Professional Documents
Culture Documents
Table of Contents
EXECUTIVE SUMMARY .......................................................................................................i
RÉSUMÉ ........................................................................................................................... xxxiii
1 BACKGROUND................................................................................................................ 1
2 SCOPE ................................................................................................................................ 1
3 OBJECTIVES ...................................................................................................................... 5
4 FINDINGS AND RECOMMENDATIONS ................................................................... 7
5 AREAS OF POTENTIAL SAVINGS ............................................................................ 43
6 CONCLUSION ................................................................................................................ 44
7 ACKNOWLEDGEMENT............................................................................................... 44
APPENDIX A – CHANGE ORDER TABLES ................................................................... 45
EXECUTIVE SUMMARY
Introduction
The Audit of Construction Supervision was included in the 2012 Audit Plan of the
Office of the Auditor General (OAG), approved by City Council on December 14,
2011.
Background
Council Members brought nine projects to the attention of the Auditor General, for
review. The projects examined were constructed in 2010 and 2011, except for two
that were constructed in 2004 and 2006. A sample was selected from the projects
completed in 2011 and 2012.
Audit Objectives
Audit Objective No. 1 - Examine and evaluate the processes and methodologies
pertaining to the Construction Supervision Procedures followed by the City.
Criteria:
Review of tender documents
Examination of tendering process, including design/build projects
Procedures for selection of contractor
Review of contract documents
Construction administration files
Assignment of project manager, project supervisor and inspectors
Construction inspection tasks and procedures
Procedures for management of change orders and extra work orders
Claims process procedures
Audit Objective No. 2 - Determine whether the processes and methodologies are
consistent and compliant with all relevant policies, procedures, legislation and
regulations.
Criteria:
Project management procedures
Procedures for transfer of project from design to construction
Tendering process
Procedures for selection of contractor
Audit Objective No. 3 - Examine nine specific projects and specific issues brought
to the attention of the Auditor General by Members of Council, to determine if they
are consistent with relevant policies, procedures, legislation, and regulations.
Criteria:
Review of specific projects and issues indicated by Councillors
Selection of type of contract
Project management procedures
Procedures for transfer of project from design to construction
Procedures for selection of contractor
Contract administration process
Inspection procedures
Quality control and quality assurance procedures
Claims management
Cost control
Criteria:
Review of ten sample projects
Selection of type of contract
Project management procedures
Procedures for transfer of project from design to construction
Procedures for selection of contractor
Contract administration process
Inspection procedures
Quality control and quality assurance procedures
Claims management
Cost control
AUDIT SCOPE
The audit scope consists of a review the construction supervision process used
during construction of capital works projects by the City.
The audit examined the following projects that have been brought to the attention
of the Auditor General by Councillors. The review focussed on the specific
concerns raised by the Councillors, as follows:
Transitway – Installation of manhole covers along the travelled lanes and on the
path of the bus wheels.
Gloucester Hornets Nest – Review of cost compared to the size of the project;
review the procurement process.
Townline Bridge Replacement, Structure 433080 – Contractor with poor
performance was awarded the contract, previous project not completed on time,
increase in risk to City. Note that this project was completed in 2004.
Cavanagh Bridge (John Shaw Road), Structure 433040 – Contract awarded to
same contractor as Structure 433080, the issues are the same. Note that this
project was completed in 2006.
Dunrobin Road Culvert, Structure 338180 – Culvert was flooded, was
rehabilitated, flooded again, and was replaced completely in 2011.
King Edward Avenue Reconstruction – Concerns with basement cracks in a
number of properties.
Woodroffe Avenue Watermain Replacement – Following a watermain break in
January 2011, construction did not start until April 2011. The concern is whether
the work could have been done in the winter or early spring. Summer
construction affected the residents, including water restrictions due to the
temporary water service.
John Leroux (Stittsville) Arena Upgrades – The roof repairs were delayed until
late 2009 because the materials would not fit the curvature of the roof. Work
was not completed until 2010. In addition, the use of design-build in
comparison to conventional design-tender-build projects to be assessed.
Goulbourn Recreation Complex – Ice pad addition was started in 2011 and
completed in 2012. There is a concern with quality assurance and control, and
how it may affect the project warranty.
To provide context of the overall process to the review of the projects raised by the
Councillors, the following ten projects completed in 2011 and 2012 were examined,
representing a total construction value of $123,766,000, which constitute
approximately 11% of the total budget value of the projects that were active in the
City in 2011. The ten projects include projects of small, medium and large size. The
following projects were selected as a representative sample based on these criteria:
Figure 1: Selected Projects Reviewed
Per Infrastructure Services Department
Estimate at
Projects Completion
Cost ($000s)
1 SW Transitway Extension (North) Stage 1 - Fallowfield to $17,568
Berrigan
2 Woodroffe Ave. Watermain Replacement (Baseline to Navaho) $4,827
3 Sandridge Rd (Hillsdale Rd to Merriman Ave) - Road, $8,000
Watermain & Sewer
4 Centrepointe Theatre Expansion $11,850
5 West Nepean Collector Sewer - CIPP Rehabilitation $3,800
6 Campeau Dr. Water Pumping Station $3,500
7 Strandherd Dr. (Crestway to Prince of Wales) incl. widening of $35,000
Prince of Wales
8 3W Feedermain Link - Phase 1, Part 1 (Ottawa River Pkwy to $32,000
Moodie)
9 Cave Creek Collector, Phase 1 (Harmer to Faraday) $6,000
10 Prince of Wales Roundabout Reconstruction at Central $1,221
Experimental Farm
TOTAL Estimate at Completion Cost of Projects Examined $123,766
Change orders were reviewed in the projects listed in Figure 1 and five of the
projects raised by Councillors, where change orders were applicable. In total
change orders of 15 projects were reviewed.
In all projects, we reviewed the costs in comparison with the authorities.
The audit encompassed the following tasks:
Review legislative framework;
Review City‟s policies, procedures, standards and practices;
1MERX is a well established and well-known electronic tendering service with Canada-wide scope,
which has been in operation since 1997.
document takers that were from outside of the Ottawa and surrounding area
(defined as 50 km from the City‟s boundary). Of these, five tenders were
awarded to contractors from outside the Ottawa and surrounding area,
comprising less than 1% of the total value of construction contracts awarded by
the City ($363,200,000).
4. The concern with the method of tender advertising is that the City only posts
tenders with the OCA (who publishes them in Link2Build, as noted above).
Consequently, tenders do not get a wide distribution outside of the City of
Ottawa. Tenders would receive wider distribution if they are published in more
general sites, such as MERX. It can be expected that advertising tenders in a
wider area will result in the City getting more bids which could result in lower
prices for the City contracts. It is noted that the City uses MERX for other
solicitations, including non-construction related request for proposals and
request for standing offers.
5. In its annual report to Council, Supply Branch analyzes the Delegation of
Authority reports to identify contracts awarded to and/or performed by local
companies. According to the annual report, when adjusted to remove goods and
services not available locally (e.g., transit buses are not manufactured in Ottawa,
nor is winter rock salt mined locally), approximately 94.5% of the City‟s annual
purchasing dollar was spent in Ottawa and the surrounding area.
BEFORE removing purchases not available locally: 69.6% 85.7% 78.9% 80.7%
AFTER removing purchasing not available locally: 91.4% 92.9% 97.6% 93.7%
Region Dollar Value % of Total Dollar Value % of Total Dollar Value % of Total
Supply Branch did a 2011 “buy local” analysis isolating only construction contracts.
Based on this analysis, 808 of the total 884 construction contracts awarded in 2011
(91.4%) were awarded to local firms. When considering dollar value, this figure
rises to 96.6%.
Figure 4: 2011 “Buy Local” of Construction Contracts
Per Supply Branch
# of
% of Dollar
Region Construction Dollar Value
Value
Contracts
Ottawa & Area 808 $397,711,493 96.6%
Ontario 50 $11,995,007 2.9%
Quebec 21 $1,845,407 0.4%
Other 5 $226,940 0.1%
Total 884 $411,778,847 100.0%
11. The City uses formal contract documents for all the construction contracts
examined.
12. The Branch Manager and Program Manager assign the project manager to the
contract based on his/her experience. Inspectors are assigned from a pool of
inspectors, supplemented with consultants as required by workload or
expertise.
13. Purchasing By-law No. 50 of 2000 – A By-law of the City of Ottawa Respecting
Purchasing of Goods, Services and Construction. As noted on the City‟s website,
the Purchasing By-law has the objective of obtaining the best value when
purchasing goods, construction and services for the City, while treating
suppliers equitably. The guiding principle is that purchases be made using a
competitive process that is open, transparent and fair to all suppliers. We
examined the application of the By-law to the process of acquiring construction
services.
14. The Project Manager Manual (PMM) provides detailed guidance and instruction
on requirements for tendering of the projects. Supply Branch coordinates with
the Ottawa Construction Association to place the Request for Tenders, and the
project manager provides input during the tendering period.
15. The PMM makes provisions for the steps to be taken when the construction
administration and inspection is done by a consultant.
16. The PMM contains directions regarding questions during tendering and
addendum procedures.
17. Once the tender has closed, the bids are reviewed by the City for clerical errors
and compared to estimates and budget. A rationale is provided for any gross
inconsistencies in unit prices.
18. The contractor is selected based on the methodology identified in the
solicitation. In the case of the projects examined, this was based on lowest
responsive bid.
19. The City does not have a policy and procedures to enable explicit evaluation of
the past performance of contractors on previous City contracts when
determining the award of a new contract. The City advises that a
prequalification process is used in large complex projects, and that the City has
the right to request a firm‟s experience in successfully completing projects of
similar size and complexity. However, the City does not always use these
methods, and past performance does not enter explicitly into the bid evaluation.
As a result, contracts are awarded to the lowest bidder meeting the mandatory
requirements identified in the solicitation, including bonding and insurance
requirements.
20. The City has developed a document for reporting supplier performance during
the course of a contract. However, if the contractor completes the contract
without default, they are eligible to bid in future City contracts; even if the
contract process was fraught with difficulties, delays, and extra costs caused by
poor performance. The only penalty considered is if Supply Branch barrs the
contractor from bidding on future City projects. A performance evaluation
method that is taken into account in the evaluation of future bid opportunities is
necessary to distinguish between contractors who perform well from those who
do not.
21. Past performance of contractors should be documented and a rating system
established to enable the City to take the contractor‟s past performance into
account when they are competing for new work. The City currently has a
Contractor Performance Appraisal Form to document performance; the form is
included in Appendix X-2 of the Project Manager Manual. This form, with some
modifications, would be a good basis for contractor performance evaluation, as
discussed in the previous point. We note that the Contractor Performance
Appraisal Form was found in the project files of only one project (Townline
Bridge) and not in other project files reviewed.
22. The contract administration functions are well documented and are followed by
the project managers.
23. Review of the change orders in the various projects examined demonstrated that
the City has a proper method of checks and balances to confirm the need for the
change order, review the amounts proposed by the contractor, and negotiate as
required a fair price for the change order amount.
24. In general terms, change orders in large new building projects can be expected
to have a value ranging between 2% and 3% of the contract value on very well
coordinated projects; however, average values can be as high as 5%. On projects
that are additions to other buildings the value of change orders is expected to be
higher. For heavy construction projects, such as roads, watermains, sewers, and
bridges, acceptable values of change orders range from 5% to 10% of the contract
value. The changes are expected to be the result of site conditions. The range of
generally accepted values were determined based on the experience of a senior
architect with more than 20 years of experience, and was used as a typical
experience. Construction Delay Claims, B. Bramble & M. Callahan, Construction
Law Library, 2005, p. 5-26 states that change orders can range from -5% to +10%.
The American Institute of Architects (AIA), The Architect’s Handbook of
Professional Practice, 1994 states that the changes could be as high as 7%. AIA
Best Practice document, Managing the Contingency Allowance, David Hart, 2007,
indicates a value of 5% is commonly used. Columbia University Facilities
(http://facilities.columbia.edu) provides a range of 5% to 10%. In addition, the
Per the above table, the percentage of the change orders due to design errors
and omissions is 22% of the change order value.
30. The City does not have a consistent approach to encourage the project managers
to recover from the consultant the cost of change orders when these are caused
by errors and omissions in the design.
