Roadwork raises budget questions

We were intially curious about the $750,000 cost of the project as indicated

After a two week wait, we received some answers from the Ministry of Transportation and Infrastructure on the budgeted versus actual costs for the improvement work recently completed at the corner of Seventh Street and Highway 3.

We were intially curious about the $750,000 cost of the project as indicated on the project signs on either side of the intersection.

It did not appear to us that there was anywhere near an amount of work done to warrant that kind of spending. We asked the ministry if there was a budgeting mistake, and their initial reply was:

“There was not a budgeting error. In most cases budgets are estimated prior to detailed engineering being completed. The budget estimate included engineering, property acquisition, utility relocations, electrical works, the construction and signage.  Through the design process and during construction we were able to find economies and delivered the project under budget.”

We were looking for a more specific answer. A phone call to a media relations officer at the ministry revealed that  the project came in at $350,000 –  to which we asked once again for a reason for those costs, which, although halved, still seemed excessive. This time the reply came as follows:

“In most cases for projects this size, budgets are estimated prior to detailed engineering being completed.

The ministry estimated the work (including engineering, property acquisition, road construction, etc.) and allocated the budget accordingly.

As is proper, this estimate contained contingency to cover the risk of unknown elements such as geotechnical conditions, property costs, etc.

When detailed design was completed, it was found that the solution was less expensive than estimated. As well, the tender came in at a lower price than estimated.”

We are still at a loss to understand the accounting rationale behind this project – we can only wonder what the descrepancies must be for more expensive projects, where there is a much greater number of variables from which to assess.

 

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