Council furious over Civic Plaza cost overruns

Work on the renovations to Civic Plaza could now approach the $4 million mark. Completion of the project is now scheduled for mid-May, four-and-a-half months after the original completion date. – Stephen Dafoe Photo

By Stephen Dafoe

Morinville – A projected $870,000 cost overrun on the over time and over budget Civic Plaza renovation project was not the news Council wanted to hear from representatives of ONPA Architects and Synergy Projects Ltd., the architectural firm and contract management company hired by the Town to renovate the 30-year-old St. Germain Plaza.

After giving Council an update on the progress of the renovation project during the Feb. 28 meeting of Morinville Town Council, ONPA’s Rob Black hit Council between the eyes with the bad news.

“It has gone up from what we were projecting in September,” Black told councillors. “We’re at a point now where we are certain about the cost. We’re at the point where we can commit this job will be done for under $4 million.”

The news was not welcomed on a project originally projected to cost the community $2.5 million. That number was increased to $3.5 million after a more concrete estimate of the work was made last fall, and it was that number which Council pencilled into its 2012 budget. Last fall Council had been given the impression their $3.5 million figure would be high, leaving the community with additional monies to purchase new and needed equipment for the renovated facility. Now it appears that money could be as much as $500,000 short of the money needed to complete the project, and those figures do not include interior furnishings and equipment.

Black said there were many contributing factors to the approximately $870,000 in cost overruns between the last estimated figure and what the present reality is.

“These renovation projects are associated with a lot of risks,” Black told Council. “Some things go well, some things go bad. Because we did such a repurposing, a lot of things went ying that should have gone yang.”

Among ONPA and Synergy’s laundry list of items are $270,000 in structural work required to carry the load of additional space in the expanded building, structural support they assumed would be there but subsequently found would not.

ONPA and Synergy also determined the mechanical system they thought would do the job in the facility was not sufficient and that a more efficient system would be required costing an additional $255,000. The cost was defended on the grounds the enhanced system would cost less to operate and maintain, something Council scoffed at given the life expectancy of the renovated building is another 25 years.

Assumptions were also made with respect to the building’s electrical system. Reuse and redistribution of existing panels was later found not to be possible necessitating and additional $147,420 in spending.

An additional $50,000 in cost overruns are attributed to increased costs of the sub-trades who will be working on the remaining parts of the project. Black said subcontractors are not taking the low margins they were willing to take a few years ago, resulting in increased prices in the trades.

Miscellaneous items, including the need to install new roof curbs instead of reusing existing ones are scheduled to add another $145,000 to the project.

Despite needing an additional $870,000 to bring the project to completion, Black contends the costs are still good value for the community as they come in around $200 per square foot. “That’s still a good value,” Black said, adding such projects often come in around $350 a square foot. “It still represents good value to the tax payer.”

Council furious over late breaking news

Morinville Mayor Lloyd Bertschi was not buying the cost overruns Tuesday night and questioned why he and Council were not notified earlier.

“We were told to believe $2.8 million was a good solid number as late as when we passed our budget,” Bertschi said, adding while he understood the cost increases in the sub-trades, he was not prepared to accept the rest. “You had to know these numbers.”

The mayor questioned why Synergy should expect an increase in their management fee when the project was both over time and over budget. Bertschi said a 5 per cent margin on a $2.8 million project would result in a $140,000 management commission for Synergy. “Why should you get more dollars for a project going over time and over budget,” Bertschi asked, adding his belief Synergy did not deserve more money just because the project is costing more. “You shouldn’t get out of this without some skin in the game.”

Mayor Bertschi closed his comments by advising the architect and management company representatives to sort things out. “What we need is performance from you two,” Bertschi said, adding the situation would not sit well when word got out to other municipalities about how the Morinville renovation project had been managed.

