Regulator approves $70M in spending for pared-back version of new Halifax Water building

The Nova Scotia Utility and Review Board has approved $70 million in spending by Halifax Water for a new operations centre — about 20 per cent less than what the utility had asked for.

Halifax Water applied to the regulator last fall for approval to spend more than $86 million on a building in Dartmouth's Burnside industrial park that would consolidate four existing depots.

The project's total estimated cost was $89 million, and the board had previously approved nearly $3 million.

Following an analysis commissioned by the board that found aspects of the project to be "excessive," Halifax Water agreed to reduce the project's scope, bringing the cost down to $87 million.

But the board found still more that it wanted cut out of the utility's plans.

Smaller footprint

In a decision released Thursday, the regulator said $9.9 million in "hard construction costs" could be saved by reducing the building's size by about 1,100 square metres, or 12 per cent. Halifax Water wanted to build a 9,200-square-metre facility.

The board calculated other cost savings associated with the smaller floor plan, including reductions in design fees and contractor overhead and profit.

Also axed from Halifax Water's plan was an underground rainwater harvesting system.

The utility said water captured in the system would save 4,600 cubic metres of domestic water and $15,580 annually. 

Brown and Goldstein, a consulting firm engaged by the board to review the file, said the payback period for the system would be 45 years and therefore advised the board that it "does not appear to be a wise investment."

Halifax Water argued that the rainwater collection system demonstrated environmental stewardship. The regulator agreed, but said environmental stewardship had to be considered against cost to ratepayers. Ultimately, the board said, the cost would outweigh the benefit.

Halifax Water responds

A spokesperson for Halifax Water said the utility is pleased the board agreed a single consolidated operations facility is better than upgrading and continuing to use the four existing depots.

The spokesperson did not directly answer a question about the project's timeline, but said Halifax Water is reviewing the board's decision, "to understand how it impacts the budget, design, and overall footprint for those involved in the integrated project delivery."

"It is still early in our review of the decision, and we are taking the time necessary to assess the next steps. Out of respect for the NSUARB, any further comments from us on this matter will flow through the regulatory process," they said.

'Integrated' construction should keep things on budget

Integrated project delivery is a method where construction costs and profits for project participants are agreed upon up front in a single contract. The owner, general contractor and others all collaborate to ensure those goals are met.

Experts told Halifax Water this approach would reduce risks experienced in the recent construction market due to labour shortages and supply chain issues, but it's at least part of the reason why the projected cost rose as high as it did.

In one of its submissions to the board, Halifax Water said the integrated approach would keep the project on budget.

In its decision, the board said it expected this would mean no more applications for funding approval.