City staff are recommending Victoria councillors increase the Johnson Street Bridge budget by $4.8 million to cover increased costs and boost the project’s over-subscribed contingency fund.

“It’s not good news,” Mayor Lisa Helps said.

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As a councillor in 2012, Helps voted against awarding the bridge contract because she thought its contingency was too small.

The project team believes the additional costs are the responsibility of either the contractor or consultants.

The city will seek to recover the additional expenditures through mediation, says a report prepared by Dwayne Kalynchuk, the city’s director of engineering, and Jonathan Huggett, the project’s director.

Meanwhile, the extra money is needed to cover the project contingency, increased costs due to the bridge’s 15-month delay and additional legal costs.

The money is recommended to come from the city’s building and infrastructure reserve fund. If approved, it would increase the total project cost to $97.6 million.

The report, which goes to councillors Thursday, says there are limited opportunities to cut costs at this stage.

Council could consider eliminating the public art component, which is budgeted at $250,000, or the E&N Rail station, budgeted at $204,000.

Helps said she is opposed to cutting the E&N station, but is open to eliminating the public art, saying the $250,000 “seems to be a lot to spend when the bridge itself is supposed to be a work of art and the landscaping and the public realm, I think, will be beautiful and welcoming.”

The $4.8-million increase includes $1.9 million for the contingency fund, $400,000 for mediation and legal costs and $2.5 million in additional costs due to the project delay.

If approved by council, the cost of the project will have risen $34.6 million since 2010, when the project was estimated at $63 million.

Helps said the cost of the bridge could still climb higher — the additional $4.8 million does not cover any potential costs that might be awarded in mediation on the cost overruns.

Contingency

In developing the budget, the city opted for a razor-thin contingency of about four per cent ($2.5 million) compared with the 10 per cent that might normally be associated with a project of this magnitude. Another $300,000 was found through cost savings.

About half of the contingency has been committed, and staff predict a $400,000 shortfall.

“While many of the risks related to the design, scope and foundation construction are behind us, there are still two more years for the project,” says the report. It suggests a total of $1.9 million be added to the fund.

Mediation

The city is in mediation with its contractor PCL Constructors, design consultant MMM Group and sub-consultant Hardesty Hanover over about $10 million in cost overruns. “The cost of the mediator, which is estimated to be $10,000, is being shared three ways with the contractor and consultants,” the report says. “Should it be necessary to proceed to litigation, the allocation for legal services would be reviewed and reported back to council.”

Delays

The discovery of significant flaws saw PCL stop all fabrication of bridge steel by Jiangsu Zhongtai Steel Structure in China on July 25, 2014. While steel fabrication has started again, the problems with the steel caused significant delays.

The report projects the new bridge, originally targeted to be operational by Sept. 30, 2015, won’t be open to traffic until January 2017, with completion in June 2017. The 15-month delay will mean an estimated $2.5 million in additional costs for such things as insurance, city staff, auditors and professional services, the report says.

The city has also had to apply for extensions on federal grants as the current funding agreement calls for project completion by March 2017.

bcleverley@timescolonist.com