The Whig-Standard
Tuesday, June 06, 2006 - 07:00
Local News - Two Kingston councillors say they’re concerned that politicians weren’t given complete information when decisions were made to boost the Grand Theatre renovation budget.
“Not having the information is one thing, but not being given it when it is available is very disturbing,” Councillor George Stoparczyk said yesterday after consultants released the results of a review of the theatre project’s cost increases.
Councillor George Beavis said he also wants to know why the rising costs were not noticed or reported sooner.
“I don’t know how it could have gotten so far out of whack without some signal lights going off, and as a matter of fact, the question I will be asking will be: were there any warnings?” he said. Councillors meet to consider the report tonight.
The consultants for KPMG found several failures in a review of the restoration of the city-owned Grand Theatre, including at least two instances when councillors were asked to increase the budget without having the latest figures on possible cost over-runs.
The review was ordered by chief administrator Glen Laubenstein after the cost of the project, approved at $6.5 million two years ago, rose above $14 million as a result of cost over-runs and a decision to widen the focus of the project. Work has been stopped since the review was ordered a month ago.
KPMG, submitted a 19-page report that concludes:
The project “suffered from too many players and a lack of accountability”;
The city performed inadequate assessment of the state of the theatre, leaving it “vulnerable to significant cost deviations”;
There was “insufficient” reporting to council on project status and potential cost overruns;
Decisions were made “at the wrong levels and/or with insufficient information”;
Budget reporting was “difficult to understand and interpret”; and
“There was limited involvement/
control/communication exercised by Finance and other key city officials over the budget and related changes.”
As a result, politicians, who have final say in the spending of public money, were left in the dark as they continued to approve spiralling costs.
“Limited and sometimes incomplete information was provided to council and key city officials with respect to revised budgets and scope,” the consultants write.
“I would say there was lack of process at the staff level to ensure that council was informed of certain changes,” Stoparczyk said.
Beavis said he was “concerned” about how costs had gotten so out of hand, although he noted the Grand is more than 100 years old and renovations to such buildings rarely go as smoothly as planned.
Still, he said he wants to know why the rising costs were not noticed or reported sooner.
Councillor Steve Garrison said he didn’t question the value of the Grand project, but was disturbed at a pattern he saw of council being asked to approve a project at a certain price, only to be asked for more money for the same project later.
“As elected representatives, we have the right to receive reports from our senior staff that are pretty accurate, and that’s beginning to be a problem,” he said, mentioning the Market Square project and the new police building as examples.
“It is getting to the point that I’m concerned about the information we are receiving from staff.”
Councillor Rick Downes noted the downtown entertainment centre and the proposed multiplex in the west end are the two next large projects on council’s plate. He said the city needs to learn lessons from the Grand before tackling them.
“The arena has arrived and the multiplex is looming on the horizon and I think the important thing is to ensure all our cost controls are in place and ensure there isn’t a repeat of the Grand Theatre.”
He also said city staff may be becoming overburdened with the sheer number of projects on the go and the workload assigned to them by council, and may be unable to scrutinize each project as closely as they would if they could consider it in isolation.
Walter Fenlon, co-chairman of the Grand Theatre’s Restoration Campaign, said last night that he had not yet read the full report that is going to council and was uncomfortable commenting for that reason.
Councillor Ed Smith said he was “disappointed” in the overruns but attributed them to the difficulties of dealing with heritage architecture and noted that the private sector also deals with similar problems when trying to renovate an existing structure rather than building new.
Smith said the report is clear that many of the problems that occurred with the project could not have been foreseen but said now that it has the report, the city could see what the problems were and endeavour not to repeat them.
“When it comes to other projects, we will learn from this experience,” he said.
The report notes that once the budget was approved, there was a culture within city management that “reporting doesn’t need to be rigorous.”
Two city managers who were directly responsible for the work left the city within the past 10 months.
Ann Pappert, the former manager of cultural services, resigned last July to take a job with the City of Kitchener. She worked on the project with Grand Theatre manager Karen Killeen, who resigned last month to take a job working in Pappert’s department in Kitchener. Their job titles appear in the KPMG report.
Although Pappert and Killeen have said their departures were voluntary, “It appears like maybe some heads have rolled,” Stoparczyk said. “We’ve lost both the manager of culture and recreation and the Grand Theatre manager.
“They might also have left voluntarily knowing what might be coming down the road.”
The KPMG report raises questions about Pappert’s actions, noting that “decisions were made by individuals with limited communication and, potentially questioned authority.”
The consultants state that councillors approved a $2.5-million budget increase in March 2005, based on information that was incomplete.
Had politicians had complete information, it would have shown another $1 million in costs were anticipated.
“Consultations identified that the manager, cultural services division was advised, in writing, of the preliminary’ nature of the additional costs by the architects and the architects recommended that more work be done to more accurately estimate the costs related to additional scope items,” the report states. “The architects were advised by the manager that there was not sufficient time or need to improve the precision of these cost estimates.”
When councillors last hiked the budget, in August 2005, they were not told that a final estimate for work was $1 million over budget, the consultants also found.
Pappert could not be reached yesterday for comment.
The report notes that there was a lack of timely and appropriate reporting to senior city management.
“The information for decision making was untimely, confusing and inconsistently communicated,” the consultants write.
As a result, senior manager Lance Thurston appears not to have known until October 2005 that the budget was $1 million in the red.
“Not until the budget over-runs were identified to be in excess of $1 million was the commissioner advised of the significant extent of the potential cost over-runs,” the report states.
In an interview four months ago, Thurston told The Whig that unexpected discoveries were putting pressure on the budget.
“I’ve been advised that we’re still within budget,” Thurston said in an interview Feb. 24.
At that time, the city was still waiting for final bids for the reconstruction phase. “We’ve kept council fully apprised of this,” Thurston said.
Thurston could not be reached for comment yesterday.
The consulting report also raises concern about the city’s ability to manage big projects, noting the “volume of projects may have some detrimental effects on management resources.”
Seven major projects are underway, including plans for a nearly $42-million downtown entertainment centre and a roughly $25-million suburban arena complex.
“Consultations revealed that there may be a lack of available staff with project management experience to champion these projects successfully, due to the concurrent initiatives and management’s workload,” the report states.
Chief administrator Glen Laubenstein could not be reached yesterday.
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