‘Perfect storm’ confronts trade centre expansion and budget shortfall likely
Jeff Lee
Sun
The area next to the seaplane terminal has been filled in with the convention centre expansion’s foundation. Photograph by : Mark van Manen, Vancouver Sun
VANCOUVER – The massive $615-million Vancouver Convention Centre expansion, now halfway through its four-year construction plan, may need more money from the provincial government, Tourism, Sports and the Arts Minister Stan Hagen has acknowledged.
But he said the extent of any future cash infusion won’t be known until later this year or early next year.
Hagen said the government company handling the redevelopment of the Vancouver harbour west of Canada Place is working continuously at trying to keep project costs down, but is also being pushed around by price escalations in materials and labour.
“I don’t think they know whether they will need more money until later,” Hagen said Friday. “At this point they are trying to be mindful of the costs, and they are trying to keep them under control.”
He said the government has made no pledge to invest more money beyond the $272.5 million it has already committed.
But he said it also knows the project must be completed on time for the 2010 Winter Olympics, so Victoria may need to invest more if the costs can’t be contained within the current budget.
Hagen made the comments after Ken Dobell, chairman of the Vancouver Convention Centre Expansion Project company, told The Vancouver Sun he is unable to say whether it will be built on budget. He said the development continues to face extraoZrdinary pressures that make it hard to keep the project under control.
“It’s big, it’s complicated, it’s challenging and it’s being built at the worst possible time in the marketplace,” Dobell said. “It is in many ways going well, but it is being built at what the construction industry would call the time of the perfect storm.”
Dobell, Premier Gordon Campbell’s former deputy minister, said the convention centre project is “a little bit late” by perhaps two or three weeks, but he’s optimistic it will be finished by late 2008.
He repeatedly refused to answer whether the project is on budget, leaving open the possibility taxpayers will be asked for even more money.
Dobell said a report is being prepared for the Treasury Board for later this month or early next year that will clarify the project’s financial situation.
“We’re reporting back to the government where we stand on budget and on schedule, as part of the regular report to Treasury Board. At this point I am not going to speculate about where we will be or what we will be reporting to the government. That is something for the government to report after we’ve talked to them.”
Dobell said he’d “like to be able to [say] that the world is perfect; the world is never perfect and there are always issues to deal with. And I have to report those [to Treasury Board] first.”
One of those issues will likely be the flat refusal by the federal government in September to consider contributing more money to the project.
In September, Dobell approached Louis Ranger, head of Infrastructure Canada, to ask for more money. It was the second time in six months he’d approached the federal government, he said.
“I was looking for some opportunity for the federal government to participate in some of the cost increases,” he said. Before he could discuss how much money was needed, Ranger told him the answer was no.
Under the current funding agreement, Ottawa and the province each provided $222.5 million, with Tourism Vancouver contributing $90 million through a hotel tax, and $30 million to be generated through private management contracts. In September 2005, the province kicked in an additional $50 million, increasing the overall budget to $615 million.
But the project continues to be beset by a series of issues that have affected the entire construction industry in B.C.
They include rampant price increases for steel and concrete and a shortage of skilled labour. The project insulated itself somewhat from some increases by locking in some steel and concrete prices early on, said Russ Anthony, the convention centre expansion project’s president.
The sheer size of the development, and the place it is being built, present unique problems, Anthony said.
It is the equivalent of building a 400-house subdivision and is being built over both water and former industrial land filled with remnants of concrete, wood and steel.
Asked if the convention centre expansion would be reduced in scope to save costs, Dobell said that was no longer an option because the massive platform for the building has already been installed. The facility’s first official use will be as the media and broadcast centre for the Vancouver 2010 Winter Olympics.
New Democratic Party MLA Harry Bains said taxpayers should be surprised and angry if the project is planning to ask the province for more money.
He said the project should not cost taxpayers more and that he believes it is suffering from poor management.
“If they are over budget on the convention centre, it is because of mismanagement and incompetence,” he said.
The private sector is still able to build major projects despite market conditions, he said. “If this was the case in the private sector, then no one would be able to come within budget. But that’s not the case.”
Bains said that like the Olympics, which increased its construction budget by 23 per cent at taxpayers’ expense, the convention centre has become a major drain on the public purse.
“It isn’t any surprise to me if they are considering going back to Treasury Board asking for more money.”
The possibility that more tax dollars will be needed comes on the second anniversary of the start of construction on the project.
The convention centre will be the largest building of its kind in B.C., with costs exceeding even the Olympics’ $580-million venue construction budget.
Two years ago, workers began tearing down the old wharves next to Canada Place in preparation for the installation of more than 1,000 steel and wood piles that will support the 1.1-million square-foot convention centre.
The piledriving job fell five months behind schedule because of complications, including the discovery of massive boulders, discarded concrete and the shell of an old Customs house buried deep in the mud.
“There was just an incredible amount of material we had to contend with in this disturbed area,” Anthony said.
Piledriving was completed in May and the concrete foundation is now almost complete. That’s good news, as far as Anthony is concerned.
“Getting up out of the water is a major step. It now turns this into a regular building project,” he said.
Anthony said the project will quickly get back on schedule, as the entire project is being built in overlapping phases from east to west, he said. Workers are already erecting the steel structure at the east end of the platform as the concrete platform is being finished on the west side.
The project has had to cope with a severe shortage of equipment; two of the four cranes being used to build the platform and erect the steel had to be shipped in from Germany. Anthony said the reconstruction program in hurricane-devastated New Orleans created a shortage of large cranes.
Skilled labour is also in short supply; there are seven provinces represented in the 200 employees on site, and the project is having to pay a housing subsidy to many of them to prevent them from working elsewhere.
Anthony said his office struggles daily with trying to keep costs down, and has tried to lock in needed commodities where possible. For example, it ordered much of the 20,000 tonnes of steel needed directly from steel mills, and also bought concrete at fixed prices before a concrete installer was hired.
The project managers have also scaled construction to take place in overlapping waves in order to keep the project rolling along smoothly, Anthony said.
For example, steel fabrication of the building is already starting on the east side of the platform, while the concrete slab is still being laid at the extreme west end. The glass walls will be installed starting next spring on the east, as building fabrication moves west.
MASSIVE PROJECT
A look at some of the stats that indicate the scope of the convention centre expansion.
Site size: 9.2 hectares
Total floor area: 77,000 square metres (convention centre: 48,000 sq. m.; exhibition hall: 21,000 sq. m.; retail and services: 8,700 sq. m.)
Steel building piles: 898
Foundation deck concrete: 25,000 cu. m.
Foundation deck reinforcing steel: 6,200 tonnes
Structural steel: 20,000 tonnes
Labour force onsite: 200
Vancouver Convention Centre Expansion Project
© The Vancouver Sun 2006
