July 31, 2015


By Bartley Kives

Local

The city that never learns

Lessons of past construction failures eluded elected, administrative leaders in 2013

The new police HQ building was sold to council in 2009 as a $135-million project but the renovation of the former Canada Post building on Graham Avenue has been plagued by $28 million worth of cost overruns.

PHIL HOSSACK / WINNIPEG FREE PRESS FILES

The new police HQ building was sold to council in 2009 as a $135-million project but the renovation of the former Canada Post building on Graham Avenue has been plagued by $28 million worth of cost overruns. Photo Store

If there's one epigram every sitting politician should memorize by heart, it belongs to George Santayana.

"Those who cannot remember the past are condemned to repeat it," the Spanish-American philosopher wrote in The Life Of Reason. His aphorism is one of the most commonly quoted and misquoted statements over the past century.

Unfortunately, the essential value of learning from past mistakes has seemed to escape elected and administrative leaders at the City of Winnipeg, once again mired in controversy over decisions to procure major capital projects without following established procedures.

In the fall of 2013, this city was rocked by a pair of abject failures to learn from the construction failures of the past.

In October, a team of external forensic auditors declared the construction of four new fire-paramedic stations in Winnipeg was marred by severe mismanagement and an uncompetitive bidding process.

In Winnipeg, this pair of ignominious achievements ranks as the biggest story of 2013, creating a near-unprecedented situation where city hall is the top local newsmaker for the second year in a row.

Days later, the Free Press revealed the execution of a much larger construction project, the Winnipeg police headquarters renovation, was plagued by additional cost overruns that brought the total project cost to $210 million, or $73 million more than city council originally approved.

In Winnipeg, this pair of ignominious achievements ranks as the biggest story of 2013, creating a near-unprecedented situation where city hall is the top local newsmaker for the second year in a row.

In 2012, a series of embarrassments and ethical scandals -- the water-park debacle, the Duddy Enterprises affair, Mayor Sam Katz's acquisition of an Arizona home from a developer's relative and the original fire-paramedic station revelations -- combined to form the local story of the year.

The city failed to stay out of the spotlight again in 2013, despite stiff competition from a floundering Selinger government that raised the provincial sales tax and utterly failed to justify the move to a skeptical electorate.

Trust in municipal government has plummeted to the point where a year-end Probe Research poll found Katz's total support running at 22 per cent, the lowest level since he was first elected mayor in 2004.

Part of the mayor's problem is a tendency to find fault with individual aspects of the city's capital-procurement woes, rather than acknowledge the widespread failures that have taken place under his watch and that of former chief administrative officer Phil Sheegl.

For instance, after the consulting firm Ernst & Young placed the fire-paramedic station replacement program under a microscope, the auditing team made litany of scathing conclusions about the badly managed project.

Four new fire-paramedic stations were planned without using "any established construction costing methodology," tendered in a manner where contracts for four stations "were awarded on a non-competitive basis to one firm" and procured without disclosure to council, the auditors said.

In a year-end interview with Free Press city hall reporter Aldo Santin, Katz bemoaned the lack of disclosure to council but drew specific attention to one aspect of the project -- the construction of the new Station No. 12 on Taylor Avenue land owned by Shindico Realty -- rather than address the systemic, process issues.

"There are some things that happened there that I am very disappointed; most specifically, that we built a fire hall on land that we don't own," Katz said.

Previous Winnipeg mayors, including Katz's immediate predecessor Glen Murray, oversaw construction projects plagued by inaccurate budgets. But the city must now contend with a goliath of a headache in the police HQ, which was sold to council in 2009 as a $135-million project.

The original impetus for the city's $29.25-million purchase of the former Canada Post building on Graham Avenue and subsequent renovation -- initially pegged at $102 million -- was to avoid the expense of recladding the Tyndall-stone facade of the existing Public Safety Building on Princess Street and temporarily decanting Winnipeg police into other offices.

But those efficiencies were eliminated by $28 million worth of cost overruns flowing from undiscovered problems with the building and inaccurate initial estimates, according to a report to council in 2011.

That same report recommended a construction contract based on a guaranteed maximum price that eventually turned out to be a paper-only concept. Council learned this October that price was based on a design that was only 30 per cent complete and subject to change once a final design was submitted.

Changes to that design resulted in $12.1 million of $17.2 million worth of additional cost overruns first disclosed to members of executive policy committee at a closed-door meeting at the end of September. This revelation -- which came only days after Sheegl fired former fire-paramedic chief Reid Douglas -- started a chain of events that led to the CAO's departure from the city.

As information about the police HQ emerged in dribs and drabs, it was revealed the overall construction model for the project had been amended, along with the nature of both the design and construction-management contracts. A report to council issued in November revealed Sheegl made some of these changes because the construction manager and consulting engineer weren't getting along.

The precise nature of this dispute -- along with the rationale for some of the changes -- was not explained by the report, which Katz nonetheless cited as the definitive account of the police-headquarters saga.

But as the year drew to a close, council refused to audit the project in a narrow vote that pitted seven councillors demanding answers against a paradoxical coalition of nine who were either content with what council has been told to date or didn't want to know more about the issue.

"There is no doubt, there is absolute incompetence probably gone to the highest level," declared Transcona Coun. Russ Wyatt in a remarkable November speech where he declared the expense of a police-HQ audit is unwarranted because the results would be predictable.

"You will get answers to your questions at that point and I would argue that you could end up spending millions on an audit and get the same conclusions that you had before."

Don't worry about forgetting the lessons of the past, folks. In this city, they're officially not worth knowing in the first place.

bartley.kives@freepress.mb.ca

Republished from the Winnipeg Free Press print edition December 26, 2013 B1

History

Updated on Friday, December 27, 2013 at 9:23 AM CST: Removes unnecessary word

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