Inflation is to blame for a more than 30 per cent increase in costs related for the development of Simcoe Village campus in New Tecumseth.
In June 2020, Simcoe County purchased the 20.6-acre property next to the existing Simcoe Manor and Village facility for this future redevelopment and expansion, allowing the facility to stay in Beeton and serve the southern part of the county.
The campus will provide an additional 34 long-term care beds — for a total of 160 beds — and more than 180 seniors housing units/homes, including more than 140 new units for seniors with varying levels of care and support needs.
The project was initially expected to cost $265 million, however following an analysis with input from Statistics Canada, cost consultants, the project’s architectural and construction management firms, county staff reported that inflation could increase overall project costs anywhere from 21 to 31.5 per cent.
These hikes were explained by Jane Sinclair, the county's general manager of health and emergency services, and Dawn Hipwell, director of procurement, fleet and property, in a written update to county council this week.
The most recent cost estimate, completed in June 2023, has confirmed inflation at more than 30 per cent, the high end of the range projected, stated the report, adding that cost reductions will come from the construction manager’s value engineering input as well as the competitive tender process. The supply-and-demand cycle will eventually begin to correct the market, so budgeting for a portion of known inflation is recommended, or an additional $19 million.
That change increases the overall project budget to $311 million, Sinclair stated in the report, and will include all hard and soft costs, contingencies and the non-refundable portion of HST.
"With substantial progression of the detailed design drawings since the June 2022 financial update, current project costs include additional technical design requirements estimated at $26.7 million and a further inflationary impact of $19 million, yielding a total project estimated cost of $311 million as outlined within this Item," she noted.
In addition to the inflation as of June 2023, the cost estimate takes into consideration likely future inflation of up to 13 per cent on hard costs as well as standard construction contingencies.
"Given the continued instability of the construction market, staff will reassess costs in the fall and include amounts in the 2024 budget as required,” stated the report.
“This is a very extensive report. We see our costs are escalating,” said Warden Basil Clarke.
Council approved the inclusion of the additional contingency funds for potential inflationary be included within the 2024 budget, however the decision will need to be ratified at the next regular council meeting.
