Calumet works through its financial challenges
CALUMET — The Village Council discussed a $40,000 shortfall Tuesday, when the lowest bid for the Elm Street Project came in $400,000 over the anticipated budget.
Engineer and Elm Street project manager Chris Holmes told the council that two bids for project were received, one from Bacco Construction, and one from B&B Construction, both of which were higher than anticipated, but he said, the council did have some options.
“You can say ‘take out the extra costs, we have to go back to the original, which was around $1.03 million,'” Holmes said, “or you can accept (lower bid).”
Bacco’s total bid came in at $1,323,766, and B&B’s bid was $1,394,370.
Holmes said he contacted the Michigan Economic Development Corporation (MDEC) about the discrepancy, and was instructed that if additional money is needed, an amendment must be requested, which he did.
He was told that the contingency could not be funded in the amendment, so an option is to move forward, and if needed, request a contingency, and “they will look at it and say, yay or nay.”
He added that the person he spoke with said that right now, there is money, and she had never seen an on-going project for which they did not fund an amendment.
Holmes recommended accepting the lower bid, and if more money is, in reality, needed, he will request the necessary amendment. The 90% grant, he said, is almost unheard of, and he does not anticipate any major contingencies.
Afterward, Holmes explained a contingency, as it pertains to the Elm Street Project, and the difference between the budget and the bid.
“It’s about $400,000, when you add in the contingency,” said Holmes, “but like I said: the council is saying they can’t fund the contingency right now. They can fund the project as is, so I don’t know what the total is going to wind up being; it could be $30,000, it could be $25,000, it could be $40,000.”
The contingency is financial cushion that exists in the event of unforeseen circumstances in the project, Holmes explained.
“Say, we thought we needed 1,000 feet of sidewalk and we only need 800,” he said, “that’s a positive that gets deposited in the contingency. If it goes the other way, where we have a chunk of sidewalk that got busted up in the winter and now you need 1,200 feet, that contingency pays for it.”
Upon Holmes’ recommendation, the council unanimously approved Bacco’s bid.