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HomeMy WebLinkAboutCSD-09-049 - Consolidated Maintenance Facility Update ReportREPORT REPORT TO: Finance & Corporate Services Committee DATE OF MEETING: September 14, 2009 SUBMITTED BY: Pauline Houston, General Manager of Community Services PREPARED BY: Cynthia Fletcher, Director of Facilities Management (ext. 2424) WARD(S) INVOLVED: All DATE OF REPORT: September 8, 2009 REPORT NO.: CSD-09-049 SUBJECT: CONSOLIDATED MAINTENANCE FACILITY (CMF) PROJECT UPDATE - SEPTEMBER 2009 RECOMMENDATION: That the scope of the Consolidated Maintenance Facility Project be increased to include the necessary components to achieve a LEED Silver designation; and, That Infrastructure and LEED components totalling $14 million as outlined in report CSD- 09-049 be approved, $9.3 million of which to be funded from the approved Federal Provincial Infrastructure Stimulus program allocation and the balance to be funded from the proceeds of land sales of surplus properties related to the project; and, That the following funding adjustments to the Consolidated Maintenance Facility Project be approved: $2.1 million allocated from the Business Park Reserve Fund $1.5 million contribution from each of the Gasworks, Waterworks and Sewer Enterprises; and further, That the environmental remediation costs related to the surplus lands to be sold upon completion of the CMF project be funded through the Brownfield Remediation Program (TIEG) and the Environmental Remediation Capital Account. BACKGROUND: On January 19, 2009, Council received staff report CAO-09-002 which provided a status update on the CMF project from December 31, 2007 to December 31, 2008. The report included information on activities related to the project charter, the project vision, a communications plan and staff engagement in the design of the facility and the development and design of work processes in the new facility. ïð ó ï REPORT: The report provides a status update on the CMF project from December 31, 2008 to August 31, 2009 in the following areas: 1. Vision for the Consolidated Maintenance Facility 2. Significant Project Scope Changes Snow Management Infrastructure Stimulus Funding and LEED Components Scope deferrals and deletions 3. LEED designation options 4. Revenue and Funding Changes Battler Yards Operations Land Sales Projections and Environmental Remediation Development Charges and Enterprise funding Future Land Needs 5. Project Budget 6. Project Risk Assessment and Management 7. Schedule Update 8. Managing the Change 9. Transition and Business Continuity Planning 10. Solar Roof 1. Vision for the Consolidated Maintenance Facility A vision for operations and services to be delivered from the CMF was developed by staff and presented to Council for information in January 2009. This vision and the supporting desired key results and work plans provide a framework for planning, action and decision-making, both within the project itself and for staff in the future as people, processes and services are integrated at the site. The Vision supports the City’s overall strategy as well as the organization’s People Plan. Three Components:Three Components: WorkplaceWorkplaceWorkplaceEnhancedEnhancedEnhanced FacilityFacilityFacility CultureCultureCulture ServiceServiceService The new facility will… Be modernized and physically comfortable. Allow staff to perform their jobs easier, faster and better. Contribute to achieving the highest levels of employee safety. Facilitate the integration and coordination of business processes where practical. Give staff quick and easy access to equipment, vehicles and supplies. Take advantage of technology and best practices to improve processes and service delivery. ïð ó î workplace culture The will ensure staff… Work together. Treat each other with respect. Collaborate and cooperate within and between divisions and work units. Have fun and enjoy their work environment. Engage in discussions and decisions on operational and workplace improvements. Share a common pride and commitment to the city team. Value the differences and contributions of individuals and work groups. Use the same procedures for practices that are common to work areas. Continuously look to innovate and improve skills, processes and services. Make personal, organizational, and community health, safety and wellbeing a priority. The new facility and workplace culture will support staff in providing enhanced services to the community by: Delivering services more efficiently, leading to faster response times and improved quality. Meeting and exceeding service and safety standards. Offering services that are responsive to the changing needs and growth of the community. Making a positive difference in the community. Responsibly using the city’s physical assets (e.g., vehicles, equipment, land, buildings). Going the extra mile to serve their customers. 