Transitway
The “Transitway Design Manual, October 1993” has provisions for the placement of
manholes on the Transitway, specifically stating that manholes and other ironwork
shall not be placed on the travelled portion of the Transitway. The Sewer Design
Guidelines, SDG001, November 2004 states that “attempts should be made to avoid
locating manholes in the path of vehicle tires, subject to the location requirements of
the Guidelines for the Placement of Utilities in the Right-of-Way", which takes
precedence. Review of the provisions show that they are adequate. Spot
examination of the Transitway disclosed that its design follows these provisions.
4. The contract work was delayed so the City applied liquidated damages to the
contractor and deducted them from the payments.
5. In 2007, the contractor took legal action against the City on the basis of a claim
for extras that was rejected by the City. This action is ongoing.
Cavanagh Bridge
1. Contract ISB04-7018 was awarded in April 2005, after the completion of the
Townline Bridge Replacement, discussed in Section 4.3.3 of the full report. The
contractor work started on July 4, 2005; was substantially completed in January
6, 2006; and, was completed on June 27, 2006.
2. At the start of the contract, the City discussed with the contractor the problems
associated with various deficiencies, non-performance and supervisory issues
on previous contracts carried out by the contractor. The City and the contractor
agreed that their performance would be monitored during the execution of this
contract.
3. The City attempted to apply a formal contractor evaluation form for future use,
based on a form similar to the Contractor Performance Appraisal Form that is
presently included in the Project Manager Manual.
4. Supply Branch working with departments developed a document for recording
supplier non-performance, by progressive escalation of contract issues. The
document provides general instructions for enforcing the provisions of the
contracts, including notice of default and for termination of the contract.
However, it is a general document intended to be applied to all City
procurement, and is not sufficiently specific to construction.
5. The procedures do not include a method for recording past performance of
contractors on City projects. There is no specific method for applying the results
of past performance of a contractor to the selection process in future City
contracts.
6. The Contractor Performance Appraisal Form included in the Project Manager
Manual could form the basis for contractor evaluation. However, we noted that
it was not found in the files of the projects that were reviewed during the audit.
2. On August 15, 2010, the road was overtopped at the culvert and part of the road
embankment was washed out by the flood. On April 11, 2011, the road was
overtopped during another storm, which caused damage to the northbound lane
and shoulder, although not to the same extent as in the August 2010 flood.
Following the flood, the road was repaired under emergency work procedures
and reopened on April 16, 2011.
3. Following the flood, a hydraulic analysis of the culvert showed that the lining
done in 2010 had reduced the hydraulic capacity of the culvert. The consultant
recommended that the culvert be replaced with a larger one.
4. On June 24, 2011, the road was overtopped a third time in less than one year. On
this occasion, the City decided to keep the road closed and to replace the culvert
with a new one selected on the basis of the consultant hydraulic
recommendations and the pipe that was available from the manufacturer for
rapid delivery.
5. The June 2011 work was done on a time and material basis, using the contractor
that had been called in to repair the damaged road.
6. The issues with this project are that the initial renewal process, which concluded
in the sliplining rehabilitation in 2007, did not follow the formal procedures for
evaluation of renewal alternatives of bridges and bridge-culverts. The
hydrology and hydraulic calculations were not sufficiently thorough to permit
the City to recognize that the hydraulic capacity had been reduced, or the
implications of this reduction.
water system risks, and that the contract for the repairs on Woodroffe Avenue
were scheduled to proceed after the completion of the 2W/2C watermain, which
would provide a third feed into the area.
9. At the time of the January 2011 watermain break, construction of the Zone 2W
2C feedermain was in progress, so the City‟s Design and Construction explored
the possibility of extending the contract to include the watermain north of Hunt
Club Road. However, Asset Management and Drinking Water Services
suggested that a condition assessment of the Woodroffe Avenue watermain be
done first to identify areas of concern. The scope of the January/February 2011
condition assessment was broader than the 2008 condition assessment, and
included the section from David Drive to Hunt Club Road, in addition to the
section done in 2008 (Hunt Club Road to Fallowfield Road).
10. On February 24, 2011, Asset Management provided Design and Construction -
West with a Scoping Document based on the findings of the condition
assessment. When comparing the 2008 and 2011 conditions assessments, it was
found that the number of pipe sections with wire breaks was similar on a per
km basis, but a greater number of pipes had more severe deterioration. They
did find substantial increase in deterioration in the prestressed concrete pipe
watermain from 2008.
11. The project manager was aware that procurement of the pipes could take a
substantial length of time and therefore proposed to sole-source the
procurement of the pipes from a manufacturer who could deliver the required
quantity of pipe within the required schedule, in order to expedite construction.
He requested pricing for the replacement pipes from the supplier and received it
on February 24, 2011.
12. On March 1, 2011, the project manager informed the pipe supplier that the City
would proceed with buying the pipe and appurtenances required from the
supplier selected. On March 10, 2011, the project manager sent an Estimated
Spending Plan Authority (E-SPA) to Purchasing for the pipe. The project
manager indicates in the email that Supply Branch had been kept apprised all
along, but review of the files found no documentation to confirm that this was
the case.
13. On March 16, Purchasing asked the project manager for the reason for sole
sourcing the pipe and for selecting the company. The discussion about sole
sourcing the pipe extended to March 30th, at which time the decision was to
proceed with a standard tender.
14. The correspondence shows that at the time of the break in January 2011, the City
repaired the broken watermain and it scheduled the required replacement of the
remaining pipes to tender the project for work in the fall of 2011. However, the
condition assessment of the watermain from David Drive to Fallowfield Road
disclosed that sections of the watermain had deteriorated substantially since
2008 and that there was similar deterioration in the segment north of Hunt Club
Road. Based on the results, the City decided to not return to service the section
of watermain from Knoxdale Road to Vaan Drive until the required watermain
replacement was completed. On this basis, the City decided to carry out the
watermain replacement and repair work as soon as possible, instead of
returning the watermain to service immediately and risking another break.
15. While the pipe was out of service, supply to the Barrhaven and Riverside South
service areas was being provided through a single 406 mm watermain along
Merivale Road, supplemented by in-line pumping. The temporary supply met
the demand at the time, but hydraulic modelling indicated that it would meet
only 75% of the maximum day demand.
16. At the end of February 2011, the results of the condition assessment and the
hydraulic modelling showed that construction could not be postponed until the
fall, and the project was scheduled for tendering as soon as possible.
17. A number of alternative means of operation and/or repair were examined,
including repairs by leaving the pipe in place, such as sliplining or reinforcing
the pipe. The analysis concluded that the preferred solution is open cut
construction along Woodroffe Avenue. Any of the alternatives would only
advance completion by, at most, two weeks and the resulting watermain
condition would not be as satisfactory.
18. As a result, it was necessary to impose a complete outdoor water ban in
Barrhaven, Riverside South and Manotick until completion of the project, in
order to avoid running the system dry and possible boil water advisories and
inability to meet firefighting requirements.
19. Review of the change orders for this project found that they were fully
documented and were reviewed by the contract administrator and project
manager. In general terms, the change orders were necessary to expedite the
project.
20. “Police assistance at intersections” item is a concern. Due to the level of traffic
congestion on Woodroffe Avenue, it was necessary to have point duty police on
a daily basis. The original tender did not anticipate this amount of point duty
for the project. The additional cost was $247,637, paid by variation in the tender
quantities at the tender price. The total price paid was $313,638. Review of the
invoices to the contractor for 1,140.5 hours of police service show that the cost
was $214,346 based on $188 per hour. The contractor was paid $99,292 or 46%
mark-up on police cost.
21. The project manager should have negotiated the cost of this item, as it clearly
was a very significant variation in the quantities, and the general conditions of
contract contain provisions for such eventuality. In addition, the manner in
which the item is paid provides the contractor with a profit on a service
provided by one City Service to another. In fact, the profit margin is 46% even if
the number of hours in the contract is not exceeded.
22. Rather than include an item with unit prices, the City should provide an
allowance for the cost of the services, with only an administration markup for
the contractor. A better option would be to have Ottawa Police invoice the City
directly for the services.
6. Review of the file showed that all deficiencies found in the building were
corrected before final payment.
7. The issues that were found on this project were mainly
The structural steel fabricator created an adversarial relationship from the
very beginning and did not follow the requirements of the contract.
The structural steel was delivered without the required shop inspection
and with defects in some pieces (these were corrected on site).
6. In total, change orders for $696,881 were the result of design errors. Of this, it is
estimated that $559,174 can be classified as payments that the City made which
could have been avoided during design. There is no indication that the City
considered recovering the additional costs from the consultants (prime
consultant and geotechnical sub-consultant).
4. The value of change orders resulting from omissions on the tender documents
was $62,949. Although the value is considered to be within the industry-
accepted margin of 3%, the fact that they were omissions and not coordination
changes should be taken into account.
5. It is noted that the project manager in this contract identified in the change
orders the reasons for each change order, and included a classification for them,
including design errors and omissions. This is important to identify as it may
assist in the potential recovery of costs.
6. The project was constructed without major problems and was completed within
budget and on time.
The contractor shall use for by-pass only existing right-of-ways and
existing easements.
The by-pass methods are determined by the contractor, but the by-pass
routes are specified by the City.
Use of an alternative by-pass route by the contractor is subject to approval
by the City. If the alternative is not approved by the City, the contractor
shall use the specified routes.
Management Response
Management agrees with this recommendation and it has been implemented.
Supply Branch now retains documentation on the procurement file confirming
that the requirement was also posted on “Link2Build”.
Recommendation 2
That the City formalize its relationship with the Ottawa Construction
Association and “Link2Build”, including ensuring that the City’s rights to review
and audit the processes are documented.
Management Response
Management agrees with this recommendation.
Supply Branch will formalize the City‟s relationship with the Ottawa
Construction Association (OCA) and “Link2Build” including ensuring that the
City has the right to review and audit the documented processes, by the end of
Q4 2013.
Recommendation 3
That the City develop a policy to require project managers to formally document
design errors and omissions found during the construction supervision process.
The documentation should include the requirement for project managers to
classify change orders into categories, such as design errors and omissions,
design issues, site conditions, etc., to facilitate the recovery of costs from the
consultants.
Management Response
Management agrees with this recommendation.
Management will develop a policy and/or procedures to document design errors
and omissions found during the construction supervision process by Q2 2014.
It should be noted that some categories, (i.e., site conditions) will not result in
cost recovery from consultants. (See Management Response to Recommendation
4 with regard to cost recovery).
Recommendation 4
That the City develop a policy and procedures to be followed to recover the costs
of construction changes and original engineering costs related to the specific
component from the consultants when the additional costs are caused by design
errors or omissions.
Management Response
Management agrees with this recommendation.
Management will develop a policy and/or procedures to recover the costs of
construction changes and original engineering costs related to a specific contract
component when the additional costs are caused by design errors or omissions.
This work will be completed by Q2 2014.
Recommendation 5
That the City develop a system to record contractor performance in City contracts,
and that the City expand the construction bid evaluation process to include
formally the past performance of the bidder in the evaluation and award of
contracts, so that contracts are awarded on the basis of past performance,
experience, and staffing in addition to lowest cost.
Management Response
Management agrees with this recommendation.
Currently, City of Ottawa construction bid solicitations include a provision
whereby a firm must have experience successfully completing projects of similar
size and complexity. Firms that are unable to demonstrate this experience are
deemed non-responsive and are not awarded the contract.
Recommendation 6
That the City ensure that for culverts where a reduction in conveyance capacity is
being considered, the renewal process includes undertaking the required
hydrology and hydraulic design.
Management Response
Management agrees with this recommendation and it has been implemented.
Since February 2011, the Asset Management Branch has modified its practice to
include a hydraulic assessment for culvert renewal options that would result in a
reduction in the hydraulic conveyance capacity.
Recommendation 7
That the City undertake a program for inspecting its critical water transmission
mains where they are known or suspected to be exposed to corrosive
environment, and that it takes action based on the results of the inspection
findings.
Management Response
Management agrees with this recommendation and it has been implemented.
In June 2012, Environmental Services presented to Environment Committee a
report on a condition assessment program for drinking water transmission mains
(ACS2012-COS-ESD-0014). This report outlines a risk-based approach to the
inspection and management of water transmission mains.
