Costs skyrocket for South Huron projects

By John Miner

Upheaval in the world energy markets is hitting South Huron municipal projects, adding hundreds of thousands of dollars to the costs.

“As they say, the chickens are coming home to roost. We are now paying the price,” Don Giberson, general manager of infrastructure and development, told a recent council meeting.

South Huron had invited tenders for two projects — an upgrade of the watermain in the area of the former Grand Bend Airport, and installation of a sanitary sewer system on Thames Road West in Exeter.

The lowest bid for the Grand Bend project came in at $1.49 million, $331,910 more than council had budgeted last fall.

The lowest bid for the Thames Road West project was $304,602, $73,843 above the budgeted amount.

Giberson said the significant increases over budget were primarily due to what is happening in the Middle East and the impact on energy costs.

Oil is a major component of the PVC pipe that will be used for the Grand Bend watermain upgrade. Higher fuel costs have also increased delivery charges for materials and boosted expenses for running machinery.

“The world price of oil has a huge impact on these projects,” Giberson said.

Coun. Marissa Vaughan questioned if the projects could be deferred and tendered next year when costs might be lower. The war likely won’t go on forever and prices with gas tend to fluctuate from year to year, she said.

Giberson replied that he doesn’t have a crystal ball, but in his decades of experience he has rarely seen prices go down. He suggested the most likely outcome of deferring the projects is that council will be paying more next year or will not get a better price than the current one.

Deferring the Grand Bend watermain upgrade would also have serious implications for commercial development at the former airport area, he said.

“You basically imperil that development.”

The commercial development, which has site plan approval from council, is moving ahead based on the understanding fire protection for the area will be upgraded with replacement of the aging 100-millimetre watermain with a 250-millimetre watermain.

The Thames Road West sewer project will allow commercial development west of the railway in Exeter.

Council voted to award the contracts for the two projects to the lowest bidder for both tenders, Rapid Drainage Ltd.

Giberson said he expects work on the Grand Bend watermain will start within a month.

Although costs are higher than anticipated, Coun. Aaron Neeb said the Thames Road sewer project is a major benefit for the municipality as it increases the amount of land available for development that creates jobs. There are already some projects underway.

“This is still a win,” Neeb said.