Vancouver Sun, Page B01, 14-Apr-2000: SkyTrain is on a risky track, study finds

By Craig McInnes, Sun Legislature Bureau, with file from Harold Munro

VICTORIA -- The provincial government put SkyTrain on a risky track by announcing the project before the money was in place and starting to build it without knowing the operation and maintenance costs, according to a major review of capital projects released Thursday.

The Deloitte Consulting review, which was commissioned by Finance Minister Paul Ramsey in the wake of the fast ferry fiasco, found major flaws in the way the government plans, launches and monitors billions in construction construction projects.

``We did find some good practices, but they were the exception,'' Peter Strum, a partner in Deloitte Consulting, told reporters at a briefing Thursday.

The review was commissioned after the cost of the fast ferry project ballooned to more than $460 million, from its original budget of $210 million, before the government noticed it was running out of control.

The report outlines an 18-month plan to revamp the way major capital projects are handled and Ramsey said the plan will be implemented.

Deloitte looked at nine capital projects worth $2.7 billion, including the failed Vancouver Trade and Convention Centre and the first phase of the SkyTrain extension.

SkyTrain was launched before it had been approved by Treasury board, the Deloitte report found. Then, in the rush to get the project started, normal approval procedures were rushed or cut completely.

There is still no operations and maintenance contract.

``Proceeding without this agreement in place represents a major cost risk,'' the report said.

Coquitlam Mayor Jon Kingsbury said Thursday the province wrote the operation and maintenance agreement with Bombardier as part of the over-all SkyTrain expansion deal and left TransLink to sign and pay for it.

Kingsbury, the TransLink director responsible for overseeing municipal involvement in SkyTrain, did not know the current status of negotiations with Bombardier.

The SkyTrain project is currently about four months behind schedule, but Graeme Bowbrick, the minister responsible, said he is confident it will be built on budget and be ready for paying passengers by the end of 2001.

``I'm very confident that the project is on track,'' Bowbrick said Thursday.

Bowbrick argues that SkyTrain won't be a disaster like the fast ferries because it is using proven technology and does not have open-ended contracts.

``That means the risks are borne by the contractors, not the taxpayers,'' he said.

Despite the criticisms of the way the SkyTrain extension was launched, the report praised the way it is reporting progress, but the Deloitte spokesman said he could non gauge whether SkyTrain will turn out to be another fast-ferries disaster because the company did not audit the project.

Liberal finance critic Gary Farrell-Collins said there is reason for concern.

``The same process was used early on, it was announced before it was funded, it was announced before it had gone through treasury board and I think we should be very nervous about what's there,'' he said.

Farrell-Collins called the Deloitte report a damning indictment of lack of management ability, lack of oversight, really irresponsible planning of multi-billion dollar budgets.

``It's affected health care delivery, it's affected transportation delivery, it's affected education delivery and the worst part of it is this isn't the first time we've had a report like this.''

One troubling finding is that health care construction projects are more problematic than others. Ramsey, a former health minister, said the problems stem from the number of interests that have to be satisfied.

``Unlike schools, most hospital projects have multiple funders, multiple interest groups and multiple levels of governance,'' said Ramsey, who declined to comment on whether the cumbersome structure is also affecting the operation of the health care system.

The report criticized the government for starting work on the failed Vancouver Trade and Convention Centre without knowing the final costs, without a commitment from the federal government and without a clear ownership agreement with the partners. The province wrote off $72 million when it pulled the plug on the project last fall.

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