Recommendation 8
That the City submit to Council as part of the Drinking Water Quality
Management System annual report a summary of inspections on critical water
transmission mains, including an action plan for correction of pipes identified to
be in very poor condition.
Management Response
Management agrees with this recommendation.
A summary of inspections on critical water transmission mains, including an
action plan for correction of pipes identified to be in poor condition, will be
reflected in the 2013 Drinking Water Quality Management System (DWQMS)
Annual Report to be presented to Council in Q2 2014.
Recommendation 9
That the City modify the payment method for services from other City services so
that they do not provide an unwarranted profit to the contractor.
Management Response
Management agrees with this recommendation.
Management will conduct a review of the requirements that will modify the
payment method for City services from other City services so that they do not
provide an unwarranted profit to the contractor. Unless specific restrictions are
identified, this will be implemented by Q2 2014.
Recommendation 10
That the City ensure that operational constraints such as the operation of the Real
Time Control System are fully described in the contract documents and that the
risk for monitoring weather forecasts is transferred to the contractor.
Management Response
Management agrees with this recommendation.
Management will work with staff in the Environmental Services department to
ensure that operational constraints are fully described in contract documents and
that the risk for monitoring weather forecasts is transferred to the contractor.
This will be built into contract standard specifications by Q2 2014.
Recommendation 11
That the City specify, in sewer renewal projects, the location for sewer by-passes
and require the contractor to use by-pass locations on existing right-of-ways or
appropriate existing easements. Sewer by-pass plans proposed by the contractor
using other locations must be at the contractor’s risk and expense, including the
consequences of delays.
Management Response
Management agrees with this recommendation.
In all future sewer renewal contracts, the City will specify the location for sewer
by-passes on existing right-of-ways and appropriate easements. Should the
contractor propose other locations, the contract will specify that this will be at the
contractor‟s risk and expense, including the consequences of delays. This will be
built into contract standard specifications by Q2 2014.
Recommendation 12
That the City modify the Scoping Document so that commitments made by all
departments are explicitly discussed in the document.
Management Response
Management agrees with this recommendation.
Management will amend the scoping document to ensure that commitments
made by all departments are explicitly expressed. This work will be complete by
Q2 2014.
Recommendation 13
That the City instruct the project managers that the liquidated damages are
provided to assist in keeping the contractors on schedule, but are not effective
unless the project manager actually charges them to the contractor.
Management Response
Management agrees with this recommendation and it has been implemented.
In Q3 2013, management issued a directive to ensure that project managers
impose liquidated damages on contractors pursuant to the City‟s Standard
Tender Documents.
Conclusion
The City‟s Construction Supervision process is complete and comparable to the
process and procedures used by other municipalities and the Ministry of
Transportation in Ontario.
The audit found a substantial amount of cost increase caused by change orders
resulting from consultants‟ errors and omissions, which the City is not recovering
from the consultants. The City is currently recovering costs resulting from changes
required by Hydro Ottawa, and should be able to recover costs for changes
required by consultants‟ errors and omissions.
Acknowledgement
We wish to express our appreciation for the cooperation and assistance afforded the
audit team by management.
RÉSUMÉ
Introduction
La vérification de la surveillance de la construction a été inscrite dans le plan de
vérification de 2012 du Bureau du vérificateur général (BVG), approuvé par le
Conseil municipal le 14 décembre 2011.
Contexte
Les membres du Conseil ont porté neuf projets à l‟attention du vérificateur général
pour qu‟il en fasse l‟examen. Les projets à examiner ont en grande partie été réalisés
en 2010 et en 2011, sauf deux qui se sont déroulés en 2004 et en 2006. Les
échantillons de projets ont été sélectionnés parmi ceux qui ont été réalisés en 2011 et
en 2012.
Objectifs de la vérification
Objectif 1 - Examiner et évaluer les méthodes et les processus associés aux
procédures de surveillance de la construction utilisées par la Ville.
Critères
Examen des documents d‟appel d‟offres
Examen du processus d‟appel d‟offres, y compris les projets de
conception/construction
Procédures de sélection des entrepreneurs
Examen des documents contractuels
Dossiers administratifs en matière de construction
Affectation des gestionnaires de projet, des superviseurs de projet et des
inspecteurs
Procédures et tâches en matière d‟inspection de la construction
Procédures pour la gestion des demandes de modification et des commandes de
travaux supplémentaires
Procédures des processus de réclamation
Objectif 2 - Déterminer si les méthodes et les processus sont cohérents avec les
politiques, les procédures, les lois et les règlements pertinents et y sont conformes.
Critères
Procédures de gestion de projet
Procédures de transfert de projet de la conception à la construction
Critères
Examen de projets précis et des problèmes indiqués par les conseillers
Choix du type de contrat
Procédures de gestion de projet
Procédures de transfert de projet de la conception à la construction
Procédures de sélection des entrepreneurs
Processus d‟administration des contrats
Procédures d‟inspection
Procédures de contrôle et d‟assurance de la qualité
Gestion des réclamations
Contrôle des coûts
Critères
Examen d‟un échantillon de dix projets
Choix du type de contrat
Procédures de gestion de projet
Procédures de transfert de projet de la conception à la construction
Portée de la vérification
La portée de la vérification consistera à examiner le processus de surveillance de la
construction utilisé pendant la réalisation de projets d‟immobilisations de la Ville.
Les vérificateurs ont examiné les projets suivants, lesquels ont été portés à
l‟attention du vérificateur général par les conseillers. L‟examen a été axé sur les
préoccupations suivantes des conseillers.
Transitway – Installation de plaques d‟égout le long des voies de circulation et là
où passent les roues des autobus.
Hornets Nest, Gloucester – Examen du coût par rapport à la taille du projet;
examen du processus d‟approvisionnement.
Remplacement du pont Townline, structure 433080 – Un entrepreneur au
rendement médiocre a obtenu le contrat; projet antérieur non réalisé dans les
délais; augmentation du risque pour la Ville. Il convient de noter que ce projet a
été achevé en 2004.
Pont Cavanagh (chemin John Shaw), structure 433040 – Contrat octroyé au
même entrepreneur que pour la structure 433080; les problèmes sont les mêmes.
Il convient de noter que ce projet a été achevé en 2006.
Ponceau du chemin Dunrobin, structure 338180 – Le ponceau a été inondé,
réparé, inondé de nouveau, puis a été remplacé complètement en 2011.
Reconstruction de l‟avenue King Edward – Préoccupations relatives à des
fissures dans les sous-sols d‟un certain nombre de propriétés.
Remplacement de la conduite d‟eau principale de l‟avenue Woodroffe – Une
rupture de la conduite principale a eu lieu en janvier 2011, mais les travaux
n‟ont débuté qu‟en avril 2011. La préoccupation est de savoir si les travaux
auraient pu être réalisés en hiver ou au début du printemps. Les travaux
effectués en été ont dérangé les résidents, notamment les restrictions de
l‟approvisionnement en eau en raison du service d‟aqueduc temporaire.
Les demandes de modification ont été examinées dans les projets énumérés à la
figure 1 et cinq des projets soulevés par les conseillers, où des demandes de
modification étaient applicables. Au totale les demandes de modification de 15
projets ont été examinées.
Dans tous les projets, la vérification a permis de comparer les coûts aux
autorisations.
La vérification englobait les tâches suivantes.
Examen du cadre législatif.
Examen des politiques, des procédures, des normes et des pratiques de la Ville.
Examen des procédures, des normes et des pratiques de l‟industrie.
Examen des données de base.
Obtention et examen de tous les dossiers associés au projet.
Tenue d‟entrevues avec les personnes participant aux différents projets.
Tenue de visites des lieux au besoin.
Préparation du rapport préliminaire pour la vérification des faits.
Tenue d‟entrevues supplémentaires pour la confirmation des problèmes au
besoin.
Présentation du rapport préliminaire à la direction à des fins d‟examen.
1MERX est un service électronique d‟appels d'offres bien établi et bien connu de portée
pancanadienne qui existe depuis 1997.
T1 : T2 : T3 : T4 :
2011 2011 2011 2011
AVANT d‟éliminer les achats non disponibles
localement :
69,6 % 85,7 % 78,9 % 80,7 %
APRÈS avoir éliminé les approvisionnements
non disponibles localement :
91,4 % 92,9 % 97,6 % 93,7 %
Région Valeur en dollars % du total Valeur en dollars % du total Valeur en dollars % du total
Ottawa et
898 901 307 $ 94,5 % 754 027 060 $ 94,6 % 732 055 748 $ 95,4 %
environs
Ontario 22 897 121 $ 2,4 % 18 187 233 $ 2,3 % 24 918 710 $ 3,2 %
Québec 10 522 412 $ 1,1 % 13 028 587 $ 1,6 % 5 796 562 $ 0,8 %
Toutes les autres 18 607 380 $ 2,0 % 12 077 843 $ 1,5 % 4 805 783 $ 0,6 %
Total 950 928 220 $ 100,0 % 797 320 723 $ 100,0 % 767 576 803 $ 100,0 %
6. Nous croyons qu‟il est possible de réaliser des économies en publiant les
invitations à soumissionner pour des projets de construction sur des sites
largement utilisés et susceptibles d‟atteindre un vaste public à l‟extérieur
d‟Ottawa.
7. Les procédures utilisées par la Ville pour affecter les gestionnaires et les
inspecteurs de projet sont semblables à celles utilisées dans d‟autres
municipalités ontariennes.
8. Les tâches concernant l‟administration et l‟inspection des contrats sont bien
documentées dans le manuel d‟inspection élaboré par les Services
d‟infrastructure.
9. Les projets examinés, à une exception près, ont été réalisés selon le modèle de
marchés publics conception-soumission-construction. Le remplacement d‟un
ponceau sur le chemin Dunrobin a été réalisé selon un modèle temps et
matériaux.
10. La Ville procède à une analyse des soumissions pour tous les appels d‟offres en
comparant le coût estimé établi avant l‟appel d‟offres aux différentes
soumissions. Cette procédure est similaire à celle utilisée en général par les
autres municipalités de l‟Ontario.
11. La Ville utilise les documents contractuels officiels pour tous les contrats de
construction examinés.
24. De façon générale, la valeur des demandes de modification pour les nouveaux
projets de construction devrait osciller entre 2 et 3 % de la valeur du contrat
pour les projets très bien coordonnés; toutefois, les valeurs moyennes peuvent
atteindre 5 %. Dans le cas des projets qui constituent des agrandissements de
bâtiments, la valeur des demandes de modification devrait être plus élevée.
Dans le cas des grands travaux de génie civil, tels que les routes, les conduites
d‟eau principales, les égouts et les ponts, les valeurs acceptables des demandes
de modification sont comprises entre 5 et 10 % de la valeur du contrat. Les
demandes de modification sont habituellement requises en raison des
conditions rencontrées sur le chantier. La plage des valeurs généralement
acceptées a été établie par un architecte principal cumulant plus de 20 ans
d‟expérience et utilisée à titre d‟expérience type. Construction Delay Claims,
B. Bramble et M. Callahan, Construction Law Library, 2005, p. 5-26, précisent
que les demandes de modification peuvent varier de -5 à 10 %. The Architect‟s
Handbook of Professional Practice, 1994, de l‟American Institute of
Architects (AIA) stipule que la valeur des demandes de modification pourrait
atteindre 7 %. Le document des pratiques exemplaires de l‟AIA, Managing the
Contingency Allowance, David Hart, 2007, mentionne qu‟une valeur de 5 % est
couramment utilisée. Columbia University Facilities (http://facilities.
columbia.edu) parle d‟une plage de 5 à 10 %. En outre, la plage acceptable pour
les demandes de modification peut être corroborée par la plage habituelle des
fonds pour éventualités qui sont prévus dans les projets de génie civil.
25. L‟examen des demandes de modification présentées pour les divers projets
examinés a révélé que plusieurs de ces demandes découlaient de problèmes ou
d‟erreurs de conception ou, encore, d‟omissions. Les travaux effectués
conformément à une demande de modification coûtent généralement plus cher
que les mêmes travaux effectués conformément à une soumission originale.