2. Significant Project Scope Changes On November 27, 2007, Council received staff report CAO-07-052 and passed resolutions to accept the recommendations contained therein, including: “That an upset budget limit for the CMF project be set at a range of $46.1M to $48.2M.” At that point in time, a potential funding shortfall of $2.2 million (4.5% of total project budget) was identified. Staff recommended at that point that the potential shortfall may be mitigated through a variety of approaches, including: Use of city staff and winter works budget to undertake some site preparation or o building renovations; A reduction in scope of work to fit costs within funding available; o Increased Funding from development charges, utilities and capital out of current; o and/or Funding from the Asset Management Reserve Fund generated through o additional land sales. The project budget was based on cost estimates prepared by an independent cost consultant, A.W. Hooker Associates Ltd., in October 2007 as part of the site selection process and report completed by the IBI Group for the City of Kitchener. ïð ó í Since October 2007, the following work has been done to better define the project scope and details to ensure that the vision for the facility is achieved while honouring the original budget limit: A full complement of consultants has been retained to prepare functional and detailed layout and servicing details for the building and the site and to better define the mechanical and electrical requirements. A detailed space program and schematic drawings of the building and site with significant input from staff have just been completed to better define the details of the project. The next step is the preparation of detailed construction drawings. Two LEED sessions have taken place and options have been provided and evaluated. A recommendation for LEED designation is contained in this report. The approach to the construction of the project has been reviewed and a change has been made to retain a construction management services firm to take on the role of construction project manager and site superintendent. A storm water management report and scoped environmental impact assessment report have been completed for the entire former Goodrich property resulting in design/construction requirements for the CMF specifically related to more hard surface to prevent infiltration and careful management of the runoff from the snow storage area. The project budget was based on 2008 construction costs. An escalation factor has been added to allow for construction in 2010. A cost consultant was engaged to ensure the budget projections for the various components of the project were consistent, as accurate as possible and all opportunities to minimize costs were considered. Snow Management As a result of the conclusions in the stormwater management report and environmental impact assessment report noted above, the cost estimate of a snow storage area on the CMF site increased significantly, such that other alternatives were explored. Further analysis is underway which includes a collaborative investigation with the Region and other area municipalities for a more suitable location in closer proximity to the downtown. In conjunction with this review, a permanent snow melting depot using natural gas as the fuel source to reduce annual operating costs is also being explored. Based on the analysis to date, it has been concluded that the CMF site is not a practical location for snow management operations. $0.5 million in project funding has been allocated to fund the final solution, once determined. Infrastructure Stimulus Funding and LEED Components Earlier this year, the City received approval for funding under the Federal Provincial Infrastructure Stimulus Program which would allow for $14 million of optional infrastructure components and LEED components on the project to proceed (i.e. $9.3 million in Federal/Provincial funding and $4.7 million City funding). ïð ó ì These components include: vehicle wash bay, salt storage facility, fuel distribution equipment, some emergency generators, block heater hookups, enhanced lighting, plus the LEED silver components outlined below. Scope Deferrals and Deletions As part of the exercise to review opportunities to minimize costs, staff reviewed major components as they related to service provision. Components were identified for inclusion in design, deferral, reconsideration for inclusion in scope, eliminate or explore partnership opportunities. Some examples of these items are: Item Result Reduction Future defer Number of covered except for those $100,000Re-assess over the first 5 external storage required for material years of operation structures sensitive to the elements nd 2 vehicle wash bay Equipment purchase $145,000Re-assess need and deleted , infrastructure justification over the first 5 to add will be in place years of operation Work Stations for Facility is designed and $160,000Provision to accommodate future growth space allocated for future growth needs will be 2025 growth, all included in the Capital workstations are not forecast similar to the City required day 1 Hall budget Size of greenhouse Reduce the size of the $233,000 greenhouse to meet needs Emergency back up Assessed the critical $500,000 power (100% of the building functions to be facility versus critical on back up emergency functions) power Number and types of Assessed the need & Savings in vehicles stored priority of vehicles to be M&E indoors parked indoors/heated. requirements (i.e. 120 priority 1, 2 & 3 vehicles to 80 priority 1 vehicles) Size of salt storage Reduce the size of the $300,000 facilitysalt storageto meet needs Deleted Bulk water sales from site $250,000Exploring alternatives and functionpartnerships Snow management Removed from CMF $2,000,000Exploring alternatives and options design once area was partnerships designated a well head and environmental protection requirements in creased the cost significantly. Deleted Aggregate recycling from CMF site Alternative to retain a large and storage options design portion of Battler yards for aggregate recycling ïð ó ë 3. LEED Designation Options Introduction The Consolidated Maintenance Facility project as it was originally formulated and budgeted (in 2007) envisaged a typical building structure with mechanical & electrical systems designed to meet Minimum Code Requirements and Program Driven needs. The City has since engaged design teams (Giffels/IBI – Architecture; Morrison Hershfield - M&E; MTE – Site Services & Structural). Over the last few months, key stakeholders from the City and the design teams have conducted joint LEED sessions to explore opportunities to design the new CMF to a LEED Silver or possibly a LEED Gold Certification. Design Options Analysis The base construction budget includes the key mechanical & electrical design elements required for a basic Code Compliant Building. Design enhancements, along with costs required to achieve a LEED Silver and LEED Gold Status are summarized below. All the design enhancements required to achieve a LEED Silver or LEED Gold Status have inherent benefits and paybacks that the City will realize. However, not all the paybacks lend themselves to a ready quantification in monetary units. A number of benefits associated with a LEED Silver o Gold Design are of a Qualitative Nature; examples include: Improved indoor environmental conditions = increased productivity, less absenteeism, etc. Improved building system monitoring = increased operating efficiencies, better scheduled & preventive maintenance programs, etc. Payback Analysis Designing the CMF to a LEED Silver or a LEED Gold certification level will impose additional initial costs. These premium costs (over base case Code Compliant Design) along with a simple overall project payback period are as follows: LEED Silver Design: LEED Silver component examples: Low Flow Fixtures and Dual Flow Water Closets Expanded drainage system within shops to support gray water harvesting Heat Recovery, Geothermal loop tied to heating and cooling systems, hydronic heating plant with high efficiency condensing boilers Real time system monitoring Lighting and Building Systems Controls, Daylight harvesting Premium Costs: $3,295,000.00 over base budget Simple Payback: Approximately 5-6 years LEED Gold Design: LEED Gold component examples: Increase grey water capture/harvesting ïð ó ê Enhanced Measurement & Verification Strategies for Mechanical & Electrical Systems Increased Daylight harvesting (using skylights) Personal (task lighting) occupancy sensors A new 1200 kW generator with exhaust gas recovery to increase maximize geothermal potential Entire facility on Emergency power Premium Costs: $2,225,000 over and above the LEED silver budget Simple Payback: Approximately 6-8 years for some initiatives and >20 years for some of the major initiatives Staff recommend that the CMF facility should be designed and constructed to achieve LEED Silver designation. 4. Revenue and Funding Changes Battler Yards Operations The original approved budget was based on the assumption that the aggregate recycling activity at the Battler Yards location would be scaled back in size and relocated to the CMF site. The rationale for this conclusion was that by changing the frequency of crushing from a bi-annual to annual process, less aggregate would need to be stored on site. As part of the project planning process, a more detailed analysis of the operation with input from staff involved in the operation, was undertaken. In terms of the aggregate recycling operation, it was concluded that this continues to be both a cost effective as well as environmentally responsible approach to handling of waste concrete and asphalt from city road construction projects. Based on further analysis of the operation and the revenue potential of the land sale at both sites, it was concluded that the 4 acres of land freed up at the CMF site would yield approximately the same net proceeds as the 10 acres of surplus lands at the Battler Yards site, after considering environmental clean up and undevelopable acreage due to easements and flood plains. Other considerations taken into account in this analysis include potential impact on the surrounding neighbourhood of moving this operation to the CMF site, as well as potential for volume of recycling activities to increase on site. With the accelerated infrastructure program gearing up, there will be a higher volume of aggregates that we can recycle on site. There is also an opportunity to explore revenue generating partnerships with Waterloo and Cambridge for aggregate recycling. The larger site at Battler Yards will give us more flexibility in the future to address