Swimming pool construction company requests funding increase of over 827,000 euros

Thursday 28th April 2022 – Mike Smith
Source: original article – Carlos López (Xàbia AL DÍA)

Council staff have been considering a request from construction company Contratas Vilar, currently building the long-awaited municipal swimming pool, for another 827,788 euros to complete the project. The company won the contract by presenting the best price of 4.67 million euros but also presented the worst technical proposal.

La Marina Plaza revealed this request earlier this week and Xàbia AL DÍA was able to confirm that the company presented a new petition to Xàbia Council on April 12th of this year requesting more money to complete the project, on the back of an original request made before the Russian invasion of Ukraine which has created an unsettling of the global economy.

In its first letter, the company asks for arbitration to find a possible solution in order to achieve the necessary “economic rebalancing” to allow the project to proceed in a timely fashion in the face of an “unprecedented” rise in the price of raw materials. The request was supported by a series of reports and price comparisons which show “an extraordinary increase in prices and the scarcity of raw materials that are affecting the project in a very considerable way“.

Specifically, it refers to raw materials such plastics, steel, aluminium, oil, aggregates, ceramics, wood and electrical conductors, which the company has accumulated in some quantity in the vicinity of the construction area but, having had a look at the numbers, they are no longer balancing.

A year ago, Contratas Vilor offered a price of 4.67 million euros, a reduction of some 330,000 euros on the original 5 million euro budget placed by the local council. It was this price that won the company the contract, compared to 4.75 million euros offered by Ferrovial and the unfeasible low bid of 3.90 million euros offered by Pavasal that was thrown out during the assessment process.

However, the technical proposal from Contratas Vilor received the worse score of all three bids and was not able to offer a reduction of the time it would take to build the swimming pool complex, 26 months, the time limit set by the financing agreement made with the Generalitat Valenciana which is part-funding the project with some 3 million euros.

Work began in September 2021 and must be completed by November 2023, a schedule that leaves very little margin for delay.

The agenda for April’s plenary session of the local council includes a debate about the progress of the pool: “Opinion regarding the approval of the amending addendum by which the annuities of the agreement between the Generalitat Valenciana are readjusted, through the Ministry of Education, Culture and Sports, and the Xàbia Council, which implements the nominative subsidy provided for in the 2021 Budgets for the construction of the municipal indoor pool“.

The opposition parties will surely take the opportunity to discuss these requests for more funding from the winning company amidst a fear that the project will become yet another in which a construction company abandons a contract and leaves half-built infrastructure.

Xàbia AL DÍA has contacted Contratas Vilor for a comment but the company has not yet responded.

UPDATE: Finance councillor Ximo Segarra, speaking on social media, said that “it is true that the company has asked for more money to support the [increase in price] of materials, first produced by the Covid-19 pandemic and then aggravated by the war in Ukraine”, explaining that the request is permitted through Royal Decree. “The company is backed by a Royal Decree-Law approved by the Council of Ministers, namely Decree 3/2020 of March, which establishes exceptional price revision measures in contracts for public works. The government of Spain made this amendment by which it is allowed to change the prices of construction contracts (which until now could not be done) by up to 20% due to the inflation of materials and raw materials“.

He said that “municipal technicians are already analyzing the proposal to determine whether or not the contract modification is appropriate. Therefore, given the current situation, the company has the right to claim what it considers and so it has done. Evidently, both the company and the local council are harmed by the overpricing of materials, but of course we’re not giving up the municipal pool. As far as the work is concerned, it is still in progress and within the planned deadlines“.

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