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Corrosion Springs $17M Project Surprise

Thursday, January 9, 2014

More items for Program/Project Management

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The unexpected discovery of “significantly corroded” structural steel at an Ontario redevelopment project has served up an eight-figure repair bill—and a major beef over who should pay it.

The corrosion was discovered in the fall during a structural adequacy investigation of the Ottawa Civic Centre, the 46-year-old centerpiece of a $400 million redevelopment project known as Lansdowne Park.

Making Repairs

The corrosion damaged the stadium's main beam, access and egress passageways, arena roof and upper arena concourse, and "key structural connections" throughout the facility, according to a report written Dec. 23 by Wayne Newell, Ottawa's general manager of infrastructure.

City of Ottawa
City of Ottawa

The City of Ottawa and the Ottawa Sports and Entertainment Group are renovating the Civic Centre soccer stadium as part of the $400 million Landsdowne Park redevelopment project.

Extensive repairs are now nearing completion, and the project schedule remains on track, authorities say.

Still unresolved, however, is which of the project partners—the City of Ottawa and its taxpayers, or the private Ottawa Sports and Entertainment Group (OSEG)—should ultimately foot the bill.

At issue is whether the repair expenses arose in the normal course of the project, or if they should be considered a new problem not contemplated by the sports group when it agreed to the partnership.

Spending Limits

The city’s maximum cost for the arena upgrade and affiliated parking was set at $135.8 million, with a project contingency of $10 million, The Ottawa Sun reported.

A partner with OSEG told the newspaper Dec. 30 that the company had paid the bill, but that the taxpayers' liability, if any, has yet to be determined.

Corrosion Surprise

The corrosion was found during a regular five-year structural adequacy investigation of the stadium in the fall, when the facility was closed.

Once spotted, the scope of the problem quickly snowballed, ultimately prompting additional investigations of most of the Civic Centre.

In the end, the inspection alone required the removal of  insulation, fireproofing, ceilings, flooring and other materialls from the steel components.

"The completed investigation identified extensive repairs required due to corrosion of the structural steel elements of the facility, which would impact the structure’s capability of supporting its designed loading capacity," Newell's memo said.

City of Ottawa / YouTube

When finished, the 40-acre Lansdowne Park site will include an array of retail, residential and commercial properties in addition to the soccer stadium.

The Civic Centre was constructed in 1967. Previous inspections, including evaluations in 2010, had found the stadium to be in “fair to good condition,” according to the memo.

Pricey Repairs

The majority of the repairs, now nearing completion, involved replacing the arena steel decking or roofing structure, Newell's memo said.

“In order to safely access this area, scaffolding had to be installed from the arena floor up to the underside of the roof," Newell wrote.

"Working from the top side, the concrete floor was removed, followed by the existing steel deck. Repairs to the support beams were completed and new steel joists were installed along the entire area under the upper concourse."

City of Ottawa
City of Ottawa

Despite the unexpected repairs, the Lansdowne redevelopment project is on track, officials say. The stadium is set for completion this summer.

Other elements that were repaired included the main beam, passageways and critical connections.

Cost Not Budgeted

The cost of the repairs was $17 million.

"This is something we had not contemplated,” Roger Greenberg, a partner with the Ottawa Sports and Entertainment Group, told The Sun in an interview.

“If we had, we would have provided for it in our budget when we made the deal with the city and estimated what the repairs were going to be."

The group says the city should pay for the repairs.

City: Not Our Problem

The city, however, opines that the sports group is responsible for repairs that are in excess of the project contingency.

“It is the city's view that, with regard to the funding of these unexpected costs, the provisions of the Lansdowne redevelopment plan project agreement related to the city's guaranteed maximum price require OSEG to pay for the costs of the work that are in excess of the project contingency that is contained within the guaranteed maximum price,” Newell wrote in his memo.

Resolving the Dispute

If the parties can’t come to an agreement on their own, the contract provides that an arbitrator make the call.

The sports group has notified the city that it is considering invoking the arbitration provision of the contract.

Should the group be required to pay, reports indicate that the $17 million will be treated as an additional investment, giving the group a larger share of the proceeds from the completed $400 million development.

When finished, the 40-acre redevelopment site will include an array of retail, residential and commercial properties in addition to the soccer stadium.

   

Tagged categories: Corrosion; Disputes; Government; Government contracts; Rehabilitation/Repair; Renovation; Structural steel

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