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Kincardine council has agreed to pay Urban and Environmental
Management Inc. (UEM) almost $19,000 for the extra work the company
completed, above and beyond its contract.
In November, treasurer Brenda French told council that the
Mississauga consulting firm had performed additional work beyond the
original scope of the contract, from mid-2007 to early 2008, on its own
initiative in order that Kincardine could continue working on compliance
with the Public Sector Accounting Board (PSAB) requirements. This
project, as dictated by the provincial government, requires all
municipalities to inventory all their assets and determine their value.
The completion deadline is February of 2010.
The original contract was for $159,860, said French, but the company
wanted an extra $35,472.50 for work it had done over and above
the initial proposal. This included field verification, unexpected
infrastructure and lack of data, data clean-up, and database work.
Through negotiations, French was able to reduce that amount to
$18,790.25.
Council was wary of handing over the money, given that the company had
not requested approval prior to doing the work. So council directed
staff to ask UEM to attend a meeting to explain itself. And that's what
happened last night (Dec. 2), in committee-of-the-whole.
Wayne Wood, senior engineer, and Leonardo Parra, GIS specialist,
explained that Kincardine is in the same boat as many other
municipalities with this complex project. "This is a new area we've
moved into," said Wood, "cataloguing assets and the data associated with
those assets. Our assignment did not include a number of items we had to
do."
He said, for example, that Kincardine has a tremendous sidewalk program
which enables the municipality to keep its sidewalks updated and in good
shape. However, there is limited data on record, pertaining to the
sidewalks, from an engineering perspective. This resulted in UEM doing
data gathering for some of the accounts and that took time, he said.
"This is a unique situation," Wood said. "You have a half-mile racetrack
to be evaluated, an airport and a lawn bowling club. We had to create a
financial history for these, from an engineering and accounting
perspective. In some cases, we had to cleanse the data to enter it into
the database. We created geographic information layers which has above
and beyond the scope of our contract. There's value in those for the
municipality.
"If we erred, it was that we didn't properly submit notification of the
lack of information," said Wood. "There were discussions with staff in
the engineering department and the treasury department. We lacked data
so we were out collecting data to complete the project in the time
specified."
He said the company spoke with the treasury staff and negotiated a
reasonable settlement.
Councillor Guy Anderson asked where the benefit to the municipality is
in having this program in place.
Wood said in the long-term (three to five years), the database will
become a tool for the municipality in doing an assessment of the
condition of its infrastructure. If the information is updated
regularly, it will show huge needs, especially in infrastructure, which
puts the municipality in a better position for government grants.
Councillor Kenneth Craig asked how common it is for the company to work
beyond the parameters of the original contract.
"It's not common," said Wood. "There were elements here that were not
expected in the original proposal. If we perform work beyond the terms
of reference, it's reasonable to be compensated for that work."
Craig said if UEM was expected to recover its expenses, council should
have been made aware of the $35,000 in outstanding cost beyond the
contract.
"I apologize," said Wood. "We had discussions with the treasury staff
about the over-expenditure and were told to put it in writing. So, our
staff submitted a bill, outlining all the extras that were done beyond
the terms of reference. In discussion since, I'm somewhat embarrassed to
have to deal with this. There is an element of that bill we should eat.
With the GIS portion, we should've had better direction. We should have
requested permission before going ahead with that, which is why we
agreed to significantly reduce those costs."
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Wayne Wood
He said the municipal staff knew UEM was doing the work.
"Our staff thought it was required to complete the project. The work had
to be done by someone and the municipal staff did not have the resources
to do it. We are committed to this project. We are also concerned that
at some point in time, we're going to be paid."
"I appreciate hearing you say you're committed to this project," said
Craig. "What is the expected completion date?"
"We provided all the data a year ago," said Wood. "We are now answering
questions as the data is reviewed by the auditor. The completion is
between the auditor and the treasurer."
Councillor Gordon Campbell said this project was put to tender and now,
with the extra compensation, is the UEM contract higher than the others
that bid? He also wanted to know why it's so important to have every
asset's value estimated when that value will change over the years
anyway.
"To clarify," said Wood, "this was a proposal, not a tender. We provided
our work schedule and a basis for our proposal. Now, we're back here
defending a request for compensation for extra work. I agree with you
about the data collection. This was thrust on the municipality by the
province with a particular method to do it. We do not have the freedom
to work beyond the standards imposed upon us. The auditor is very
specific and wants details, such as with a watermain, who did the
estimate and what was the rationale for it?"
Deputy mayor Laura Haight said council bears some responsibility for not
keeping track of this project as it should have. "I have no problem that
you did the extra work because it was needed. I have a problem with the
communication side of it. Is it fair for the extra cost to the
municipality if it was not approved?"
"We were expecting that staff would provide the data in regard to the
assets," said Wood. "There were meetings during which attempts were made
to find the data. Then, with the knowledge of staff, we went into the
field and got the data ourselves. Field verification was not in our
original proposal, but municipal staff was not available to do it.
Without the data, the project would have been delayed. Your accountant
and our company would have been paying people who could not work on the
project. Ultimately, it would have meant bigger claims."
He agreed the company should have asked for written authorization before
proceeding with the work, but that, too, would have caused delays. "It's
also easier collecting data in summer than in the middle of winter," he
added.
"Were staff advised about the additional cost for the additional work?"
asked councillor Mike Leggett.
"They knew the work was additional to the terms of reference," said
Wood. "In our defence, this is a new program with many unknowns. We're
designing the program as we go along."
"I'm concerned we're creating a precedent," said Leggett.
Chief administrative officer John deRosenroll asked how many items have
been identified and accounted for through PSAB.
"We've processed 70 different assets for Kincardine," said Parra, "and
that involved thousands of bits of information drawn up on a chart. It
took seven people, full-time, four months to compile that chart."
Mayor Larry Kraemer said Bruce County council is facing the same issues.
"We've never before tried to put a valuation on everything owned by the
municipality," he said. "Trying to determine the value of a road base is
a huge challenge. Or figuring out how long an installed sewer is going
to last. We don't really know. And yet, these numbers have to be
defensible. I support paying UEM the extra compensation. They have valid
reasons for the extra work and they took responsibility for part of the
problem."
Committee-of-the-whole agreed to make the payment of $18,790.25 to be
funded from the capital expenditure reserve fund. Final approval will
come to council at its next meeting.
"Now, keep us updated on this," said councillor Ron Hewitt. |
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