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Park Plaza development at Gyro Park will be re-tendered after bids come in way over budget
One of the largest community improvement plans for Osoyoos in the past several years has been delayed for several months after tenders to construct the Gyro Park Multi-Purpose Park came in between 40 to 50 per cent over the original budget.
Town council voted unanimously Monday to re-tender the project later this summer after the lowest bid among five contractors bidding on the project was 40 per cent higher than the $444,000 approved for the first phase of Gyro Park upgrades.
The Gyro Park Multi-Purpose project had its origins in 2012 following a planning charette initiated by the Waterfront Steering Committee. Close to 30 community stakeholders assisted a contracting company prepare an overall plan for guiding redevelopment of Gyro Park.
The plan recommended a number of implementation projects, the first being the Gyro Park Plaza, said Alain Cunningham, the town’s director of planning and development services.
The town hired Outland Design Landscape Architecture Ltd. to design, tender and supervise construction of the plaza project as well as other landscaping projects needed to finish off capital works in the area.
Outland’s design concepts were presented to a public open house in early February and formed the basis of their planned design work, said Cunningham.
Council agreed to complete the work over two years to spread out the costs.
Phase One for 2014 was schedule to include removing the old parking lot, installing pavers, concrete universal access pathways, a large composite deck, tree planting, irrigation systems, light standards, electrical conduits and bench furnishings.
“This report advises council of the expensive bids we have recently reviewed for this work and suggests why they are so much higher than we budgeted and recommends how we could respond, including re-tendering,” said Cunningham.
The original budget was for $444,000 to be spent in 2014 and $131,000 next year. The plan also budgeted $21,000 for landscaping the new Gyro Park parking lot.
Invitations for tenders were posted in early April and five tenders were received by the closing date of April 16.
The lowest bid was just under $800,000, while the highest was just under $900,000. One of the bids was local, from Osoyoos Aggregates, at just over $821,000.
The original budget was not based on cost estimates, but rather on available Resort Municipality and town reserve funding, said Cunningham.
Outland Design’s updated estimates were actually upgraded to $544,000, but even these estimates may not have properly accounted for the less competitive local marketplace as say compared to Kelowna, he said.
One of the contractors who attended the tender opening meeting advised that by spring time, landscaping companies are already set up with numerous summer projects, so they don’t have a strong incentive to be competitive and advised that would likely change by the fall, he said.
Outland Design provided staff with a spreadsheet comparing how the five companies broke down their costs between 70 budget items and town staff compared the highest estimate for each item and found 15 are between two and three times costlier, 12 were three to five times costlier and 16 were five to nine times costlier, said Cunningham.
“We also calculated a total tender price based on the lowest estimates for all items to be about $575,000,” he said. “Admittedly this is not a totally realistic scenario because of differential comparative advantages between contractors … and their relative expertise, experience, access to local labour and higher purchasing power from suppliers, but it is indicative of the potential for obtaining more competitive tenders.”
Staff recommends notifying contractors that council has to re-tender because of the very high cost estimates and limited budget and doing this in July with construction to begin in mid-September, he said.
Outland will also be asked to review their specified materials and speak with suppliers to seek out ways of saving costs without compromising the overall aesthetics and functionality of their design, he said.
Lastly, staff should also tender out all other landscaping projects in late July and depending on those results, move some cost savings or reprioritize funding to the Gyro Park project, he said.
Mayor Stu Wells said re-tendering is the only option because this project has been recognized as a top priority by a large segment of local stakeholder and citizens, but there’s no way the project can proceed with the lowest tender offered.
Coun. C. J. Rhodes inquired if it would be possible to begin some work on the plaza, but Cunningham said that would not be advisable as there are significant costs involved in bringing in different contractors and there would be significant cost savings if the first phase were completed as one project.
Chief administrative officer Barry Romanko said every item budgeted by Outland will have to be reviewed when the project is send to tender again.
“We will be going over specifics,” he said. “The cost of a single park bench can be $600 or $700 and a bike rack at $500 … we have to go over all of this again.”
Rhodes wondered if an exception could be made to grant the contract to the lowest local bid if it’s within a small percentage of the lowest bid that meets all contract requirements.
Cunningham said that would go directly against town policies and could create serious legal issues and he insisted the policy to grant contracts to the lowest bidder that meets all contract requirements remain intact.
Cunningham said volunteers with the Waterfront Steering Committee would be informed about why the project can’t proceed and why this project should be re-tendered.
A letter will also be sent to all five bidding contracting companies informing them their cost estimates are not reasonable and they won’t have any opportunity to win this contract unless their tender bids are dramatically lowered, said Cunningham.