Council Approves Extra $380,000 For Pipeline
Photo By Roxanne Ashe - Virtual Interiors Photography
Should the City pay an additional amount on a major project was a topic of discussion at Monday evening’s meeting of Moose Jaw City Council.
The issue was about paying an additional $380,000 plus GST and PST for a change order on the $20 million Phase One of the Buffalo Pound to Moose Jaw Transmission Line. A change order is where additional funds are paid for extra work necessary for such things as unforeseen circumstances in a tendered project.
City Engineer Josh Mickelborough said the change order was being sought due unforeseen conditions while boring under the Spectra Energy and TransCanada Pipelines right of way. The 127 meters of directional boring or punch took 11 instead of the scheduled three weeks to complete due to boulders and cobble stones where they should not have been such a major problem.
“Additional costs (were) incurred by Hamm to complete an auger bore crossing during the Buffalo Pound Transmission Line Project during the punch or auger bore operation underneath the TransCanada pipeline. Unknown underground conditions were encountered that weren’t foreseen - cobbles, boulders, mud stone formations were encountered all along the 127 meter crossing,” Mickelborough told Council.
Mickelborough explained several test holes were drilled prior to the tendering process and they did not show the conditions later encountered during the boring. That opinion was based upon test holes drilled during the tender preparation process which did not show the reality the contractor Hamm Construction faced.
“Several of those (test holes) were done these conditions were not encountered and they were unforeseen,” he stated, adding “obviously a challenging situation when you get into an operation like that and the contractor decided to continue the effort with respect to making the crossing with the methodology they had chosen.”
“If they had chosen to stop work there would have been significant retooling costs and delay costs to do so.”
Councillor Chris Warren however questioned whether paying the recommended amount was the right course.
“The contractor once they encountered this could have done some more investigation and it was quite possible the equipment they had put forward in their bid was not appropriate to this type of work even though it was anticipated,” Councillor Warren said reading an independent report.
“Part of the rationale for the increase and delays was around the equipment and the weather and again the independent report states that these types of delays would not be reasonable to allocate extra funding.”
Councillor then asked a question of Administration what would be the repercussions of not approving the requested change order?
“What would be the repercussions of denying the claim what would be our liability in this situation?”
Mickelborough responded the report showed “standard considerations when you do the analysis of the contract.”
“Establishing there was geo-tech done and there was an onus on the contractor to be prepared for it but based upon the analysis of the engineer of record, the consultant…and external expertise brought in to do the field records, field notes, conditions, schedules and logs that the effort that was required was unforeseen and unreasonable within the terms of the contract.”
Councillor Warren went on to state “Hamm at their sole discretion could have undertaken an independent investigation.“
“According to this report it was not unforeseen. It was identified in advance of the tendering process. Stantec goes on to say they could do further analysis and investigation before submitting their bid,” he said, asking “It wasn’t unforeseen so is there any legal onus on the City to pay this additional funding when it was known up front before the tendering process took place?”
City Solicitor Myron Gulka-Tiechko said he would not provide a legal opinion in a public forum but provide one if necessary in-camera. Giving legal opinions in-camera or behind closed doors to Council is standard and allowable practice.
Councillor Warren stated the report also showed Hamm had already done a 10 percent bump up on the project’s contingencies.
“I think the important part here is drilling information indicates horizontal drilling will be in silty clay which would be favourable conditions for horizontal drilling and then some acknowledgement that conditions may exist with cobblestones is a fairly general statement that is included,” Mickelborough stated.
“What they did encounter was not expected or reasonable and identified and that is why the recommendation is what it is,” he said.
Councillor Heather Eby then pointed out a portion of the report which dealt with the issue.
“I note in the same Stantec report there is a line where (it says) there is no guarantee an independent investigation would have identified the size or the extent of the gravel cobblestone or boulder formation. And I feel the change order is the right way to go.”
In the end the change order was approved giving Hamm Construction an additional $380,000 plus GST and PST.