Sioux City threatens 'off-ramp' for Kiewit on $500m wastewater overhaul

Sioux City threatens 'off-ramp' for Kiewit on $500m wastewater overhaulFacing a state-mandated facility plan for its aging and over-capacity wastewater treatment plant, Sioux City is advancing a massive multi-phase rehabilitation but has drawn a hard line on costs for its Construction Manager at Risk.

The city is pursuing a $500 million renovation of its wastewater plant, which is currently operating at up to 110% capacity.

Kiewit, currently holding the pre-construction contract, must deliver a GMP for Phase 1 near $300 million or the city will bid the project out conventionally.

Initial cost estimates at 30% design were $550 million for Phase 1, though recent 60% design reviews saw estimates drop to approximately $420 million.

The facility handles an exceptionally high industrial load, treating a biological oxygen demand (BOD) equivalent to a population of 9.1 million people.

Sioux City is moving forward with a critical, multi-generational overhaul of its wastewater treatment infrastructure, but city leadership has issued a stark ultimatum regarding the project's procurement method. During a January 12 council meeting, officials discussed the progress of the Wastewater Treatment Plant Facility Plan Improvements Project, which is driven by a state mandate due to the facility operating between 100% and 110% of its capacity. The majority of the existing plant is 65 years old, with Public Works Director Tom Pingle describing the infrastructure as "crumbling," citing instances of concrete slabs collapsing. The city has opted to renovate the existing site rather than build a new facility outside of town, which was estimated to cost $900 million. The current plan involves a phased approach, with Phase 1 and Phase 2 estimated at a combined $500 million. The city is currently utilizing a Construction Manager at Risk (CMAR) delivery method, with Kiewit retained for pre-construction services and Hazen and Sawyer handling design. Kiewit was selected based on a portfolio spanning over 600 wastewater projects and a history of delivering complex upgrades within budget through value engineering, as seen in recent work at the Largo Wastewater Reclamation Facility in Florida. However, the transition to a construction contract for Sioux City hinges on the Guaranteed Maximum Price (GMP) the firm is expected to present in the coming months. Councilman Rick Bertrand emphasized the necessity of an "off-ramp" clause in the contract, seeking assurance that the city could take its design specifications and bid the project conventionally if Kiewit fails to meet the budgetary target of $300 million for Phase 1. Pingle confirmed the existence of this clause, stating, "If we don't like it... we can go ahead and take those plans and specs that we just paid a ton of money for, put them out in the street and bid it the conventional way." Pingle noted that Kiewit's initial cost estimates have been volatile. At the 30% design mark, the estimate for Phase 1 stood at $550 million. Following value engineering and a review of the 60% design, that number dropped to $420 million, with a potential lower end of $340 million. City staff and consultants believe the number is still "a little high" and are pushing to reach the $300 million target without allowing scope to be pushed into Phase 2. The facility faces unique challenges due to Sioux City's status as a major food production hub. Despite a municipal population of roughly 90,000, the plant treats a waste load equivalent to a residential population of 9.1 million people. Pingle noted the plant ranks in the top 50 nationally for load size. The facility plan accounts for the departure of flows from South Sioux City and Gelita, yet the plant remains above capacity, necessitating the expansion. Phase 1 of the project is required to be completed by 2032 under a consent order, with Phase 2 following by 2036. The city hopes to commence construction in May or June of 2026, pending the finalization of the GMP and council approval.