West Shore Park Corporation (WSPC) has a significant investment in the Water Tank and water distribution system which serves approximately 180 homes. The tank is 32 years old and WSPC, for the past four years, has been saving and preparing for the replacement of the tank.
Bids and Budget
In late summer, WSPC engineering firm (RHMG Engineers) solicited bids from five contractors to install a new water tank. Bids were received, reviewed and presented to WSPC the week of September 25. Only two contractors submitted bids: Boller Construction (Boller) at $380,000 and Gaskill and Walton Construction at over $500,000. In addition, there are engineering fees of $23,600 and a 5% contingency for unexpected construction situations (e.g. bad valve, etc.) of $19,000, for a total project budget of $422,600.
In 2012, a very preliminary estimate without any contingency was $275,000. In 2016, the estimate was revised to $372,000 including a contingency. The cost, based on an actual bid, is now $422,600, an increase of $50,600. To date, for this project, WSPC has collected $320,000 and has planned to use $26,000 from the water emergency fund, leaving a difference of $76,600. Additional money could be “borrowed” from the emergency fund on a short-term basis. Boller will start the preliminary underground piping and hydrant work in November 2017 and complete the tank installation in May 2018. This will allow WSPC to collect the difference of $76,600 during WSPC’s next fiscal year (which starts April 1, 2018).
When trying to budget for the tank project four years ago, the Board relied on the engineer’s estimate and tried to budget accordingly to collect enough funds. The engineer’s estimate tried to account for future material costs, labor increases, health of economy, etc. The biggest cause for the increase in budget from four years ago is the health of the economy. The increase in construction and the positive outlook for future construction nationwide and especially locally has made large qualified contractors less willing to bid on smaller projects such as the tank project. Also, working with Home Owners Associations (HOA) is not the ideal situation for contractors and they tend to shy away from projects with HOAs.
Schedule
At the last WSPC board meeting on October 2, 2017 the Board approved giving Boller a Notice to Proceed (NTP) to begin the process of preparing shop drawings, Schedule of Values, schedule, obtaining the materials and finalizing contracts. Boller is a well-known reliable company with a good reputation, has been located in Lake County for almost 40 years and has a wide range of construction experience.
Over the next few weeks, WSPC water commissioner and the Board will be working with the RHMG and Boller to finalize the contract, Schedule of Values, final schedule, certificate of insurance, shop drawings and any other permits or paperwork required prior to mobilization.
At the beginning of November, Boller is expected to begin the installation of the underground piping and hydrants. Over the winter, the tank drawings will be submitted and reviewed and the tank will be fabricated ready for an early spring delivery. The demolition of the old tank will begin in early April with installation of the concrete base to follow immediately. The tank will then be constructed, finished and inspected. The entire construction of the tank is estimated to take 6 to 8 weeks and be completed by late May 2018.
WSPC Finances
As with any construction project of this magnitude there is always a risk of going over budget either by underestimating the cost of the project or unforeseen events during construction that could push the construction cost up. The engineer’s low original estimate is unfortunate but is not uncommon. Estimating a construction project cost 4 to 5 years in the future is not an exact science and difficult due to the multiple variables involved. The cost is above the original estimate and what WSPC projected to save. WSPC will have to make up the difference.
The unforeseen costs during construction have been estimated at 5% for budget reasons. The engineers, contractor, and other construction managers that live in the neighborhood who have helped with this project feel 2 to 3% is typical for smaller simpler construction projects such as this one.
WSPC’s Board plans to include $75,000 in next year’s budget to pay for the remainder of the tank project. This is the same amount that has been in the budget for the past three years. 2018/2019 budget discussions including the tank replacement budget will be discussed at the next several monthly board meetings.
WSPC’s water system saves each homeowner several hundred dollars a year versus being on a municipal water source. It is important to maintain and keep this system running properly.
If you have any questions, feel free to contact me at 847.613.7216 to discuss.
