NexSource Centre comes in $1 million over budget

NexSource Centre comes in $1 million over budget

The Town will dip into surplus to pay the difference

Sylvan Lake’s NexSource Centre will come in at $1 million over budget, Town Council found out at its recent meeting.

The recreational facility, which opened in March, is now expected to cost a total $38.75 million.

It was regularly reported that it was on schedule and on budget during the construction process.

Town council heard that two administrative errors resulted in the cost overruns and went undiscovered until staff performed an internal audit of project expenses.

The detailed audit of the project showed some early costs related to feasibility and design work and demolition did not get included in the overall budget. That early work cost about $477,000.

Another $575,000 in builder expenses was also overlooked.

In a report to council, staff estimate the centre rehabilitation project face a $999,000 budget shortfall, equivalent to 2.65 per cent of the overall project budget.

The decision to add items such as cladding of existing structures, kitchen and concession operating equipment, and audio-visual components added to the project costs.

The budgeting was further complicated by the project beginning with the community services department and later transferred to public works.

The Town is also anticipating revenues will fall about $334,000 short of original estimates.

To cover the costs, Council voted to dip into $1.5 million in unused provincial Municipal Sustainability Initiative grant money. The town also has $5.5 million in a surplus account that could be used if needed.

Despite the large shortfall, Council is is still pleased with the out coming of the facility, saying they wouldn’t have changed a thing.

During construction when a surplus was expected, the decision was made to replace aging outside cladding on the Aquatic Centre and elsewhere at a cost of $450,000. Another $235,000 was invested in kitchen and concession equipment and $160,000 for audio-visual equipment.

The town built the project with a thin 2.7 per cent — about $1 million — set aside as a contingency budget.

Typically, a project of this size would carry a five to 10 per cent contingency to address unforeseen expenses.

In the future, a bigger contingency will be required for projects like the NexSource Centre. Administration plans to come back to council with a financial policy requiring all capital projects to “carry a contingency amount in accordance with industry norms,” read the report to council.

NexSource includes two regulation size arenas, one topped with a three-lane running track, five-sheet curling rink, aquatic centre and a seniors centre have been included in the facility. Multi-purpose rooms, a new lounge and children’s play space round out amenities.