I have, as many will know, been critical of the proposed and apparently council agreed, $51+million budget and essentially open-ended cost aspects of the RCMP building project.
I have also argued that the Integrated Project Delivery system and partner companies involved, chosen and approved by mayor and council through unknown and possibly non-competitive means, to design/manage/build the facility is, in and of itself, a contractual ‘Risk Avoidance’ method for the hired project team at the expense of the owner/client and ultimately the taxpayers.
This is often accomplished through proposing, and obtaining, owner/client agreement of a budget so high or including contingencies so large, as to negate most chances of overruns, either of time or cost. In this case a construction budget, excluding land, of $48 million at $982 per Gross Square Foot compared to an average for five others averaging $559 per GSF, that is a 75 per cent cushion from the outset.
However, should a cost overrun, or other event occur for whatever reason, the council as owner/client and integral party to the IPD contract is equally responsible for a share of such. There are now, somewhat complicated, new CCDC documents for such IPD contracts and eventualities, but note that the end result, as opposed to the traditional design/competitively bid/construct system, is that the owner/client, representing in this case the interests of we the taxpayers, now assumes partnership costs and risks, previously carried separately and bonded by others.
I am unsure of the obligations of the parties to such contracts, with regard to provision of Bid Bonds, Labour & Material Payment Bonds and Performance Bonds normally demanded for projects of this size by the ‘Surety’ market and provided to the owner/client, not by them.
In a short synopsis by Thomas E. Kennedy in 2016, he makes a number of observations regarding IPD from the owner/client’s perspective, some of which are very applicable here:
1. IPD requires an owner/client who can, and will, provide strong leadership, with clearly defined goals and a detailed knowledge of the construction process. Although such knowledge and leadership skills are requirements of the owner/client for any form of successful project delivery, with IPD all budgeting and scheduling ultimately requires the owner/client’s thorough understanding, commitment and agreement of the process and costs at each stage. I am unsure North Cowichan possesses these skills.
2. IPD requires an owner/client capable of professionally evaluating and selecting each of the participating companies, senior team members and staffs of each party to the multi-party IPD contract. This is particularly true since each must be very transparent at every stage and able to share the risks. It is questionable whether evaluation of either the IPD process, or of other possible professionals was carried out since the appointment(s) took place a year ago with little public notice.
3. Each company and signatory to the IPD becomes jointly responsible for the actions of the other signatories and accepts the risks undertaken, including Professional Liability, General liability, WCB compliance, Code Compliance and Claims submitted, etc. These require definition and prior agreement legally and contractually by all.
4. If, and only if, the questions above, and any others are agreed upon, the IPD partnership has to be insurable.
5. Because of the potential for unique risks, created by IDP, each owner/client should only enter such form of contract with professional good guidance. Even the best of team members can make mistakes, or be subject to the failures of sub-consultants and contractors. Just as would be the case in any system the owner/client should be aware of all the risks and rewards, manage for the best but be fully prepared for the worst. We the taxpayers have seen little to assure us that these strictures have been followed.
I post this with the best of intentions and highest of hopes.
Allen J. Willcocks,