COVID-19 cost increases straining budget for planned $119.7-million (or more) new Ottawa South police facility

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Ontario Construction News staff writer

The City of Ottawa has selected the contractor for the first phase of a major new police building, but costs are expected to be significantly higher than the project’s overall anticipated $109.2 million budget.

The city’s police board received a public briefing on the project last Thursday (April 8) in a public session, before the meeting went into a closed session “to unveil the results of the contract competition,” The Ottawa Citizen reported.

In a presentation to the open meeting, chief administrative officer Jeff Letourneau highlighted the construction industry’s challenging market circumstances during the COVID-19 pandemic.

The planned structure on a 15-acre site at 3505 Prince of Wales Dr. has been in planning for more than a decade, with a more detailed review happening in the past three years.

In his presentation, Letourneau said overall materials costs have increased by 10 to 15 per cent in the past year, while mechanical equipment prices have increased by 25 per cent.

There is also a construction labour shortage in the National Capital Region, he said. The fourth quarter of 2020 “saw the start of market inflation in Ottawa” with work on the Light Rail Transit (LRT) expansion, three mega projects on Parliament Hill, and another massive City of Ottawa project, the joint Ottawa Public Library/Library and Archives Canada facility.

Costs also have increased because of the requirement for additional overhead and profit to cover personal protective equipment, extra monitoring, and slow-downs, and there are additional premiums for insurance and protection, including builder’s insurance and coverage for ‘force majeur’ conditions, he said.

The structure, which will house 760 staff, had originally been budgeted at $109.2 million, though this price increased to $119.7 million by May, 2020. “Staff identified a plan to keep the project on budget,” The Citizen reported. Letourneau’s report indicated the city’s budget for the work was $118.23 million in April, 2019.

The city needs the new police station to replace both the Greenbank and Leitrim stations, which are scheduled to be decommissioned around 2026. The site will also accommodate units working out of two smaller leased facilities.

“Board members sensed possible budget issues as they asked questions in the public session about the potential for extending the lives of other facilities and the revenue potential of developing the other half of the city-owned south-end site,” the newspaper reported.

The full police board is expected to review a report with recommendations at its April 26 meeting.

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