Validation phase exceeds approved cost
By Chad Ingram
Published Feb. 5, 2019
The cost for the “validation phase” of the Minden arena project has exceeded the amount Minden Hills council approved for it, by a wide margin.
During a special meeting of council on Jan. 31, councillors received an update on the project, some expressing dismay at the size of the financial overage for its initial phase, and ultimately refused to approve those additional costs.
In September, the previous Minden Hills council approved $140,000 for the completion of the validation phase, which is a series of engineering assessments. In July of last year, the previous council essentially approved, in principle, awarding the project – which is now proposed to include the construction of a new arena and gymnasium, which would be attached to the current community centre building – to Ottawa's McDonald Brothers Construction, which was the sole company to bid on the project. The contract for the job, which would cost $12.5 million, plus HST, has not yet been signed, and council is scheduled to vote on whether to authorize the contract during a Feb. 14 meeting.
In December, community services director Mark Coleman brought a report to council saying the forecasted cost for the validation phase had risen to $252,000, and councillors approved up to an additional $140,000 – so, a total spending ceiling of $280,000 – for that phase of the project.
During the Jan. 31 meeting, it was revealed that cost has risen again.
“That number has been revised,” Coleman told councillors, adding that, “Part of this is forecasting, part of it's actuals.”
The revised number was more than $323,000, exceeding the December estimate by nearly $71,000. On top of that, additional legal and meeting costs – including conference calls and lunches – have brought the total combined forecast for the validation phase to $353,00, Coleman's report indicated.
During the Jan. 31 meeting, Coleman turned things over to Paul McDonald, president of McDonald Brothers Construction, to explain the cost increase.
“It's a variable,” McDonald said of the estimate for the validation phase. “It's a function of a dozen engineering firms, individuals, ourselves . . . looking at what we're asking of them to put this report together.”
The scope of the project has also grown somewhat, since a gymnasium large enough to host a high-school-level basketball game is now included in the proposed design. The proposed gymnasium presented during a December public meeting on the project was smaller than a school-sized gymnasium, something that drew criticism from the community.
“This cost increase is primarily a result of the building design evolution,” Coleman's report read.
“That value is an approximation,” McDonald said, adding that in the original request for proposals document his company had responded to, it was indicated the validation phase could cost as much as $400,000. “It's not like a purchase order.”
“It comes as a surprise,” Mayor Brent Devolin said of the new figure. “I guess I would have liked to have advanced knowledge, when we approved the number we did, that there was a variable there. Unlike the rest of the project, where I think we've been working really hard to screw those variables down all over the place, this kind of comes out of left field. So it's . . . it's perplexing.”
McDonald re-emphasized the estimate for the validation phase, which includes a series of sub-consultants, is an approximation.
“There is no little line in all of the sub-consultants' fee proposals, where you can really ascertain, exactly, that validation portion,” he said.
“The number we gave you, it includes all of that fee, you're not paying more here,” said Patrick Brousseau of McDonald Brothers, referring to the project's total cost, which has not been approved by council. “I understand the predicament. It's a little more than what you had authorized, and we apologize for that. But the investment that you've made now, you're benefitting from it, because I have less contingency . . . we're not burning that money.”
“So, to put that in simple, layman's terms, the exercise in drilling deeper, you remove risk,” Devolin said.
Councillor Bob Carter expressed significant dismay that the costs for the validation phase were exceeding what had been approved by council.
“In December, we had a meeting, we had some actual costs up to that point, and we came and we were asked to approve another $140,000,” Carter said in reference to council's raising of the spending ceiling up to $280,000. He noted the updated forecasted cost for the validation phase exceeded the December estimate by 50 per cent.
“That's a 50 per cent overage in about six weeks,” Carter said. “I understand your explanation, and I don't give a damn about original budgets and what things originally cost. You know, we were asked for $140,000 to get to a point, and we made it very, very clear that that was the amount of money that we were going to be spending. And now we're 50 per cent over.”
“I wasn't privy to what happened at council,” McDonald said, indicating perhaps there'd been some miscommunication.
“We here in the council, I believe, are here to give guidance to the operational people, so I'm not looking to you for the explanation,” Carter said to McDonald. “We gave this to the operational people, and that's where I have the biggest concern.”
“In fairness to the operational people, they came to me and asked for this,” McDonald replied. “I think the miscommunication lies with me, personally.”
Councillor Jennifer Hughey said she shared Carter's concerns.
“I just wanted to echo some of what Councillor Carter said,” Hughey told the room. “I think he mentioned quotes like 'level of comfort.' You know, there's a certain level of comfort that we as council have to have in you, and in our right to bring this forward to us . . . when maybe we're at a $10,000 overage, versus a $70,000 overage, because that really creates a level of uncertainty in general.
“I've been thinking . . . as the mayor said, this is the biggest capital project we've been faced [with], and so my uncertainty lies a little bit now with you guys, right?” Hughey said to the McDonald reps and Coleman. “Because I'm trusting you to come forward to us with numbers that are correct.”
“This is massive, right?” Hughey continued. “So we expect maybe a higher level of information relayed. So, I just want to put it out there on the record, that, for me, it's not really about if we build this arena, it's when, but it's also about how, and how this process is done, and for me, that's the most important part.”
Chief administrative officer Lorrie Blanchard told council that, in order for them to be at the point where they had enough information to make a decision, all the work that has been completed needed to be completed.
“I don't disagree with you, except that it's one thing to have work done that's necessary, and it's one thing to have work done that's approved,” Carter said. “The principle is, once we approve something, that is what should be done, or there has to be some new approval.”
In a recorded vote, councillors voted uniformly not to approve the additional costs for the validation phase.
Earlier in the meeting, councillors received a presentation on the updated proposed facility design from Mario Pistone of Parkin Architects, that included a tour through a three-dimensional rendering. Council is scheduled to vote on whether it will proceed with the awarding of the contract during a Feb. 14 meeting.