Bertschi was not alone in taking ONPA and Synergy to task. Councillor Lisa Holmes questioned where the additional money was to come from and what the companies were going to do about the overages. “Where is this money supposed to come from,” she asked. “What assurances do you have that you’re going to be accountable on this. These things didn’t happen last week. They’ve been going on since we started. How are you going to be accountable for your portion of this fallout?”
Councillor Nicole Boutestein was less than impressed with what she saw as a lot of guess work on the renovation project. “How come more research wasn’t done and less assuming,” Boutestein asked.

Black told her and the rest of council the need to get the project going quickly meant a no risk approach in the construction management project was not possible; in order to have truly firm numbers, demolition would have been needed prior to investigating the scope of the job. As that was not the case, the project encountered issues as the work got underway and the actual condition of the building was revealed. “We brought our best knowledge base to the table on this,” Black said, adding ONPA and Synergy have both been around for a long time with a wealth of experience.

Councillor Ben Van de Walle expressed his concern project costs could rise even higher and sought assurances the price would not rise again. “Four million can go to $4.5 million,” Van de Walle said.

“We’re saying this project is not going to go to $4.5 million,” Black told Van de Walle. “It’s not going to go over $4 million. It’s going to go down from that figure.” Pressed for assurance there was zero chance of further cost overruns, Black could not guarantee it. “Zero is like saying never, but how about if I say 99.9999,” he said. “What can we do? There’s always risk.”

After the Feb. 28 meeting Mayor Bertschi told the media the additional $500,000 between Council’s $3.5 million budget for the renovations and the possible $4 million final price tag on the project could be paid for with unused Municipal Sustainability Initiative funding from the province. However, the mayor is anticipating Administration, who will be meeting with the architect and management company over the next couple of weeks, will take measures to reduce the cost overruns as much as possible.

Completion of the 19,500 square foot facility was originally anticipated to be late December, 2011. That target was subsequently changed to early January, then March, and most recently mid-May of this year.

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12 Comments

  1. I can understand some cost increases like structural issues that could not be uncovered beforehand, but you would think a company with this kind of experience could account for that in the budget ahead of time. Also the fact that sub-trades are charging more than a few years ago is understandable, however, shouldn’t those numbers have been firm and in place when Council was originally given a confirmed estimate of the cost? It certainly sounds like poor management is among the list of issues on this project costing our community a LOT of money! And they should NOT be getting paid a larger fee considering this project is 5 months late (if it is done by then) AND almost a million dollars over budget!!! That is unacceptable in my view.

  2. If anyone ever even THINKS about hiring these bozos again – be prepared for a sharp stick in the eye!!

    This is a disgusting turn of events and I refuse to believe, if ANYONE in our Town Administration was even remotely doing his or her job, that SOMEBODY wasn’t aware of this pending disaster!

    Way back when, Councillor Boddez was being prophetic when he expressed concern over how the spending on this project will affect the community down the road. Well folks – we’re now down the road and look what we’ve got!!

  3. I trust that with such a large project that there was a call for bids from several contractors prior to picking this building company. Was there? If so, were not all the bids in the same ballpark or did this contractor low-ball the others, which should have raised a red flag. If all bids were close then I would say it sucks to be us…. But wait, don’t contracts of this natural generally carry a protection cap whereas the contractor is given a limit, which if it is met they have to immediately inform the owner of these issues…. Is the owner not responsible enough to have an independent engineer on scene to ensure a multi million-dollar contract stays on schedule and budget? Were the proper studies and building inspections carried out? Mr. Black’s comment indicate that they were not in an effort to get this project going…Who was driving the pressure on timelines that caused a proper inspection not to be carried out, the contractor or the owner?
    Poor planning indeed. From the MCCC noise issues yet to be rectified to this…. What’s that saying, “Haste makes Waste”.
    But like everything else there is always something good if you look for it. Morinville will certainly have safer streets, as I’m sure the photo radar guy will be working overtime to help pay this one off.

