Lewis & Clark board revels after receiving lower-than-expected bids

Lewis & Clark board revels after receiving lower-than-expected bids By David Lias
Plain Talk To say that a bit of celebrating took place late last month in the Lewis & Clark Regional Water System board room may be a bit of an understatement. The board and Troy Larson, executive director of the water system, were expecting open bids May 21 of approximately $96 million for the second phase of construction of the Lewis & Clark water treatment plant, currently being built a few niles north of Vermillion. Of the seven bids received, the apparent low base bid totaled not $96 million, but $61.4 million, substantially below the project engineer's estimate. Seven bids were received.  Lewis & Clark officials were extremely pleased that the apparent low base bid of $61,410,000 was substantially below the engineer's estimate of $96 million. "This is fantastic news and will free up funding to put more pipe in the ground," said Board Chairman Red Arndt of Luverne, MN.  "Finally getting the water treatment plant under contract will be a huge step forward for us." Foley Company of Kansas City, MO, the contractor that's currently building Phase 1 of the water treatment plant, submitted the low bid for the second phase. In a unique twist of fate, the Lewis & Clark board found itself facing a situation last month that is opposite of what it had to deal with when it opened the first set of bids for the entire plant in September 2007. "In September 2007, we bid the entire project, the entire project, in just one phase," Larson said. "And the low bid came in at $142 million, which was $45 million over budget. "We were stunned – off-our-chairs stunned," he said. The higher-than-expected price tag forced the board to rethink its construction plans. Instead of attempting to finance the entire plant and build it all at once, with money it didn't have, the board agreed to divide the work into three phases. "Now we have a scenario where the second of the three phases came in $35 million under the engineer's estimate," Larson said. "Think about that – we went from $45 million over on the whole thing, to $35 million under on just the second phase. With Lewis & Clark, it seems to be feast or famine." Larson said significant changes have occurred in the construction bid environment since 2007. "In 2007, fuel prices were spiking, materials were high – it was the absolute worst time, it turned out, to bid a project," he said. "Now, the timing is phenomenal. We've got contractors who are hungry,  and the prices for materials such as steel and contract are low, so we are thrilled." A third factor that proved to be an advantage for the water project is the current competetive nature among building companies. "We had more contractors bid this time, which relates to them being hungrier," Larson said. "The first time we only had four bidders; this time we had seven. Obviously, more competition means lower prices, so we're very pleased." The board anticipates that work on Phase 2 of the water treatment plant project will begin next month. The Lewis & Clark board awarded the contract to the low bidder on May 28. The second phase work will take place directly west of the current construction activities at the water plant site. In the first phase of work, the contractor has been concentrating on building an underground reservoir. The first phase includes infrastructure separate from the main plant, including the reservoir, an electrical building, and high service pumps. The second phase includes the construction of the main water treatment plant building. Depending on the alternates selected, the treatment capacity of Phase 2, when completed, could be as much as 34 million gallons a day (MGD). Phase 3, to be built in the future, will be an expansion of the main treatment building. It will increase the treatment capacity of the water plant to 45 MGD. By bidding the treatment plant in phases, the water system board has been able to collect an extra year's worth of federal funding to apply toward the construction. "In addition, by taking off smaller bites, we're better able to manage our cash flow," Larson said. "In the long run, we anticipate phasing will actually cost us more, but by doing it in this way, we're better able to manage our cash flow." The water treatment plant is located approximately eight miles north of the Missouri River, as the crow flies. Its location, however, doesn't mean it will have any impact on other rivers and streams in Clay County. The plant is being built north of Vermillion, rather than close to the Missouri, because the construction site is of higher elevation which will aid in the pumping process once the water is treated. "The water will be drawn from a series of wells down by Mulberry Point," Larson said, "that is adjacent to the Missouri River. The aquifer that we will be pulling water out of is recharged by the river." When completed, the Lewis & Clark system will supply water to 15 cities and five rural water systems. The largest city destined to receive the water is Sioux Falls, but it doesn't rank the highest on a per-need basis. "We have roughly five members who will be using Lewis & Clark as their sole source of water," Larson said. "The other members – roughly 15 of them, including Sioux Falls – will use the river's water to blend with their other sources. But in terms of sheer volume, Sioux Falls is the biggest member." All of the water received by the members of the Lewis & Clark Water System will receive water treated at the new plant that, in a few years, should be fully operational north of Vermillion. After all members are connected and receiving water, construction will begin on a third phase of the plant. "Thirty-four million gallons will be able to handle the needs of our members out of the gate," Larson said. "We anticipate the last project we would bid would be phase three, where we would expand the treatment plant to its full capacity as designed, which is 45 million gallons a day." Depending on federal funding levels, construction is estimated to be complete by 2019. He admits that it seems like a very significant amount of water will be taken from the river. In layman's terms, however, it hardly amounts to a drop in a bucket. "The 45 million gallons represents less than three-tenths of 1 percent of the daily flow of the Missouri," Larson said. "It may not look like it, but it really is the Mighty Mo." The treatment plant's design will allow even more expansion – up to 60 million gallons per day, if needed. "That is not part of our Congressional-authorized project," Larson said. "That would be a future expansion many years down the road." When completed, the Lewis & Clark system will provide drinking water through its members to over 300,000 people in South Dakota, Iowa, and Minnesota. Lewis & Clark's member systems will use this new source of water to either replace or supplement existing sources of supply. Through engineering analysis, the Missouri River was determined to be the most viable source of water for Lewis & Clark. The system will distribute treated water through 337 miles of pipeline to members in a roughly 5,000 square mile area, which is the size of Connecticut. In addition to a traditional lime treatment facility, the non-looped system will also include a series of pump stations and reservoirs. Based on the federal component of project expenditures, it's estimated that the economic impact to the region from construction of the project will total $374 million, which includes the creation of 3,730 construction related jobs over the lifetime of the project. These jobs will mean a direct labor income of $10.2 million annually to a region with an annual median income of $37,814. Tax revenues generated from construction are expected to be $15.9 million. The direct, indirect and induced impact of the operation and maintenance of the facilities after construction is estimated to be over $7 million annually for the region, creating 74 permanent positions.

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