Cette hausse des coûts s‟explique par le fait que l‟entrepreneur facturera le plein
prix pour le travail, les matériaux et les équipements qui seront requis puisqu‟il
n‟y a aucun concours et que l‟entrepreneur peut prendre une marge de 15 % sur
les coûts dans le cas des travaux qu‟il effectue lui-même ou de 10 % pour les
travaux effectués par un sous-traitant pour les frais généraux et le profit. Les
pourcentages de majoration ont été déterminés à partir des demandes de
modification examinées dans le cadre de la présente vérification. En revanche,
dans une soumission, les frais généraux et le profit de l‟entrepreneur sont
répartis dans l‟ensemble des éléments du projet.
26. Dans certains cas, le coût total de la demande de modification était le résultat
d‟erreurs et d‟omissions de la part du consultant. La Ville a payé la totalité de
ces coûts, sans exiger du consultant qu‟il assume les coûts supplémentaires.
27. Dans deux des projets examinés, le gestionnaire de projet a comptabilisé les
demandes de modification par catégories (p. ex. erreurs et omissions au moment
de la conception, coordination, demande du propriétaire, conditions du site et
autres). Une telle façon de procéder facilite les choses lorsque vient le temps
d‟établir les montants pouvant être recouvrés auprès des consultants. Il convient
de noter que ce ne sont pas tous les gestionnaires de projet qui procèdent ainsi.
Ce processus devrait être appliqué par tous les gestionnaires de projet.
28. La figure 5 résume les coûts des demandes de modification des différents
projets et la portion des coûts attribuable à des erreurs et à des omissions au
moment de la conception de la part des consultants. Des détails
supplémentaires sur chaque demandes de modification pour chaque projet sont
présentés à l'annexe A du rapport intégral.
29. La valeur des demandes de modification semble indiquer qu‟il pourrait y avoir
des problèmes. Cette question sera étudiée plus en profondeur dans notre
vérification des Services d‟infrastructure de 2013.
Figure 5 : Montants prévus aux contrats et demandes de modification
Nom du projet Montant Montant des Pourcentage Partie de la
initialement demandes de des demandes demande de
prévu au modification de modification modification
contrat par rapport au payée par la
montant Ville en raison
initialement d‟erreurs de
prévu au conception
contrat
1 Pavillon du parc Hornets Nest, 298 253 $ 35 097 $ 11,8 % 30 816 $
Gloucester
2 Pont Cavanagh 751 100 $ 167 918 $ 22,4 %
Transitway
Le manuel de conception du Transitway (Transitway Design Manual), octobre 1993,
contient des dispositions concernant l‟emplacement des trous d‟homme sur le
Transitway et précise que les trous d‟homme et autres dispositifs en métal ne
doivent pas se trouver dans la partie carrossable du Transitway. Les lignes
directrices en matière de conception des égouts (SDG 001) de novembre 2004
précisent qu‟il « faut tenter d‟éviter de placer les plaques d‟égout là où passent les
pneus des véhicules, sous réserve des exigences en matière d‟emplacement des
lignes directrices relatives à l‟emplacement des appareils de service public dans
l‟emprise », qui ont préséance. L‟examen des dispositions révèle que l‟emplacement
est adéquat. L‟examen ponctuel du Transitway a révélé que la conception de ce
dernier respectait ces dispositions.
Pont Cavanagh
1. Le contrat ISB04-7018 a été attribué en avril 2005 à la suite du remplacement du
pont Townline (voir section 4.3.3). L‟entrepreneur a commencé les travaux le
4 juillet 2005, les avait en grande partie terminés le 6 janvier 2006 et les a achevés
le 27 juin 2006.
2. Au début du contrat, la Ville a discuté avec l‟entrepreneur de problèmes liés à
diverses lacunes, à un manque de rendement et à la supervision de contrats
antérieurs effectués par l‟entrepreneur. La Ville et l‟entrepreneur ont convenu
que le rendement de l‟entrepreneur ferait l‟objet d‟un suivi pendant l‟exécution
du présent contrat.
3. La Ville a essayé de créer un formulaire d‟évaluation officielle des entrepreneurs
aux fins d‟utilisation ultérieure en se fondant sur un formulaire semblable au
formulaire d‟évaluation du rendement des entrepreneurs qui est inclus dans le
manuel du gestionnaire de projet.
4. La Direction de l‟approvisionnement, de concert avec les services, a élaboré un
document pour documenter les lacunes dans le rendement des fournisseurs, en
soumettant les problèmes constatés aux échelons supérieurs. Le document
contient des directives générales pour l‟application des dispositions des contrats,
y compris les avis de défaut et de résiliation de contrat. Toutefois, il s‟agit d‟un
document général destiné à l‟ensemble des processus d‟approvisionnement de
la Ville et qui n‟est pas suffisamment spécifique à la construction.
5. Les procédures ne comprennent pas de méthode d‟enregistrement du
rendement antérieur des entrepreneurs pour les projets de la Ville, et il n‟existe
pas de méthode précise pour appliquer les évaluations du rendement des
entrepreneurs pour un contrat donné aux processus de sélection ultérieurs pour
les contrats de la Ville.
6. Le formulaire d‟évaluation du rendement des entrepreneurs inclus dans le
manuel du gestionnaire de projet pourrait servir de fondement pour l‟évaluation
des entrepreneurs. Cependant, nous avons remarqué qu‟il ne se trouvait pas
dans les dossiers des projets examinés lors de la vérification.
ruptures de fils était similaire par kilomètre, mais qu‟un plus grand nombre de
tuyaux présentaient une détérioration plus grave. On a en effet constaté une
augmentation importante de la détérioration du tuyau en béton précontraint de
la conduite d‟eau principale par rapport à 2008.
11. Le gestionnaire de projet, qui était au courant que le processus d‟acquisition des
tuyaux pourrait s‟échelonner sur une longue période, a donc proposé l‟achat des
tuyaux auprès d‟un fournisseur unique qui pourrait livrer la quantité requise de
tuyaux dans les délais requis afin d‟accélérer l‟avancement des travaux. Il a
demandé le prix des conduites de remplacement au fournisseur et a reçu sa
réponse le 24 février 2011.
12. Le 1er mars 2011, le chef de projet a informé le fournisseur de tuyaux que la
Ville lui achèterait les tuyaux et les accessoires requis. Le 10 mars 2011, le
gestionnaire de projet a envoyé une autorisation du plan des dépenses
estimatives (E-SPA) au Service des achats pour les tuyaux. Le gestionnaire de
projet a mentionné dans le courriel que la Direction de l‟approvisionnement
avait été tenue au courant tout au long du processus, mais l‟examen des dossiers
n‟a pas permis de trouver de documentation confirmant que c‟était bel et bien le
cas.
13. Le 16 mars, le service des achats a demandé au gestionnaire de projet pour
quelle raison on avait opté pour un fournisseur unique et pourquoi le
fournisseur en question avait été choisi. Les échanges sur le choix d‟un
fournisseur unique se sont poursuivis jusqu‟au 30 mars, date à laquelle on avait
décidé de procéder à un appel d‟offres standard.
14. La correspondance révèle que, au moment de la rupture, en janvier 2011, la Ville
avait réparé la conduite d‟eau principale et envisageait d‟aller en appel d‟offres
pour le remplacement requis des tuyaux restants en vue du début des travaux à
l‟automne de 2011. Cependant, l‟évaluation de l‟état de la conduite d‟eau
principale entre la promenade David et le chemin Fallowfield a révélé que des
sections de la canalisation s‟étaient dégradées considérablement depuis 2008 et
qu‟il y avait une détérioration similaire dans le segment situé au nord du
chemin Hunt Club. D‟après ces résultats, la Ville a décidé de ne pas remettre en
service la section de conduite d‟eau principale allant du chemin Knoxdale à la
promenade Vaan jusqu‟à ce que le remplacement prévu de la conduite d‟eau
principale ait été achevé. Ainsi, la Ville a décidé d‟effectuer le remplacement de
la conduite et les travaux de réparation dès que possible au lieu de remettre
immédiatement la conduite d‟eau principale en service et de risquer un autre
bris.
15. Pendant que la conduite était hors service, l‟alimentation en eau des zones de
service de Barrhaven et de Riverside-Sud a été assurée par une conduite d‟eau
principale unique de 406 mm enfouie le long du chemin Merivale et complétée
par pompage. L‟alimentation temporaire a répondu à la demande pendant cette
22. Plutôt que d‟inclure un article avec des prix unitaires, la Ville devrait fournir
une allocation pour le coût des services ne comportant qu‟une marge pour frais
d‟administration pour l‟entrepreneur. Il serait préférable que l‟assistance
policière aux intersections soit facturée directement à la Ville par le Service de
police d‟Ottawa.
8. Les travaux, reposant sur le plan de conception révisé de la toiture, ont été
achevés en septembre 2010. Les coûts supplémentaires ont atteint 39 314 $ en
raison du changement de système de couverture et des retards que celui-ci a
engendrés.
9. Une analyse du calendrier du projet fait ressortir les points suivants.
Le consultant en conception n‟a pas fait preuve de diligence raisonnable en
ne vérifiant pas si le système de couverture présenté dans les documents
d‟appel d‟offres pourrait être effectivement installé.
Le consultant en conception a refusé d‟admettre que le système de
couverture proposé ne pourrait être installé jusqu‟à ce que l‟entrepreneur
et le fournisseur de matériaux de couverture aient démontré que
l‟installation de ce système n‟était pas réalisable pour ce projet.
La Ville a envisagé la possibilité de demander au consultant un
remboursement des coûts supplémentaires engendrés par le changement
du système de couverture et les retards que celui-ci a engendrés, mais a
décidé de ne pas donner suite à cette réclamation.
La Ville a mentionné avoir reçu les services du consultant sur un autre
projet en compensation des frais payés par la Ville sur ce projet. Toutefois,
l‟étendue des services offerts en compensation n‟est pas pleinement
documentée.
cette omission a entraîné des coûts de plus 1,6 million de dollars. Le Ville a
entrepris une poursuite contre le consultant en conception et le consultant en
géotechnique.
Égout collecteur de Cave Creek, phase 1 (de l’avenue Harmer à la rue Faraday)
1. Ce projet prévoyait la construction du nouvel égout collecteur de Cave Creek,
phase 1, de l‟avenue Harmer à la rue Faraday. Le contrat a été octroyé le
18 août 2010. Les documents d‟appel d‟offres exigeaient l‟achèvement
substantiel des travaux avant le 21 décembre 2010 et leur achèvement complet
avant le 15 mai 2011.
2. Le certificat d‟autorisation délivré par le ministère de l‟Environnement n‟a pas
été reçu avant le 14 septembre. Les travaux ont aussi été retardés par les travaux
de Bell, qui devait avoir quitté le site en septembre 2010, mais qui ne l‟a pas fait
avant novembre 2010.
3. Le contrat initial a été évalué à 3 505 330 $. Les demandes de modification du
projet se sont chiffrées à 367 888 $.
4. Environ 332 000 $ des coûts additionnels ont résulté du retard avec lequel ont
commencé les travaux de construction.
5. La Ville a payé 61 930 $ pour un égout pluvial avec ponceau à dalot, mais un
article du contrat prévoyait la fourniture et l‟installation d‟un ponceau de même
taille. La Ville a expliqué que le tronçon visé ne pouvait pas être payé en
fonction des prix unitaires parce que le tronçon d‟égout pluvial remplacé était
en béton coulé sur place et que son remplacement exigeait la démolition d‟un
ouvrage en béton existant, la mise en place de deux dalots en béton
préfabriqués, l‟installation de goujons destinés à lier le nouvel ouvrage au
ponceau en béton existant et la construction d‟un nouveau tronçon en béton
coulé sur place.
Réponse de la direction
La direction est d‟accord avec cette recommandation et celle-ci a été mise en
œuvre.
La Direction de l‟approvisionnement garde maintenant tous les documents sur le
dossier d‟approvisionnement confirmant que les exigences ont également été
affichées sur « Link2Build ».
Recommandation 2
Que la Ville officialise ses relations avec l’ACO et « Link2Build » et veille
notamment à ce que les droits d’examen et de vérification du processus de la
Ville soient consignés.
Réponse de la direction
La direction est d‟accord avec cette recommandation.
