STAFF REPORT
January 19, 1999
To: Works Committee
From: Commissioner of Works and Emergency Services
Subject: Construction Effects on Small Businesses
Purpose:
This report explores suggestions that have been made to mitigate the effects of City construction
projects on small businesses.
Recommendation:
It is recommended that this report be received for information and forwarded to the Toronto
Association of Business Improvement Areas (TABIA) for their review and comment to the
Commissioner of Works and Emergency Services.
Background:
On November 3, 1999 the Works Committee had before it a communication from Councillor Layton
expressing concerns regarding the effects of City and TTC construction projects on small businesses
and requesting a report from the Commissioner of Works and Chief General Manager of the TTC
to address the issues. In addition, there were communications from the TTC to Councillor Layton
and from the President of the Chinese Chamber of Commerce, who expressed disappointment over
the construction project carried out by the City on TTC's behalf in September, 1999 in the
Broadview/Gerrard area.
The communications were forwarded to the Commissioner with a request for a report. This report
describes the details of the two projects that triggered these concerns, responds to the concerns
expressed, and outlines the feasibility of different methods of mitigating the effects of construction
on local businesses. The report has been prepared in consultation with staff of the TTC, Legal
Services, Insurance & Risk Management, Revenue Services, Economic Development and Purchasing
and Materials Management.
Discussion:
Description of the Broadview/Gerrard and Queen Street East Construction Projects
The two projects which have caused concerns from the community were reconstruction contracts at
the intersection of Broadview Avenue and Gerrard Avenue and Queen Street East between
Greenwood and Carlaw. They were joint TTC/City projects where streetcar tracks were repaired and
City roads and sidewalks were reconstructed at the same time. It should be noted that whenever joint
contracts such as these are undertaken, the City acts as project manager and receives technical
support and detailed track design from the TTC. The contracts are tendered as City contracts and
are evaluated and awarded according to the City's approved process.
The Queen Street project involved the rehabilitation of 1220 linear metres of track and the
reconstruction of curb lanes and sidewalks between Greenwood Avenue and Carlaw Avenue. Traffic
was limited to one lane westbound for the duration of the project which lasted 6 weeks between July
23, 1999 and September 5, 1999. The work on Queen Street was delayed due to an oversight in pre-engineering analysis by Toronto Hydro who had to reconstruct their plant in the right of way,
delaying the project by 9 weeks.
The Broadview/Gerrard project involved the rehabilitation of the TTC track as well as the
reconstruction of the intersection and was planned to be carried out over the Labour Day weekend
from Thursday, September 2, 2000 at 7:00 a.m. to Tuesday, September 7, 2000 at 5:00 a.m. The
successful contractor was not able to assemble the workforce or equipment needed to complete the
project within the schedule and the opening of the intersection was delayed by 2 days until
September 9, 1999. We are in the process of finalizing the claims in connection with this contract.
The notification process used for both projects was developed and executed jointly by TTC and City
staff. The TTC notified transit patrons of the expected disruptions while the City notified adjacent
property owners, the Councillors and community interest groups.
These two projects, which were the most complicated joint projects undertaken by the newly
assembled District 1 Engineering Services staff, have now been completed and reviewed for
successes and areas for improvement. We have compared these projects to ones for which we have
received thanks and congratulations from the affected community and Councillors. From this review
and comparison, we have identified measures that can be implemented city-wide in the future to
mitigate the effects of construction on adjacent properties and businesses.
Measures to Mitigate Construction Effects on Adjacent Businesses
The following measures have been identified by staff to address this issue:
a) Detailed Pre-Engineering Analysis Will Avoid Delays In The Field
One of the factors that has affected the timing and construction staging of our projects is the
discovery of unexpected conditions in the field. This can include utility plant not known to
have been the right of way, utility plant that is unexpectedly deteriorated or plant that is not
in the place the Utility Company indicated it was. Similarly, it is not unusual to encounter
differences in City infrastructure from what is on as-built drawings plans and maps. This is
because City, TTC and Utility operation crews have been carrying out spot repairs in the
intervening years between major rehabilitations, and the last set of restoration plans will not
always reflect varying thicknesses in concrete or additions to City traffic or other plant.
Some projects have encountered unexpected soil conditions; finding varying soils, water and
even contaminated soil where not anticipated.
While pre-engineering analysis is routinely done and most contingencies are accounted for,
there remain problems that could be avoided with more thorough pre-engineering analysis.
The discovery in the field of unanticipated conditions such as those mentioned above results
in delays to construction as new designs or construction techniques are developed and
implemented. The contractor will sometimes develop new staging plans to be able to keep
moving on the project, but it can be difficult to catch up to the initial time-table.
There are two solutions to this problem. First, early development and approval of the capital
program would allow time to be allocated to detailed soils analysis, test pits utility
circulations and stakeouts. Resources expended on this activity will not only result in better
cost control but also in reduced community impact. Second, the utility companies must be
urged to thoroughly review the City's plans to accurately identify the constraints imposed
on City work by utility plant. Staff will be raising this issue with the utility companies
represented at the Toronto Public Utility Coordinating Committee (TPUCC).
