June 30, 1999

To:Works Committee

From:Commissioner of Works & Emergency Services

Subject:Contract WPC-11-97

Cogeneration Facility at the Humber Treatment Plant

Additional Expenditures for Extra Work

Purpose:

To obtain Council authorization to negotiate and authorize additional expenditures for the performance of necessary additional work on Contract WPC-11-97 for the Construction of the Cogeneration Facility at the Humber Treatment Plant.

Funding Sources:

Funds are available in the approved 1999-2003 Water and Wastewater Services Division Capital Account C-WP115, Humber Treatment Plant.

Recommendations:

It is recommended that:

1)Additional expenditures in the amount of $196,000.00 including Goods and Services Tax, be authorized for the performance of necessary additional work on Contract WPC-11-97 for the Construction of the Cogeneration Facility at the Humber Treatment Plant, in accordance with the estimates listed in Appendix A attached; and

2)the appropriate City officials be authorized to take the necessary action to give effect thereto.

Background

By adoption of Clause No. 3 of Report No. 4 of the Works and Utilities Committee, City Council, at its meeting of May 13, 1998, awarded Contract WPC-11-97 for the Construction of the Cogeneration Facility at the Humber Treatment Plant. The contract was awarded to Comstock Canada Ltd. for the total lump sum tender price of $16,798,000.00 including GST and a Schedule of Prices allowance of $22,860.00 for additional work if required. The order to commence work was dated July 14, 1998, at which time the contract work began.

At the time of award, in accordance with former Metro By-law No. 146-90, as amended, a Department Head had authority to approve additional expenditures on a commitment in accordance with the By-law up to an amount equal to ten percent of the commitment. As such, under the former Metro By-law a further $1,679,800.00 or ten percent of the awarded contract amount would have been available for required extra work.

At its meeting of January 6, 1998, City of Toronto Council enacted By-law No. 7-1998, Interim Financial Control By-law, which repealed former Metro By-law No. 146-90. As the new By-law contains no provision to exceed the awarded contract value, as confirmed by the City's Legal Division, the Department has effectively lost its ability to authorize the unforeseen and necessary additional work that may arise during construction of capital projects. This is particularly problematic when construction is tendered on a firm, lump sum basis. For contracts recently tendered, since confirmation of the repeal of former Metro By-law No. 146-90, we have been providing, on an interim basis, a general contingency allowance for possible extra work into the Schedule of Prices for Alterations, Extras, and Deductions for incorporation into the total lump sum tender price. In the case of Contract WPC-11-97, however, no such general contingency was added, as we believed it was still available through former Metro By-law No. 146-90.

Comments and Justification:

At its meeting of April 13, 14 and 15, 1999, City of Toronto Council adopted Clause No.10 of Report No. 4 of the Works and Utilities Committee authorizing an additional expenditure in the amount of $140,000.00, including Goods and Services Tax for the performance of necessary additional work on Contract WPC-11-97.

Since the last request to City Council for authorization of additional expenditures for Contract WPC-11-97, more recent issues have been identified as requiring the performance of extra work. In some cases, additional information and unexpected circumstances have arisen during construction, which have necessitated changes to the original tendered scope of work. To ensure continuity with respect to liability and warranty issues under the contract, these changes must be implemented by the issuance of extra work orders. For example, a centralized electrical power consumption monitoring system, which was installed under another ongoing contract at the Humber Treatment Plant, is currently being activated. It would be most economical and expedient to also incorporate the Cogeneration Facility, Contract WPC-11-97, into the programming of the centralized electrical power monitoring system at this time. In other cases, staff of the Department and/or our consultants have identified changes to the design of the original contract which are now advisable to be performed to conform to changed regulatory code requirements or operating procedures, and which should be implemented to ensure construction of the best possible finished product. For instance, the requirement by Ontario Hydro for electrical grounding of existing equipment in plant buildings where new plant systems are proposed to negate electrical hazards.

The total value of the estimated extra work required to-date as a percentage of the overall value of the contract is equivalent to 2.0 percent.

Conclusion:

The additional expenditures for extra work in the amount of $196,000.00, including GST are summarized in Appendix A attached. This additional work is necessary to either meet regulatory code requirements and/or ensure construction of the best possible product.

Contact Name and Telephone Number:

M. Barbon, P.Eng.

Senior Project Engineer

Engineering Services-Works Facilities & Structures

Technical Services Division

Telephone No. (416) 392-8854

Tom G. Denes, P.Eng.

Executive Director

Technical Services Division

Barry Gutteridge

Commissioner

Works and Emergency Services

Attachment