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Money matters . . . Clyde's new wastewater scheme looks set to have a "cost reimbursement" model for that particular section. PHOTO: ADAM BURNS

The “high-risk” nature of an upcoming stage of Clyde’s new wastewater scheme means an alternative “cost reimbursement” model will be used for the contract for that stage.

Clyde’s septic tanks would need to be emptied as part of the work constructing reticulation within the historic area of the town, a report from Central Otago District Council capital projects programme manager Patrick Keenan to last week’s 3 waters infrastructure committee meeting said.

That step had the highest level of risk of the first stage of the wastewater project, as work would be done on properties that were constructed many years ago and may have had several renovations and septic tank replacements.

It would be difficult to quantify the risks, and council would pay “a premium” to transfer the risks to contractors through a traditional contract. Alternatively, contractors might feel they needed to increase the price of tenders to cover any unexpected costs from the risks.

Therefore, a non-traditional “cost reimbursement” model not usually used for tenders was proposed, Mr Keenan said.

A cost reimbursement contract is one in which the contractor is reimbursed the actual costs they incur, plus an additional fee.

Mr Keenan said the collaborative cost reimbursement contract would see the contractor and council work closely with the designer to manage the risks of the design and construction stages.

He said design of the reticulation had just commenced.

The $13.6million stage one of the Clyde wastewater project also includes building a new pump station and installing a pipeline from Clyde to Alexandra.

Work on the pipeline has already begun, and work on the reticulation will start in August, although contractors will be in Clyde during preparation work before that. The reticulation work is scheduled for completion in 2021.

PAM.JONES

@alliedpress.co.nz