The projected cost for a new building to provide more childcare spaces in North Cowichan has jumped $8 million in just one month.
North Cowichan council gave a green light in late June for staff to submit a grant application for $10 million to the province’s Community Childcare BC New Spaces Fund to pay for the creation of new childcare spaces for the Parkside Academy Childcare Society.
The childcare spaces would be provided at a new facility on Morton Way, just northwest of North Cowichan municipal hall, that would be wholly owned by North Cowichan.
But council agreed to increase the grant application to $18 million after a staff report on the project by Shawn Cator, North Cowichan’s director of operations, was presented at the council meeting on July 20.
Cator said there are a number of reasons for the increase in costs to the project, including escalating construction costs since the original estimates were made in October, 2021.
He said staff estimate that the total increase due to the escalation in labour and material costs of the project is approximately $1.5 million.
Cator said that, based on the cost increases that have been observed, staff also decided to increase the contingency funds for the project.
“The most recent cost estimate includes a 35 per cent design and construction contingency, which is a significant increase from the 10 per cent contingency in the earlier estimate,” he said.
“Staff are recommending this increase in an effort to ensure additional funding is in place if future construction escalation should occur. The additional $3.5 million contingency allowance is an important safety net to ensure that North Cowichan is not responsible for cost overruns. The Ministry of Education and Childcare agreed that an increase in the contingency would be appropriate to mitigate project risks.”
As for the other $3 million in additional costs, Cator said further discussion with Ministry staff has identified there are advantages in the scoring of applications by increasing the energy efficiency to a Zero-Carbon Building standard.
“The estimated increase in the project cost as a result of the ZCB standard is approximately $3 million for the 15,000 sq. ft. building,” he said.
Council hopes that the grant, if successful, will cover the total costs of the project, but Mayor Al Siebring acknowledged that the municipality would be responsible to cover any cost overruns.
However, he said council would have the option to back out of the grant before any final commitments are made to the project.
Cator said a $3.5-million contingency fund should be sufficient so there will be no financial concerns if the grant application is approved.
Siebring said there is some speculation in the public that the municipality would be subsidizing a private company in its partnership with the Parkside Academy Childcare Society to provide the childcare spaces.
He asked staff if the municipality could face any legal repercussions.
George Farkas, North Cowichan’s general manager of planning, development and community services, said the funding model that is being used is in place to allow local governments to take advantage of grant funding with the understanding that the municipality would be partnering with a non-profit society.
“So this partnership would very much be in keeping with the intentions of the program,” he said.