QUESTIONING MUNICIPAL SELF-PERFORMANCE
Has the municipality
done an independent cost
account to compare the
cost of self-performing
with the historic cost of its
publicly tendered work?
Are all administrative costs
included in the cost of selfperformance
Are all the overhead and
operating costs included in
the cost of self-performance
When a contractor submits a bid for municipal infrastructure construction or maintenance work,
the price includes a host of administrative and other real costs that may not always be considered
when developing comparative costs for self-performing the work. An accurate comparative analysis
must include all costs that are considered in a contractor’s bid price. These are costs that will be
incurred by the municipality but may be accounted for in other departments or separate budgets
of the corporation. Regardless of how the municipality accounts for these costs, they are real cost
components of self-performed construction work.
It is important to not only conduct an analysis of real costs of self-performance versus contractor
bid prices through public tendering, but also ensure transparency and accountability of the comparison
through independent cost accounting and analysis. Comparisons developed by municipal
staff or offered by the public sector unions do not meet the tests of transparency or accountability.
This can only be ensured by independent, third-party cost analysis.
“Head office” administration is a real cost that should be included in the analysis of self-performance
costs. For an accurate comparison with a contractor’s bid price for tendered work, the municipality’s
costs of accounting, bookkeeping, A/R, human resources, government reporting, recordkeeping
and other normal administrative functions related to its construction activities must be
included in the assessment of the true cost of self-performance.
The proportionate cost of physical overhead such as office space, office equipment, telephone and
computer systems, heat and utilities, vehicle parking and maintenance facilities, staff vehicles or vehicle
allowances and other items of overhead that are used to facilitate in-house construction activities
must be included in the assessment of the true cost of self-performance.
the cost of
Are all construction
equipment costs included
in the analysis of the cost of
Any decision to self-perform infrastructure construction and maintenance work will necessitate
the acquisition and maintenance of construction equipment and tools. Although the various costs
of owning and/or leasing expensive construction equipment may be incurred in different, autonomous
departments of the municipality, in order to develop a true cost for self-performance of construction
work, these costs must be assessed and included.
A contractor’s bid price for publicly-tendered work includes all costs related to owning and/or
leasing construction equipment. These costs include, but are not limited to:
• The capital cost of purchase or leasing costs;
• The financing costs on purchases, if applicable;
• Maintenance and repair costs;
• Fuel costs to operate;
• Licensing and insurance;
• Costs of transporting and storing equipment;
• Disposition and replacement; and
• Maintaining support equipment ( fuel trucks, welding vehicles, water trucks, etc.)
6 Think BIG | Quarter 3 2019 | saskheavy.ca