Lone bidder to get first contract in $10B Iona sewage plant project

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Metro Vancouver is set to award the first significant contract for its biggest capital project yet, the estimated $10 billion replacement for the Iona sewage plant in Richmond.

But one expert finds it worrying that only one proposal for consulting engineering was submitted in response to Metro’s request for proposals.

The contract includes developing the wastewater treatment plant’s preliminary design, estimating construction and operating costs, testing new technology and providing advice on how to stage construction to get the best prices.

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Metro staff recommended awarding a $60.6 million contract for the work to a consortium called Fraser Delta Group, led by the companies AECOM and Jacobs Consultancy Canada.

Wednesday, Metro’s liquid waste committee accepted that recommendation. It will go to the full board’s July 26 meeting for final approval.

Winnie Shi, Metro’s director for the Iona project, called this initial contract “critically important” for helping keep such a huge project on financial track.

“This is a very important contract to help us look at alternate delivery options and phasing for us to address the cost sustainability, all the concerns (that are) obviously paramount and top of mind,” Shi said.

Cost was a major concern for the liquid waste committee, as the Iona project follows the North Shore treatment plant debacle, where the budget has exploded to almost $4 billion from its initial $700 million estimate.

The lack of competition for a contract the size of the Iona replacement surprised one expert.

“It would be very unusual to receive only one (proposal) given the magnitude of the work and the number of qualified consulting firms that are capable of carrying out that work,” said Troy Vassos, an adjunct professor in engineering at the University of B.C.

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Metro Vancouver needs to replace the Iona plant, which only offers primary sewage treatment, to meet federal requirements that all municipalities provide secondary treatment and wants to complete the project by 2035.

Vassos, a civil engineer with 40 years experience including consulting work for Metro, said the concern is that a bidder that senses they’re alone might not be “quite as sharp with their pencils,” leading to higher costs.

Developing proposals for such work is expensive and competing firms might not have wanted to risk that expense for an outside chance of getting the work, Vassos said. Especially if a competing firm, such as AECOM, which has worked on several Metro projects, is viewed as having an inside track.

Shi said Metro “went through a fairly extensive market sounding,” to test interest in the engineering sector, including interviewing several contenders, which helped the major projects office refine its request for proposals.

“It was a concern, certainly,” Shi said said of the single bid. Metro had hoped there would be at least two.

However, Metro learned through the process that three of the largest firms, which already had experience on earlier work at Iona, planned to “team together” for a proposal, leaving some others “wondering how do we compete with that?”

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Shi added that in anticipation of a single bid, Metro took steps to confirm it was getting a good price on the proposal by seeking an independent cost estimate that was “blind from the proposal.”

Metro also relied on an expert advisory panel to advise it on questions of whether the bidders have the expertise needed and if they’re getting “good value,” Shi said.

Metro Chair Mike Hurley said an early estimate “is a dangerous number” to attach to a project, considering his experience with major projects over the past six years.

“The public will be watching, this is a number that’s in their head now,” Hurley said. “And (the final price) is likely not going to be this number.”

Cheryl Nelms, general manager of project delivery for Metro, said early estimates do have a “lower level of certainty,” but the current projections include contingencies to cover project risks, such as cost escalation, and reserve funds.

Today’s $9.9 billion estimate is based on a 2022 estimate of $6.7 billion for construction, with those contingencies and reserves making up the balance, Nelms said.

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“Our challenge is how do we break that up,” Nelms said of the construction work. “How do we break that up into packages that effectively get competition.”

depenner@postmedia.com

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