Recommandation 3
Que la Ville élabore une politique selon laquelle les gestionnaires de projets
seraient tenus de consigner dûment les erreurs et les omissions au moment de la
conception décelées dans le cadre du processus de surveillance de la
construction. Les gestionnaires de projets devraient être notamment tenus de
classer les demandes de modification par catégories (erreurs et omissions au
moment de la conception, problèmes de conception, conditions du site, etc.) de
manière à faciliter le recouvrement des coûts auprès des consultants.
Réponse de la direction
La direction est d‟accord avec cette recommandation.
La direction élaborera une politique et/ou des procédures sur la consignation
des erreurs et des omissions au moment de la conception décelées dans le cadre
du processus de surveillance de la construction d‟ici la fin du deuxième trimestre
de 2014.
Il convient de noter que certaines catégories (p. ex. conditions du site) ne
donnent pas lieu à un recouvrement des coûts auprès des consultants. (Voir la
réponse de la direction à la recommandation 4 concernant le recouvrement des
coûts.)
Recommandation 4
Que la Ville élabore une politique et les procédures sur le recouvrement des
coûts liés aux demandes de modification et des coûts d’ingénierie initiaux liés à
des éléments de construction précis auprès des consultants lorsque les coûts
additionnels résultent d’erreurs ou d’omissions commises au moment de la
conception.
Réponse de la direction
La direction est d‟accord avec cette recommandation.
La direction élaborera une politique sur le recouvrement des coûts liés aux
demandes de modification et des coûts d‟ingénierie initiaux liés à des éléments
de construction précis auprès des consultants lorsque les coûts additionnels
résultent d‟erreurs ou d‟omissions commises au moment de la conception. Cette
mesure sera mise en place avant la fin du deuxième trimestre de 2014.
Recommandation 5
Que la Ville élabore un système permettant la consignation du rendement des
entrepreneurs ayant obtenu des contrats municipaux et qu’elle élargisse le
processus d’évaluation des soumissions relatives à la construction afin d’inclure
formellement un critère de rendement antérieur des soumissionnaires au
processus d’évaluation des soumissions et d’octroi des contrats, l’objectif étant de
faire en sorte que les contrats soient accordés en tenant compte du rendement
antérieur, de l’expérience et du personnel en plus du prix le plus compétitif.
Réponse de la direction
La direction est d‟accord avec cette recommandation.
Actuellement, le processus d‟appels d‟offres de la Ville d‟Ottawa comprend une
disposition selon laquelle une entreprise doit avoir une expérience concluante
dans la réalisation de projets d‟envergure et de complexité semblables. Les
entreprises qui sont incapables de faire la preuve d‟une telle expérience sont
jugées irrecevables et ne se voient pas accorder le contrat.
Un projet a été lancé au sein de la Direction de l‟approvisionnement. Il vise à
permettre la mise au point d‟un système électronique qui enregistrera le
rendement antérieur d‟un entrepreneur et y donnera suite. Ce système sera mis
en place avant la fin du quatrième trimestre de 2014. Les Services
d‟infrastructure travailleront avec la Direction de l‟approvisionnement à
déterminer comment le rendement antérieur affectera l‟octroi des contrats à
l‟avenir.
Recommandation 6
Que la Ville s’assure que, dans le cas des ponceaux pour lesquels on envisage
une réduction de la capacité d’écoulement, le processus de réfection comprenne
la réalisation des études de conception hydrologique et hydraulique requises.
Réponse de la direction
La direction est d‟accord avec cette recommandation et celle-ci a été mise en
œuvre.
Depuis février 2011, Gestion des biens immobiliers a modifié ses pratiques par
l‟ajout d‟une évaluation hydraulique pour les options de réfection des ponceaux
susceptibles d‟entraîner une réduction de la capacité d‟écoulement.
Recommandation 7
Que la Ville mette en œuvre un programme d’inspection de ses conduites d’eau
principales critiques qu’elle sait exposées à un environnement corrosif ou qu’elle
soupçonne de l’être; que la Ville prenne les mesures qui s’imposent en fonction
des résultats des inspections.
Réponse de la direction
La direction est d‟accord avec cette recommandation et celle-ci a été mise en
œuvre.
En juin 2012, les Services environnementaux ont présenté au Comité de
l‟environnement un rapport sur un programme d‟évaluation conditionnel pour
les conduites principales d‟eau potable (ACS2012-COS-ESD-0014). Ce rapport
expose une approche fondée sur les risques pour l‟inspection et la gestion des
conduites d‟eau principales.
Recommandation 8
Que la Ville présente au Conseil, dans le cadre du Rapport annuel du système de
gestion de la qualité de l’eau potable, un sommaire des inspections menées à
l’égard de ses conduites d’eau principales critiques, y compris un plan d’action
pour la réparation des conduites désignées comme étant en très piètre condition.
Réponse de la direction
La direction est d‟accord avec cette recommandation.
Un sommaire des inspections concernant les conduites d‟eau principales
critiques, y compris un plan d‟action pour la réparation des conduites désignées
en très piètre état, sera incorporé au Rapport annuel du système de gestion de la
qualité de l‟eau potable de 2013, lequel sera soumis au Conseil au deuxième
trimestre de 2014.
Recommandation 9
Que la Ville modifie le mode de paiement des services municipaux dispensés par
d’autres services de la Ville afin que ceux-ci ne donnent pas aux entrepreneurs la
possibilité de réaliser des profits indus.
Réponse de la direction
La direction est d‟accord avec cette recommandation.
La direction mènera un examen des exigences qui modifieront le mode de
paiement des services municipaux dispensés par d‟autres services de la Ville afin
de ne pas donner aux entrepreneurs la possibilité de réaliser des profits indus. À
moins que des restrictions ne soient précisées, cette mesure sera en place avant la
fin du deuxième trimestre de 2014.
Recommandation 10
Que la Ville s’assure que des contraintes opérationnelles, telles que l’exploitation
d’un contrôleur en temps réel, soient clairement décrites dans les documents
contractuels et que le risque lié à la surveillance des prévisions météorologiques
soit transféré à l’entrepreneur.
Réponse de la direction
La direction est d‟accord avec cette recommandation.
La direction travaillera avec Services environnementaux pour faire en sorte que
les contraintes opérationnelles soient entièrement décrites dans les documents
contractuels et que le risque lié à la surveillance des prévisions météorologiques
soit transféré à l‟entrepreneur. Cette mesure sera intégrée aux modalités
contractuelles avant la fin du deuxième trimestre de 2014.
Recommandation 11
Que la Ville spécifie, dans les projets de renouvellement des égouts,
l’emplacement des conduites de dérivation du réseau d’égout et exige de
l’entrepreneur qu’il situe toute conduite de dérivation sur des emprises ou des
servitudes établies. Les entrepreneurs qui proposent d’autres tracés sur d’autres
emplacements le feront à leurs risques et à leurs frais, y compris les
conséquences des retards.
Réponse de la direction
La direction est d‟accord avec cette recommandation.
Dans tous les futurs contrats de renouvellement des égouts, la Ville exigera que
les conduites de dérivation soient situées sur des emprises et des servitudes
établies. Si l‟entrepreneur propose d‟autres emplacements, le contrat devra
spécifier que ce sera à ses risques et à ses frais, y compris les conséquences des
retards. Cette mesure sera intégrée aux modalités contractuelles avant la fin du
deuxième trimestre de 2014.
Recommandation 12
Que la Ville modifie le document de délimitation de sorte que les engagements
pris par tous les services soient explicitement examinés dans ce document.
Réponse de la direction
La direction est d‟accord avec cette recommandation.
La direction modifiera le document de délimitation de sorte que les engagements
pris par tous les services soient explicitement examinés dans ce document. Cette
mesure sera en place avant la fin du deuxième trimestre de 2014.
Recommandation 13
Que la Ville informe les gestionnaires de projets que les dommages-intérêts sont
utilisés pour amener les entrepreneurs à respecter leur calendrier, mais qu’ils ne
sont efficaces que dans la mesure où les gestionnaires de projets les facturent aux
entrepreneurs.
Réponse de la direction
La direction est d‟accord avec cette recommandation et celle-ci a été mise en
œuvre.
Durant le troisième trimestre de 2013, la direction a émis une directive pour faire
en sorte que les gestionnaires de projets imposent des dommages-intérêts aux
entrepreneurs en conformité avec les documents d‟appel d‟offres standard de la
Ville.
Conclusion
Le processus de supervision des contrats de construction de la Ville est exhaustif et
comparable à celui utilisé par d‟autres municipalités et par le ministère des
Transports de l‟Ontario.
La vérification a permis de constater qu‟une proportion substantielle de la hausse
des coûts associés aux demandes de modification résultait d‟erreurs et d‟omissions
des consultants et que la Ville ne recouvre pas ces coûts auprès des consultants. Elle
le fait pour les demandes de modification présentées par Hydro Ottawa et devrait
aussi le faire pour les demandes de modification requises en raison des erreurs et
des omissions des consultants.
Remerciements
Nous tenons à remercier la direction pour la collaboration et l‟assistance accordées à
l‟équipe de vérification.
1 BACKGROUND
1.1 Introduction
The Audit of Construction Supervision was included in the 2012 Audit Plan of the
Office of the Auditor General (OAG), approved by City Council on December 14,
2011.
Infrastructure
Services
Department
Construction services are provided by the three design and construction branches,
namely: Municipal East; Municipal West; and, Buildings & Parks.
2 SCOPE
The audit scope consists of a review of the construction supervision process used
during construction of capital works projects by the City. The projects examined
were constructed in 2010 and 2011, except for two that were constructed in 2004 and
2006.
The audit examined the projects listed in Table 1 below, which were brought to the
attention of the Auditor General by Councillors. The review focussed on the
specific concerns raised by the Councillors, in addition to the overall review of the
delivery of construction services.
Table 1: Projects Referred by Councillors
Project Concerns of the Councillors
1 Transitway Installation of manhole covers along the travelled
lanes and on the path of the bus wheels.
2 Gloucester Hornets Nest Review of cost compared to the size of the project;
review of the procurement process.
3 Townline Bridge Contractor with poor performance was awarded
Replacement, Structure the contract, previous project not completed on
433080 time, increase in risk to City. Note that this project
was completed in 2004.
4 Cavanagh Bridge (John Contract awarded to same contractor as Structure
Shaw Road), Structure 433080, the issues are the same. Note that this
433040 project was completed in 2006.
5 Dunrobin Road Culvert, Culvert was flooded, was rehabilitated, flooded
Structure 338180 again, and was replaced completely in 2011.
6 King Edward Avenue Concerns with basement cracks in a number of
Reconstruction properties.
7 Woodroffe Avenue Following a watermain break in January 2011,
Watermain Replacement construction did not start until April 2011. The
concern is whether the work could have been done
in the winter or early spring. Summer construction
affected the residents, including water restrictions
due to the temporary water service.
8 John Leroux (Stittsville) The roof repairs were delayed until late 2009
Arena Upgrades because the materials did not fit the curvature of
the roof; work was not completed until 2010.
9 Goulbourn Recreation Ice pad addition was started in 2011 and
Complex completed in 2012. There is a concern with quality
assurance and control, and how they may affect
the warranty.
In order to provide context of the overall process to the review of the above
projects, ten projects completed in 2011 and 2012 were examined, representing a
total construction value of $123,766,000, which constitute approximately 11% of the
total budget value of the projects that were active in the City in 2011. The 10
projects were of small, medium and large size. The following projects were selected
as a representative sample based on these criteria:
Table 2: Selected Projects Reviewed
Per Infrastructure Services Department
Projects Estimate at
Completion
Cost ($000s)
1 SW Transitway Extension (North) Stage 1 - Fallowfield to $17,568
Berrigan
2 Woodroffe Ave. Watermain Replacement (Baseline to Navaho) $4,827
3 Sandridge Rd (Hillsdale Rd to Merriman Ave) - Road, $8,000
Watermain & Sewer
4 Centrepointe Theatre Expansion $11,850
5 West Nepean Collector Sewer - CIPP Rehabilitation $3,800
6 Campeau Dr. Water Pumping Station $3,500
7 Strandherd Dr. (Crestway to Prince of Wales) incl. widening of $35,000
Prince of Wales
8 3W Feedermain Link - Phase 1, Part 1 (Ottawa River Pkwy to $32,000
Moodie Drive)
9 Cave Creek Collector, Phase 1 (Harmer to Faraday) $6,000
10 Prince of Wales Roundabout Reconstruction at Central $1,221
Experimental Farm
TOTAL Estimate at Completion Cost of Projects Examined $123,766
Change orders were reviewed in the projects listed in Table 1 and five of the
projects raised by Councillors, where change orders were applicable. In total
change orders of 15 projects were reviewed.