these changes. Land space requirements for this operation have been reassessed, such that a portion of the property can be sold for development (1.5 acres). Staff recommend that 10 acres of the Battler Yards location be retained for aggregate recycling operations. Land Sales Projections and Environmental Remediation The land sale projections in the project budget have been reassessed based on current economic conditions and considering environmental remediation costs. The environmental remediation costs will be funded through the Brownfield Remediation Program (TIEG) offered by the City of Kitchener and Regional Municipality of Waterloo, as well as the Environmental Remediation Capital Account. ïð ó é Development Charges and Enterprise Funding The revenue projections for the development charge contribution has been updated based on the recently approved Development Charge By-law. In addition, the contributions from enterprises (gas, water and sewer) have been reassessed based on their proportionate share of square footage at the new facility as well as including the infrastructure/LEED components of the project that have been added as a result of the Federal/Provincial Infrastructure Stimulus funding. Future Land Needs As a result of the decisions related to Battler Yards and the Snow Melting operation, approximately 7 acres of land at the CMF site that were originally earmarked for these functions have been freed up. These lands have been strategically located on the site, fronting on Wabanaki Drive, such that future consideration can be given to selling this prime property for industrial development. It is recommended that we continue to hold these lands and complete a site growth assessment in five years after completion of the CMF. At that point, a decision will be made as to whether or not the lands are required for future CMF expansion and the appropriate funding for that use would be allocated. It is recommended that the cost of this land be funded by the Business Parks reserve fund, on a temporary basis until that decision is made. 5. Project Budget The overall project budget has been adjusted to reflect inclusion of infrastructure and LEED components, which are now possible because of the Federal/Provincial Infrastructure Stimulus program funding, as well as adjustments to detailed revenue and expenditure lines as a result of updating estimates. Budget Summary: Approved Budget Revised BudgetInfrastructure/LEED (November 2007)Base ProjectComponents Revenues$46.0 million$47.0 million$14.0 million Expenditures$48.2 million$48.3 million$14.0 million (Surplus)Deficit $ 2.2 million$ 1.3 million$ 0 Budget details are provided in Appendix 1. 6. Project Risk Assessment and Management This project has a strong focus on risk management. Since the original risk assessment prepared in July 2008 by KPMG where 45 active risks were identified, 40 of which were rated high in priority, a rigorous risk review process has been put in place, requiring regular monitoring and management of identified risks by both the project team and the Internal Auditor. It is not uncommon in projects with a broad scope such as the CMF project, to have the number of active risks fluctuate a great deal throughout the life of the project as mitigation strategies are put in place and new risks identified. Currently, the project is tracking 18 active risks, of which 9 are rated high in priority. Key risks that will continue to require diligent and careful monitoring include project scope and budget and well as project completion schedule. ïð ó è 7. Schedule Update Following is a summary of some of the projected key milestone dates in 2009-2011: The detailed design stage for the project is anticipated to be completed in December 2009 followed by construction. The planning stage for the move-in and for staff integration will continue through 2010. The project is being undertaken using the construction management process. This approach will result in numerous, sequential tenders and staged construction activities. Construction completion and operations moves will be scheduled on a phased in basis over the fall of 2010 through spring of 2011. The construction of Wabanaki Drive from Wilson Avenue to Goodrich Drive will take place in 2010. 8. Managing the Change The City’s Consolidated Maintenance Facility represents not only a major construction project, but a significant change management initiative from a people and service delivery standpoint. Following is a summary of work underway on components of the project which will ensure a successful transition for staff, operations and services. A subgroup of the Project Steering Committee was created in March to focus on Service Maintenance/Enhancement and Process Improvement/Integration – to analyse and assess issues and opportunities presented by the transition of staff and services from multiple locations into one, within the context of the Vision for service and operations of the CMF. Staff identified 640 tasks, business processes, services and physical areas of the site which require review. These items were prioritized in terms of services/tasks/areas impacted by relocation, opportunity for process or service ïð ó ç