Province tries to get building of new Fredericton justice building going again
After attracting a single, too-high bid in earlier effort, province moves to hire construction management firm
The province is now seeking a construction management firm to continue the courthouse work, which got as far as the frame before it was stopped in August.
An earlier tender was cancelled because the sole bid came in at an amount substantially higher than what the government wanted to spend.
"It should be more of an economical approach to the whole project," Transportation and Infrastructure Minister Richard Ames told reporters at the legislature Wednesday.
The only response to the province's request for proposals "came in way out of whack," Ames said.
"Like it was just cahootles of money over [budget], so what we did is we sent out another RFP that closes in November and the project manager will take care of that."
Transportation
and Infrastructure Minister Richard Ames says the use of a construction
management firm should be a more 'economical' approach to getting the
justice building finished. (Jacques Poitras/CBC)
The government under Premier Blaine Higgs announced it would build a new courthouse on King Street after deciding to axe an earlier plan for one that would be attached to the Centennial Building, just down the street.
Earlier tenders had been issued to prepare the site, starting in December 2021, as well as to erect the steel frame of the building, which was completed this past spring.
The bulk of the remaining work was to be done by a contractor starting this year, and on July 7, the province issued a tender for that work.
By the time the tender closed on July 13, the only company to respond was EllisDon, which submitted a bid $30 million higher than the province's original budget of $60 million for the project.
An earlier plan called for a new courthouse attached to the Centennial Building on King Street. (John Leroux/ Supplied)
In an email to CBC News, Department of Transportation and Infrastructure spokesperson Tyler McLean said the construction management model is working well in other jurisdictions, as it removes some of the risk that would typically be the responsibility of a general contractor.
"Construction management is advantageous in periods of unstable markets and price uncertainty," McLean said.
"It transfers the risk of future price increases from the contractor to the owner. In a traditional tender, this risk is carried by the contractor."
The latest tender for the justice building was issued last Thursday, and will remain open until next Thursday.
McLean said a construction management firm is expected to be in place in December, and construction activity is expected to resume next year.
McLean declined to say whether the budget for the project has changed, saying it won't be revealed in advance of the closing of the request for proposals.
Shifting the risk
When a general contractor is hired, they take on the bulk of the risk by having to ensure the project gets completed on time at a price decided upfront, said Lloyd Waugh, a professor of civil engineering at the University of New Brunswick.
With a construction management firm, phases of the project will likely be tendered out separately as it progresses, which leaves the province vulnerable to future price increases in labour and materials.
The
use of a construction management company transfers the risk to the
provincial government, as opposed to a general contractor, said Lloyd
Waugh, honorary research professor at the University of New Brunswick's
civil engineering department. (Submitted by Lloyd Waugh)
Amid the market volatility seen recently, costs could continue to rise, which is a possibility that general contractors typically factor into their bids.
Alternatively, prices for materials and labour could also get cheaper in the future, which would be good for the province, Waugh said.
"If you think of interest rates, and you know, potential for construction costs to go down over the next year, then this leaves them [provincial government] the opportunity to benefit from those costs going down," Waugh said.
"But it also leaves from the potential that costs go up more than people are currently expecting, then they'll get stuck with the higher cost."
Lone bid should be concerning, prof says
With a construction management firm, the provincial government will be able to have more oversight on how much money is spent on the project, said Lavagnon Ika, professor of project management at the University of Ottawa.
However, he said the lone $93-million bid for the first tender should be raising warning flags for the provincial government.
The
fact that the province received a lone bid earlier of $93 million
raises questions about whether it can get the justice building finished
within its $60 million budget. (Zoom/CBC)
While a construction management firm might be able to get the work done within the $60-million budget, there's no guarantee that's possible given how much the costs of materials and labour have gone up.
"Why is it that we have only one bidder?" said Ika, referring to the earlier tender.
"That's the challenge. That's the question that we need to look into."
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