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No one could see this coming?

Aspers, feds had to know museum would go over-budget

Hey there, time traveller!
This article was published 25/12/2011 (3076 days ago), so information in it may no longer be current.

Gail Asper at the museum's construction site.


Gail Asper at the museum's construction site.

In the race to see who was the most naive about the true cost of the Canadian Museum for Human Rights, the Asper family and the federal Tory government are running neck and neck.

Word leaked out last week the museum, pegged at $310 million in 2009, will now cost $351 million. Ottawa has elected not to offer any help to cover the shortfall, leaving it up to the Crown corporation that controls the museum and the private sector to find the money to open the museum in 2014, a year later than originally envisioned.

Stephen Harper.


Stephen Harper.

The reasons for the overruns vary. More money was needed for additional steel to re-enforce a core part of the structure. The foundation needed some shoring up because of unstable soil conditions. And exhibit technology is proving more costly than expected. There is a chance some of these additional costs will be recouped in claims against the project's chief engineering firm, but that won't be realized for years.

Eric Hughes, the new interim chairman of the CMHR board of directors, said he is not alarmed by the cost overruns. He noted there is "a certain amount of optimism built into the best budgets." He also added that the overruns were "unfortunate but not outrageously big" given the magnitude of the project.

Hughes' comments are interesting because he is a chartered accountant, and because of his professional experience, he understands budgets and figures. It is also interesting to note that he is a trusted friend of Prime Minister Stephen Harper and still reportedly does the prime minister's taxes. So, if Hughes is not all that spooked by what's going on, why is Ottawa so testy about the overruns? In 2007, when Harper announced the federal government was giving Izzy Asper's museum national designation, he touted it as a bold, revolutionary project that set a new standard for public-private partnerships. In the years that have passed, it's clear the prime minister has lost most of his passion for this project. The CMHR has become a liability that is being shunned by the very people who once celebrated its ambitious design and mandate. And all because the project is over-budget.

The Prime Minister's Office has steadfastly clung to the belief the museum should have been built for $265 million, the figure used in 2007 when Harper announced Ottawa would create a federal Crown corporation to build and operate the museum, along with providing $100 million federal funding.

Why put so much stock in that number? In 2008 when the negotiations were completed to create the federal Crown museum to oversee construction and operation of the museum, Gail Asper and the Friends of the CMHR promised in writing it would be built for $265 million. The promise was made despite the fact Asper knew the figure was preliminary and inflation would likely drive the cost higher.

It was profoundly naive for Asper to make that assertion, but perhaps not as naive as the federal government believing her. Federal officials were aware the $265-million figure was based on early stage design and development documentation. Ottawa could have insisted on a firm price -- and paid a premium to the contractor to make that happen -- but did not. As a result, no sane person could expect the project to be built for $265 without a massive reduction in either the size or the scope.

One can assume now the PMO believes the museum should have been downsized and exhibits should have been trimmed to meet the original $265 million budget. That's one approach to building a national museum, but it almost guarantees the final product will be so underwhelming, it will undermine its very mandate.

If there is a mitigating factor here, it is the Friends of the CMHR are continuing to put their money where their donors' mouths are. Now that the cost has risen to $351 million, the Friends have agreed to raise $150 million or more. But the Friends have been looking for some help from Ottawa to get them closer to their goal.

A deal was very nearly struck to lend the museum $45 million at no interest, a type of loan that has been extended to Crown corporations many times in the past. Sources confirmed the museum had agreed to a seven-year repayment schedule, which would be aided in part by additional private fundraising and operating revenue generated when the museum actually opens.

This was a win-win solution because it allowed the government to say with complete honesty it did not dig into its own pocket to cover the shortfall; it is still up to the museum to manage prudently to cover operations and pay off the loan. And second, it meant the museum would not be delayed. That is important because delays will drive up the total budget even further.

Again, assuming federal officials making these decisions are not stoned on eggnog, they must realize each year the museum is delayed, construction costs will rise through inflation. And each year-long delay is another year where operating revenues are not flowing. Finally, further delays would be devastating to the private fundraising campaign the PMO now believes will be the project's salvation; donors will be unlikely to increase their contributions or speed up payment of pledges, for a project facing an uncertain future.

Again, if we assume federal officials are sane, why would they knowingly create a situation where museum costs go up even further, and where private fundraising is undermined?

The first reason is each time the project has increased in cost, the Friends have raised more money. The PMO obviously believes if you refuse to provide more money, the Friends will find their own solution.

The second reason is the PMO and Heritage Department are sick and tired of dealing with Gail Asper. Although she is, without a doubt, the heart and soul of this project, she has worn out her welcome in Ottawa. Along with Asper Foundation executive director Moe Levy, Asper has stepped on too many toes in pursuit of additional funding. Efforts by advisers and supporters to get her to dial down her relentless assault on the PMO have fallen on deaf ears; she remains an outspoken advocate even though she's been told she's no longer helping the process.

It is spiteful for the PMO to deny the museum a solution solely because it no longer enjoys Asper's company. Especially when no other national museum has mounted a fundraising campaign of this magnitude, and Asper is essential to that campaign.

The museum has until the end of March 2012 to find money to cover the remaining $40 million. With Ottawa turning its back on the project, it looks very unlikely they'll meet that deadline. Which will mean another year delay and a higher total cost.

We are left to hope Santa brought the combatants in this battle of naivety some common sense. This is a project that was greeted at its inception with great expectations. It's unacceptable to abandon the project now.


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