Taxpayers are going to cover more than $325,000 in cost overruns from the construction of the new Squamish Emergency Services Building.
Details of the cost overrun were presented to Squamish Council on Tuesday (Sept. 28) at a special council meeting.
Council was warned through a memo from Cliff Doherty, the District of Squamish (DOS) director of public safety, that as of Sept. 1 there was an overexpenditure projected to be $324,723, or six per cent of the project budget.
Another memo went to Council on Tuesday that confirmed the overspending and set out details.Coun. Corinne Lonsdale said that her calculations show that the budget was exceeded by about $500,000.
The original project budget was $4.9 million and the DOS added another $325,000 to the budget this year to create space for the Squamish Emergency Program and an emergency operations centre. The total budget was $5,225,000.
The B.C. Buildings Corporation (BCBC) managed the project and Gerald Longson was the development services manager. According to a report written by Longson, the total additions to the project budget amounted to $532,681.36, but the RCMP covered some of the additional costs.
Mayor Ian Sutherland concluded that there was a lack of leadership on the project.
"The team was missing a quarterback," Sutherland said.
Sutherland wanted to know why the overspending wasn't reported earlier and the members of the team said that they didn't realize there was an issue until recently.
Lance Van Drunigk of Unitech, the company hired to manage construction of the building, said not all costs were known until this month. He explained that 16 surprise invoices from BCBC were presented to him early in September.
"We all had the impression that we had things under control," said DOS administrator Kim Anema. "In May we projected that we would have contingencies."
Anema was on a steering committee that included Van Drunigk, Longson and Doherty.
Ralph Hughes, the DOS acting director of financial services, discovered the overspending.
"I should have been a part of the team," Hughes said. "I wasn't introduced to the team."
The steering committee members admitted that the system to track invoices and spending didn't work.
"I just have a great deal of concern over the lack of communication," Lonsdale said. "I'm just appalled."
Coun. Jeff Dawson said that he was disappointed that nobody involved in the project was offering an apology.
"I haven't heard any remorse or embarrassment," Dawson said. "You haven't got the professional integrity to say 'I'm sorry.'"
Anema responded by saying that he regrets the overspending.
"We all have some responsibility," Anema said. "Each of us has some responsibility and I as administrator admit that I had a responsibility."
To make things even worse, council was informed that liens were placed on the building. One of the companies involved in the construction, Coast Electric, declared bankruptcy just before the building was finished. The hiring of another electrical company added costs.
"A number of the contracted subtrades in carrying out their work were not fully committed to the project and created coordination problems and increased costs to the project," Longson wrote in his report to council. "These included the forming and framing subcontractor and the structural steel subcontractor. Two major subcontractors did not fulfill the terms and conditions of their contracts and therefore had to be released from their contracts and replacement subcontractors hired. These included the roofing and masonry subcontractors. The replacement subcontractors added additional costs to the project."
Longson also pointed to the 144 change orders on the project as another source of additional costs.Longson and Van Drunigk both said a number of times that the contingency budget for the project was too low from the very start.
The final cost wasn't known as of Tuesday because more invoices are expected and there is a legal matter still to be settled.
The project team said the overrun isn't expected to grow significantly with the additional invoices and the legal matter.
Council voted to cover the shortfall by moving $64,564 from the playing fields budget and the rest from the prior year's surplus. Hughes explained that the playing field budget is being tapped because the fill from the building was used at no cost to the DOS as pre-load on the next ball field project.
