Councillor livid firm gets $10M despite errors
Design trouble boosted projects' costs
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Hey there, time traveller!
This article was published 10/09/2009 (4765 days ago), so information in it may no longer be current.
The newest member of Mayor Sam Katz’s inner circle is fuming that a private engineering firm blamed for design errors at two Winnipeg sewage-treatment plants received more than $10 million in consulting payments from the city last year.
City council infrastructure-renewal boss Mike O’Shaughnessy, who rejoined executive policy committee on Wednesday, lashed out at senior city officials after receiving a report showing Earth Tech Canada received almost $10.1 million from the city in 2008.
Since 2007, the city has been negotiating with Earth Tech Canada — now AECOM Canada — to recover some of the costs of overruns at the West End Water Pollution Control Centre, where upgrades estimated to cost $26 million were adjusted upwards in stages to $47 million.
At the time, a confidential water and waste department report blamed $12 million of the cost increases partly on "design errors, incomplete design and design clarification" that forced engineers to redraw plans for a heating and ventilation system and a chemical-addition system at the plant.
The city and AECOM are still trying to work out what portion of the cost overruns will be borne by either party, as the city may have contributed to the errors by changing contracts, said Mike Shkolny, water and waste department engineering manager.
But at the first EPC meeting following the summer break, councillors revealed the same firm assumed responsibility for a separate error at a North End Water Pollution Control Centre upgrade project.
The second error involved the incorrect placement of a concrete support column, which prevented a piece of machinery known as a decanter from moving inside a nitrogen-removal facility, Shkolny said. This incident was only reported verbally to city councillors behind closed doors, Shkolny said, because the city was concerned media attention could jeopardize potential litigation.
No legal action was ever pursued. The firm remedied the situation by paying for the studies, scaffolding and cranes required to remove a piece of superfluous skimming equipment from the decanter, thus allowing the facility to work, Shkolny said.
"Earth Tech absorbed it all," said Shkolny, pegging the cost of the second error at about $50,000.
A spokeswoman for AECOM Canada did not return calls Wednesday.
Nevertheless, Old Kildonan Coun. O’Shaughnessy, who ordered a city investigation into the West End cost overruns two years ago, grilled Winnipeg chief administrative officer Glen Laubenstein and chief financial officer Mike Ruta for the fact Winnipeg continues to sole-source contracts worth up to $500,000 to engineering firms as part of the $34.8 million worth of payments to consultants made in 2008.
"Five-hundred-thousand dollars without a tender is a sin; $100,000 without a tender is a sin," said O’Shaughnessy.
St. Norbert Coun. Swandel, the finance chairman, added his concern that sole-source consulting contracts seem to be the norm and not the exception.
Laubenstein said the city is seeking to reduce the number of consultants it employs. But in 2008, consulting payments rose to $34.8 million from $29.9 million in 2007.
City councillors in a stink over cost increases and design errors at two city sewage-treatment plants
The West End plant
The headache: In July 2007, the city was forced to adjust the projected cost of upgrades at the West End Water Pollution Control Centre at the southwest corner of Wilkes Avenue and the Perimeter Highway. The projected tab was raised to $47 million, up $12 million from a $35 million estimate earlier that year — and up $21 million from the original estimate of $26 million.
What happened: In a written report, the city’s water and waste department said "design errors, incomplete design and design clarification" forced engineers to redraw plans for both a heating and ventilation system and a chemical-addition system. The report also stated engineering firm Earth Tech Canada had trouble running the project and wound up with a "strained relationship" with contractor Bird Construction. These problems contributed to the increase costs.
The aftermath: Then-city council finance chairman Mike O’Shaughnessy ordered an investigation into the ballooning cost of the West End project. Negotiations with the firm formerly known as Earth Tech are still underway, as it remains unclear what role the city may have played by changing specifications for the design work.
Political fallout: The West End cost overrun formed the basis for a push to replace Winnipeg’s water and waste department with a new city-owned utility that will partner with engineering firms, on the assumption firms would be less likely to make mistakes if they owned some aspect of the project. City council approved the creation of a new utility in July.
The North End plant
The headache: In the spring of 2008, the city found a piece of machinery inside a new nitrogen-removal facility at the North End Water Pollution Control Centre on Main Street could not rotate without striking a concrete support column. The projected tab for the facility was adjusted to $25.4 million from $23.3 million.
What happened: In a verbal report, city staff informed city councillors that engineering firm Earth Tech erred in the design of the support column, leading the contractor to build it in the wrong place.
The aftermath: In this case, the engineering firm assumed full responsibility for the error and paid for the removal of a piece of skimming equipment that would allow the arm to move. In the end, the error cost $50,000.
Political fallout: On Wednesday, Couns. O’Shaughnessy (Old Kildonan) and Justin Swandel (St. Norbert) questioned how Winnipeg can continue hiring firms that err, often without tendering.
Total spending on consultants by the city of Winnipeg in 2008: $34.8 million, up from $29.9 million in 2007
Water and waste department spending on consultants in 2008: $18.6 million
Public works department spending on consultants in 2008: $9 million
Spending on consultants by 15 other city departments and special operating agencies in 2008: $7.2 million