Thursday, January 05, 2006

Richter Report – January 5, 2006 – Over Budget & Out of Control (Part3of3)

Over-Budget & Out-of-Control: Diary of the Township Grandstand Project – Part 3

Solutions (Third & final of a 3 part series)

A project that was estimated to cost $3.0 Million two years ago is now costing $5.2 Million. Of this, Township taxpayers are on the hook for $3.0 million instead of their original $800,000 share – a 300% increase. So what can we do to stop financial disasters like this from happening again?

Here are my suggestions. (Any others would be welcome and are obviously needed).

1) Council should be prepared to say “NO” to budget increase requests and, if necessary, stop projects immediately without hesitation. Council should not be seduced into ever-increasing budgets.
2) A budget should be sacred and consequences clear. This new culture must prevail.
3) Council must be always assured of securing firm fixed prices under all circumstances in future and not be coerced into entering design-build contracts, especially in very active and inflationary construction times, and never on large and unique projects.
4) Contracts with co-sponsors should clearly state that all parties share all costs and cost overruns.
5) In light of this and other recent dramatic cost increases, Council should severely curtail and restrict new projects for the next few years until the Olympic construction boom cools down. We don’t have to build everything today. We can wait for more favourable cost periods.
6) A separate level of independent cost surveyor reporting to the Council should be employed on large and unique projects.
7) Finally, we should strike a joint public-township task force to investigate this specific project and all similar capital projects in the Township. In addition to a senior Township administrator and a member of Council, this task force should be comprised of competent, capable and independent individuals experienced in construction, contracts, design and cost accounting. They should be charged with reporting causes for overruns on budgets, and recommending policies & procedures for courses of action to prevent and eliminate overruns in the future.

Township taxpayers cannot be expected to continually suffer increases in tax rates to pay for over-budget spending. The gravy train must end.


(Part 1) (Part 2) (Part 3) to see 3 part series

Kim Richter is in her 3rd term as Langley Township Councillor and also is a Professor of Business at Kwantlen University College. She holds a masters degree in health administration and was a health care management consultant.

No comments:

Post a Comment