Projected construction costs for a mere parking lot at a Hamilton seniors housing complex have ballooned from $350,000 to $1.1 million, in what one city councillor calls a "disastrous" case of mismanagement and miscommunication.
'We're not spending $1.1 million on a parking lot.' - Donna Skelly, Ward 7 councillor
A new report to council shows consulting and construction work for a parking lot at a CityHousing Hamilton (CHH) property at 395 Mohawk Rd. E. drastically exceeded its price tag through a combination of not getting written quotes, and not knowing exactly what the project would cost or where the money to pay for it would come from.
The social housing agency hired an out-of-town consultant — without getting competitive bids — for $9,950, says a report from Charles Brown, the city's director of audit services.
Then miscommunication meant the consultant had to do more work without a written contract.
Now, the city has already spent $115,325 without a shovel in the ground, said Coun. Donna Skelly of Ward 7.
"It was an absolute unmitigated disaster," said Skelly. "Nobody was watching who was spending the dollars and how much was being spent."
"We're not spending $1.1 million on a parking lot."
'How often does this happen?' - Donna Skelly
Brown's report — the second damning report this year about how the city uses consultants — outlines what happened.
CHH hired a consulting firm in late 2015 for $9,950 without getting three written quotations, he said.
There was no written agreement on what work the consultant would do. But council approved spending $350,000 in Ward 7 area rating dollars for the project.
Within a month, it "became apparent there had been a misunderstanding" around who was responsible for design and construction when it came to a nearby intersection and traffic signals by the lot.
So the consultant revised its work with a new price tag — $115,325 — which CHH approved, but still not in writing. It also didn't reevaluate the business case of the project, Brown said, or know where the money would come from beyond Ward 7 area rating.
The new cost of the parking lot, the consultant said, is $1,178,000 plus HST.
That price includes the following:
- $274,000 to relocate the parking lot entrance.
- $400,000 on work on the Mohawk Road intersection.
- $107,100 in contingency money.
- $297,000 to expand the parking lot.
CHH is reviewing its procurement policies now. Skelly, who was elected in 2016, said council never would have approved a $1.1 million parking lot.
'How often does this happen?'
City council's audit, finance and administration committee will discuss the situation on Wednesday. Neither CHH CEO Tom Hunter nor president Chad Collins could be reached for comment Friday.
Brown has already written about the city's shoddy use of consultants.
In an April report, he said the city overspent on consultants by 67 per cent in 2016, and 101 per cent in 2015. His report also showed drastic cost overruns, multiple budget errors, poor oversight and about $34 million in capital costs incorrectly categorized as expenses.
Skelly worries the CHH parking lot is one example of a bigger issue.
"We just happened to uncover this," she said. "How often does this happen?"