When news broke on March 13 that the Johnson Street Bridge replacement project had ballooned from $77 million to $92.8 million, critics of the project wondered how long staff were aware of the problem.
Documents obtained by the News through the Freedom of Information and Privacy Protection Act reveal City of Victoria staff had a good sense for the escalation by Jan 6.
Assistant finance director Susanne Thompson advised in a memo that it was “critical” to inform council as soon as possible. She confirmed $8.4 million in additional costs and said a preliminary review of the data suggested more unconfirmed costs would bring the revised budget estimate to $91.25 million.
On Jan. 12 Thompson elaborated her findings in an email to project director Mike Lai and advisor Bill Larkin. In it, she pinpointed Feb. 16 as a likely date to present the information to council.
“In order to meet that deadline, all additional costs and related decisions (procurement, legal, insurance) will have to be clarified and decisions made by the end of next week – Jan. 20,” she wrote.
But instead of advising council at the first available date, staff waited more than two months to present the report.
Both council and the public learned of the $15.8-million cost escalation days after the federal government announced a $16.5-million grant for the Johnson Street Bridge.
Coun. Lisa Helps speculates the timing may have been strategic, relating to the funding announcement. If so, she said, “that should worry us.”
“That actually may well be a strategically good decision to make, but that is council’s prerogative to make that decision,” Helps said.
Part of the reason for the delay is explained in a Jan. 18 email from finance director Brenda Warner to Lai.
“In discussions with Gail (Stephens, city manager), she is clear that she only wants to go to council once for a budget amendment for this project, so I would encourage you to identify any other additional resources you need to manage this project, and to ensure that appropriate levels of contingency are included,” Warner wrote.
The process of pinning down exact budget requirements took longer than desired.
Well into the first half of March, many emails were sent between the bridge and finance departments seeking clarity on accounting procedures and other budgeting refinements.
As late as March 7, the project estimate was $95 million.
Part of the problem in pinning down a correct estimate could be attributed to a lack of expertise. “From a Finance perspective it is imperative that someone with high-level financial experience is dedicated to this project to assist the Project Manager,” Thompson wrote in her Jan. 12 email.
Director of communications Katie Josephson confirmed an in-house certified general accountant has been assigned to the project.
In an emailed statement, she said the delay in notifying council can be attributed to due diligence, as staff needed to confirm additional costs through a value engineering analysis.
“The initial numbers were preliminary and were informed upon further extensive review,” Josephson said.
“It was necessary to confirm all project related costs to ensure the accounting and estimates presented to council were accurate and current.”