A review conducted by an independent quantity surveyor and the city’s lawyers has concluded the final cost of the George Street Parkade was roughly four per cent above the “probable and reasonable” cost.
The City of Prince George released the report by lawyer Sukhbir Manhas of Young Anderson Barristers and Solicitors and SSA Quantity Surveyors Ltd. on Tuesday.
The official budget for the parkade project was $12.6 million, but the final cost came to $34.16 million – $22.46 million for the parkade, $597,138 to connect the parkade to the city's district energy system, and $11.1 million for water and sewer upgrades in the area, and other off-site works.
“It is our opinion that the probable and reasonable cost (excluding GST) for construction of the parkade assuming a May 1, 2018 start with a 12 month construction period lies in the range of $20,700,000 to $20,800,00,” SSA’s report says.
However, in his letter to the city, Manhas said the actual construction took twice as long as SSA’s one-year assumption.
“The Parkade was not completed in May 2019, as assumed by SSA, but was completed over a year later. As a result, the discount rate to be applied to the costs to construct the Parkade in current day dollars (i.e., approximately $23 million) should be in the range of 6%. Applying that discount rate, the cost in 2020 dollars to construct the Parkade would reasonably have been approximately $21.6 million,” Manhas wrote. “Ultimately, the actual costs of constructing the Parkade were approximately $22.5 million, or approximately 4% more that the probable and reasonable costs, in 2020 dollars, of constructing the Parkade of $21.6 million.”
Given the four per cent difference between the “probable and reasonable” cost and the actual cost, Manhas advised the city that no further audits are necessary.
“In our experience, a variation of 4% between the theoretical costs of construction for a project determined by a quantity surveyor and the actual costs of construction is not extraordinary; it is quite common,” Manhas wrote. “In light of the results of the SSA Opinion Report, and our further discussions with SSA, an audit of the Parkade, both from an administrative and financial standpoint, is not warranted given the costs of such an audit.”
Neither Manhas’ letter or the SSA report address why or how the city’s initial budget was so far from the actual cost of the project.
“The original estimated cost of the George Street Parkade was $12.6 million. This figure was based on preliminary designs and projected cost estimates in the summer of 2017,” a statement issued by the city on Tuesday said.
Nor does the report address who in the city administration knew about the cost overruns and why they were hid from city council and the public.
The cost overruns, and the lack of disclosure about them, prompted city council to adopt a number of measures to increase city council oversight of capital projects, adopt a formal whistleblower policy and develop new capital management processes. City council received a report on the capital project management strategies being implemented on Monday.
