Additional Expenditures for Extra Work

on Capital Projects Currently in Progress

The Works Committee recommends the adoption of the following report (September 20, 1999) from the Commissioner of Works and Emergency Services:

Purpose:

To obtain Council authorization to negotiate and authorize additional expenditures for the performance of necessary additional work on contracts within the Water and Wastewater Services Division as outlined in this report.

Funding Sources:

Funds are available in the approved 1999-2003 Water and Wastewater Services Division Capital Accounts for each contract outlined in this report.

Recommendations:

It is recommended that:

(1)additional expenditures in the amount of $212,343.41 including Goods and Services Tax be authorized for the performance of necessary additional work on Water and Wastewater contracts, as described herein and in accordance with the amounts listed in Appendix B attached; and

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

Background:

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meeting of January 6, 1998, City of Toronto Council enacted By-law No. 7-1998, Interim Financial Control By-law, which repealed former Metro By-law No. 146-90.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 in instances where the capital 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. However, in the case of contracts identified herein, Contract No. WS-4-97, Rehabilitation of the 13.8 kV Power Substation at the R.C. Harris Filtration Plant, and Contract No. WPC-8-97, Replacement of Sludge Dewatering Centrifuges at the Highland Creek Treatment Plant, no such general contingency was added, as we believed it was still available through former Metro By-law No. 146-90.

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 ten percent of the awarded contract amount for each of the contracts identified herein would have been available for required extra work on each contract.

Comments and Justification:

Shown in Appendix A are the above-noted contracts which require the performance and/or payment of approved extra work.

Appendix B identifies the extra work necessary to be performed for both of the contracts described in Appendix A along with their corresponding costs.

Through the course of construction under Contracts Nos. WS-4-97 and WPC-8-97, a number of issues have arisen that required work in addition to the scope of work specified in the contract documents. To ensure continuity with respect to liability and warranty issues under the contracts, these changes must be implemented by the issuance of extra work orders.

Some of the extra work is required to be performed to conform to recently changed regulatory code requirements or operating procedures, and should be implemented to ensure construction of the best possible finished product.

With respect to Contract No. WS-4-97, Toronto Hydro's standard compliance changes and the unanticipated strike by Toronto Hydro personnel required additional effort. Because of the inherent uncertainty of the strike duration and the regulation imposed by Toronto Hydro that no newly-installed switchgear can be energized without Toronto Hydro's commissioning, a decision was made not to proceed with removal of the old equipment. This was done to avoid entering the high water demand period with less than full power capacity. This decision effectively led to deferral of the replacement work on the last transformer-switchgear assembly until after October 1, 1999, representing the start of the low water demand period reflecting lower electrical power consumption. The contract documents specified that no work could be undertaken during the high water demand seasonal period between May 1 and October 1.

The necessary extra work to be authorized under these contracts is due to unexpected circumstances which have arisen during construction, and amounts to a combined total of $212,343.41 for both contracts.

Conclusion:

The additional expenditures for extra work in the amount of $212,343.41, including GST are summarized in Appendix B attached. This additional work is necessary to either meet regulatory code requirements and/or ensure construction of the best possible product.

 Contact Names and Telephone Numbers:

P. Jancic, P. Eng.A.F. Piccolo, P. Eng.

Senior Project EngineerSenior Project Engineer

Engineering Services - Works FacilitiesEngineering Services - Works Facilities and Structuresand Structures

Technical Services DivisionTechnical Services Division

Telephone No. (416) 392-8251Telephone No. (416) 392-8853