Cayman Islands government ministries spent more than $40 million since 2005 on consultants, mostly for construction projects involving two new public high schools, the Caymanian Compass has learned.
Largely due to the massive high schools project, the Ministry of Education far outstripped other ministries in terms of consultant expenses, racking up $32.7 million over the time period covered by an open records request by the Compass.
In a June 2012 report, the Office of the Auditor General identified poor project management practices and a lack of construction expertise within the Ministry of Education as major problems with the two new high schools, the completion of which is projected to cost more than $200 million.
Clifton Hunter opened in September 2012, while the new John Gray High School remains unfinished. An earlier proposal to build the Beulah Smith High School in West Bay was abandoned.
The ministries released information in response to queries under the Freedom of Information Law submitted by the Compass in January. The Compass requested information on payments to advisers and consultants from May 2005 to the present.
In total, all ministries and Cabinet reported spending $40.6 million on advisers and consultants during that time.
According to the auditor general’s June 2012 report, “The government does not have standardised policies and procedures for managing major capital projects. Each ministry or agency is responsible for establishing its own policies and procedures. For each government organisation to hire its own construction management experts and to establish its own policies and procedures is costly. The use of differing procedures and documentation, such as contracts and construction management practices, places the government at heightened risk that projects will fail.”
Major US architecture firm OWP/P received the most government money, more than $10 million, for “architectural design and engineering services”. OWP/P is the “architect of record” for the new high schools. The dates associated with the transactions are from January 2007 to August 2012.
Cayman Construction Management received the second-most funds, $6.3 million. The consortium of local firms is the construction manager on the high schools project. The dates were December 2010 to October 2012.
The recipient of the third-largest amount of government funds is Benoit Construction Management Services, the project manager on the high schools project. David Benoit’s firm received $3.1 million. The dates were from October 2009 to October 2012.
The Public Works Department received $1.6 million from the Ministry of Education for various projects, including the high schools and George Town Library.
Law firm Conyers, Dill & Pearman received $1.6 million from the ministry for legal advice in regard to the high schools project. Property consulting firm BCQS Ltd. earned $1.6 million for its services, primarily for the high schools.
Architecture firm Fielding Nair International received $1.4 million from the ministry for educational facilities projects such as the high schools and George Town Primary School.
Delta Consulting Group and Berkeley Research Group, who reviewed mechanical, electrical, plumbing and fire protection work for both Clifton Hunter and the new John Gray High School sites, were paid $1.1 million over a period from December 2010 to August 2012.
UK Queens Counsel Simon Lofthouse was paid $870,000 in “professional fees” in relation to the high schools project.
David Smith, who was the first project manager for the high schools initiative, was paid $530,000 from February 2007 to November 2008.
According to the auditor general’s June 2012 report, “The Ministry of Education’s mandate relates to education and not construction project management. The ministry had to procure the services of project managers to manage the high school projects as it did not have staff to undertake such functions. Over the years from 2005, up to the point that the contract was signed, the ministry employed three different project managers on the high school projects. One of the project managers was not in Grand Cayman on a full-time basis when he was responsible for the three high school projects.”
The proliferation of consultants on Ministry of Education capital projects occurred within the context of the auditor general’s observation that the ministry – whose mission is to educate, not to create buildings – lacked staffers that had experience with capital projects.
“Without a robust governance framework in place, we were not surprised to find that the project management practices for the building of the new high schools were deficient impacting on the planned costs and timeframes for delivery. The assignment of responsibility for the building of the schools came under the Ministry of Education, who did not have the management expertise or the experience in delivering building infrastructure projects. There was no business case developed for the eventual design concept used to proceed for tendering the contract; a significant missing element required for good governance of a major capital project,” according to the June 2012 report.
Additionally, the auditor general cites “the involvement of politicians in the conceptual design phase of the project” as contributing to the poor management and control of the project before the general contractor signed an agreement in 2008.
The auditor general advocated for a “centre of excellence” approach to major capital projects, where a single agency delivers the project for a “client” ministry.
According to the report, “As construction project management is a specialised area, those involved in this activity would have the support of an organisation that understands this activity and which has established policies and procedures in place so that a standardised approach is followed and appropriate control is in place over project management activities.”
Cost of disputes
The consultant expenses don’t include payments to contractors such as Tom Jones International or Caribbean Mechanical (High Schools 2008) Ltd.
After those two contractors stopped working on the high school sites, government wound up paying settlements of $400,000 to Tom Jones and $5.5 million to Caribbean Mechanical.
Last fall, in response to an open records request, the education ministry said it paid $1.3 million to consultants in relation to the Caribbean Mechanical settlement. Delta/Berkeley received nearly $920,000; Conyers received $240,000; and BCQS received nearly $150,000, according to the ministry.
Because of the then-ongoing legal disputes, the auditor general did not examine the construction phase of the high schools project as part of its June 2012 report.
“In conducting our audit work, we were made aware of certain operational issues that affected the scope of our audit. Due to the complexities associated with ongoing legal actions surrounding the construction phase of the John Gray and Clifton Hunter high schools, this and future phases are not part of the current audit,” according to the report.