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Governments get frank assessments

It was almost a year ago, last November actually, when VANOC made its request to the federal and provincial governments for an additional $110 million to cover the rising capital costs of Olympic venues.
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It was almost a year ago, last November actually, when VANOC made its request to the federal and provincial governments for an additional $110 million to cover the rising capital costs of Olympic venues. And it took until August before Prime Minister Stephen Harper finally came to Vancouver and announced the federal government would put up its half of the additional money.

Why the nine-month delay in approving additional funding for a project when the two governments really didn’t have any choice in the matter? The federal government’s announcement last week that it wants its own audit of VANOC is a clue.

VANOC’s request for more funds was made when the previous federal government was ready to fall. It wasn’t until January that the Conservatives could form a government and review the request.

Both the feds and the province have representatives on the VANOC board, although the federal representatives are still all appointees of the previous Liberal government. But both governments wanted independent, arm’s length assessments of VANOC’s operations and its request before agreeing to put up another $55 million each. And the Conservatives wanted their own report, rather than partnering with the province, so two assessments were done. Both were made public last month and, with a third report produced by B.C.’s acting Auditor General, Arn van Iersel, the trio of papers raise a host of concerns.

The report for the federal government, the Due Diligence Review of the 2010 Winter Games Venue Program prepared by Pacific Liaicon and Associates Inc., a member of the SNC-Lavalin Group, is particularly damning. It found that most of the contingency included in the $580 million capital budget — about $100 million — had already been consumed. In fact, there was only about $13 million left in the contingency fund. “Our past experience in managing large projects is that the contingency starts coming into play in the construction and check-out stages of the project, not in the beginning of the conceptual engineering stage,” the authors wrote.

“All of the information we have reviewed seems to have lumped contingency and escalation together.”

At the time the report was published only three venues had completed or were close to completing their engineering — the UBC hockey arena, the Whistler Nordic Centre and the Whistler Sliding Centre.

The harshest criticism was reserved for the senior vice president venue construction, a position that the authors wrote, “…requires a person who has managed projects of similar magnitude and complexity and whose total focus would be in personally driving the design, engineering, procurement, construction, cost, schedule, safety and quality to completion.” They also made clear that a new senior vice president of construction should be appointed.

The report was published May 19. Late in the afternoon of May 18 VANOC sent out a release saying that Steve Matheson was no longer in charge of venue construction and Dan Doyle was the new man responsible.

The provincial government’s report, produced in August by Partnerships B.C. and released last month, is not as plain spoken but it led to a new Performance and Accountability Agreement with VANOC. Partnerships B.C. also recommended VANOC continue to complete project definition reports and project evaluation plans for all venues, including a complete quantitative risk register, by Oct. 31, 2006. An updated report on the total capital costs of venues is also required by Halloween.

One other recommendation of note was that VANOC “seek further opportunities to change scope, design and delivery options around the venues to reduce costs.” You may recall that it was in late August VANOC representatives appeared before council to request that Whistler drop the Paralympic sledge hockey arena. By moving the sledge hockey to Vancouver VANOC, of course, saved several million dollars.

The acting Auditor General’s report, the last of the three big reports, received the most media coverage when it was released last month because it put the total cost of the Games at $2.5 billion, rather than the $1.4 billion figure that the provincial government had been using. Van Iersel’s report delved into the accounting of the Games and related projects, including how estimated costs for each venue had escalated since 2002 (the Whistler Sliding Centre leads the way, increasing nearly 94 per cent, from $52 million to $100 million). But the Auditor General was primarily interested in the province’s financial exposure — as the B.C. government is the ultimate guarantor of the Games — rather than the workings of VANOC.

The trio of reports are wake up calls for the federal and provincial governments, VANOC and taxpayers. Accountability, one of the Conservative government’s favourite topics, is a common theme running through all three reports. And with VANOC required to answer more questions by the end of the month, and its long-awaited business plan expected next month, the federal and provincial governments are holding the organization accountable.

But all this information came out only after independent assessments were done on behalf of the provincial and federal governments and B.C. taxpayers.

Whistler, too, has a stake in the Olympic preparations. Two of Whistler’s guiding principles for involvement in the Olympics were that the Games: “Result in the creation of legacies which are of lasting value to the residents and businesses of the Resort Municipality of Whistler” and “Add lasting value to the Resort Municipality of Whistler.” Whistlerites have, to date, had no way to assess if that is happening.