Clifton Hunter High School has been valued at “at least” $20 million less than what it cost to build, Acting Auditor General Garnet Harrison confirmed Wednesday.
The school is one of several government properties that was potentially overvalued in the recently completed audit of the government’s entire public sector financial statements for the 2013/14 budget year. The value discrepancies were one of the major reasons Mr. Harrison’s office gave the statements an “adverse” opinion – meaning the information they contain is unreliable.
The school was built for $110.1 million, but the value was determined to be “impaired against the cost of construction” by at least $20 million, Mr. Harrison said.
In accounting terms, that means the estimated value of the Clifton Hunter property is $90 million, or potentially even less.
Ministry of Education officials are currently reviewing valuation reports and will update government’s financial statements once the decline in the school property’s value has been quantified.
Sources in government informed the Compass that the ministry was having a second valuation on the school property done, prior to updating the financial statements. The final cost of the high school construction went about $41.4 million higher than the auditor general’s office estimates of government’s planned spending on the project dating from May 2008.
Those additional costs beyond what was initially planned for the school included:
An architectural design contract that went $3.7 million above planned costs
Another $1.7 million was spent for ministry-ordered design changes in July 2012
A new project manager contract, not originally contemplated in May 2008, which cost $3.1 million
An additional construction manager contract, again not in the May 2008 plan, costing $5.1 million
$4 million in legal advice and arbitration costs to settle “numerous” contractor disputes
A $6 million price estimate in July 2012 to remediate faulty construction work
Additional claims of $2.2 million were made by two project contractors to cover time extensions needed to complete their work
The termination of the project’s main mechanical, electrical and plumbing contractor in 2010 cost a further $4.5 million following a settlement agreement.
“The total of these items … is $30.3 million,” a separate audit report on the schools project indicated. Mr. Harrison said none of these expenses would have added significant value to the schools project.