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Police HQ-job switch puzzling

Design-build model has less scrutiny, competition

Hey there, time traveller!
This article was published 14/11/2013 (1372 days ago), so information in it may no longer be current.

When threatened, a herd of musk oxen forms what biologists call a defensive circle: They stick their horns out and cover their rear ends.

The men and women in charge of the City of Winnipeg have adopted a similar posture in response to questions about the city's wildly over-budget police headquarters.

The new police headquarters on Graham Avenue is $76 million over-budget.


The new police headquarters on Graham Avenue is $76 million over-budget.

In the space of five ignominious years, a $21-million Public Safety Building repair job ballooned into a $211-million new police headquarters building. Questions have emerged about project oversight, incomplete designs, amended contracts and faulty estimates.

For more than a week, acting chief administrative officer Deepak Joshi and other senior officials have refused to respond to requests for interviews about a police-HQ renovation that appears to share some of the same problems that plagued the pilloried fire-paramedic station replacement program.

What do both projects have in common? For starters, both wound up over-budget, although the $3.3-million fire-paramedic station overrun pales in comparison to the $76-million debacle afflicting the police HQ.

More significantly, the contract-award process for both the police job and the construction of four fire-paramedic stations were amended many times and involved some sole-sourced contracts.

In the case of the fire-paramedic stations, an external audit determined the entire process was uncompetitive. But Winnipeg will have to wait months, or even years, before the police HQ is audited, if that happens at the behest of three city councillors, the Winnipeg Police Association, the Canadian Taxpayers Federation and the Free Press editorial board.

In the meantime, it is worth pointing out perplexing questions that already swirl around the police HQ, which appeared to start out as a traditional construction project before morphing into what the industry calls a "design-build" job, which involves less competitive bidding and less client oversight.

Normally, when a government builds a complex structure -- say, a police headquarters -- the construction job winds up being procured under the conventional, design-bid-build model. Under this model, the city selects an architecture firm to design a building, issues bids for the work and then chooses a construction company to complete the job.

The police HQ started out this way in 2010. But partway through the year, somebody -- the city won't say who -- decided to switch to the "design-build" model, where a single company assumes all the responsibility and all the risk for the work, at least in theory.

This construction model can reduce costs for a client, in this case the City of Winnipeg. But a drawback can be communication problems, as the needs of the client may not be reflected by the decisions made by the contractor -- in this case, Caspian Projects.

According to a report to council, precisely this sort of problem happened when police interview rooms were designed without secure ceilings, to name just one example.

To some, it appears unusual for the city to use this construction model at all, let alone switch to this model in the middle of the bidding process. "That would be bizarre in this kind of arrangement," said Jack Abiusi, an engineer with Tower Engineering Group, a firm that presented the city with a $1.3-million bid to co-ordinate the project before the overall process was changed.

An even bigger potential problem with the design-build model is there's no objective way to decide who should be awarded the main construction contract. Design-build bids from different firms can include different designs.

In the case of Winnipeg's police headquarters, the city started with one design. Winnipeg consulting firm AECOM was paid $5.3 million to develop a design in 2010. The following year, after the construction contract was amended, the city asked Ottawa's Adjeleian Allen Rubelli to complete the design work, for another $4.8 million.

The Ottawa firm was asked to complete the design in December 2011, more than a month after former city CAO Phil Sheegl and Caspian signed a "guaranteed maximum price" agreement based on a design that was only 30 per cent complete and subject to change.

In an email statement Wednesday, the city claimed Sheegl nonetheless had no idea the design wasn't finished. "The CAO and the public service were not aware at that time that the designs were incomplete and had code issues in various areas," said city spokesman Steve West, speaking on behalf of Joshi and chief financial officer Mike Ruta.

On Thursday, West clarified that statement, claiming Sheegl did know the design was incomplete but didn't know about code issues that required redesign. Regardless, the city knew months earlier there were problems with the design -- and there was no way to nail down a cost for the project before it signed the construction deal.

"It is an understanding between Caspian and the City of Winnipeg that the drawings are limited in terms of scope and co-ordination and are not what would be typically tendered for firm pricing," Caspian president Armik Babakhanians wrote in a July 2011 letter.

This letter was received 10 days before council granted Sheegl the power to award the construction contract without any further political oversight.


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Updated on Friday, November 15, 2013 at 8:32 AM CST: Clarifies that not all the police-HQ contracts were sole-sourced.

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