In all projects, we reviewed the costs in comparison with the authorities. Particular
attention was given to the change orders.
The audit encompassed the following tasks:
Review legislative framework;
Review City policies, procedures, standards and practices;
2.7 Interviews
Interviews were held with City staff involved in the various projects.
3 OBJECTIVES
On the basis of the information gathered during the preliminary assessment, and
the corresponding analysis of that information, the scope of the audit was
synthesized in the audit objectives. The criteria attached to each audit objective
explain the scope of the review. These were presented in the Audit Plan, which was
reviewed by the City.
Audit Objective No. 1 - Examine and evaluate the processes and methodologies
pertaining to the Construction Supervision Procedures followed by the City.
Criteria:
Review of tender documents
Examination of tendering process, including design/build projects
Procedures for selection of contractor
Review of contract documents
Construction administration files
Assignment of project manager, project supervisor and inspectors
Construction inspection tasks and procedures
Procedures for management of change orders and extra work orders
Claims process procedures
Audit Objective No. 2 - Determine whether the processes and methodologies are
consistent and compliant with all relevant policies, procedures, legislation and
regulations.
Criteria:
Project management procedures
Procedures for transfer of project from design to construction
Tendering process
Procedures for selection of contractor
Contract administration process
Cost control
Management of change and extra work orders
Inspection procedures
Management of claims by contractor
Audit Objective No. 3 - Examine nine specific projects and specific issues brought
to the attention of the Auditor General by Members of Council, to determine if they
are consistent with relevant policies, procedures, legislation, and regulations.
Criteria:
Review of specific projects and issues indicated by Councillors
Selection of type of contract
Project management procedures
Procedures for transfer of project from design to construction
Procedures for selection of contractor
Contract administration process
Inspection procedures
Quality control and quality assurance procedures
Claims management
Cost control
Criteria:
Review of ten sample projects
Selection of type of contract
Project management procedures
Procedures for transfer of project from design to construction
Procedures for selection of contractor
Contract administration process
Inspection procedures
Quality control and quality assurance procedures
Claims management
Cost control
rock salt mined locally), approximately 94.5% of the City‟s annual purchasing dollar
was spent in Ottawa and the surrounding area.
Table 3: Analysis of Local Purchasing by Quarter
Per Supply Branch
Q1: Q2: Q3: Q4:
2011 2011 2011 2011
BEFORE removing purchases not available locally: 69.6% 85.7% 78.9% 80.7%
AFTER removing purchasing not available locally: 91.4% 92.9% 97.6% 93.7%
Region Dollar Value % of Total Dollar Value % of Total Dollar Value % of Total
Supply Branch did a 2011 “buy local” analysis isolating only construction contracts.
Based on this analysis, 808 of the total 884 construction contracts awarded in 2011
(91.4%) were awarded to local firms. When considering dollar value, this figure
rises to 96.6%.
Table 5: 2011 “Buy Local” of Construction Contracts
Per Supply Branch
# of
% of Dollar
Region Construction Dollar Value
Value
Contracts
Ottawa & Area 808 $397,711,493 96.6%
Ontario 50 $11,995,007 2.9%
Quebec 21 $1,845,407 0.4%
Other 5 $226,940 0.1%
Total 884 $411,778,847 100.0%
Recommendation 1
To provide a wider circulation of tenders, that the City, in addition to posting
tenders with the Ottawa Construction Association, ensure that all tenders are
posted on “Link2Build” and retain documentation of this.
Management Response
Management agrees with this recommendation and it has been implemented.
Supply Branch now retains documentation on the procurement file confirming
that the requirement was also posted on “Link2Build”.
The projects examined, with one exception, were constructed using a design-tender-
construction format of procurement. The Dunrobin Road culvert replacement was
constructed using a time-and-materials basis immediately after the second flood
event, due to the need to re-open the road very quickly. None of the projects
referred by the Councillors and those selected as representative projects were
constructed using a design/build process.
The City carries out a bid analysis for all tenders, comparing the Cost Estimate
prepared before tendering with the various bids. In general the bid analysis
compares the prices for the various components (items) of the contract to enable the
project managers to assess any trends in the various bids. Awards are made in
accordance with the selection methodology identified in the solicitation document.
This procedure is similar to that used generally by other Ontario municipalities.
The contractor is selected based on the methodology identified in the solicitation. In
the case of the projects examined this was based on lowest responsive bid.
The City does not have a policy and procedures to enable explicit evaluation of the
past performance of contractors on previous City contracts when determining the
award of a new contract. The City advises that a prequalification process is used in
large complex projects, and that it has the right to request a firm‟s experience in
successfully completing projects of similar size and complexity. However, the City
does not always use these methods, and past performance does not enter explicitly
into the bid evaluation. As a result, contracts are awarded to the lowest bidder
meeting the bonding and insurance requirements.
The City has developed a document for reporting supplier performance during the
course of a contract; however, if the contractor completes the contract without
default, they are eligible to bid in future City contracts; even if the contract process
is fraught with difficulties, delays, and extra costs caused by poor contractor
performance. The only penalty considered is if Supply Branch barrs the contractor
from bidding on future City projects. A performance evaluation method that is
taken into account in the evaluation of future bid opportunities is necessary to
distinguish between contractors who perform well from those who do not.
Past performance should be documented and a rating system established to enable
the City to take into account contractors past performance when they are competing
for new work. The City currently has a Contractor Performance Appraisal Form to
document performance; the form is included in Appendix X-2 of the Project
Manager Manual. This form, with some modifications, would be a good basis for
contractor performance evaluation, as discussed in the previous point. We note
that the Contractor Performance Appraisal Form was only found in the Townline
Bridge project file and not in any other reviewed project file.
generally helps ensure that the contractor does not remove more materials than
needed.
In general terms, change orders in large building projects on new buildings can be
expected to have a value ranging between 2% and 3% of the contract value on very
well coordinated projects; however, average values can be as high as 5%. On
projects that are additions to other buildings the value of change orders is expected
to be higher. For heavy construction projects, such as roads, watermains, sewers,
and bridges, acceptable values of change orders range from 5% to 10% of the
contract value. The changes are expected to be the result of site conditions.
These values were determined based on the experience of a senior architect with
more than 20 years of experience, and was used as a typical experience.
Construction Delay Claims, B. Bramble & M. Callahan, Construction Law Library,
2005, p. 5-26 states that change orders can range from -5% to +10%. The American
Institute of Architects (AIA), The Architect’s Handbook of Professional Practice, 1994
states that the changes could be as high as 7%. AIA Best Practice document,
Managing the Contingency Allowance, David Hart, 2007, indicates a value of 5% is
commonly used. Columbia University Facilities (http://facilities.columbia.edu)
provides a range of 5% to 10%. In addition, the acceptable range of change orders
can be supported by the usual range of contingency allowances that are provided in
civil construction projects.
Review of the change orders for the various projects examined disclosed that
several were the result of design errors and omissions. Work performed under a
change order is generally more costly than if the same work is performed under the
original tender bid. The reason for the higher cost is that the contractor will charge
full price for labour, materials, and equipment required to carry out the work (since
there is no competitive process), plus the contractor is entitled to mark up the cost
by 15% in the case of work done by the contractor or 10% for work done by a sub-
contractor for overhead and profit. In contrast, contractor's overhead and profit are
distributed throughout the project items in a bid.
In some instances, the cost of the entire change order was the result of consultant's
errors and omissions, but the City paid the entire cost, without requiring the
consultant to cover the additional costs. As discussed later in this report, the City
should have a policy and procedures to enable recovery of unwarranted costs when
they are the result of design errors and omissions.
On two of the projects reviewed the respective project manager classified the
change order into categories (e.g., design errors and omissions, coordination, owner
request, site conditions, and others). This procedure is important to assist in
recording the amounts that could be recovered from the consultants. Not all project
managers follow this procedure, but should.
Recommendation 2
That the City formalize its relationship with the Ottawa Construction
Association and “Link2Build”, including ensuring that the City’s rights to review
and audit the processes are documented.
Management Response
Management agrees with this recommendation.
Supply Branch will formalize the City‟s relationship with the Ottawa
Construction Association (OCA) and “Link2Build” including ensuring that the
City has the right to review and audit the documented processes, by the end of
Q4 2013.
Recommendation 3
That the City develop a policy to require project managers to formally document
design errors and omissions found during the construction supervision process.
The documentation should include the requirement for project managers to
classify change orders into categories, such as design errors and omissions,
design issues, site conditions, etc., to facilitate the recovery of costs from the
consultants.
Management Response
Management agrees with this recommendation.
Management will develop a policy and/or procedures to document design errors
and omissions found during the construction supervision process by Q4 2014.
It should be noted that some categories, (i.e., site conditions) will not result in
cost recovery from consultants. (See Management Response to Recommendation
4 with regard to cost recovery).
Table 6 summarizes the costs of change orders for the various projects, and the
portion of the cost that was due to design errors and omissions by consultants.
Details on individual change orders for each project are provided in Appendix A.
The amount of the change orders suggests that there may be issues with this matter.
This will be explored further in our 2013 Audit of Infrastructure Services.
Table 6: Contract Amounts and Change Orders
Project Name Original Change Percentage of Portion of the
Contract Order Change Orders in Change Order
Amount Amount Relation to Paid by City
Original Contract Relating to
Amount Design Errors
1 Gloucester Hornets $298,253 $35,097 11.8% $30,816
Nest Fieldhouse
2 Cavanagh Bridge $751,100 167,918 22.4%
Note that the percentage of the change orders due to design errors and omissions is
22% of the change order value.
4.3.1 Transitway
The “Transitway Design Manual, October 1993” has provisions for the placement of
manholes on the Transitway. Specifically, Section B.3.5 - Catchbasin Spacing and
Grates states that surface ironwork, including manholes, valve chambers, etc. shall
not be placed on the travelled portion of the pavement. In Section B.7.1 – Utilities
the Design Manual states that Utilities (i.e., utility companies) should be
discouraged from locating their plant within the Transitway, and reiterates that no
surface ironwork shall be permitted on the travelled portion of the Transitway.
The Sewer Design Guidelines, SDG001, November 2004 in Section 6.2.2 Locations and
Spacing states that attempts should be made to avoid locating manholes in the path
of vehicle tires, subject to the location requirements of the Guidelines for the
Placement of Utilities in the Right-of-Way", which takes precedence.
Review of the provisions show that they are adequate. Spot examination of the
Transitway disclosed that its design follows these provisions.
reviewing the change orders it is concluded that change orders totalling $30,816
were mostly necessary due to design issues. The drawings show that the parking
lot located east of the addition slopes to the site, so it would have been reasonable
to expect that surface runoff would reach the construction site. Although the soils
report indicated that the groundwater levels at the time of the investigation were
lower than the bottom of the excavations, the seasonal fluctuation in groundwater
levels should have been taken into account.
Although the work incorporated into the project was necessary, the costs of the
additional work is higher when done by change order than when it is included
from the beginning in the tender bid, because there is no competitive process at that
time. Based on the change orders in the projects reviewed, the contractor‟s
overhead and profit mark-up on any change is 10% for sub-contractors and 15% for
the general contractor; these mark-ups are added to the cost of doing the work,
which generally already includes profit margin.
The change orders addressed the need to add more step footings to the new
foundation to prevent undermining of the existing foundation; the cost of winter
protection to concrete due to groundwater issues; and the cost of a drainage system
to address surface and groundwater issues.
The specific errors and omissions comprised:
An error in the design of the footings adjacent to the existing building footings:
Although the design drawings show that the design engineer was aware that the
existing footings where higher than the footings for the new building, and thus had
the required information to know that a step would be necessary, the design
engineer did not address that the new footings could not be excavated lower than
the existing ones without undermining them. A field instruction and additional
cost was required to correct this issue.
