QUESTIONING MUNICIPAL SELF-PERFORMANCE
Covering employees for workers’ compensation is a major cost for contractors and is included in
their bid price for the work. In considering self-performance of infrastructure construction work,
municipalities will assume the cost of covering workers involved in those activities. Workers’ compensation
coverage for construction work is exponentially higher than for other municipal employees
– as much as 10 per cent or more of gross wages depending on the construction trade. Workers’
compensation costs are significant and must be included in the assessment of the true cost of selfperformance.
In the case of serious injury, the municipality will assume long-term liability for future
pension and disability benefits.
In most Canadian municipalities, procurement is a major activity and a significant budget item.
Procurement is also a critical and specialized aspect of the construction process, requiring expertise
not inherent in traditional municipal procurement activities. Municipalities that might consider
self-performing infrastructure construction or maintenance will incur costs in staff and systems
required to procure construction products and services. These costs must be included in assessing
the true cost for self-performance of construction work.
Question 5:
Is the cost of workers’
compensation included in
the cost of self-performance
analysis?
Question 6:
Are all costs of
procurement included in
the cost of self-performance
analysis?
Question 7:
Are all insurance costs
included in the cost of
self-performance analysis?
A contractor’s bid on a publicly tendered construction contract includes not only General
Commercial Insurance coverage but a host of other insurance coverages that are necessary to perform
construction work. These include construction equipment, third-party liability insurance,
commercial and personal vehicle insurance, environmental accident insurance, officers’ and directors’
liability insurance and specialized work, worksite or operations insurances. These are all insurances
that are necessary for a municipality that might consider self-performing construction
work. The proportionate cost of these insurances must be considered in assessing the true cost of
self-performance.
Question 8:
Are costs related
to quality control
included in the cost of
self-performance analysis?
Contractors invest significantly in quality control to ensure the products and materials they provide
to municipal construction work meet or exceed specifications. Many contractors operate or pay for
sophisticated quality control testing laboratories staffed by skilled testing personnel. They also incur
considerable cost in capital investment in equipment to sample and test materials, from gyratory
compactors for testing asphalt mixes and profilographs for testing pavement smoothness, to
nuclear gauges for testing density and compaction.
Municipalities that might consider self-performing their infrastructure construction and maintenance
work will incur costs for private consultants for quality control of their in-house work. These
costs must be considered in assessing the true cost of self-performance. Further questions of accountability
and transparency arise should a municipality ever consider establishing in-house quality
control systems to evaluate its own construction work and materials. This can undermine the
integrity of the process should an organization test and evaluate its own products.
ANDREYPOPOV/123RF
thinkbigmagazine.ca | Quarter 3 2019 | Think BIG 7
/thinkbigmagazine.ca