With one pre-qualified bidder dropping off, the design-build progressive request for proposals for Sudbury's new arena project is down to two interested general contractors.
The third shortlisted pre-qualified bidder, EllisDon Corporation (Mississauga), did not end up submitting a bid by the June 16 1:30 p.m. deadline, so has dropped out of consideration.
City administration is expected to evaluate the two remaining proponents and prepare a recommendation to council next month alongside a total project cost for the municipal arena/events centre slated to be built on The Kingsway in the city's east end.
A comprehensive update on the project was provided to city council during a meeting last week, at which the city’s elected officials were told the existing timeline, with a 2025 grand opening, remains their north star.
“We are very much trying to stick to the timeline we’ve outlined,” Ian Wood, the city's director of strategic initiatives, communications and citizen services, told Sudbury.com prior to the meeting.
City council gave staff direction in July of last year to proceed quickly with the project, and that’s what he said they have done.
“Since that time, we’ve tried to stick as close as possible to the timelines.”
The projected timeline is still expected to have enough approvals in place for the KED to be removed as an election issue in time for the Oct. 24 civic election.
The central pillar to this argument is that a project completion agreement is expected to be signed by all of the project’s partners this year, which legally binds them to completing their respective shares.
Meanwhile, city council still has a few potential jumping off points before their current term is up. The city is expected to build a municipal arena, Gateway Casinos is expected to build a casino, and Genesis Hospitality is expected to build a hotel.
Site preparation work, including shared space between the partners’ properties, will be cost-shared, and city council has budgeted a total of $100 million toward the overall project. Included in the update to city council was an explanation of the progressive design-build process the city has opted to follow in selecting a general contractor.
The progressive design-build approach is relatively new for projects such as this and warrants explanation, David Shelsted, the city's director of engineering services, said during a pre-council conference call with local media.
Under this model, the project’s scope and budget remain open-ended for much of the process, during which the winning proponent is expected to hash out the project’s nuances with city administrators. This differs drastically from a traditional design-build approach, Shelsted said, which sees the city put out a tender with specific requirements and award it to the lowest bidder at a guaranteed cost.
“One of the failings of that type of methodology is sometimes there are lots of good ideas the contractor has that they cannot express because they don't get involved until the procurement method is almost done and the design is developed,” he said.
Further, the three shortlisted design-build teams expressed opposition to a traditional process for the KED during these trying COVID-era times, during which costs are in constant flux.
“A lot of the contractors are in favour of moving toward this kind of procurement method,” he said of progressive design-build projects, which cost less to submit a bid and offer a shared risk between the contractor and owner, which is in this case the city.
The city is currently near the end of the first of three stages in the design-build process, which will cap off next month when administration recommends a general contractor to council alongside a final budget.
City council has already approved a budget of $100 million for the KED, so anything greater than that would require their go-ahead via a formal vote. The second phase will progress with the selected proponent working with the city on a detailed design and a work schedule, alongside various other key project details.
“We as the owner have a lot of opportunity to input into the design and therefore impact the end cost as well,” Shelsted said.
Although the city has already established a comprehensive vision of what the municipal arena/events centre should include, the collaborative give and take of this phase in the design-build process could alter this vision.
The second phase is expected to end later this year with the selection of a target price. In the event the target price is different from whatever budget council approves in July, the city’s elected officials will be required to provide administration with further direction.
This decision point signals another potential off-ramp for the city, at which time they’re still able to terminate the contract and retain intellectual rights to the design.In the event the target price is agreeable, the project would move forward full-steam ahead with a projected grand opening and puck drop featuring the Sudbury Wolves in 2025.
The open-ended nature of the progressive design-build process has raised alarms by critics who have expressed concerns about the potential for costs to rise out of control.
The plan would see the city and lead contractor share in any underspending or cost overruns that take place, but with certain controls established depending on how great the project veers from the target price approved by city council.
Cost overruns of up to five per cent greater than the target price are shared 50/50 between the city and contractor. The city would fund 25 per cent of cost overruns of between five and 10 per cent, while the contractor would cover all cost overruns greater than 10 per cent, up to a capped maximum value.
As for underspending, the contractor retains 75 per cent of underspending when it’s five per cent or less than the target price. They retain 50 per cent of underspending of between five and 10 per cent less than the target price.
Any additional unspent dollars are retained by the city.This protects the city on both ends, Shelsted said, noting it prevents corner cutting on the underspending side of the equation and costly overruns on the other side.
Also new on the KED front is the conclusion of an OPP investigation into comments Coun. Gerry Montpellier made on social media about a potential bribery attempt, which has concluded without evidence to support the claim. After publishing his initial Facebook post on Sept. 4, 2021, in which he highlighted the situation, Montpellier denied he was offered a bribe.
He clarified the comments he heard were “suggestive in nature but not criminal.”
There is still no word on Gateway Casinos’ commitment to the project.
Last November, they paused their investment due to the then-open OPP investigation and the Minnow Lake Restoration Group’s legal challenge, which has yet to reach its conclusion.
Given the city has been successful in combatting previous legal challenges in relation to the KED, Shelsted said that “the city is confident in the successful conclusion of that lawsuit.”
Site preparation work was scheduled to begin within days of Gateway Casinos withdrawing their financial commitment last year, which caused Bot Engineering and Construction Ltd. to request financial compensation for the costs incurred, standby for labour, equipment and other expenses.
The city subsequently negotiated a settlement to minimize costs and the risk of potential litigation, according to city administration’s latest event centre update.
The cost of the settlement is $1.1 million to date, which will be spread among the project’s partners. The city’s share is $666,600.
Tyler Clarke covers city hall and political affairs for Sudbury.com.