$800K paid for Port design work

More than $800,000 was paid for design and engineering on the Royal Watler Cruise Terminal, the Auditor General’s report on the project states.

The Auditor General believes the figure to be too high.

‘Based on management representations, the Port Authority paid over $200,000 for design and consultancy services prior to the commencement of the project,’ the report stated. ‘Subsequent to that, the design-build contracts included over $600,000 for design and engineering.’

‘Thus, in the period 2001 to 2005 the Port Authority incurred over $800,000 [in fee charges] simply for designing the works.’

The report criticised the Port Authority for hiring architects for design and project managers for implementation without properly establishing a framework for such activities.

The Auditor General noted project drawings were requested of several architectural firms in the period between the Master Port Development Plan and the final design of the project.

‘We did not see any evidence of beings being invited from architectural firms for the design of the facility,’ the report stated. ‘Eventually, when it seemed that a design had finally been settled on and one firm was fairly advanced in their engineering drawings, their employment was abruptly terminated and construction contracts were thereafter solicited on a design-build basis.’

The report indicates that the architects Chalmers Gibbs Martins Joseph were hired without a contract prior to the aborted tendering of the project on a design-and-build basis and paid $173,886 for their work. The Auditor General’s office also provided information that indicates APEC consulting, a local engineering company, also billed $44,158 during that period.

Despite the substantial amounts paid in design and consultancy fees to that point, much more was charged thereafter.

‘It is expected that money will have to be paid for design services in a design-build contract,’ the Auditor General’s report stated. ‘However, inherent in the nature of design-build contract is that each contract will have some level of input by the owners into the design and specifications of the project.’

The Auditor General noted that the more complete the design presented to the contractor, the less the owner should expect to pay for design work by the successful design-build bidder.

‘Thus when the project manager [Burns Conolly Group] submitted significantly completed drawings for the marine work, one would have expected (barring significant revisions) a minimal fee for design and engineering services.’

Although the Port Authority had already paid $173,866 for design work that included fairly completed marine drawings which were used to solicit construction bids for the project, the successful bidder for the marine portion of the project, Misener Marine Corporation Inc., included the figure of $480,791 for outside engineering/design on its list of values.

‘We did not see evidence of significant revisions to the drawings and it is therefore difficult from our perspective to understand how such a large fee could be charged when Misener were given fairly complete marine drawings with which to work,’ the Auditor General’s report stated. ‘This cost therefore appears to be more significant than we would have expected for work that had already been substantially done.’

The report states that while the Audit Office realises contractors aim to secure profits and that a reasonable mark-up on construction activities and recovery of administration expenses is fair, it could not endorse a mark-up of over 100 per cent on any of the administration activities of the contract or where the firm was already in possession of significantly complete designs.

The Auditor General attributed many of the mark-ups to the abandonment of the tendering process.

In addition, the Auditor General’s Office said Hurlston Ltd, which won the contract on the building portion of the project, charged $138,475 for design work.

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