A design error in addressing the drainage to the site: The design engineer did not
address that, as it is shown on the drawings, the drainage from the parking lot is
directed by the existing grades toward the fieldhouse extension, and as a result,
significant water problems occurred during construction.
The mistaken conclusion from the geotechnical report that the groundwater
elevation would be lower than the footing foundation elevations: Although the
geotechnical investigation found that the water table at the time of the field
investigations was below the foundation levels, it is well known that the water table
elevations fluctuate seasonally. The design did not include any provisions for
drainage of groundwater away from the footings, and had to be added during
construction.
As will be seen in other projects reviewed, the cost of design errors and omissions
can be substantial. Based on the cost of overhead and profit mark-up (15%), as
indicated in the change orders, in this particular case the additional cost calculated
as 15% of the value of the change orders is approximately $4,000.
Recommendation 4
That the City develop a policy and procedures to be followed to recover the costs
of construction changes and original engineering costs related to the specific
component from the consultants when the additional costs are caused by design
errors or omissions.
Management Response
Management agrees with this recommendation.
Management will develop a policy and/or procedures to recover the costs of
construction changes and original engineering costs related to a specific contract
component when the additional costs are caused by design errors or omissions.
This work will be completed by Q2 2014.
In the bid for the subject bridge contract, the contractor met all the bid
requirements, including provision of a bid deposit and agreement to bond, and
subsequently met all insurance and bonding requirements.
Upon completion of this contract in July 2004, it could be concluded that the
contractor completed the work satisfactorily, but had schedule problems.
Recommendation 5
That the City develop a system to record contractor performance in City contracts,
and that the City expand the construction bid evaluation process to include
formally the past performance of the bidder in the evaluation and award of
contracts, so that contracts are awarded on the basis of past performance,
experience, and staffing in addition to lowest cost.
Management Response
Management agrees with this recommendation.
Currently, City of Ottawa construction bid solicitations include a provision
whereby a firm must have experience successfully completing projects of similar
size and complexity. Firms that are unable to demonstrate this experience are
deemed non-responsive and are not awarded the contract.
A project has been initiated within Supply Branch to develop an electronic
system to record and act on a Contractor‟s past performance. This system will be
implemented by Q4 2014. ISD will be working with Supply Branch on how
contractors‟ past performance will be affecting future award of contracts.
On June 24, 2011, the road was overtopped a third time in less than one year. On
this occasion the City decided to keep the road closed and to replace the culvert.
The contractor who had been called in by the City to repair the road was retained
using a time and materials basis to complete the culvert replacement. This time the
new culvert was selected on the basis of the consultant hydraulic recommendations
and the pipe that was available from the manufacturer for rapid delivery.
The issues with this project are that the initial renewal process, which concluded in
the sliplining rehabilitation in 2007, did not follow the formal procedures for
evaluation of renewal alternatives of bridges and bridge-culverts. The hydrology
and hydraulic calculations were not sufficiently thorough to permit the City to
recognize that the hydraulic capacity had been reduced, or the implications of this
reduction.
Recommendation 6
That the City ensure that for culverts where a reduction in conveyance capacity is
being considered, the renewal process includes undertaking the required
hydrology and hydraulic design.
Management Response
Management agrees with this recommendation and it has been implemented.
Since February 2011, the Asset Management Branch has modified its practice to
include a hydraulic assessment for culvert renewal options that would result in a
reduction in the hydraulic conveyance capacity.
The report recommended that the four pipes in Repair Priorities 1 and 2 be
excavated and inspected externally to confirm the level of distress, and to replace
the pipes accordingly. We did not find a record that the additional inspection
recommended was carried out.
Based on the results of the failure risk analysis report, dated February 2009, the
Priority 1 pipes should have been replaced within one year.
The City stated that the section of pipe north of Hunt Club Road had never been
inspected prior to the failure in January 2011. Given the findings of the 2008
condition assessment and the 2009 failure risk assessment, and the fact that the
watermain north of Hunt Club Road was constructed two years earlier, using the
same materials, and placed in similar soil conditions, we reviewed whether it may
have been prudent for the City to have done, in 2009, a condition assessment of the
watermain north of Hunt Club Road at least to the limits of the original
construction contract.
After discussion with the City, it became clear that the section of pipe where the
Priority 1 pipes were located has different characteristics from the remainder of the
watermain. The section south of Hunt Club Road is at a considerably shallower
depth than the section north of Hunt Club Road, making it subject to a higher risk
of corrosion. The majority of the pipe sections with more advanced deterioration
were located in the shallower sections, suggesting that the basis for the inspection
limits were reasonable. In addition, inspections of large watermains pose important
operational constraints. On this basis, it was agreed that the limits chosen by the
City for inspection in 2008 were reasonable.
The design for the replacement of the four pipes south of Hunt Club Road in
Priority 1 and 2 started in December 2009, with original schedule of construction
start for October 2010, which is 8 months later than the Priority 1 failure risk
indicated. The original design schedule was to have the design completed and the
tender package ready before June 2010.
At a scheduling meeting on January 12, 2010, the City decided that the project
would be postponed, but that the design should be ready for construction in case an
emergency required the work to proceed. This decision was made based on other
risks to the water system. Drinking Water Services carried out a transient analysis
(maximum water pressure analysis) in 2009 to assess the likelihood and magnitude
of transients that could affect the pipes. This decision was communicated to the
project manager by a senior watermain rehabilitation engineer on May 19, 2010,
who indicated that the delay was due to other potentially conflicting demands on
the system, that the watermain and transient pressures would be monitored by
Operations, and that the design should proceed to completion in case an emergency
repair became necessary. The City has indicated that the decision to delay the
repairs was made based on other risks to the water system that would not have
been apparent to the consultant conducting the inspection at the time.
The City indicated that an assessment was performed to determine the likelihood
and magnitude of transients through routine operations.
Following the major watermain break on January 14, 2011, the City reactivated the
project design, with the initial intention of including the failed section repairs in the
contract. However, the drawings were only at 60% completion and there were no
contract documents ready, which indicates that the design was stopped once the
City notified the project manager that the contract had been postponed. The fact
that the drawings were not ready did not impact the 2011 construction schedule,
although it could have been a concern had one of the Priority 1 pipe segments failed
before the scheduled construction.
At the time of the January 2011 watermain break, construction of the Zone 2W
(West) – Section 2C feedermain was in progress, so the City Design and
Construction explored the possibility of extending the contract to include the
watermain north of Hunt Club Road. However, Asset Management and Drinking
Water Services suggested that a condition assessment of the Woodroffe Avenue
watermain be done first to identify areas of concern. This time the assessment
extended north of Hunt Club Road, the section of watermain that had similar
characteristics as the watermain south of Hunt Club Road, in addition to the section
done in 2008 (Hunt Club Road to Fallowfield Road).
The 2008 assessment included approximately 3 km of pipe. The 2011 assessment
included 5 km of pipe, which showed three additional pipes in need of repair
including the section that failed in 2011.
On February 7, 2011, the project manager warned for the first time that the pipe
supply could take up to three months as pipe suppliers were very busy. He started
getting prices from the suppliers who could deliver the replacement pipes within
the schedule required to expedite construction for the spring.
On February 24, 2011, Asset Management provided Design and Construction - West
with a Scoping Document based on the findings of the condition assessment. When
comparing the 2008 and 2011 conditions assessments, it was found that the number
of pipe sections with wire breaks was similar on a per km basis, but a greater
number of pipes had more severe deterioration. They did find a substantial
increase in deterioration in the prestressed concrete pipe watermain from 2008. On
the same date, the City received the pricing for the replacement pipes.
On March 1, 2011 the project manager informed the pipe supplier that the City
would proceed with buying the pipe and appurtenances required. On March 10,
2011 the project manager sent an Estimated Spending Plan Authority (E-SPA) to
Purchasing for the pipe. The project manager indicates in the email that Supply
Branch had been kept apprised all along, but review of the files found no
documentation to confirm that this was the case.
On March 16, Purchasing asked the project manager for the reason for sole sourcing
the pipe and for selecting the company. The discussion about sole sourcing the
pipe extended to March 30th, at which time the decision was to proceed with a
standard tender.
The correspondence shows that at the time of the break in January 2011, the City
repaired the broken watermain and it scheduled the required replacement of the
remaining pipes to tender the project for work in the fall of 2011. However, the
condition assessment of the watermain from David Drive to Fallowfield Road
disclosed that sections of the watermain had deteriorated substantially since 2008
and that there was similar deterioration in the segment north of Hunt Club Road.
Based on the results, the City decided to not return to service the section of
watermain from Knoxdale Road to Vaan Drive until the required watermain
replacement was completed, in order to not risk another watermain break if it was
returned to service without the repairs. On this basis, the City decided to carry out
the watermain replacement and repair work as soon as possible.
While the pipe was out of service, supply to the Barrhaven and Riverside South
service areas was being provided through a single 406 mm watermain along
Merivale Road, supplemented by in-line pumping. The temporary supply met the
demand at the time, but hydraulic modelling indicated that it would meet only 75%
of the Maximum Day Demand.
At the end of February 2011, the results of the condition assessment and the
hydraulic modelling showed that construction could not be postponed until the fall,
and it was scheduled for tendering as soon as possible.
Recommendation 7
That the City undertake a program for inspecting its critical water transmission
mains where they are known or suspected to be exposed to corrosive
environment, and that it takes action based on the results of the inspection
findings.
Management Response
Management agrees with this recommendation and it has been implemented.
In June 2012, Environmental Services presented to Environment Committee a
report on a condition assessment program for drinking water transmission mains
(ACS2012-COS-ESD-0014). This report outlines a risk-based approach to the
inspection and management of water transmission mains.
Recommendation 8
That the City submit to Council as part of the Drinking Water Quality
Management System annual report a summary of inspections on critical water
transmission mains, including an action plan for correction of pipes identified to
be in very poor condition.
Management Response
Management agrees with this recommendation.
A summary of inspections on critical water transmission mains, including an
action plan for correction of pipes identified to be in poor condition, will be
reflected in the 2013 Drinking Water Quality Management System (DWQMS)
Annual Report to be presented to Council in Q2 2014.
Review of the change orders for this project found that they were fully documented
and were reviewed by the contract administrator and project manager. In general
terms, the change orders are necessary to expedite the project.
The “police assistance at intersections” item is a concern: Due to the level of traffic
congestion on Woodroffe Avenue, it was necessary to have point duty police on a
daily basis. The original tender did not anticipate this amount of point duty for the
project. The additional cost was $247,637, paid by variation in the tender quantities
at the tender price. The total price paid was $313,638. Review of the invoices to the
contractor for 1,140.5 hours of police service show that the cost was $214,346, based
on $188 per hour. The contractor was paid $99,292 or 46% mark-up on police cost.
The specification F-1012 allows one hour of contractor‟s organization/site
supervision for each hour of police assistance at $40 per hour. In addition, it allows
mark-up of 10% for contractor‟s overhead and 10% contractor‟s profit. It is hard to
understand how there needs to be 1 hour of contractor‟s organization and
supervision for each hour of police assistance. In our opinion, the unit price is very
generous. Even reducing the time allowed for contractor‟s
organization/supervision to 1 hour per 8-hour shift would reduce the unit price to
$233 and the City would have paid $266,258, leaving a profit to the contractor of
24%. If the mark-up for contractor‟s profit is eliminated, the unit price becomes
$212 and the City would have paid $242,053, leaving a profit to the contractor of
13%. This is an operation that has no risk to the contractor, so it should not be
subject to profit.
The project manager should have negotiated the cost of this item, as it clearly was a
very significant variation in the quantities, and the general conditions of the
contract contained provisions for such eventuality. In addition, the manner in
which the item is paid provides the contractor with a profit on a service provided
by a City service to another. In fact, the profit margin is 46% even if the number of
hours in the contract is not exceeded.
Rather than include an item with unit prices, the City should provide an allowance
for the cost of the services, with only an administration markup for the contractor.
A better option would be to have Ottawa Police Service invoice the City directly for
the services.
Recommendation 9
That the City modify the payment method for services from other City services so
that they do not provide an unwarranted profit to the contractor.
Management Response
Management agrees with this recommendation.
