The price tag for a $1.8-billion Winnipeg sewage mega project is expected to rise once again — a hike that’s being directly blamed on COVID-19.
The north end treatment plant upgrade is now expected to cost an additional $65 million, adding to a previous tab of $1.789 billion, after bids to design its headworks facilities came in above the asking price.
"International experts (say) it’s really a global condition right now. (With) the global pandemic, the market is not willing to take on as much risk as they may have pre-COVID… and the supply and demand is quite skewed, so there’s a lot more work than there are people (to do it)," Moira Geer, water and waste director, told city council’s finance committee Tuesday.
The contract for this phase of the project attracted just two bids, with both priced above the maximum amount the city had set aside for the work, Geer said.
The news comes despite the fact the municipal cost estimate was reviewed by three different groups prior to the pandemic, she said.
Geer warned these conditions could also drive up the cost of other city projects as governments around the world attempt to speed up economic recoveries from COVID-19 with new infrastructure investments.
The finance committee chairman said he has asked Winnipeg’s chief financial officer to explore what impact this pandemic trend in the marketplace could have on other proposed construction, such as road renewal.
"It’s very important that we understand the impact of COVID and what it may do to our future capital budgets," said Coun. Scott Gillingham (St. James).
The cost of Winnipeg’s $335-million south end sewage treatment plant is also expected to increase by $16.5 million due to contractor delays, according to a city report. The cost to import some materials is also "skyrocketing," Greer said.
"We’ve got an extra cost due to shipping containers and trying to get some parts… that have to come from (South) Korea," Geer told the finance committee.
The city missed a key deadline to reduce pollution leaving the south end plant. The upgrades were expected to greatly reduce the amount of phosphorus in the plant’s effluent, which promotes algae growth in Lake Winnipeg.
The city was required under its provincial environment act licence to meet that target by Dec. 31, 2020, but now expects to achieve the goal by Dec. 31, 2021. The city once expected to finish the entire south end upgrade by this summer or early fall.
"The new target date is under review with the contractor, and has yet to be determined," said city spokesman Adam Campbell.
For missing the pollution-reduction deadline the city is considered to be non-compliant with its licence for the south end plant and is now required to provide monthly progress reports on the upgrade, according to a provincial spokesperson, who noted penalties are possible for failing to meet the target but have not been issued so far.
"Provided that the city exercises due diligence and proceeds in good faith with the conditions set out by (the province)… the enforcement action will be held in abeyance."
Born and raised in Winnipeg, Joyanne loves to tell the stories of this city, especially when politics is involved. Joyanne became the city hall reporter for the Winnipeg Free Press in early 2020.