To: The Chronicle Journal
Date: Monday, October 15th, 2012
Subject: Letter to the Editor at the Chronicle Journal in regards to the
published letter concerning: Harmony House: a proposal Monday, October 15, 2012
Open letter to Premier Dalton McGuinty and cabinet published on-line.
I found Mr. Cec Cranton's letter quite interesting and therefore prompted
myself to reply with the following bit of history regarding the building of our
TBDRHSC as follows.
1/ In 1998 the estimated total project cost of this
proposed facility was $126 million
2/ In 1999 month of May a submission of MP to the
MOHLTC stated the new estimated project cost of $ 140.27 million was the
revised magic number.
3/ In 1999 August 12 Independent Cost Estimate Helyar
provided the MOHLTC with independent cost estimate of Master Plan; they stated
that the accorded was a value of $160 million to build the new
hospital.
4/ In 1999 November 1 Supplement to March 23,1999
Functional Program Supplement reflects an increase of 41 beds to the HSRC
targeted Number 334, for a total of 375 beds. That submission contained a
revised cost estimate of $ 162.6 million (per EllisDon who
became the general contractors of the project).
5/ In 2001 December 10 CM Contract TBRHSC provides
written confirmation to the ministry that the June 2001 Construction Management
is final. It is most "Important to note that the Contract is
never executed between TBRHSC and EllisDon Construction".!!!
6/ In the fact that there was no enforceable
guaranteed-maximum-price and that the Contract was not enforceable by either party, yes you did read that correctly as hard as it may to
actually believe.!
Under the terms of the Construction Management (CM) Services RFP,
the fees of the
Construction Manger were to have been fixed. As the Project scope
continued to increase
And because the CM Contract was never executed, the Construction
Management fees
Continued to increase above and beyond the original budgeted
amount. Processes for changes, as identified in contract documents, were not
followed. All changes were to be formally initiated and approved by the
architect, which is a process designed to ensure that both the interests of the
Owner and the Contractor are protected, and that contract changes and associated
costs are justified. PRISM’s review of change orders indicated instances where
change orders / directives were issued directly by the construction manager
without review by the architect. There were also instances of change requests
directly communicated to the trades by TBRHSC, the work was completed, and then
a formal change directive was issued.
The MOHLTC stipulated that all tender packages
related to the Project must be reviewed and Approved by the ministry’s Capital Branch prior to
releasing them. A following review indicates that from the outset this policy was not consistently
followed and that as the Project Progressed there was little evidence of formal review
of tender packages by the Capital Branch. The process largely ceased, contracts were
tendered without formal approval, and yet, the MOHLTC continued to finance the Project.
There were numerous requests for additional funding
(at least four) throughout the life of the Project. The most significant request occurred in
November, 2001 for $100 million over the then-approved budget of $162.6 million. The hospital had already committed to or spent much of the additional funds being sought before even
making the request. This meant that the ministry’s ‘review’ of and response to this
request was based on funds that had already been spent. This resulted in less than adequate
reviews and approvals with the ministry not able to be proactive. The reasons
cited were equipment - $28.2 million; contingency - $20.3 Million; cost escalation - $38 million; and project
scope - $12 million.
The Board of Governors delegated excessive authority jointly to the Chief Executive Officer (CEO) and the Project Coordinator. Any change orders exceeding $ 1 million in value required Approval by the Board of Governors. Of the 2,846 change orders, totaling $ 47.51 million, Only 2 were for an amount exceeding $ 1 million, having a combined value of approximately $ 5 million. TBRHSC’s CEO and Project Coordinator had the authority to approve, and did approve, approximately $ 42 million in changes resulting in the full use of the contingency and a further $ 21 million in un-budgeted base building construction costs, post-substantial work and claims.
Undoubtedly, limited ministry resources coupled with
the untimely and inaccurate information provided contributed to a capital
project “out of control”. From its inception to completion the TBRHSC New
Hospital Project experienced an increase of
$157 million in a five-year timeframe. The new
Thunder Bay hospital facility could have been designed and
constructed for $ 180 million to $ 200 Million, with nearly $100 million of the”
project cost creep” resulting from a costly building design and at the very
outset and poor project management practices throughout the life of the project
being the elephant in the room.
The individual responsible from the contracting end
of things was a fellow named "Russ Martin -
Construction Manager-Ellis Don Construction"
whom I met during an interview I had with this company, he was Project Manager for Pre-construction & Design Development, Tendering,
Schedule and Budget Control. Inadequate project management resources were
assigned to the Project resulting in Numerous break-downs in process, an excessive volume of change
orders (over 2,800 Change orders) and a significant delay in schedule. The scale and
scope of the Project (even As initially envisioned) warranted that the Hospital as Owner
properly dedicate resources to The Project to monitor the work being performed by the consultants
and the CM.
There was no overall project execution/management plan (scope,
cost, schedule, risk, etc) or Underlying detailed policies and procedures, Project cost
reporting was often not timely or accurate, thus impeding effective monitoring
of The Project, at all levels, there existed little opportunity to meaningfully
mitigate costs (with the exception, perhaps, of legal action). Nearly all amounts
had been spent and the Hospital was completing the claims settlement process. There was
no evidence of “best practices” controls around the use of Project contingency;
it is difficult to determine to what extent the Project cost overrun would have
been minimized or even entirely avoided had such proper contingency controls
been implemented.
The final project cost of the new TBRHSC was $283.9 million.
Construction
Costs were approximately 58 per cent more than the budget approved in April pf 2002 when the hospital's programs and project scope were agreed to by the Ministry. Minister of Health and Long-Term Care George Smitherman later released a report by Special Advisor Tom Closson on the Construction of the new Thunder Bay Regional Health Sciences Centre (TBRHSC) a outlined the lessons from this redevelopment project and steps the government is taking to improve hospital construction."This report is a sober read about the consequences of poorly planned and controlled capital redevelopment projects," Smitherman said. "We owe it to Patients and local citizens to make sure that this kind of situation doesn't happen again. Our government takes this report to heart and has already made improvements to the capital redevelopment process to ensure Hospital projects are conducted in the best interest of patients and local Communities."
Unfortunatley Mr. Smitherman and the report of Tom Closson is too
little too late in my opinion, this should be noted by all concerned of taxpayer
dollars totally being mis-spent, plain and simple.
Sincerely,
Jim Gamble
Thunder Bay
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