We are committed to conducting thorough pre-engineering analysis of construction projects
in order to minimize delays which, in turn, will reduce the effects of the work on small
businesses.
b) Prequalification of Contractors Will Avoid Disappointments in Field Performance
At present, the prequalification system used by the City for Works construction projects is
for road, maintenance, structure and structural coating projects in excess of $500,000.00 and
is managed by the Ministry of Transportation of Ontario (MTO). The
prequalification system takes into account the financial and technical capability of the
contractor to perform the work within the specified time should the contractor be awarded
the contract.
In cases where MTO prequalification has not been used (Contracts less than $500,000.00,
sewer and watermain works) and poor performance has been documented, the documentation
is referenced, but it is difficult to reject a low bidder where the sole justification is a letter
of complaint. The preferred process would be to develop qualification criteria to be
included in the specifications which allow bidders to demonstrate that they possess adequate
equipment and workforce as well as to demonstrate successful completion of projects of
specific complexity or community impact. Contractors not meeting the criteria would not
be eligible to bid on jobs for which they do not qualify. Furthermore, contract documents
can stipulate that a detailed phasing and scheduling plan be submitted for review and
approval by the City.
Qualification clauses for contractors, in keeping with the City's purchasing policies, will be
included in construction tenders issued for competitive bids whenever it is feasible. This
measure will help to ensure that the successful contractor has the workforce, equipment and
experience to carry out the jobs with as little disruption as possible. Once the contractor has
been awarded the job, he will be required to submit a detailed implementation plan to ensure
that disruption is minimized.
c) Early Communication with the Community will Minimize Disruption
Staff is refining and harmonizing the details of a community consultation plan for
construction projects, but the underlying philosophy is that early communication with the
community is of paramount importance. Early communication about the nature, scope and
timing of the work allows for the City and community to work together to optimize
construction timing and staging.
Staff of the Economic Development Division have undertaken to provide Works staff with
a schedule of special events planned for business areas so we can avoid scheduling conflicts.
d) Ongoing Communication with the Community Enables Fast Responses to Problems
Our most successful projects have included the establishment of Construction Liaison
Committees consisting of the affected businesses/residents, City field staff and the
contractor. These committees are established before the work begins and typically consist
of the pre-set weekly meetings in the construction trailer and whatever additional meetings
or discussions are needed. They provide the contacts and a forum to allow for the field staff
and community to have an on-going discussion of issues of concern.
The Economic Development Division advises that they have received very positive feedback
about our Construction Liaison Committees and we are committed to implementing them as
a best practice city-wide.
Payments or Tax Relief to Small Businesses
Under the Municipal Act, Council is prohibited from giving grants to commercial enterprises, so it
is not possible to use grants to mitigate or atone for the effects of construction. In addition, the
Municipal Act contains a specific prohibition against the giving of a total or partial exemption from
any levy, charge or fee. Accordingly, it is not possible to provide tax relief for small businesses who
have experienced construction disruption.
Existing Claims Procedure
The City does have a claims process whereby business loss or property damage claims that are
appropriately justified can be paid by those responsible. City contracts require the contractors to
indemnify and hold harmless the City from loss and damage and to be responsible for the
consequences of their work. Contractors are required to carry appropriate levels of insurance to
ensure of a financial means to make required payments. The City's claims process monitors
contractor's diligence in attending to any resultant claims and if a contractor fails to meet its
obligations to the public. City staff in Works and Emergency Services and Purchasing and Materials
Management are promptly notified so corrective action can be taken. Such corrective action might
involve utilizing financial guarantees provided by the contractor and held by the City.
While the correspondence forwarded by the Works Committee expresses particular concern over
small businesses, it would not be possible to evaluate small business claims in a different manner
from large businesses or residents' claims without opening the City to the potential for huge
payments on every contract.
We expect that the establishment of the Construction Liaison Committees will reduce the need for
claims by allowing for on the spot problem solving. However, if a business owner or resident wishes
to file a claim, project and field staff are familiar with the claims process and can advise members
of the community how to submit one.
Summary & Conclusions:
Two recent District 1 construction projects that received community complaints have been examined
to determine what steps can be taken on future projects to mitigate the negative effects during
construction on small businesses and the adjacent community. Four strategies that can be
implemented are: detailed pre-engineering analysis to minimize delays in the field, prequalifying
contractors to ensure they have the appropriate equipment, workforce and experience, early
communication with businesses and the community to mutually plan for the construction and
ongoing communication through a Construction Liaison Committee. Payment of grants or the
provision of tax relief for small businesses to mitigate or atone for the effects of construction is
prohibited under the Municipal Act.
Contact:
Kathleen Llewellyn-Thomas, P. Eng.
Director, Engineering Services
Technical Services Division
Districts 1 & 2
Tel: 392-8590
Fax: 392-4426
E-mail: Kllewel@toronto.ca