Staff asked to explain $ 1⁄ mblowout 4
South Waikato District Council staff have been asked to explain how a project’s budget had blown out by more than $250,000. During a Community and Assets Committee meeting last week, councillors learned the budget for the Tokoroa Wastewater Treatment Plant sludge upgrade, which was set at $ 610,000, had risen to $866,476.
The plant upgrade includes the installation of a centrifuge dryer.
According to the council, the existing way of drying of biosolids (sludge) on site is not environmentally friendly.
The biosolids are forced to drying beds, where the moisture either evaporates or soaks into the ground.
After 100 days, the substance remaining is transported to the landfill for disposal.
Options were considered for alternative treatment of biosolids and doing away with the drying beds. The best option determined for the quantities of biosolids produced was to install a centrifuge dryer at the wastewater plant.
The budget was put together before the design was completed and the equipment was purchased before the tender process was completely settled.
The project was split into three tenders. The first two tenders were for the supply of equipment, the first being for the supply of the centrifuge and sludge conveyor and the second for the supply of a polymer dosing system.
The third is for the installation of the equipment.
During last week’s meeting, the council’s group assets manager Roger Fisher was bombarded with
I would like a full explanation to all the councillors about how the tender process works . . .
Mayor Neil Sinclair
questions from councillors asking him to explain the blowout.
‘‘We put out the contract, the designs, build, and prices that came in were quite a bit more than what we had initially budgeted [for] . . . because we didn’t understand what the needs of this equipment would be,’’ he said. ‘‘It was just an underestimate.’’ Councillor Adrienne Bell asked: ‘‘We are told that the total cost now is $866,000 and then a contract has been awarded for $493,000, what is the $373,000?’’
Mr Fisher responded: ‘‘That was the purchase of the equipment, the main equipment.’’
Mayor Neil Sinclair also raised his concerns.
‘‘Given the status of what is tak- ing place with our RAL contract . . . I would like a full explanation to all the councillors about how the tender process works because I don’t think we all quite grasp what takes place when budgets are granted.
‘‘ I don’t know that when I passed the budget for this project, I recognised that the design wasn’t complete and that it could well be out by 25 per cent and that is a heck of a lot. I would like some reason for that expediency to actually do that budget. We as councillors need to know better in terms of the tender process and what therefore takes place.
‘‘When the contracts come in, I would hate to think that every tender process, that councillors are expected to read the whole tender document to see whether the right things are taking place.’’
The mayor’s reference to the RAL refers to a High Court decision which found the council had not followed proper tendering provisions, from which the council was ordered to pay $380,230 to RAL, an unsuccessful tenderer, for breaching a preliminary contract.
The council says it is appealing the decision ( South Waikato News, August 22, 2012.)
Councillor Herman van Rooijen was not satisfied with Mr Fisher’s justification and proposed to halt the project. ‘‘I’m certainly not convinced myself that this has been properly justified,’’he said.
Questions were also asked if the project was too far along to be halted.
It was moved and seconded that the shortfall of $256,476 be funded from the wastewater depreciation reserve and that the third tender be awarded to Spartan Construction for $493,241.56 (GST exclusive).