“PWP, Public Works, [Department of] Transportation have been the most impacted significantly, not just the Capital [Improvement Program] but also our service contracts, our general day-to-day [activities] particularly with the high price of fuel,” said Pasadena Water and Power Acting General Manager Jeffrey Kightlinger during a Municipal Services Committee meeting on Tuesday, July 26.
Kightlinger said the projects are hampered by the rising prices of materials and the increasing energy costs and labor costs.
According to Kightlinger, due to these cost increases, prolonged schedules for completing projects should be anticipated.
He also cautioned that if inflation doesn’t ease, the departments might need more funding to finish the projects.
Several large high-priority PWP projects are affected. Kightlinger listed Arroyo Seco Canyon, Sunset Reservoir Improvements, Advanced Metering System, Advanced Metering Infrastructure and 4kV to 17kV Distribution System.
“For Water and Power, we’re basically seeing 45% average increase across the board in most of our types of work and we really want to highlight delays in getting materials, particularly electric meters, cables, emergency generators. Some of these things we can’t even buy — so those types of projects have been put on hold from six months to a year,” Kightlinger said.
Despite the issues, Kightlinger also said PWP is continuously monitoring projects and considering ways to mitigate higher costs.
“What are we going do about it? Frankly, there’s not a lot within our power to control inflation, to control some of these nationwide trends. What we’re looking at is how we can re-prioritize our projects, how we can reallocate our spending, and what can be deferred.”
“Our hope is some of the issues will be resolved over the course of time as the pandemic starts to wane, as some of the labor shortages get addressed. Maybe we will have some good news to report down the road but there also maybe budget amendments and recommendations that we will be having to make,” Kightlinger said.
At the meeting, Director of Public Works Tony Olmos told the committee that as a result of the high costs of materials, the department had to rebid some of its projects.
“The bid came in so much higher,” Olmos said. “Contractors are coming to us and basically asking for a lot more CPI than what we have authority or budget for. So in some cases they are walking away and we have to go back and rebid.”
“We’re gonna have to keep tracking it and see how we can make adjustments along the way to try to mitigate it as best we can,” said Olmos.
Transportation Director Laura Cornejo also shared with the committee how inflation has been impacting DOT’s projects, particularly its purchase of new buses.
“We are part of a purchasing cooperative where the manufacturer came back and said they needed to renegotiate the cost of the buses because of the unexpected increase in material cost, so that’s delaying us being able to come back to council and request authorization to purchase buses to replace some of our older fleet.”
Cornejo assured members of the committee that the department is working through these issues and is trying to deliver projects regardless of the challenges they are facing.
The departments will go back to the committee to provide periodic updates as needed via the Quarterly Monitoring Reports for capital projects.
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