STAFF REPORT
January 19, 1999
To: Works Committee
From:Commissioner, 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.
Recommendations:
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
Tom G. Denes, P.Eng.
Executive Director
Technical Services
Barry H. Gutteridge
Commissioner
Works and Emergency Services
