily moving target. To be fair to anybody trying to bid on anything with plumbing right now, it’s a very tough job.”
But fellow board member David Courtney was less sympathetic.
“No disrespect to the team that has put this together, but I think it’s way over the top in terms of the cost,” he said. “The [additional] $2 million is a real sticking point for me, especially when we were counting on [the total of] $14.6 million.”
While not unanimous, the board ultimately voted to accept the bids and avoid further delays, with most agreeing it seemed unlikely a re-tendering of the project would produce lower bids. The project is also being required by Island Health as part of an effort to remove more of Maxwell Lake’s organic matter, which reacts with chlorine treatment to create trihalomethanes (THMs).
Boysen said given the timetable, staff had found ways to shift the district’s budget and planning to make up the difference.
“I think we have a path forward,” said Boysen. “And our strategy includes no new parcel taxes or water toll charges.”
The loan authorization secured by referendum last year will stay at $11.7 million, Boysen said, but between using some capital and connection charge reserves — the latter bolstered by a modest number of new taps since the moratorium was partially lifted — and putting off the $1.5-million Crofton Road pump station until 2027, the district’s budget had enough to “get to the line” on the higher cost.
“And we will likely receive new [post-moratorium connection] income in 2026 and 2027, but we’ve not included that in the budget,” said Boysen. “Currently we’re only at 20 per cent of those 300 estimated units.”
District financial officer Tammy Lannan noted those future connection payments could be applied to the loan, reducing the amount of interest the district pays over time.
Further cost-savings efforts included a request just sent to the province for flexibility, asking to put part of the $10 million recently allocated for raising the St. Mary Lake weir toward the treatment plant. And Boysen noted NSSWD hadn’t yet heard results on its application to the Canada Housing Infrastructure Fund, which carried a request for $6 million — toward both the Maxwell plant and the pump station.
“But we also haven’t heard ‘no,’” he said. “We’re not done finding opportunities for cost savings.”
Acknowledging inflation and tariffs were raising costs everywhere, board chair Brian Pyper said he believed the extra effort to get the plant built will pay dividends in the future, as it’s designed to accommodate the district’s entire system if necessary — increasing NSSWD’s resilience for storage and distribution.
“And I’ll point out, our last plant came in under budget, with the same project management in terms of engineering,” said Pyper. “There’s no reason why this one can’t either. Let’s move forward, and start digging.”