Cost over-run was predictable
The Whig-Standard
Editorial - Saturday, February 17, 2007 Updated @ 5:33:15 PM
When the cost of a public project exceeds its budget, the immediate response is anger. In Kingston, often that’s followed by resignation, since this isn’t the first time this has happened and, well, we should have known.
Which is perhaps the more correct response, especially in the case of Kingston’s most recent cost over-run, the $4.3 million the city now seems to need to finish the downtown arena and entertainment monolith.
There is good news in this week’s report to council. We learned that for $900,000, we can expand the seating capacity from roughly 5,000 to 6,000. Councillors should run, not walk, to the next meeting to vote in favour of that bargain opportunity to correct one of the project’s major flaws.
As for the rest, the initial outrage we all felt needs some context, and some study.
The context comes from the scope of the project. Anyone who had done any research on arenas built in Ontario before 2003 would have scoffed at the price tag of between $25 million and $30 million initially suggested in the mayor’s task force’s report.
Based on what had gone on elsewhere, it was clear to anyone who had done any homework that to build such an edifice here would cost $50 million, if it was going to cost a dime. We’re almost there.
To think that a project such as this wouldn’t exceed a budget is ridiculous. Such projects are too dynamic. Too many things can go wrong. There are too many variables. With a history of similarly bad estimates – the new police station, Market Square, the Grand Theatre – we should have expected it, if for no other reason than that those debacles led to no apparent mechanism being put in place to prevent it from happening again.
The amount in this case, $4.3 million, is not a trifling amount, but on a $41.7-million project it’s a little over 10 per cent. Does that make it more palatable? It depends on what comprises the over-run.
We’re told that the cost of the environmental remediation of the property exceeded expectations. There’s probably nothing you can do about that. No one really knows what’s buried somewhere until you dig it up. Other things are more dubious: $1.9 million for canteen fixtures; almost $800,000 to upgrade the refrigeration system, install cables and build a catwalk; $700,000 for furniture.
How could you not plan for concessions in an arena? Can the city not go back to the contractor, the architect, the early project manager, and say, hey, this is on you: we paid you to figure this stuff out, to tell us what we needed. Our taxpayers are not paying for your mistakes.
(Of course, if you had staff and politicians exercising due diligence, somebody would have noticed there was no mention of buying furniture for this place, or if it had been properly peer-reviewed, somebody might have noticed the absence of electronic cabling.)
Which leads us to another possible scenario, which is a price tag made artificially low to improve the prospect of political approval. Then, once money has been spent and work has begun, well, what choice do we have but to continue?
Nobody wants to think the people to whom we entrust our tax money are either inept or devious. People make mistakes, and in the grand scheme of a $41.7-million project, maybe a $4.3-million over-run is small potatoes. We should be alarmed, however, at both the regularity with which these things seem to happen and the cavalier attitude staff and councillors seem to have about them.
Perhaps the latter leads to the former.