COMMENT: More cost overruns at City Hall

Laurie Charlton
By Laurie Charlton
April 8th, 2013

The Columbia Avenue infrastructure project is going to cost more than our beloved mayor and former CAO proclaimed.  A lot more.  Our new, frequently absent and significantly overpaid CAO Cecile Arnott and Mayor Greg Granstrom have so far neglected, failed, or refused to inform council what the costs of the project have been or ultimately will be.  None of the current crop of robotic rubber-stampers on council has bothered to ask what those costs might be with Councillor Kathy Moore being the sole responsible exception.  Councillor Moore’s attempts to learn the costs have been rebuffed by our secretive mayor.

Through a protracted Freedom of Information request process, and an appeal to the Information and Privacy Commissioner when the City refused to provide access to documents about the project, I’ve been able to discover some, but not all, of the costs for the project to the end of November 2012.  Additional costs are expected.

As of November 30, 2012, the City has approved payment to Copcan Contracting Ltd. $6,095,970 including holdbacks to be paid at project completion.  This amount exceeds their original tender cost by almost $75,000.  These costs were incurred even after the scope of the project was reduced by $425,000 after the original tender had been accepted.

Documents I reviewed suggest that the amount paid to Copcan will rise to at least $6,196,000.  The available costs do not include the extra costs incurred by Copcan for additional blasting and other work not included in the original contract which are being disputed by the City, the preliminary engineering work done by WSA Engineering, the engineering costs paid to ISL Engineering, the amount of HST that is not rebated to the City, nor the cost of services performed by City workers for the project that may be charged to other parts of the City budget.

The records I viewed indicate the extra blasting costs in dispute could be as much as $90,000, engineering costs paid to ISL could be as much as $918,000, and the unrebateable HST could be about $108,000.  I have no idea what WSA Engineering was paid or what costs the City may have incurred directly for the project. 

The final price tag for the Columbia Avenue infrastructure project, including these additional costs, could be over $7.3 million.

Doesn’t this sound like the Ophir Reservoir financial debacle all over again?

In November 2010, former CAO Kumar convinced council to proceed with an Alternative Approval Process (AAP ) to authorize borrowing up to $6 million to pay for a project to upgrade the infrastructure on Columbia Avenue and Washington Street all the way to Kirkup Avenue.  Based on a preliminary estimate prepared by WSA Engineering the project would cost $6 million.

In a presentation to council in early June 2011, ISL Engineering, who were hired to do the actual design work and construction supervision, projected the total cost of the project, including engineering and contingencies, would be about $8.7 million.  In an email, former CAO Victor Kumar stated that these costs were for the “Cadillac version” of the project.

In October 2011, ISL estimated the total cost of the project to be about $8.8 million with “Phase 1″ of the project, Columbia Avenue and Washington St. to First Ave. costing $5.0 million including engineering and contingencies. 

In November 2011, ISL projected the construction costs for the total project to be $8.2 million.  Engineering and contingency costs would increase the total costs to about $9.5 million.

In a memo dated December 22, 2011, Kumar asked council to authorize him to proceed to tender on a portion of Phase 1 of the project.  His memo indicated the cost, including engineering and contingencies, would be only $4,273,627.  That was the cost projected by ISL in October 2011 for only the Columbia Avenue portion of the project.  It did not include the portion of Washington from Columbia to First. 

Did Mr. Kumar low-ball council in order to get the project approved?  Why was the Washington Street from Columbia to First portion of Phase 1 included in the tender when council had only approved the Columbia Avenue portion?

In an agreement signed May 14, 2012, The Ministry of Transportation and Infrastructure agreed to pay $1,431,080.40 to the City as their share of the project.  The final Ministry contribution would be adjusted based on unit prices and final quantities.  The $1.4 million ministry contribution includes about $94,000 for contract administration and construction supervision.  It does not include HST or contingencies.  These additional costs could raise the total Ministry contribution to about $1.75 million.

The difference between the total potential cost and the Ministry contribution will be the City’s share of the project – about $5.55 million based on the numbers above.  That’s almost double the estimated City share of the cost presented to council by Mr. Kumar in his Dec. 22, 2011 memo.  That’s a huge increase in a little over a year’s time.  And there has been no indication from anyone at City Hall that the project is actually finished. 

It’s disgraceful that CAO Arnott and Mayor Granstrom have not yet provided council with a report on the costs of the Columbia Avenue project.  It’s not surprising that the 2013 budget and financial plan have not yet been presented to council for discussion.  Maybe that’s because the CAO and Mayor can’t figure out how the City is going to find all the money they’re going to need to pay for the project. 

That’s a topic for another commentary.

Laurie Charlton is a retired chemist who was a Rossland city councillor for 17 years between 1975 and 2011.

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