City answers the question- Could roadwork projects suffer from inflation seen elsewhere?

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Road works asphalt removing machine loading powdered asphalt on the truck

Headlines from across the province include information about inflation affecting everything from food to gas prices.

In Essex, Ontario, 30 minutes outside of Windsor, one such headline reads INFLATION IMPACTING ROAD PAVING PROJECTS.

Written by AM800 staff in Windsor, it goes on to explain that three roadwork projects in the small town will cost nearly $700,000 more because the price of asphalt cement has gone up significantly since the RFP’s were approved.

Knowing this information and the amount of roadwork in our community that is planned for the summer, SaultOnline reached out to the City of Sault Ste. Marie with concerns for the projects planned in our community and the taxpayer being left holding the bag on any overruns. The following four questions were put forward.

What is the situation in Sault Ste. Marie. Is there a drastic change in what was planned in the RFP’s?

What was the number the City went with for the RFP’s this year?

Who is responsible for cost overruns on roadwork projects?

Will this have an adverse effect on the amount of work which is planned or the overall roadwork budget?

The new Director of Engineering for the City, Carl Rumiel, responded promptly and explained the difference between what is done here as compared to the situation in Essex.

“The budget estimates used for asphalt are based on prices from previous years with an inflation rate applied to it.  If the budgeted numbers are low, the City absorbs the overrun or decides if it wishes to adjust the volume of work to meet the budgeted numbers. Projects this year are on track of the budgeted allowances.
 
To protect the Owner and the Contractor, the City’s contracts have an asphalt cement payment adjustment.  This adjusts payment to the Contractor (up or down) based on changes to the Ministry of Transportation’s asphalt cement price index.  The index is published monthly and used to calculate the amount of payment adjustment to reflect fluctuating asphalt prices. For example, if the price goes up, the City would absorb the cost through contingency allowances in the contract, and if the price goes down, the City will pay less.
 
The City does not pay the price per tonne the same way you suggested Essex may. Through City construction contracts, we purchase asphalt pavement which includes sand, gravel, asphalt cement, hauling, placing and compaction. Public Works also purchases asphalt pavement but without the placement as our crews would do the actual paving.”

Stay with SaultOnline/ONNTV as we continue to account for the mindful spending of taxpayer money within the community.

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