Cost increases at State Pier to be subject of Bond Commission vote
The state Bond Commission on Thursday will vote on a $20 million infusion of funds to cover escalating costs for the reconstruction of State Pier in New London into an offshore wind hub.
The Connecticut Port Authority, which is overseeing the project, announced in March that additional money was needed to cover costs of delays and to speed up work on the project.
That dollar figure turns out to be about $15 million.
The port authority last month approved $5.8 million to cover the costs associated with delays, mostly blamed on challenges to the permitting of the project. On Tuesday, it approved an additional $8.4 million, in part to accelerate work at State Pier and ensure most of the work is completed by April 28.
What was a $235.5 million project is now a $255.5 million project. The cost estimate in 2019 was $93 million and jumped to $235.5 million after the project design was completed.
The $20 million that is up for approval this week by the state Bond Commission would cover the estimated $15 million needed by the port authority and provide an additional $5 million to cover other unanticipated costs, port authority board Chairman David Kooris said Tuesday.
“That would bring our available funds to $255 (million) which gives us some additional resources available to serve as an owner’s contingency in case additional unforeseen conditions or costs arise, which is possible,” Kooris said.
He said there is still $7 million of the original $11 million allotted for contingency costs incorporated into the overall project budget.
Bond Commission approval on Thursday would bring the state’s share of the project's cost to $180.5 million. Danish offshore wind company Ørsted and its partner Eversource, which will be leasing State Pier, are contributing $75 million, including a $22.5 million pledge by Deepwater Wind. Ørsted acquired Deepwater Wind in 2018.
At a special meeting Tuesday, Kooris said the updated project costs should not be a surprise and were consistent with what has been discussed over the past few months. The port authority announced publicly on March 22 that costs would increase by between $12 million and $15 million, but had not firmed up a figure at that time. Gov. Ned Lamont, during a tour of State Pier in March, reiterated his commitment to the project in the face of rising costs, calling the project “transformative for our state and our region.”
About $5.3 million of the $8.4 million approved on Tuesday would cover costs associated with labor.
Marlin Peterson, a program coordinator with State Pier construction administrator AECOM, said work crews will change from a 40-hour work week to a 60-hour work week, with crews working 10-hour shifts six days per week starting in June and continuing through September.
The port authority also is ordering more steel preemptively to account for unanticipated depths at which the piles are being driven around the pier. That cost is about $1.5 million and the steel, if unused, would become an asset of the port authority, Kooris said.
The board, at its regular meeting next month, is prepared to lock in the guaranteed maximum price, or GMP, for construction work at $217 million — $13 million more than the target GMP of $204 million. The additional money associated with the project pays for soft costs, such as engineering fees and project management.
“None of this has anything to do with inflation,” Kooris said of the cost increase. “None of this has anything to do with rising costs for material or labor. All of our rates and material prices were baked in. This is the cost of keeping our contractor working for longer than anticipated because permits were delayed ... and the additional costs associated with the additional work hours to make up for some of that delay.”
Acceleration of work on the project is essential in order to achieve a substantial completion of the work no later than Feb. 28, port authority interim Executive Director Ulysses Hammond said.
Hammond said it will be a “seminal milestone” when terminal operations at State Pier begin in March 2023. He said offshore wind components are scheduled to begin arriving at State Pier in April 2023, with subsequent staging and pre-assembly services starting in May 2023. The initial handling and transport of components for offshore wind is to begin a month later.
“Based on this schedule, State Pier will be the staging port for the next three utility-scale offshore wind farms in the United States, including South Fork, Revolution Wind and Sunrise Wind, which collectively will generate, according to publicly available data, enough wind power and clean energy to power more than one million homes," Hammond said.