Clifton Hunter High School: Valued at $20M less than building cost

Clifton Hunter High School

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. 

Clifton Hunter High School  – PHOTO: JEWEL LEVY

Clifton Hunter High School – PHOTO: JEWEL LEVY

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  1. Perhaps a thorough reading of the auditor’s report would answer this question: were the problems with this project in contracting, oversight, or both. Most government contracts provide strict requirements for contract performance and significant penalties if the contracted work is not performed to acceptable standards. Reading between the lines, contracts were entered into with an original project manager and contract manager, both of whom were later replaced, and several subcontractors who ran over the time they committed to in their contracts or did shoddy work that had to be redone. All of these contractors should have been held to perform pursuant to their contracts or pay the price when they did not perform and other contractors had to be brought in to do the jobs they committed to perform. Were the contracts inadequately written to protect the government’s (and thus the citizens’) interests? Was government oversight of the project so lax or ineffective that the contractors’ deficiencies were not identified earlier in order to head off these exorbitant cost overruns? I do not pretend to know the answers to these questions. Somebody in authority better know the answers and correct the problems before the next overpriced project is built.