Sun
What did the provincial Liberal government learn from the fast-ferry fiasco?
Very little, it appears.
That is the clear impression we get from reading the devastating report by British Columbia‘s acting auditor general on the cost overruns for the Vancouver Convention Centre expansion project, which ends with the chilling warning that the $883.2 million now budgeted for the project may not be the final tab.
Errol Price’s report is a disturbing tale of denial, incompetence, misleading reports and misplaced optimism over a period of years as the price rose almost $400 million from an initial estimate of $495 million.
It starts with a failed attempt to find a private sector partner to build and manage a new convention centre.
The province pushed ahead on its own, with contributions from the federal government and Tourism Vancouver — but with sole responsibility for any increases in the initial budget of $495 million. That figure, Price explains, was not really a budget but an estimate based on how much money had been raised for the project.
The naming of the convention centre as a venue for the 2010 Winter Olympics created a ironclad deadline for construction to be finished.
That looming deadline prompted the Crown agency (Vancouver Convention Centre Expansion Project Ltd.) set up to manage the project to start construction on the foundation before the final design for the above-water portion had even been set and before any contracts had been signed.
The Crown agency was given a tough assignment. It had to build a massive project in a hot construction market with tight deadlines.
But for at least three years, its officials lived in denial, budgeting just four per cent for inflation when their advisers told the agency the increase would be more than that. As it turned out, even the higher estimates were way too low.
By July 2005, tenders were coming in 25 per cent higher than expected — yet the agency clung to its original inflation estimate of four per cent for 2006.
Why?
It appears to have been part of a pattern set by the provincial government of trying to pretend that costs were under control, even though everyone involved in the project, including the deputy minister who sat on the board and reported back to the government, knew they were soaring.
In April of 2006, the provincial government told the project managers to carry on with the existing budget, which had by then ballooned to $615 million, without cutting the scope of the project — even though Victoria knew at that point that the budget numbers were a complete fiction.
Even though this government knows all about risk transference — transferring financial risks to the private sector through public-private partnerships — it failed to create a contingency fund for the risks with this massive public project.
At the same time, the acting auditor general noted that the government failed to provide the board with directors competent to handle a project of the scope of the convention centre.
The province now says it has addressed the issues raised by Price, with a fixed contract for completion and new professional management.
The provincial government has yet to explain why it waited until the project soared hundreds of millions over budget to take what should have been these necessary first steps.
© The Vancouver Sun 2007