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This article was published 8/5/2015 (1961 days ago), so information in it may no longer be current.

An over-budget Winnipeg road-construction project went ahead with a cost estimate so rough, city auditors couldn’t figure out who came up with it, how they did it or even when.

An internal audit into the Waverley West arterial roads project has concluded the original $54.7-million cost estimate was too preliminary to predict the actual cost — and the loose nature of that estimate was not disclosed to city council when the project budget was first presented.

The audit nonetheless suggests the city dodged a bullet when the final price tag only ballooned $15 million, which is far less than the potential overrun for a project that went ahead without sufficient analysis at the outset.

The Waverley West arterial roads project involved the extension of Kenaston Boulevard to the Perimeter Highway, a new flyover at Bishop Grandin Boulevard, the twinning and realignment of Waverley Street and other intersection changes.

The work was announced in 2009 as a $54.7-million project that would be cost-shared by the city, province and Ottawa through the Building Canada Fund. After a series of delays, it’s now slated to be complete this year at a cost of $69.7 million.

When the cost overruns were first disclosed in 2012, former St. Norbert councillor Justin Swandel blamed part of the increase on a federal environmental-assessment delay as well as a provincial demand to change the scope of the intersection of Kenaston and the Perimeter.

A report completed in December by city auditors Bryan Mansky and Micheal Giles — and published Friday — concludes the city alone is to blame for the $15-million cost hike.

The provincial demand for a new intersection was dropped and the federal delay is not cited as a serious factor in the report, which will come before council’s executive policy committee on Wednesday.

Rather, the original cost estimate was "too preliminary to accurately forecast the project costs," the auditors found. It was a Class 5 estimate, which has an accuracy range of 100 per cent above or 50 per cent below the stated figure.

The auditors found the rough nature of the Waverley West roads estimate was "not clearly disclosed" in 2010 capital budget, the infrastructure-spending blueprint approved by city council.

They also could not figure out who came up with the original $54.7 million, what methodology that entity employed in devising that number or even when the figure was created.

"While we did obtain documentation for the $54.7 million estimate, the documents were of rough-draft quality, and prevented us from determining where or when the documents originated, or what methodology was used to create the estimate," the auditors wrote. "From the supporting documents made available to us, the methodology that produced the $54.7 million amount cannot be verified."

As well, a higher cost estimate of $62.5 million was also developed but not used at all.

"Due to the lack of documentation for the $54.7 million estimate, we are also unable to conclude why this $62.5 million amount was not included in the Building Canada Fund application, rather than $54.7 million," the auditors wrote.

City staff told the auditors that consultants working on behalf of Waverley West’s developers — primarily, Ladco and the Province of Manitoba — developed the original cost estimates.

They would have done so because the developers shared in the project costs, said Doug McNeil, Winnipeg’s new chief administrative officer.

"This is a huge subdivision. The developers involved hired their own engineers, early on in the process," said McNeil, adding his understanding is that city staff believed $54.7 million was a more accurate number.

Given the nature of the funding agreement, the city wound up on the hook for the entirety of the $15-million cost overrun. Instead of the city paying for slightly more than one third of the project, it paid for more than half the tab.

"When you submit a grant (under the Building Canada Fund), whatever you submit is set in stone. Whatever other screwups, the city has to deal with it," said St. Norbert Coun. Janice Lukes, who represents Waverley west also serves as council’s public works chair.

"The good thing is, the project is what we needed. The sad part is, it went in as a Class 5 estimate and now the city’s on the hook for the balance of the cost."

The auditors now recommend the city ensure all major projects are based on Class 3 estimates, which are based on more analysis and have an accuracy range of 30 per cent above or 20 per cent below the stated figure.

The city has also asked Ottawa to give it more time to prepare accurate cost estimates before it enters into funding deals. "We have an agreement from Canada to work with us and give us some time to put a Class 3 estimate together," McNeil said.

Lukes said this time is crucial. "You’re trying to plan. You’re trying to put your network together, and then the province and the feds say, ‘Over here! Over here! We have this pile of money.’ "

bartley.kives@freepress.mb.ca