Harbour Clean-up Overruns!!

The recent announcement by the city of St. John’s that the Riverhead wastewater treatment plant is an estimated $44 million (47%) over budget needs more explanation than already provided. Estimated cost is now pegged at $137 million.

It is not the project that should be questioned, but the cost analysis process that went with the project.

The final project budget of $93 million was settled on because it is the mid-point of initial estimates for the cost of the project that ranged from $70 million to $116 million – the standard practice when seeking federal and provincial funds for a project is to take the mid-point of cost estimates.

This is the first alarm bell. Why is there a $46 million range in the estimates of the project? What were the variables associated with this project that necessitated such a broad range in the estimates? Using the lower range figure of $70 million, the project is headed for a doubling of it’s cost. It also means that right from the start of the project the municipalities (St. John’s, Mount Pearl, Paradise) were willing to accept cost overruns of up to $23 million. Were their citizens made aware of this?

Obviously the estimate of $116 million was closer to the mark but even this incurs an overrun of $21 million (18%).

While it is difficult to estimate some costs on projects of this size and duration, the overrun for the project seems excessive.

I acknowledge that some of the above costs include expenses that weren’t included within the original estimate. But this in itself raises questions. Additional costs ($3.6 million) were incurred because the city had to work around infrastructure that impeded the route of the interceptor sewer. Why was this not known? Doesn’t the city have diagrams/plans of its infrastructure? And nearly a million dollars was incurred because of site issues. Surely the site should have been the first thing finalised and costs known.

Citizens of the three municipalities deserve answers to the above queries. We also deserve to know who was involved in performing the cost analysis and who signed off on the project before it went to the respective councils. We also need to know if respective councillors challenged/queried any of the initial estimates and why they were willing to let their citizens incur such overruns?