Victoria Climbs Toward a $100-Million Bridge

The higher the climb, the harder the fall

The three firms in the running to build a new Johnson Street Bridge were originally scheduled to submit their bids to Victoria City Hall on Friday, August 17. Now the deadline has been extended: according to an addendum to the Request For Proposals on the City’s website, the new date is Monday, September 10.

Why the extension? On August 16, the Times Colonist reported that the City was “considering extending the deadline if that would lower costs.”  An update emailed to councillors the following morning said the new date would “provide the Proponents and the City with additional time to consider optimization opportunities which should result in best value for the City.”

It’s great that the City is trying to reduce the impact on taxpayers. However, the extension compresses the amount of time council will have to sign a contract or look for alternatives — contractors must have coffer dams for the new foundations in place by February 15, when the federal “fish window” closes until next July. The deadline extension also suggests that some or all of the bids are still above the City’s “affordability ceiling” of $66.1 million for construction — adding more fuel to the fire of recent concern that the project cost is about to increase again.

The latest concerns were sparked on July 26, when Joost Meyboom of MMM Group, the consultant engineers, presented Victoria councillors with an updated list of some 90 risks facing the bridge project. Tellingly, the two risks rated High — that is, likely and significant — were “[un]realistic accuracy of estimate” and “designer/contractor disputes over design optimization.” (CTV covered the meeting; watch their report HERE.)

Then, on July 31, Victoria News broke the story that City staff knew in January — two months before telling council — that the bridge was outstripping its budget. On January 6, the City’s finance department sent a memo (get it HERE) to bridge project manager Mike Lai stating the $77-million total project estimate from 2010 was at least $8.4 million short. And on January 12, the finance department sent another memo (HERE) warning that the City would have to hire more staff to administer the project — and noting they were also contemplating giving MMM the authority to sign contracts on the City’s behalf.

On August 3, mayor Dean Fortin went on CFAX to explain. Staff withheld information because they had to get solid facts before going to council, he said. And the borrowing amount for the new bridge hasn’t increased since the 2010 referendum, so the impact on taxpayers hasn’t changed. Listen to the interview:

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But the basic question remains: how did the cost of this project spin out of control?

For the answer, let’s go back in time ….

April 2, 2009: City and Delcan engineers tell councillors it will cost $25 million to repair the existing bridge for 40 years, or $35-40 million for a new bridge that will last 100 years. (Here’s a slide from the engineers’ presentation.) Using those numbers, on April 23, 2009, council votes to pursue replacement, and tells staff to apply for infrastructure stimulus funding.

May 21, 2009: City engineers tell council that they’ve applied for stimulus funding, using a new project budget of $63 million. (The mayor told CFAX this was a meaningless “Class D estimate”, but it wasn’t indicated that way at the time; here’s a slide from the engineers’ presentation.) Nobody knew what the bridge would look like, or who would build it. Nevertheless, according to the minutes of that meeting, nobody complained about the increase, or worried that the City would get stuck with the bill if the stimulus application failed.

June 14, 2010: The quantity-surveying firm Advicas presents a “Class C” estimate of $85 million (later $77 million without rail) — the first time an estimate has been generated for the “rolling bascule” design unveiled by architects WilkinsonEyre and engineering constultants MMM in September 2009. The fine print says Advicas based its estimate on information provided by MMM, as did Stantec’s “peer review” of MMM’s replacement scheme. Consequently, the $77-million price tag used in the November 2010 referendum is never independently verified.

March 15, 2012: MMM presents council with a new budget of $92.8 million. The City’s finance department warned in its January 6 memo that the bridge was far more expensive than the $77 million estimated in 2010 — “Many construction/design related costs such as permits, technical review resources and City assist costs were not contemplated in the Class C estimate” — but City engineers do not tell council about this screwup. Instead, Fortin says “every line item is kinda reasonable”, and council reluctantly approves the increase.

July 26, 2012: MMM presents council a list of some 90 risks facing the bridge project, including the high risks of “[un]Realistic accuracy of estimate” and “Designer/contractor disputes over design optimization”. Joost Meyboom warns that the final bids may vary by as much as “40 percent” — in other words, they could be 40 percent above $66.1 million — and that MMM still has to do more geotechnical analysis of the site. (Download an MP3 of the meeting HERE), and follow along with MMM’s presentation and City staff’s risk report.)

So this is how costs escalate: step by step, via a combination of staff withholding crucial information at key moments, and council failing to hard-cap the cost of the project or independently pursue alternatives.

When Ipsos-Reid surveyed residents back in May 2010, they identified cost as their #1 concern with replacement. At the time, a 40-year repair of the old bridge was priced at $25 million (a number subsequently verified by MMM). Now we’re approaching four times that for a new one. And construction hasn’t even started yet.

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