September 20, 2006

SEA-TO-SKY HIGHWAY IMPROVEMENT PROJECT

Construction work continues on the Sea-to-Sky section of Highway 99, which winds its way through the spectacular Coast Mountains, linking communities from West Vancouver to Whistler

OLYMPICS

Mega project costs spark controversy

IAN HARVEY

Correspondent

The Vancouver Olympic Organizing Committee (VANOC) has agreed to new performance and accountability standards in response to an Auditor General’s review that suggests the mega project is about to implode on its budget.

“We have reviewed the reports in detail and have taken steps to enhance accountability and set clear reporting and management requirements for VANOC’s venue development program through a Performance and Accountability Agreement,” said B.C. Economic Development Minister Colin Hansen. “The agreement outlines how the province and VANOC will work together to reduce financial exposure to taxpayers.”

But another report released last week by the federal government casts further doubt on the budget’s viability.

“Whether the revised enhanced ($580 million) budget will be sufficient to deliver a venue package that meets (International Olympic Committee) satisfaction is questionable,” warns the report by Pacific Liaicon, a subsidiary of the construction firm, SNC-Lavalin Inc.

Such dire predictions of more cost over-runs for the Vancouver 2010 Olympic Games shouldn’t be a surprise to anyone, say stakeholders.

“No Olympic games is on time and on budget, but we’re determined to do the best we can,” said Wayne Peppard, executive director of the British Columbia and Yukon Territory Building and Construction Trades Council. “Ironically, we sat down at the beginning during the bid process and tried to negotiate an accord with VANOC, but they dropped us like a rock. We think we could have set standard wage conditions that would have greatly benefited the taxpayers.”

Meanwhile, VANOC CEO John Furlong is adamant the games are on time and on budget. “We consider the venue program to be fully funded,” he told a press conference. “And we will deliver this project for the $580 million that has been committed.”

Others questioned the way costs were calculated for the project that originally projected $470 million in taxpayer support from three levels of government and as of Aug. 30, had secured another $110 million in funding for a total $580 million.

British Columbia Auditor General Arn van Iersel’s report included a host of other projects not directly related to the games, and many say that’s unfair.

“I think VANOC has been prudent,” said Keith Sashaw, president of the Vancouver Regional Construction Association. “To say that costs have gone from $600 million to more than $2.5 billion really misrepresents things.

The Sea-to-Sky highway improvements and the Rapid Transit upgrades shouldn’t be included in the costs because these are things which will benefit the people for a long time after the Olympics are over.”

The Sea-to-Sky improvements will cost either $600 million or $775 million, depending on who is doing the accounting – van Iersel or the province.

The Vancouver Board of Trade said in a statement that the lumping of all costs indirectly and directly related to the games is an “exaggeration,” and damages the credibility of what is otherwise a useful audit.

It said even adding all items together, the total - less the projected revenue and economic returns – is closer to $1.5 billion than the $2.5 billion van Iersel claimed.

Sashaw said the increases in construction material costs driven by demand from Alberta’s boom and China’s hunger for infrastructure couldn’t have been predicted in 2002 when the process started, and delays caused by skilled labour shortages were also not foreseen.

There’s no mission creep involved, said Sashaw, citing VANOC’s decision to win approval from the International Olympic Committee (IOC) to scale back the hockey rink to NHL standards from Olympic standards as a good move.

Other problems, such as the Richmond Speed Skating facility, are caused by poor soil conditions on the site, which is adjacent to the river bed and require elaborate footings.

Still, Richmond is overseeing the oval and of the $178 million price tag, VANOC is contributing only $61 million.

Richmond plans to fund the balance by selling or leasing city-owned land and redirecting casino profits, though the province is still on the hook if those plans come up short.

Don McGill, president of the BC Teamsters representing 20,000 truckers, many of whom are involved in hauling construction materials, said keeping an eye on the future benefits is lost in the short term clamour to point the finger of blame.

“Everyone knew there would be cost over-runs as there has been on every Olympics, even Expo86 here in Vancouver,” said McGill. “But we have to concentrate on what these projects will mean to the future of Vancouver. Those are the same benefits we talked about when we started this and the reason we decided to go ahead.”

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