May 7, 2018 Financial Report on Alice - Dundas Street Project

The BDO auditor (Trina Connell) and the Brighton Director of Finance and Administrative Services (Linda Widdifield) attended the May 7, 2018 Council Meeting.  The original intent was that Widdifield’s 105 page report (Timeline Report for Alice and Dundas Streets Construction and Payments) would be discussed in a closed session in the presence of the BDO auditor.  Councillors Baker and Martinello made a motion that the report be discussed in an open session.  This received unanimous support from Council and so it was moved to an open session.  It is not clear why but there is NO audio record of the proceedings.

Under questioning from Coucillor Baker the auditor was asked if she still felt this was a “tracking issue” as reported in her March 15, 2018 letter.

“Through discussion with staff it was determined there was no process in place to track costs throughout the project. A cost analysis was not performed until after the project was complete when certificates had already been approved and the holdback was released. The absence of this process prevented cost overages from being identified and followed up on in a timely manner.”

The auditor responded that she had not read Widdifield’s report. Council then recessed to give the auditor a chance to read the report.  After reading it, Connell stated that she would be retracting this statement and altering her report. It seems the Auditor had simply restated information provided to her during her so called audit.

Widdifield’s report is available here Alice - Dundas Financial Analysis. This version doesn’t include the financial attachments (e.g., certificates and payments).  Many of the attachments are illegible.  If you wish to see the document in its entirety, it is available on the Brighton website 2018-05-07 Meeting Agenda (Alice and Dundas Streets Construction and Payments).

There are still a number of unanswered questions and anomalies in the documents produced so far.  These will be addressed at a later date after the BDO auditor issues a revised report.

It is concerning that Widdifield would seek to downplay this error by suggesting that the Municipality was “not over budget for 2017, but had one project run over the approved cost.”

The other issue is how change orders were handled.  According to Widdifield’s report each certificate had the following change orders:

  • Certificate 1 ($11,688.13) Reason: “sand fill to replace unsuitable backfill”
  • Certificate 2 ($21,954.30) Reason: “sand fill to replace unsuitable backfill and storm system changes.
  • Certificate 3 ($38,159.59) Reason: “sand fill to replace unsuitable backfill, storm water changes and storm CCTV”
  • Certificate 4 ($19,773.37) Reason: “winter heat for concrete, sand fill to replace unsuitable fill and storm system”
  • Certificate 5 ($13,024.74) Reason: “winter heat for concrete, sand fill to replace unsuitable fill and storm system”
  • Certificate 6 ($6,589.11) Reason: “storm system”
  • Certificate 7 ($45,244.36 Reason: “sand fill to replace unsuitable backfill, storm system and retaining wall/landscaping”
  • Certificate 8 ($46,740.00) Reason: retaining wall at 82 Alice Street”

A change order is a document used to record an amendment to the original construction contract. Change orders create a record of additional services being provided to the Municipality, along with the cost for those services.

Based on the change order information provided, every Certificate exceeded the budgeted amount that was in the original contract. 

April 16, 2018 - Report on Alice & Dundas Street Reconstruction - Extras

On April 16, 2018, the Brighton Manager of Capital Infrastructure submitted a report to council titled “Alice and Dundas Street Reconstruction – Extras".  This report indicates that there was a surprising lack of knowledge or understanding of what was involved in this project.  The report provides no insight into the lack of project oversight.  A copy of the report is available here Alice & Dundas Reconstruction Extras

Based on the information in the report, the project scope did not allow for:

  1. replacement of excavated soil that was deemed unsuitable
  2. connection of storm sewer laterals that serviced residential roof drains and sump pumps
  3. heating concrete to aid the curing process during winter months
  4. removal and replacement of the Health Unit emergency exit stairs
  5. removal and replacement of the Town Hall retaining wall to get at underground infrastructure
  6. adding a water valve at the intersection of Alice and Elizabeth Street (This required the installation of a live tap so that area residents would not be without water during the installation of the valve)
  7. a geotechnical investigation of ground conditions prior to the start of the project
  8. a Closed Circuit TV (CCTV) inspection of the underground infrastructure prior to starting the project
  9. “staff and the contractor … speaking to the resident frequently”

Things that should have been (but weren’t) addressed by this report:

  1. How does a project get to the tendering process without a proper engineering study? Was an engineering study even done?  If so by whom?  Apparently the RFP included an item for the “Survey, Design and engineering drawings for the project”.
  2. How many companies submitted tenders? What were the tender amounts? Was there any disparity in the amounts that might have raised a red flag?
  3. Why did Council ignore Staff’s recommendation that the tender be awarded to Behan Construction and insist that it be awarded to Cobourg Development Services (CDS)?
  4. Before putting a shovel in the ground, the CDS tender was over the staff estimate for the project by $218,006.16. Why did this not ring alarm bells?
  5. Six months into the project, staff came to council with discovery work (replacement of the large diameter storm sewer pipe) that added an estimated $170,000 to the cost of the project and effectively wiped out the $60,000 contingency. Why did this not raise questions about the scope of the project?
  6. Why did the discovery of storm water laterals and the need for an additional water valve not raise a red flag and prompt a briefing of council ESPECIALLY since there was no contingency left?

March 19, 2018 Brighton Rehabilitation Project Overspent

There was a surprise announcement at the March 19, 2018 Brighton Council meeting.  Apparently the Alice - Dundas Street rehabilitation project (completed in 2017) was over budget by $234,800.  This came as news to the Coucillors who normally would be given an opportunity to review and approve significant changes to a project's budget.  The details are slowly emerging.  Updates will be posted as more information becomes available.

This is the information available so far:

This newspaper article was written by Sarah Hyatt for the Brighton Independent 2018-03-21 Brighton Independent Article on Overspending

This is a memo from the CAO Bill Watson that was part of the Council meeting agenda (CAO Watson was not in attendance at the meeting) 2018-03-19 CAO Memo "Auditors Report Capital Project Control"

The Financial Audit company (BDO) wrote three letters to the Municipality regarding what they found out about this project during their audit

The audit company was apparently seeking comments from the Municipality to ensure that they properly understood the situation they had analyzed.  BDO made a number of recommendations to help the Municipality avoid making similar mistakes in the future.

This is an audio recording of the presentation made by Trina Connell (BDO partner) summarizing their findings with respect to the overspending on the Alice - Dundas Rehabilitation Project.  The audio is just over 46 minutes long.