The City moved to minimize the chance of future capital project cost overruns Tuesday night when it approved recommendations aimed at tightening oversight and control.
The recommendations, council indicated, would serve as a safeguard for future projects.
“What’s really important to me is to see what happened and why but also the recommendations and to move forward with them,” said Mayor Kerry Cook.
Recommendations include the use of a principle contractor model rather than a project management model that was used in the case of the fire hall.
In a principle contractor model, the contractor assumes the risk; however, the City pays for that risk in increased tender cost.
The fire hall initially went out to tender under a principle contractor model but the tenders were over budget; therefore the City was faced with the choice of changing the model or not proceeding, say staff. The second recommendation was, if a project management model was used, to retain financial administration responsibilities. For the fire hall project the contractor was responsible for both financial and on-site management. That, said the City, resulted in late reporting, a lack of control as well as a costly miscalculation on soil that drove up costs.
“I keep thinking what we could have done. We hire a company for the project and they keep saying everything’s fine,” said Coun. Tom Barr. “Do we say, ‘Hey, we want to look at your books. Have you got all the bills?’ If we were looking after the finances we would have caught the late invoices sooner.”
The third recommendation was, in the event of cost overruns, council be informed prior to further work commencing and the establishment of a project oversight committee. The latter was established in this case.
Brian Carruthers, chief administrative officer, told city council that even with the changes he could not guarantee that future projects would not go over budget; he told council it could take measures to manage a prospective overrun.
“In spite of the recommendations it’s not realistic to say a building won’t go over budget in the future,” Carruthers said.
“There are unknown costs that are managed through a contingency or modifications in the project’s scope.”
In this case the contingency was $250,000.
The City maintains the 2011 budget will be unaffected as the debt was absorbed in the 2010 budget.
However, councillors Geoff Bourdon and Surinderpal Rathor insisted that money spent on the overrun will, at some point, show up in taxes.
“It will be seen in taxes; there is a certain level of service or equipment that will be delayed for another year,” says Bourdon.
Rathor agreed: “Ultimately it’s going to affect the taxpayer. That money could be used for something else or for doing more work in the city.”
He went further requesting an independent audit on the overruns.
“My whole thing is how can we prevent this for the future, that’s all. I’m not trying to point fingers,” he said. “We have to answer on Nov. 19 (municipal election).
“That’s when we find out if we did the right job. The bottom line is this council, including me, we have failed on this project.”
Coun. Natalie Hebert said she was unsure whether an audit would bring to light any more information about what the City could have done differently.
The fire hall was $528,034 over budget.