Management at Edmonton’s city hall has adopted eight recommendations from the city auditor after potentially multi-million dollar problems were uncovered in how construction contracts are procured from the private sector.
The problem was, staff rushed some jobs and didn’t take enough care to make sure the contract was right.
The audit pointed out conflicts of interests in the tendering process, as well as situations where staff wasn’t properly trained, documentation wasn’t done correctly and the size and scale of an entire project wasn’t considered fully.
“It is serious and eight recomendations for an audit report, that is high,” city auditor David Wiun said.
One un-named example was a $142 million project. It led to delays for both the city and the bidding vendors because all of the details weren’t clear at the outset.
“That particular case identified a lack of preparedness on the city’s part,” deputy city auditor Ed Ryl said. “There were numerous addendums and it led to a lot of extra work on the part of the vendors as well, responding to the additional addendums. We highlighted that.
“The city has to do a better job in terms of preparing themselves so the vendor community can respond better.”
Chief financial officer Todd Burge said the problem was first noticed a couple of years ago in waste management so changes were begun on the whole “procurement to pay” process. Wiun added that the sand recycling audit a year ago led his department to look at the entire city operation.
“They’re almost re-engineering the way they do a procurement now,” Wuin said on how all eight recommendations are being acted on. “So they are taking it serious and I believe they should take it serious.”
Adam Laughlin, the deputy city manager who handles the infrastructure file, told audit committee they’re talking to the industry sooner in the bidding process, so they can improve a projects’ design, size and scale in each “gate” of the process.
“In some cases you might want to engage construction or the industry in the those early gates, to ensure that the right type of scope is defined prior to procurement.”
Mayor Don Iveson asked if that means it will become less likely for projects come in over time and over budget and was told more design upfront would make that possible.
“That is a learning organization,” Mayor Iveson said.
Burge said upwards of 90 per cent of projects come in on time and on budget.
“It’s always the big ones,” he said of the other 10 per cent. “They’re the ones that tend to be more complex and have greater risks. And I think that part of the changes that we’ve made in the way that we’re doing our capital will address some of those risks on the bigger projects.”
“We’re coming off an incredible 15 years of growth that we’ve ever had,” Burge added. “We have an opportunity now to adjust a whole bunch of processes in the city, catch ourselves up of being a bigger city in the kind of process and control you need to be a bigger city and I think this all part of that maturation.”
The city handles about $1 billion in contracts each year covering construction and services. The audit said by rushing things, quite often, not all possible vendors bid which can increase prices.