Waverley West Arterial Roads Project audit reveals project costs were reasonable and appropriately reported

Released: May 8, 2015 at 2:10 p.m.
Audit outlines recommendations for future improvements, many of which have been implemented

Winnipeg, MB - Key findings of the Waverley West Arterial Roads Project audit released today reveal the revised project budget was reasonable, was within the accuracy range of the original project estimate and costs were appropriately reported.

In order to access provincial and federal funding for this project, a class 5 estimate (accurate within -50% and +100%) of $54.7 million was used for a Building Canada Fund application and was incorporated into the 2010 Capital Budget. The Building Canada Fund contributed $33.2 million to this project, and without this funding, the City of Winnipeg would have borne the 100 percent of the costs for these new roads and improvements on its own.

By partnering with the federal and provincial governments under the Building Canada Fund, the City was able to achieve significant cost savings. The estimate used for the Waverley West Arterial Roads Project Building Canada Fund submission, while a class 5 estimate, was based on the best information available to staff at that early stage. No information available at the time the application was submitted was overlooked or withheld.

Once project estimates were further refined to a class 3 estimate, the Public Works Department identified in December 2012 a potential $20 million shortfall in the project budget, $5 million of which was due to unanticipated scope changes requested by the Province of Manitoba and subsequently cancelled through negotiation. A budget increase of $15 million was passed by Council in the 2013 Capital Budget, bringing the revised project budget to $69.7 million. The City Auditor concluded, �The revised Project budget is reasonable, based on the stated accuracy range for a Class 5 estimate in the 2010 Capital Budget.�

�The City values the opportunity to partner with the other levels of government on infrastructure projects and delivering our projects on-time and on-budget is a priority for us,� said Doug McNeil, Chief Administrative Officer. �We have been working with our federal counterparts to improve our participation in the New Building Canada Fund application process and have been working towards more precise estimates for funding agreements. We are committed to transparency, accountability, and improved project planning.�

The Waverley West Arterial Roads Project was completed on-time and within the revised project budget.

The audit outlines recommendations for improvements in planning and delivering major capital projects. The following improvements have been implemented:

  • Council enacted a new Asset Management Policy in January, 2015.
  • The public service has worked to develop a new Asset Management Administrative Standard, adopted on March 31, 2015, and new Investment Planning and Project Management Manuals to provide better guidance for capital project management. The public service worked collaboratively with the City Auditor to ensure that this Administrative Standard and these manuals help to address the Auditor's recommendations. The new Asset Management Administrative Standard specifies that â�œIn order to commence construction, Major Capital Projects must have either a â��Class 3' (or better) estimate that is within budget, or approval from the Executive Policy Committee.â��
  • The City's Cost Estimate Classification System has been reviewed and updated.

The following improvements are in progress:

  • Beginning in the 2015 budget process, all departments are required to include the project class estimate on each capital detail sheet in the Capital Budget. (Certain exceptions will apply, for example, capital program authorizations will not include a project class estimate as the programs are scalable.)
  • The Public Works Department is undertaking a review of current practices regarding engineering overhead recoveries from capital projects. We will use this analysis to develop a reasonable recovery mechanism based on current capital funding trends.
  • The public service is preparing a report recommending that the threshold for defining a Major Capital Project be revised from $10 million to $20 million as recommended by the Auditor to ensure that additional oversight resources are not spent on projects with lesser relative project risk.
  • The public service is working to better integrate our new capital projects management/asset management system, with departments.
  • The City's BuildWINNIPEG partnership task force, is also exploring opportunities to identify shovel-ready projects, which can be more precisely costed in advance of funding applications.

The audit report will be considered by Audit Committee at its meeting on Wednesday, May 13, 2015.

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