October 30, 2007

Auditor’s report warns Vancouver convention centre expansion costs could escalate

SCOTT SUTHERLAND

The Canadian Press

VICTORIA

British Columbia’s spending watchdog is warning Vancouver’s grossly over-budget convention centre expansion project could face more cost escalations before it’s finished in 2009.

Further overruns on the iconic convention centre are not out of the question, acting auditor general Errol Price said in a report tabled Thursday in the B.C. legislature.

“Although the latest approved budget is for $883.2 million, there is no guarantee that this will be the final cost,” Price said in his 72-page audit of the way the mega-project on Vancouver’s waterfront is being managed.

That’s because estimates of future costs are based on future events.

Price said the project has been plagued by problems from its outset in 2000, when the original cost estimate was pegged at $495 million.

The federal government came on board with a fixed contribution of $222.5 million and Tourism BC committed to a further $90 million, based on hotel tax revenues.

The province initially matched Ottawa’s contribution, but was left in the position of having to approve and fund any budget overruns.

A decision to turn the expanded facility into a showcase for the 2010 Winter Olympics and to use it as the Games’ international media centre expanded the scope of the project and put it on an accelerated completion schedule that forced up costs, the report says.

Price said the B.C. Liberal government’s failed attempts to find a private partner further saddled taxpayers with unanticipated risks.

In an interview, Price said costs ballooned because actual construction began before designs were finalized.

Price also said no one could have predicted the huge effect inflation, initially calculated at about four per cent annually, would have on the project.

In reality, construction inflation in the early days was running closer to 10 or 11 per cent, the report said, and between 2002 and 2006 the cumulative inflation rate was 47 per cent.

Price also criticized the way progress was being reported to the project’s board of directors, saying it was incomplete and presented a “rosier picture than was actually the case.”

B.C. Finance Minister Carole Taylor repeated his pledge last July that the approved budget of $883.2 million would be the “final number.”

The Opposition used Price’s report to snipe at the project.

“This project was mismanaged by minister after minister after minister after minister,” complained NDP leader Carole James.

“Four hundred million dollars over budget and this government still refuses to hold anyone accountable.”

The B.C. arm of the Canadian Taxpayers’ Federation was also critical of the way the entire project has been handled.

“I think it’s a wake-up call for taxpayers to realize that governments are just not good project managers,” Maureen Bader, the organization’s provincial director, said in a release.

Canadian Press

Print | Email | Comment