The Northwest Territories government failed to manage the key risks of building the Deh Cho Bridge with a private company, resulting in construction delays and rising costs, says federal Auditor General Sheila Fraser.
Releasing her audit of the $182-million bridge mega-project on Tuesday, Fraser said the agreement between the N.W.T. government and the Deh Cho Bridge Corp. was not even a public-private partnership to begin with because the government had assumed all the major financial risks.
The bridge, which is being built across the Mackenzie River near Fort Providence, N.W.T., had been touted as a public-private partnership between the territorial government and the bridge corporation, a business entity that was created by the First Nation and Métis governments in Fort Providence.
But Fraser said the bridge project was, in fact, a publicly funded project all along because the Deh Cho Bridge Corp. did not have its own money at stake.
"When you have a public-private partnership, it is important that both partners assume risk as well as assuming reward," Fraser told reporters Tuesday afternoon in Yellowknife.
"The community — the Deh Cho Bridge Corp. — really never assumed risk. They had very little financial capability, and the government even assessed that their technical ability was limited…. I think the risks really were on the government from the very beginning."
Unresolved design issues criticized
The bridge project's risks went up significantly when the government allowed construction to begin in the spring of 2008, even before the bridge's design was approved.
Fraser said the government should never have allowed construction to start without an approved design, and it was those unresolved design issues that caused the delays and cost increases.
"While it was initially presented as a $55-million project, the government now says it will cost $182 million," Fraser said in a release.
The N.W.T. Transportation Department took over the whole project last year, after the Deh Cho Bridge Corp. was declared in default of a $165-million government-guaranteed loan.
Fraser's audit says the department has since "put a framework in place to manage the key risks" but "some of the risk mitigation measures are too general to be useful."
Could cost more than $182M
Fraser launched her audit of the Deh Cho Bridge last year, at the request of regular N.W.T. MLAs that were concerned about the project's rising costs and construction delays.
Currently slated to open in November, the Deh Cho Bridge will provide a year-round road link between Yellowknife and other communities in the N.W.T.'s North Slave region and southern Canada.
'I will not be surprised if the final cost of this bridge is more than $182 million.' —Sheila Fraser
But Fraser said there is still a risk of the bridge not opening on time, and a good possibility it may cost more than the $182 million currently estimated.
Fraser said an engineer needs to sign off on the project to ensure it meets bridge standards. As well, she said government officials have not budgeted, for example, the costs of cleaning up contaminants on the construction site.
"I can tell you, in all honesty, that I will not be surprised if the final cost of this bridge is more than $182 million," she told reporters.
"It will depend on how the government eventually calculates all the costs and what they include or don't include in the bridge project, but I don't think any of us should be surprised if it does go over that amount."