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Better B.C. government megaproject oversight needed: report

Peter Caulfield
Better B.C. government megaproject oversight needed: report
FILE PHOTO — The Port Mann/Highway 1 project recently underwent an independent consultant review which raised some concerns about the B.C. government’s management of the megaproject.

The recently released report of an independent consultant’s review of the Port Mann Bridge replacement has some concerns about the B.C. government’s management of the megaproject.

Perrin, Thorau and Associates says the province needs to invest in people and processes so that it can adequately oversee such large projects in the future.

The report, commissioned by the BC Ministry of Finance, says future major transportation projects will benefit from greater provincial government proficiency in such disciplines as project management and procurement.

Like B.C.’s roads, the story of the Port Mann Bridge/Highway 1 project (PMH1) is long, with many twists and turns and ups and downs. In the same way that a road trip has lessons for the reflective traveler, the PMH1 review has some useful tips for the willing-to-learn public sector journeyer.

Herewith a condensed, simplified and selective version of what happened.

PMH1 replaced the original Port Mann Bridge (1964) and upgraded 37 kilometres of Highway 1 from Second Narrows Bridge to 216th Street between Langley and Fort Langley in the Fraser Valley.

The project was expected to be a Design-Build-Fund-Operate-Toll-Transfer project.

A private consortium would design, build and operate the project using private sector financing that would be repaid from toll revenue.

The procurement process to select a private partner began in 2007 and ended in the selection of Connect BC, a consortium of firms, in 2008.

They were authorized to begin design work while the financial details of the partnership agreement were negotiated. But the 2008 financial crisis intervened, significantly increasing the private sector cost of funds.

Since a public-private partnership for the project was no longer financially viable, negotiations with Connect BC ended.

Instead, the province decided to fund the project using government debt and to construct the project as a design-build.

As the Perrin, Thorau report points out, the design-build approach required considerably more involvement by the province during the design and construction of the project, compared to a public-private partnership, because of the risks shouldered by the province.

The provincial agencies involved — the Ministry of Transportation and Infrastructure (MOTI), Partnerships BC and the Transportation Investment Corporation (TI Corp) — assembled a team of employees and contractors to fulfill the provincial responsibilities. The project, which was opened to traffic in 2012, had been budgeted at $3.319 billion. It was completed for a total cost of $3.367 billion, or $48 million over budget.

The Perrin, Thorau review looked at a number of questions dealing with the project, including governance, oversight, budgetary project control and due diligence, as well as the management of funds and procurement policies.

The report made a number of recommendations, including:

 

Project and Construction Management Capacity

“The Province should maintain… the people, business processes and information systems that enable it to create and analyze schedule estimates and cost estimates for transportation infrastructure projects independently (emphasis added) of contracted professional services providers and construction contractors.”

 

Independent Costing and Scheduling Capabilities

“The Province should maintain… its own capabilities to estimate the cost and schedule of a large highway construction project…”

 

Project and Construction Management Records

“The Province should investigate the benefits and costs of storing documents and records created during major highway project development and construction in a records management system that is designed for project management…”

 

The management of MOTI, Partnerships BC and TI Corp made a joint response to the report.

They wrote, in part, “We accept these recommendations, noting that they have been either fully implemented on more recent projects… or are currently underway.”

While not commenting directly on the project or the report, Rory Kulmala, CEO of Vancouver Island Construction Association, says project management “isn’t rocket science.”

“There are well-defined principles and concepts that are largely self-explanatory,” said Kulmala, who has 25 years of experience in public and private sector project management.

A project manager needs to be “a conduit of truth,” he says.

“In public projects sometimes political considerations puts stress on the project management team,” Kulmala said. “A political agenda can lead to grief and a good project manager needs to keep above it all.”

Public procurement educator Maureen Sullivan says the biggest shortcoming in procurement in many projects is a lack of planning.

“The better the planning, the easier it is to manage the project once it gets rolling, and the fewer the problems there will be.”

Supply chain consultant Larry Berglund says that, generally speaking, the public sector is not as well prepared as the private sector to take on procurement for a megaproject.

“There aren’t many really large public sector projects for procurement managers to practice on, and there is often politics involved,” said Berglund.

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