‘It does appear to be a trend’: Increased construction costs to impact Penetanguishene budget

Andrew Mendler – Midland Mirror

Construction costs rose during the COVID-19 pandemic, and their continuing rise is having an impact on municipal budgets.

Town of Penetanguishene staff were caught off guard by the bids they received for the reconstruction of Harriet Street.
Staff had budgeted $1.08 million for the road’s complete reconstruction from Jeffery to Edward streets. The project will include the replacement of sanitary, stormwater and water infrastructure. It will remove combined storm and sanitary sewers than run under the street and address historical drainage issues. A new road with curbs, a designated parking lane and sidewalks will be installed once the underground work is complete.

Bids for the work came in between $1.49 million and $2.1 million — well over the budget allotment for the project.

“We weren’t expecting to see quite those high costs when the tender closed,” said director of public works Bryan Murray. “We went out earlier in the year to hopefully get a better price, but we are seeing dramatically increased construction costs.”

On April 12, staff recommended council accept the lowest bid, submitted by Penetanguishene contractor Maacon Construction Corporation, for $1,487,645.

The majority of the project will be funded through a mix of taxation, water and wastewater rates, development charges and subsidies. An additional $422,500 will be covered using Ontario Community Infrastructure Funding (OCIF) the municipality received.

The unexpected construction costs seen by Penetanguishene aren’t unique to the municipality.

Material price increases, fuel cost increases and labour shortages have resulted in sizable year-over-year construction costs across the province since the onset of the pandemic.

“We reached out and looked at what a neighbouring municipality received for a similar-style project and they were getting similar pricing, so it does appear to be a trend,” said Murray. “The prices we are seeing are here to stay for the next while …. We are just going to have to adjust.”

Murray plans to revisit the 10-year capital plan and adjust some numbers for future projects to ensure the town is budgeting enough funds for the work.

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