MANKATO — The nearly $94 million cost of modernizing Mankato’s regional sewage treatment plant is more than twice the estimate of four years ago, but the price of the mammoth project has stabilized as construction nears the halfway point.
The contractor, which began work in the summer of 2024 with an assignment to wrap it up by the middle of 2027, has ran into no major surprises or setbacks, according to a status report to the City County Monday night.
“The project, I’m happy to say, is on schedule and within budget,” said Karl Keel, Mankato’s interim public works director.
Including engineering costs and a construction contingency fund, the total price tag for the renovations is just under $94 million. The construction contract with Rice Lake Construction Group, originally $83.22 million, has risen only to $83.41 million due to 13 change orders required to deal with unexpected conditions or to make small adjustments in the design as recommended by the contractor or the consulting engineers.
City Manager Susan Arntz has authority to unilaterally approve up to $4.19 million in change orders on an $83 million project, needing only to periodically inform the council of the changes. So far, the net cost of the contract adjustments through Sept. 1 has been just $19,310 — the equivalent of two one-hundredths of 1% of the original contract.
For city leaders — and the ratepayers in homes and business across Mankato and a half-dozen neighboring communities who rely on the wastewater treatment plant — it’s a welcome improvement from the skyrocketing cost of the project in its earlier phases.
In 2017, consulting engineers from the Minneapolis firm of Black & Veatch Corp., working with local engineering firm Bolton & Menk, estimated it would cost $39 million to replace aging components of the plant, many of which date back to the 1950s.
By 2021, after drafting more detailed plans, the engineers had bumped up the estimated cost to $44.5 million. When the construction contact went out to bid early the next year, all of the bids were at least a third higher than the estimate. Even the lowest at $61 million was rejected as too expensive.
Waiting, redesigning some project components and rebidding didn’t help. The estimated cost of the project climbed to $88.67 million by early 2024. The engineering costs were rising as well, and amended contracts with the Black & Veatch/Bolton & Menk engineering team approved in January 2025 pushed the total above $90 million.
But other than the $19,310 in added expenses during the first 14 months of construction, the escalator at least temporarily stopped its rapid upward climb.
“This is refreshing from not only the perspective of the council but of the community,” said Council President Mike Laven, who asked Keel if the project seemed likely to be completed on time.
“So far,” Keel said, “we’re in about as good a shape as we could be schedule-wise.”
He warned, however, that more change orders are coming, and they won’t be as insignificant as the first 13, although they will be well below the threshold requiring council approval.
“We have a number of larger ones that are pending,” Keel said.
On Monday night, the council unanimously approved without discussion a $1.78 million extension of the contract with the engineering firms to continue overseeing the construction in 2026. The council had previously paid them $2.33 million for their work in the second half of 2024 and throughout 2025. The anticipated future costs for 2026 — plus another $382,000 in construction oversight fees for 2027 that are expected to come before the council a year from now — had previously been summarized for the council in January.
Of the total $4.49 million in payments to the engineering consultants, all but about $1 million is due to the absence of municipal engineers to oversee, inspect and guide the work being done by Rice Lake Construction. The expanded contract with the Black & Veatch/Bolton & Menk team was originally approved in the face of vacancies in Mankato’s city engineering division. The engineering division is now in the final stages of being eliminated completely, with plans to rely on private consulting engineers for all future projects.
A letter from the consultants to the city a year ago suggested that the charges were something of a bargain. The construction oversight contract with the city contained fees that would have been typical just for office-based work even though the firm would also be providing on-site supervision, according to the letter signed by Scott Fronek of Black & Veatch and Kristopher Swanson of Bolton & Menk.
“For a project of this complexity and magnitude, it is common to estimate that office-based engineering services as a percentage of construction is generally around 4%,” Fronek and Swanson wrote. “Our proposed fee for office-based engineering is approximately 3.1%. Delivering this project below typical industry norms provides a competitive value demonstrating the history and knowledge our two companies bring to this project.”
Some of that history and knowledge of Mankato’s plant stemmed from previous contracts with the city that were in addition to the $4.49 million in recent, current and upcoming payments. The two firms were the consultants handling the earlier designs for the project, along with providing the city with estimates of future construction costs.
The city’s finance director said in February 2022 that the firms had been paid roughly $3 million for the design work and cost estimations.