Management will conduct a review of the requirements that will modify the
payment method for City services from other City services so that they do not
provide an unwarranted profit to the contractor. Unless specific restrictions are
identified, this will be implemented by Q2 2014.
The contractor submitted on May 15, 2009 a quotation for the contemplated change
order that provided the breakdown of credits and additional costs for the change;
the additional cost was $149,000. The additional costs were reviewed and accepted
by the City, but no formal authorization to proceed with the change was issued to
the contractor.
On May 26, 2009, the contractor advised the City that the purlin covers and interior
hat channels had been ordered on May 20, 2009, but the manufacturer estimated
delivery for June 4th or 5th. The City noted that the purlins must be fully installed
over the slab area before the summer camps start on June 22, 2009, since no interior
work over the slab would be able to proceed after that date. The contractor
responded that they could not commit to that date, and reminded the City that the
changes had not been authorized.
On June 1, 2009, the contractor submitted an alternative roof system for
consideration by the City. The contractor stated that authorization to proceed
would be required by June 3, 2009 to permit completion of the purlin covers before
June 22, 2009.
At that time, the consultant arranged to have the supplier that was originally
specified carry out measurements of the roof to determine whether their roofing
system could be installed on the building. The contractor was concerned about the
supplier using the contractor‟s scaffolding and other material to do the
measurements, and requested clarification regarding the purlin covers, as they
affected their operations. In response, the City clarified that limits of liability
during the measurements and informed the contractor that the specification was for
the original roofing system, and that the delays were caused by the contractor‟s
choice of the alternative supplier.
On June 19, 2009, the City informed the contractor that the specified roofing system
would not work on the building. Between this date and August 7, 2009, the
engineer prepared revised drawings and the contractor provided a revised
quotation.
Subsequently, the City authorized the contractor to repair the existing roof wood
truss connections (change order No. 1) and the change of roofing system to the
revised assembly (change order No. 2). However, the project did not proceed
because the arena time commitments did not allow work in the late summer. In
November 2009 the purchase order was cancelled.
On November 25, 2009, the City Legal Services advised the City that it could issue a
termination letter based on the contract, paying the contractor for reasonable costs
due to the delay. The message indicates that there were grounds for a claim against
the consultant due to the faulty specifications they provided to the City.
The contractor submitted a claim for $301,663, which was considered, high by the
City.
On February 5, 2010, the City offered to reinstate the purchase order to the
contractor subject to several conditions regarding schedule and cost. On February
28, 2010, the City formally offered to reinstate the purchase order.
The project was completed in September 2010, using the revised roof design. The
total additional cost was $39,314 due to the change of the roof and the delays.
Analysis of the project timeline shows the following issues:
The design consultant did not carry out sufficient due diligence to confirm
that the roofing system provided in the tender documents would actually
work.
The design consultant refused to accept that the roofing system proposed
would not work until the contractor and the roofing supplier showed that
it was not a feasible system for this project.
The City considered a claim against the consultant for the additional costs
due to the change in roofing system and the delays, but decided against it.
The City received services from the consultant on another project to
compensate for the consultant costs on this project. However, the extent of
services provided is not fully documented.
and with defects in some of the pieces. The City had the structural steel inspected
on site and the defects were corrected by the contractor.
The City imposed on the contractor liquidated damages of $117,000 for the delays,
by deducting the sums in three payments.
Inspection and testing was carried out by the architectural firm and the structural,
mechanical, and electrical engineering firms retained by the City, which provided
general review of construction. In addition, the City retained an inspection
company to inspect the structural steel and welding, and carried out testing of
concrete and compaction in accordance to standard practice.
Review of the file showed that all deficiencies found in the building were corrected
before final payment.
The issues found on this project were mainly:
The structural steel manufacturer created an adversarial relationship from
the very beginning and did not follow the requirements of the contract.
The structural steel was delivered without the required shop inspection
and with defects in some pieces (these were corrected on site).
Recommendation 4 applies to this project
existing storm sewer it was found to be lower than shown on the record drawings.
The resulting additional cost was $440,831.
These changes were the result of an error in the storm sewer elevations shown on a
record as-built drawing on file at the City. The original design proposed that the
sanitary sewer from the Longfields Station would be constructed under an existing
2100 mm diameter storm sewer, to connect to the proposed sanitary sewer on
Longfields Drive. When the contractor exposed the existing storm sewer it was
found to be lower than shown on the record drawings.
The issue in this project is the accuracy of the record drawings and whether the
design consultant should have checked the inverts of the storm sewer given that the
crossing was critical. It appears that the City has not investigated whether it could
recover any costs of this extra work from the respective consultants.
During construction of the Highbury Overpass it was found that the rock at the
design foundation elevation was not adequate. This finding necessitated additional
rock explorations and testing, and re-design of the footing. The total cost of the
change orders was $86,132, which could have been saved if the geotechnical
investigation had been completed thoroughly.
The City publishes Standard Tender Documents for Unit Price Contracts, which
include a typical section for the trench for sewer and services (Standard Drawing
No. S6). However, the design drawings showed a typical trench width for two
sewers instead of using the standard drawing. As a result, a change order was
issued for the additional rock excavation required. The total cost of the additional
rock excavation was $18,069.
In total, change orders for $696,881 were the result of design errors. Of this, it is
estimated that $559,174 can be classified as payments that the City made which
could have been avoided during design. There is no indication that the City
considered recovering the additional costs from the consultants (prime consultant
and geotechnical sub-consultant).
Recommendation 4 applies to this project
Recommendation 10
That the City ensure that operational constraints such as the operation of the Real
Time Control System are fully described in the contract documents and that the
risk for monitoring weather forecasts is transferred to the contractor.
Management Response
Management agrees with this recommendation.
Management will work with staff in the Environmental Services department to
ensure that operational constraints are fully described in contract documents and
that the risk for monitoring weather forecasts is transferred to the contractor.
This will be built into contract standard specifications by Q2 2014.
Recommendation 11
That the City specify, in sewer renewal projects, the location for sewer by-passes
and require the contractor to use by-pass locations on existing right-of-ways or
appropriate existing easements. Sewer by-pass plans proposed by the contractor
using other locations must be at the contractor’s risk and expense, including the
consequences of delays.
Management Response
Management agrees with this recommendation.
In all future sewer renewal contracts, the City will specify the location for sewer
by-passes on existing right-of-ways and appropriate easements. Should the
contractor propose other locations, the contract will specify that this will be at the
contractor‟s risk and expense, including the consequences of delays. This will be
built into contract standard specifications by Q2 2014.
Construction of the project proceeded without a major issue until the project was
ready to commission. In fact, on October 2, 2009 the contract administrator
consultant issued a certificate of substantial performance which included payment
to the contractor for partial demobilization, commissioning, asphalt pavement,
curbs, grading, service entrance switchgear installation, soft starters and variable
frequency drive installation, lighting and receptacles, electrical distribution, wiring
of mechanical systems, control and instrumentation costs incurred by the contractor
during the billing period.
The City‟s Drinking Water Services found that the SCADA (supervisory control and
data acquisition) installed by the sub-contractor did not meet the City‟s standards.
It is noted that the sub-contractor built and installed the SCADA panel without
providing shop drawings or seeking input from Drinking Water Services for the
design. Minutes of Deficiencies Meeting No. 1 show that the Factory Acceptance
Testing for the Area Control Panel (ACP) was not completed and that the ACP was
not CSA certified. Shop drawings were submitted for the components, but not the
entire ACP. Resolution of the issues with the ACP took from April 2010 to
February 2011 (ten months).
After that, the project run into schedule difficulties, as the sub-contractor had to re-
design the control system to meet the City‟s requirements, re-build it accordingly,
re-install it and then test it.
The main issues with this contract related to the schedule of construction and the
commissioning of the station due to mistakes and errors by the sub-contractor in
the design and installation of the ACP, as noted above.
Given that the contractor was able to install the wrong ACP and that the consultant
recommended payment for the work, it can be concluded that there was a gap in
the inspection process. It is reasonable to expect that the consultant should have
realized that the ACP was being installed without following the required steps, as
stipulated in the contract documents. Consequently, the consultant is partly
responsible for the delays in completion of the pumping station.
Recommendation 4 applies to this project
The City paid a $16,500 change order for installation of seismographs for vibration
monitoring of construction activities. This should have been paid by the contractor
and not by the City.
The project was completed on time, within the overall budget. However, there
were a considerable number of changes due to omissions in the design.
Recommendation 4 applies to this project
The contract value at the project start was $3,505,330. Change orders for the project
amount to $367,888.
The original construction plan by the contractor was to start the work on Harmer
Avenue, and to proceed with three crews. In addition, the road construction sub-
contractor planned to grind the asphalt and to reuse it in the contract. The City
gave the contractor the choice of postponing the work to the next spring, but the
contractor was concerned that there may not be sufficient working days in the
contract to complete before the specified completion date. Given this constraints,
the City directed the contractor to start work on Faraday Street to reduce the
number of working days that he would need in 2011. The City considered that the
June 30, 2011 completion date was important in order to avoid having the
contractors for Phases 1 and 2 working too close to each other in the summer 2011.
Approximately $332,000 of the additional costs was the result of the delay in
starting construction.
The City paid $61,930 for a box culvert sewer that had to be replaced due to the
conditions found in the field. Upon review, it was determined that there was
already an item in the contract for supply and installation of the same size culvert.
The City has explained that the section of storm sewer replaced was a cast-in-place
concrete section; replacement required demolition of a section of the existing
concrete sewer, placement of 2 sections of precast concrete box, installation of
dowels to tie in to the existing culvert, and construction of a cast-in-place concrete
section.
It is noted that this project had three project managers: the first one retired, the
second one worked on the project until a permanent position within the City
opened and the third is managing the project currently. The project management
for this project appears to have been transferred properly, as there does not appear
to be any consequence from the changes in PM.
The cost of change orders was $57,560, of which $36,135 was due to the need to
change the connection of catchbasin leads to the existing storm sewer owned by
Public Works Canada. The method of connection had been agreed between Public
Works and the City, but the agreement was not provided to the designer. As a
result, the method of connection shown on the drawings and used in the field did
not meet the requirements of Public Works and Government Services Canada
(PWGSC). The City instructed the contractor to remove the connections done per
the design and to redo them based on the instructions from PWGSC.
The issue created by making the wrong connection should have been prevented
through coordination between project managers from different departments
(Infrastructure Services and Planning & Growth Management).
Recommendation 12
That the City modify the Scoping Document so that commitments made by all
departments are explicitly discussed in the document.
Management Response
Management agrees with this recommendation.
Management will amend the scoping document to ensure that commitments
made by all departments are explicitly expressed. This work will be complete by
Q2 2014.
The contractor in this project did not treat the project with the priority it required.
The City‟s project manager wrote a memorandum to file summarizing his concerns,
which included:
The contractor left his sub-contractors working for five weeks without supervision.
The contractor completed the roadwork 16 days late, but without completing the
work in the islands, the centre median, the cobblestone installation, and
landscaping.
Ten work days were lost because the contractor was absent from the site.
There is no documentation in the file or in the payment certificates to indicate that
the City charged the contractor any liquidated damages. Given the information
provided by the project manager and the lateness of completion of the project, the
project manager should have charged liquidated damages to the contractor.
Recommendation 13
That the City instruct the project managers that the liquidated damages are
provided to assist in keeping the contractors on schedule, but are not effective
unless the project manager actually charges them to the contractor.
Management Response
Management agrees with this recommendation and it has been implemented.
In Q3 2013, management issued a directive to ensure that project managers
impose liquidated damages on contractors pursuant to the City‟s Standard
Tender Documents.
markup on the change orders, the savings to the City could be approximately $1.2
million.
6 CONCLUSION
The City‟s Construction Supervision process is complete and comparable to the
process and procedures used by other municipalities and the Ministry of
Transportation in Ontario.
The audit found a substantial amount of cost caused by change orders resulting
from consultants‟ errors and omissions, which the City is not recovering from the
consultants. The City is currently recovering costs resulting from changes required
by Hydro Ottawa, and should be able to recover costs for changes required by
consultants‟ errors and omissions.
7 ACKNOWLEDGEMENT
We wish to express our appreciation for the cooperation and assistance afforded the
audit team by management.
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