Sewage plant cost could jump by ‘tens of millions’

The first phase of the City of Winnipeg’s most expensive infrastructure project is at risk of having its price increase by “tens of millions” of dollars.

A contractor claim cites rising labour, material, equipment and subcontractor costs that could hike the cost of the first project of the massive upgrade to the North End sewage treatment plant.

“The claim presents financial risk in the range of tens of millions of dollars. Any resolution is expected to exhaust the remaining project contingency, so a budget amendment will likely be required for this claim,” writes Cynthia Wiebe, Winnipeg water and waste’s manager of engineering services, in a staff report.

The city is working with external legal and contract experts on how best to address or “defend” against the claims, she wrote.

Wiebe told Monday’s finance committee meeting the full impact is still being worked out.

“This dispute does present a financial risk to the city,” she said.

The price to complete the power supply and headworks facilities piece of the sewage mega project, the first of three phases, had risen from $473 million to nearly $518 million. The full three-phase sewage upgrade is expected to cost $3.043 billion, before any new price hikes are added in.

Council’s finance chairman said the threat of adding “tens of millions” more to the price tag warrants attention.

“Obviously, it’s a concern. This is a massive project and it’d be nice if we have had a means in our funding agreements with our partners (the provincial and federal governments) to recuperate some of that rather than (all cost increases) being raised entirely from water and sewer ratepayers,” said Coun. Jeff Browaty.

During the meeting, city officials noted some contract clauses on the project were set up to reduce the financial risk to bidders, which allows new cost claims to be pursued. They declined to share much detail, noting the matter is still being negotiated.

Browaty hopes the final price will be worked out over the next few months, noting the project is expected to be finished in the second quarter of 2026.

In a written statement, a water and waste spokeswoman said any budget increase would require city council’s approval following a detailed request in a future public report.

She said the price negotiations should not extend the project timeline.

“There is no new delay in project completion,” wrote Lisa Marquardson.

Meanwhile, concerns that a contractor could leave the site of another major sewage upgrade before work has been completed have been alleviated for now.

Last month, council approved a plan to devote an extra $10 million for the south end sewage treatment plant upgrade in case the city needed to hire additional contractors. At the time, officials said a contractor planned to leave the site by May 2, before the city expected the work would be done.

However, the original contractor has continued working instead.

“They didn’t walk off… It looks like they’re set to stay and complete it because they brought in a number of new people,” said Coun. Ross Eadie, chairman of council’s water and waste committee.

Eadie said that means the city has not needed to tap in to the additional funding yet, which would exceed the project’s official $375.6-million budget.

During Tuesday’s finance meeting, Wiebe said the $10 million of backup funding will remain earmarked for the project to ensure the work gets done, even if the contractor decides to leave before the city deems it complete.

“We put a lot of controls in place so that, if the contractor were to walk off, we are able to just continue to meet our licence (requirements for the plant) and complete the project,” she said.

In a statement, Marquardson said it’s not yet clear when the long-delayed south end plant upgrade will be finished.

“The project has not been completed yet and the current schedule that was aiming (to do so in the second quarter of) 2025 is being re-evaluated,” she wrote.

In 2012, the city was ordered by the province to complete the south end plant upgrade by 2015, long before the current contract was even tendered. The current contract was initially expected to be completed in 2021.

joyanne.pursaga@freepress.mb.ca

X: @joyanne_pursaga