Water Utility could need millions more to finish WTP4

A mix of cost overruns and the need for appropriate contingency funding could force Austin Water Utility officials to return to the Austin City Council to ask for further appropriations for the controversial Water Treatment Plant 4 project. Officials with the utility say they are not yet sure when they will be asking for the extra funds or exactly how much they may need.

Though utility Director Greg Meszaros was careful to argue that the project was not yet over-budget during a presentation at Wednesday’s Audit and Finance Committee, Council members were not so sure. A recalculation of the utility’s budget for the project provided to In Fact Daily by Council Member Bill Spelman illustrated that the project could be more than $24 million behind projected baseline construction costs.

 

The utility has added a series of environmental protections to the project as it progressed. Meszaros told In Fact Daily that a portion of the costs over initial budget were thanks to those efforts. “But that’s not the whole reason,” he added.

Council approved a contract between the city and the utility’s Contract Manager at Risk, MWH Constructors, in 2009. Eventually, the Council authorized Austin Water to spend about $360 million in construction costs for the project. Council members had approved additional funds for engineering and design costs before the construction agreement passed.

Each of the votes on the project proved to be somewhat contentious, as a steady block of Council members Spelman, Laura Morrison, and Chris Riley continued to vote against funding the effort. The election of Council member Kathie Tovo provided that coalition with the votes to review the project with an eye toward suspending construction for a period of time.

The figures behind that idea turned out to be more than the cost of simply completing the facility, and construction efforts continued. Ninety percent of the project has now been bid for contract.

The apparent overages for the project are associated with its construction costs. Indeed, according to utility figures, plant construction is estimated to be running roughly $29 million over the project’s budget baseline. By those figures, the estimate for the contingency portion of the construction project – just over $27 million – appears to be exhausted in current calculations.

 

If the current estimates hold, the utility would be at least $2.2 million short on the plant’s construction costs. Above all of that, utility officials have suggested that they could need as much as $24.4 million in additional contingency costs associated with the Construction Manager at Risk contract. Austin Water would have to return to the City Council for any construction amount over the roughly $360 million originally authorized for the completion of the project. That includes both the $2.2 million currently projected construction shortfall and possibly more than $24 million in additional construction contingencies.

 

However, Meszaros remains hopeful that savings on other elements of the project could still leave it costing the city between roughly $505 million and $515 million. Cost projections for this version of the project originally came in at $508 million, and the utility is pre-authorized to spend up to that figure.

 

As Meszaros told Council members Wednesday, “We’re still forecasting our project to be plus-or-minus one percent of our budget from (2008).” He punctuated that statement for In Fact Daily. “When you take the whole project, we are still forecasting that we’re going to be right at $508 million,” Meszaros said.