El Paso Water grapples with $52 million overrun on Bustamante wastewater expansion

El Paso Water grapples with $52 million overrun on Bustamante wastewater expansionThe utility is evaluating cost-control strategies to mitigate market escalation on the CMAR project, which is being uniquely driven by the increasing organic strength of the city's wastewater rather than volumetric flow.

The Public Service Board approved a $43.1 million guaranteed maximum price (GMP) package for building subtrades and process mechanical equipment, bringing total awarded GMPs for Phase 1 to $494 million.

While the Phase 1 cost model was established at $586 million in March 2024, current market conditions have pushed projected costs closer to $640 million.

Staff attributed the $52 million gap to market escalation, regional competition for skilled labor, and design refinements.

The capacity expansion from 39 MGD to 51 MGD is required to treat highly concentrated organic waste driven by new housing developments and strong water conservation efforts.

El Paso Water is actively working to close a projected $52 million budget gap on the first phase of its Roberto R. Bustamante Wastewater Treatment Plant expansion, driven by persistent market escalation and regional labor competition. During a March 11 meeting, the utility's Public Service Board approved a $43.1 million guaranteed maximum price (GMP) package for building subtrades and process mechanical equipment. The contract amendment with the PCL/Sundt joint venture brings the total awarded amount for Phase 1 to $494 million. While the awarded amount remains under the $586 million Phase 1 cost model established in March 2024, Utility Engineering Division Manager Ivan Hernandez warned the board that current market conditions are pushing the projected final cost closer to $640 million. Hernandez attributed the $52 million variance to market uncertainty, design refinements, extended general conditions, and intense regional competition for skilled labor. To mitigate the overrun, El Paso Water and its construction manager at-risk (CMAR) team are evaluating several cost-control strategies ahead of the final Phase 1 GMP package expected in August. Options include deferring late-phase aesthetic work to avoid locking in escalated prices, aggressively compressing the project schedule to reduce general condition costs, and continuing value engineering. The utility may also reallocate portions of the $44 million in contingency funds built into the first eight GMPs, provided those initial project risks do not materialize. The Bustamante expansion will increase the plant's treatment capacity from 39 million gallons per day (MGD) to 51 MGD to maintain compliance with Texas Commission on Environmental Quality regulations. However, utility leadership noted the project is uniquely driven by the organic strength of the region's wastewater rather than volumetric flow increases. Vice President of Operations and Technical Services Gilbert Trejo explained that new high-density housing developments utilizing garbage disposals, combined with the city's aggressive water conservation programs, have significantly increased the concentration of organic material in the wastewater system. "Our wastewater plants were not designed for this strength of organic waste," Trejo said, noting that the concentrated inflows require larger concrete basins and enhanced aeration equipment to support the biological treatment process. Phase 1 construction is scheduled for completion and startup by mid-2030. The overall Bustamante expansion program, which includes a planned $215 million Phase 2, carries a total budget of $1.1 billion.