  4. I get mad everytime I hear about the Civic Plaza/Library cost overruns! One word comes to mind and that is ACCOUNTABILITY. While I wait for the Administration to work with ONPA and Synergy and see what comes out, I wonder if the public Morinville residents will ever hear what actually happened and who is or should be held accountable.
    I doubt it.
    Linda Lyons

  5. While I in no way support cost overruns, anytime you do renovations you are taking a risk. Ask me about my house and what happens when you replace one type of floor with another…

    This risk could have been mitigated at least in part by verifying the supporting structures that the company assumed would be there. You don’t “assume” when it comes to million dollar projects. Did the contract say that they were assuming? Who approved this assumption?

    I agree with going back to review the bids and see how this came about. Firm estimates with the sub-trades should have been procured in writing, rather than assume the costs will remain the same from last summer to this winter. Didn’t anyone think about the impact of Redwater and other construction projects? You can’t predict material costs as they can rise without notice, but many other costs should have been identified early.

    Finally, I agree with Councillor Holmes’ observation that the company knew about the overruns a long time ago, or at least when they started booking the trades. Was there not a clause that any increase over a certain percentage had to be identified and approved by the Town? If not for this council meeting, when did they plan on telling someone?

    The taxpayers want, no, demand to know.

  6. Re: Brent’s comments…

    I’ll bet the decision to change types of flooring was NOT made in isolation by the contractor, was it? So it wasn’t really a RISK on your part was it?

    All your ( and those of other folks) questions pertaining to this contract are totally valid.

    The heads of departments of our administration were obviously NOT doing due diligence, nor were they providing ANY sound advice. This is NOT over and the results of this (and the Commnity Cultural Centre fiasco as well) are going to have to be dealt with over the next few years – you CANNOT sweep this under the rug!

  7. I find it hard to believe that the city & city staff can put a2.5 mil contract out for tender after staff and city electives have reviewed said contract and appointed a engeneering company to repersent the city and 8 months later the city is advised they are850,000.00 over budget was no one on city staff involved ? Did the city expect the contractor to just send a bill for total cost after contract was completed?

  8. Anyone ever looked into how this project was tendered? Typically a publicly funded project over $100,000.00 needs to go to a PUBLIC tender. Why does this project not appear on any resources used to locate public tenders?

  9. You would think at this point the Town, more specifically the Mayor, would issue a statement on the entire process and what happened before the rumour mill gets churning and someone makes a formal complaint to Municipal Affairs or the RCMP.

  10. “Anyone ever looked into how this project was tendered? Typically a publicly funded project over $100,000.00 needs to go to a PUBLIC tender. Why does this project not appear on any resources used to locate public tenders?”

    If this was tendered, it would be interesting to know if other bidders used asssumptions like supposing there’s structural support, assumming the HVAC is good enough, figuring they could reuse electrical boxes. These assumptions could all have been investigated further before the tender was awarded by the administrator without full demolition. If not, how do you guarantee all bids are for the same amount and type of work.

    If this was not tendered, then we are talking about millions of taxpayer money being given away and council and administration will deserve whatever befalls them, up to and including dismissal and/or criminal charges.

    • There was never any question on the existing HVAC. That had to go. The present cost overrun seems to include an increased HVAC system from what was originally scheduled to replace the original system.

  11. I’ve read that the HVAC upgrade cost $255,000.00 more than what was originally budgeted for. My question is how much was originally budgeted for? Was a soft budget put together to win approval only to go ahead with multiple change orders that should have been known issues in the planning stages. Albeit there are unknowns in any project but $147,000.00 more for electrical? Was there no design consultants for the mechanical, and electrical? Also how about the $50,000 for “High Labour Demand” I’m assuming that is for overtime hours worked by employees which I don’t see in the end result, as the project isn’t exactly setting any land speed records. Just because demand for a trade increases, you cannot simply increase the contract, these are items that are estimated for within the budget based on market conditions which haven’t changed much since the beginning of the project.

    Almost frustrating enough to make me forget about the awful pet food smell outside…..almost

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