enhancement, and affects business continuity. From this process, 200 items were identified and prioritized by: criticality to design of the site/facility; requirement that a process review must occur for relocation and integration to be successful; and little or no impact on business continuity. Over the next 4-6 months focused analysis of processes will be undertaken to ensure successful transition and continuity of public services during transition to the CMF. Focused review and business cases for change will be brought forward to the Project Steering Committee. Staff is developing a strategy for change to ensure successful transition of staff and operations, including refined or enhanced working arrangements to align with the Vision in creating a collaborative positive work environment. A staff working group has taken an issue -based approach in this work and identified and prioritized a number of areas for inventory and review including working arrangements/terms, and management practices. This review will include a gap analysis between current varied practices and enhanced common practices, as well as assessment of outcomes from the service and process integration work. Recommendations for change including financial and time costs, communication, training and orientation requirements will be brought forward to the Project Steering Committee. This work will also identify practices to be addressed through changes to management approaches, those subject to the collective bargaining process, as well as potential jurisdictional challenges which will need Union agreement for any change to occur. To supplement this issue-based work, staff has also undertaken an analysis of data and findings from the City’s 2009 Employee Culture Survey, to identify additional areas of opportunity for change and integration. In addition to learning needs to support a successful transition and orientation to new work practices, education and training is planned for senior and middle management and supervisors in change management practices to ensure that they are equipped to lead and implement the changes required. 9. Transition Planning and Business Continuity/Relocation Plan In order to ensure successful transition and continuity of public services during the physical relocation of people and equipment to the CMF, a subgroup has been formed to develop a detailed strategy. Integrating people, major equipment, furniture and records from various City of Kitchener Divisions and various locations, while striving to continue the highest level of business continuity, is an exercise in logistics management. This ; subgroup will develop a comprehensive transition plan for the project • Identifying items, material and equipment which can be purged or re-located • Identifying a schedule to deplete material from existing location and delivery dates to our new location • Identify and securing resources necessary for smooth transition • Clearly communicating the plan and details to those staff relocating, the corporation and to our public customers • Identifying necessary training • Implementing, evaluating and adjusting the full plan With 450 staff members and 640 services transitioning to the new facility, this plan will be critical to minimizing impacts on staff members and ensuring we can continue providing maximum service. ïð ó ïð 10. Solar Roof As you will recall, the Solar Roof Project is a stand alone project of approximately $4,000,000, which was also approved for funding under the Federal/Provincial Infrastructure Stimulus Program - Environmental Initiatives. This sub-project will be incorporated into the overall CMF project plan, whenever the Ontario Power Authority program moves forward, which is currently estimated to be Autumn of 2009. FINANCIAL IMPLICATIONS: In order to accommodate revised projections in land sale revenue, provide matching funds for the infrastructure stimulus program enhancements and a refined analysis of operational needs (i.e. Battler Yards Operations), the following funding adjustments to the Consolidated Maintenance Facility Project are recommended: $2.1 million allocated from the Business Park Reserve Fund $1.5 contribution from each of the Gasworks, Waterworks and Sewer Enterprises An initial review of the enterprise related capital project priorities has been completed with Finance, Engineering and Utilities staff to ensure that there is sufficient funding capacity within the enterprises in order to accommodate the additional funding as noted above. This review concluded that this funding can be accommodated over 2010-2012, based on some deferral of other projects. The exact timing of the funding and specific projects affected will be finalized and presented to Council as part of the 2010 Capital Budget process. In addition, it is recommended that the environmental remediation costs related to the surplus lands to be sold upon completion of the CMF project be funded through the Brownfield Remediation Program (TIEG) and the Environmental Remediation Capital Account. COMMUNICATIONS: A full and detailed communications strategy for the consolidated maintenance facility (CMF) project was developed and approved by the project steering committee