Tram contracts: unreliable estimates

The City of Quebec’s Auditor General notes that there was a management problem in awarding one of the top three streetcar contracts due to unreliable estimates.

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The City of Quebec Auditor General Michel Samson released his annual report on the progress of the streetcar project on Tuesday. He dealt with several aspects including contract management. Of the three largest contracts for the tram, he found that managing the additional costs was “reasonable” in those awarded to Tram-Innov and Systra Canada for the design.

But for the third, he highlights a cost explosion that he says could have been avoided. In fact, the $375,000 contract awarded to law firm Norton Rose Fulbright in 2018 and now being executed by Fasken Martineau DuMoulin has exploded by 1067%.

problem of contract management

This, according to the Administrative Court, “clarifies a problem in the execution of the contract, since this change cannot be qualified as reasonable and foreseeable”. The VG analyzes that this significant increase is due to the fact that “the estimates made by city employees are not reliable”.

In fact, the allocated sums of $375,000 were not enough to cover legal fees for a full year, as an additional $4 million outlay was approved the following year, followed by another $4.8 million in the year 2020.

For other contracts, cost estimates prepared by city officials were less reliable than those prepared by subcontractors. The differences can be up to more than 40%, states the VG.

Quebec Mayor Bruno Marchand pointed out in the afternoon that inaccurate estimates do not mean additional costs, as estimates are sometimes higher than final costs.

For him, the report of the VG is positive. “Yes, there are things to improve, but overall it is an excellent report for the project office and the city. What the citizens of the city remember is that they can be confident.”

acquisitions

Deficiencies in the land acquisition process were also noted, particularly in the accuracy of the plans the city held in its possession. “Of the 232 plots of land for which the Major Projects Department has the lot plans, 34 contained errors, including 23 in the lot plans of the urban engineering networks.” This causes delays as the resumption of these plans takes time.

Despite the fact that the city of Quebec approved the expropriation of 17 properties, no expropriation process has been completed, he notes.

In addition, Mr. Samson considers the risk provision to be “sufficient in relation to the progress of the project”. A reassessment of the cost of the project by VG, estimated at nearly $4 billion, will be made by the end of the year.

For his part, opposition leader Claude Villeneuve believes the report does not constitute a “major scandal”. “Quebec is a city where the debt ratio has been well managed and good financial practices exist.”

The fact that the underestimated contract is an exception reassures him. “The fact that we have a limited event like this shows that the rest is going very well,” he said. But he agrees that there is a need to revise the procedures to reduce the discrepancies between the estimates and the final costs.

– With the collaboration of Jean-Luc Lavallée

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