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Consultant urges municipal officials gathered in Corner Brook to regain control of capital project costs

Terry Hussey, chief executive officer of Vigilant Management, speaks to delegates at the Municipalities Newfoundland and Labrador conference being held in Corner Brook Thursday.
Terry Hussey, chief executive officer of Vigilant Management, speaks to delegates at the Municipalities Newfoundland and Labrador conference being held in Corner Brook Thursday. - Gary Kean/The Western Star

 

Among Terry Hussey’s pet peeves is the complacent attitude municipalities take when it comes to cost overruns on capital works projects.

Hussey, chief executive officer of Vigilant Management, was one of the speakers to present Thursday to delegates attending the Municipalities Newfoundland and Labrador conference being held in Corner Brook this week.

He noted that public projects have long been prone to being behind schedule and over budget. The average cost overruns for municipal capital building projects between 2012 and 2014 was a whopping 67 per cent.

Even worse, officials have come to expect overruns because that’s just the way it is.

With an image of The Joker burning a mountain of cash in the Batman movie “The Dark Knight” on the two large screens behind him, Hussey implored the municipal leaders to take better control of the costs incurred when doing capital works projects in their communities or risk not getting work done.

With little reprieve in sight from the tough economic times in Newfoundland and Labrador, Hussey said municipalities can expect to get less cash from higher levels of government for capital works and be expected to shoulder more of the cost-shared ratios.

The province is also getting away from its former practice of helping municipalities out when cost overruns are incurred on cost-shared projects, so those excess expenditures will soon become more of a municipal problem.

Recruiting and maintaining good municipal staff is getting harder with an aging and declining population and that doesn’t help things, noted Hussey. Nor, he added, does the fact more and more public works projects are winding up in courts because contractors are becoming more aggressive about making money in a weakened economy.

“Municipal construction in our province is in a bad place,” Hussey told the conference delegates. “Officials like you are being asked to do too much with too little help and if we continue to do things the way we always have, we will continue to get the same results.”

Hussey’s solution is for municipalities to use an owner’s project manager to eliminate inefficiencies in the process. The owner’s project manager represents the municipality’s best interests in all matters and takes the risk of scheduling and budget problems out of hands of the designers, engineers and contractors.

Hussey, who provided examples of how his company recently completed major projects on time and within budget, said overruns can improve when an owner’s project manager is used. In Massachusets, the state’s school building authority saw cost overruns of less than three per cent and scheduling overruns of around two days between 2013-’15 when using an owner’s project manager to build schools.

With the province changing the law regarding how public bodies can procure goods and services, municipalities will soon be required to use a competitive bidding process to acquire professional services such as design and engineering services. That, said Hussey, creates an opportunity for municipalities to get better services for cheaper costs.

Going the route of using an owner’s project manager, he said, will mean municipalities will have a better chance to get the same work done for less money or spend the same and get more work done.

“There’s an opportunity here for you to step forward and make a difference,” Hussey said.

(***This article was edited 03-11-2017 to more accurately reflect the context of cost and scheduling overruns statistics.)

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