in July 2008. The communications strategy targets all of the audiences and stakeholders who will be affected either directly or indirectly by the new facility, including city staff, city council, the general public and the residents of nearby Hidden Valley. The strategy also includes tools and methods for reaching all of these audiences with information as the project progresses, and especially at significant project milestones. Communications objectives through the course of the project centre around ensuring major decisions related to the new CMF are made in an open, transparent and engaging fashion between the city and its stakeholders. Internal staff involvement has been extensive over the course of the project to date. In the past year, more than 200 management and front-line staff from across the corporation have played a role in this project. Opportunities for staff to engage themselves in the project have included sitting on process-design focus groups that were formed to analyze the city’s current practices and make recommendations on future processes for the CMF; and providing feedback at key milestones, such as the development of the project vision and the unveiling of the architect’s block drawings. ïð ó ïï Other examples of methods the city has used to engage staff in the CMF project, and keep the public informed on its progression, include: Regular updates by way of the intranet, all-department e-mails and messages on TV monitors at the city’s outside facilities (Bramm Street, Chandler Drive and Elmsdale Drive;) Regular updates to the public, by way of the city’s website, media releases, and e-mails targeted at interested residents from Hidden Valley. Since the spring, and as work continues on the project budget, as well as the integrated project plan, staff has been kept up to date as much as possible on the progress of the project -- including recent changes to the structure of the project team and the project steering committee. The integrated project plan will assist the communications team in anticipating and planning for upcoming project milestones, using the tools and methods laid out in the approved communications strategy; while monitoring project-related issues that may require triage-style communications. Once the integrated project plan is near completion staff will review, revise and expand the overall project communications strategy. CONCLUSION: The Consolidated Maintenance Facility project continues to be a high priority project for the organization, which will create the opportunity to deliver enhanced service for our residents. The original project budget commitment for the base project continues to be maintained while allowing adjustments to the project schedule and funding sources in order to accommodate the City’s contribution to the Infrastructure Stimulus program enhancements to the project. The funding shortfall identified in the original budget has been reduced and mitigation strategies as previously identified will continue throughout the life of the project. The next Project Status Report will be provided to Finance and Corporate Services Committee in January 2010, based on a quarterly update schedule. This report is submitted on behalf of the CMF Project Steering Committee comprised of: Pauline Houston, General Manager of Community Services (Project sponsor and chair) Troy Speck, General Manager of Corporate Services Larry Gordon, Chief Purchasing Officer Wally Malcolm, Director of Utilities Don Miller, Director of Fleet Jim Witmer, Director of Operations Tracey Hare Connell, Executive Director of People Services and Organizational Development Michael May, Director of Corporate Communications and Marketing ACKNOWLEDGED BY: Pauline Houston, General Manager of Community Services ïð ó ïî CONSOLIDATED MAINTENANCE FACILITY Appendix 1 PROPOSED BUDGET Monday, August 31, 2009 A B (B-A) Original Base Revised Base Infrastructure Budget Budget Variance Budget Revenues Federal/Provincial Grants - - - 9,333,333 20,836,352 Contribution from Capital 22,637,523 (1,801,171) - 330,000 Contribution from Reserve 330,000 - - 1,801,171 Investing in Ontario Grant - 1,801,171 - 3,060,000 Contribution from Gas 1,560,000 1,500,000 - 3,060,000 Contribution from Water 1,560,000 1,500,000 - 3,060,000 Contribution from Sewer 1,560,000 1,500,000 - 6,175,000 Contribution from DC 3,299,000 2,876,000 - 2,100,000 Contribution from Business Parks Reserve - 2,100,000 - 5,976,933 Land Sales 14,650,000 4,666,667 (8,673,067) 573,000 Existing Capital Funds 428,000 145,000 - 46,972,456 947,933 14,000,000 46,024,523 Expenses Land Costs 22,410,308 22,811,710 401,402 - Consulting Services 2,597,211 3,499,642 902,431 1,335,500 Art 200,000 200,000 - - Permits 106,527 150,000 43,473 - IT System Costs 300,000 300,000 - - Relocation Costs 300,000 700,000 400,000 - Building and Site Development 18,000,000 17,737,500 (262,500) 12,664,500 Communication - 5,000 5,000 - Contingency 2,300,000 2,000,000 - (300,000) Interest Costs 1,996,288 477,729 (1,518,559) - Miscellaneous Project Admin Expenses - 30,000 30,000 - Building Operation Costs - 350,000 350,000 - 48,210,334 48,261,581 51,247 14,000,000 Surplus/(Deficit) (2,185,811) (1,289,125) 896,686 - ïð ó ïí