REQUEST FOR DECISION
DATE: April 7, 2021 Report No. EPW-21-008
TO: Laurie Hurst, Chief Administrative Officer
FROM: Jeff Miller, Director of Engineering and Public Works
SUBJECT:
Title
Budget Adjustment to HVAC Replacement - MH Phase 1, P088
End
RECOMMENDATION:
Recommendation
That Council approve the transfer of $56,335 from the Infrastructure and Revitalization Reserve Fund to capital project HVAC Replacement - Municipal Hall Phase 1, P088 as set out in Staff Report No. EPW-21-008.
Body
RELEVANT POLICY:
Financial Plan Bylaw
STRATEGIC RELEVANCE:
Local Services and Infrastructure - identify infrastructure repair and proactively plan for replacement.
BACKGROUND:
The Municipal Hall was built in 2003 and is 18 years old. The six heating/ventilation/air condition (HVAC) units are the original units from 2003. Over the past several years these units have exceeded their life expectancy and have experienced significant failures. This project will see the replacement of these HVAC units with new ones. The new units along with the new control system will provide heating and cooling for the Municipal Hall in an effective and efficient manner.
The system that controls the louvres and fans within the ducting was replaced in 2020 under the DDC Replacement - Municipal Hall P070. During this project, funding from P088 was allocated to P070 to pay for common wiring and controls between both projects.
Detailed design work began in 2020 and the project is now ready to be tendered. Based on the Class C cost estimate from the Consultant the project budget will be insufficient to meet the expected cost and needs to be increased.
ISSUES:
1. Rationale for Selected Option
The existing units are operating at less-than-optimal efficiency and are suffering from failures that do not allow a balanced flow of heating or cooling into the Municipal Hall. This creates an uncomfortable working environment for both staff and visitors.
The units are being replaced as spare parts are difficult to obtain and the costs of carrying out repairs is equal to replacement. By replacing the units, they will begin a new lifecycle and with regular maintenance will be functional for 15 to 20 years.
Staff have received a Class C cost estimate for the project. The estimated cost is $375,000. Based on this cost estimate, the project will experience a funding shortfall of $56,335. The staff recommendation is that the budget be increased by this amount. This increase is occurring now to allow its incorporation into the draft 2021 Financial Plan.
There are two possible funding sources for these funds. The first is the Infrastructure and Revitalization Reserve Fund (Reserve Fund) with the second being an already approved project (P098 Fuel Tank Replacement). Staff are recommending that the increase in budget for P088 be funded from the Reserve Fund.
The Reserve Fund has sufficient capacity to support this increase in the project budget. While P098 has sufficient funds to support this reallocation, this project is scheduled to be undertaken in 2021. By reallocating funds from P088 a shortfall will be created in its funding that will have to be dealt with later in the year.
2. Organizational Implications
The Director of Engineering and Public Works along with the Public Works Manager have included this project on their work plans for the year and it should not impact operations. Additional Engineering and Public Works staff will also be utilized at various points within the project. These points have been accommodated into their work plans.
3. Financial Implications
A breakdown of the budget history and projected costs for P088:
Project Initiated
Original project budget set for design in 2019 - $100,000
Budget increased due to construction costs in 2020 - $300,000
2020 Approved Budget Total - $400,000
Funds utilized in 2020
Detailed design - ($32,000)
P070 costs - ($49,335)
Remaining budget in 2021 Draft Financial Plan - $318,665
Cost Estimate to Complete
Class C cost estimate for construction - $327,000
Contingency (10%) - $ 33,000
Subtotal - $360,000
Consultant cost to complete project- $ 15,000
Total - $375,000
To meet this projected cost, $56,335 is required. This amount would be funded from the Reserve Fund that has sufficient balance to fund this project increase.
4. Sustainability & Environmental Implications
The new units are designed to be highly efficient for heating and cooling operations. By utilizing the new control system, staff will be able to provide a comfortable working environment for the work hours the Municipal Hall experiences. During down times, the system can be programmed to minimize heating and cooling operations to save energy and lower the impact of the building on the environment.
5. Communication & Engagement
The tender package will be finalized by the early part of April. This package will be advertised on several procurement sites in addition to the Township’s website.
ALTERNATIVES:
1. That Council approves the transfer of $56,335 from the Infrastructure Reserve and Revitalization Reserve Fund to HVAC Replacement - Municipal Hall Phase 1, P088 as set out in Staff Report EPW-21-008.
2. That Council approves the transfer of $56,335 from P098 Fuel Tank Replacement Project as set out in Staff Report EPW-21-008.
3. That Council does not approve any additional expenditures for this project.