Tarouba project couldn’t make deadline

16.31. Udecott failed to pay TAL, despite which TAL continued to carry the costs of designers, consultants and of its own staff for some months. Although TAL was appointed engineer under the FIDIC Contract, Udecott itself determined the sums to be paid and made payments direct to HKL, ignoring the contract certification process.

Udecott further failed to inform TAL of the sums being paid, despite many requests from them. It was TAL who eventually terminated their engagement, but only long after Udecott had adopted a policy of ignoring and side-lining TAL and relying on Genivar, who eventually replaced TAL as the appointed engineer. As an aside, it may be noted that, despite the removal of TAL from the Brian Lara Project, TAL and Mr Cytrinowycz continued to operate as project manager to Udecott on the Government Campus Project, where they were still in post when that project was inspected by the Commissioners in March 2009.

16.32. Arun Buch responded to the statement of Mr Cytrinowycz pointing out that TAL appeared to be unaware of the obligations of a project manager. HKL was given an effectively impossible programme to accomplish and did not know what they were in for when they signed a contract in 2006. It was the responsibility of TAL to ensure that such impractical and impossible contracts were not put out. TAL had failed to assess the buildability of the project, or to carry out value engineering or realistic costing and scheduling in 2005. Mr Buch comments that TAL also charged excessive fees (over $60 million). It should have been apparent to TAL in 2005 that the design of the canopy and roof was impossible and impracticable. Whilst HKL might be at fault, TAL was responsible for initiating the problems which HKL inherited.

16.33. It is necessary to emphasise that the Commission is not charged with deciding any question of legal liability or culpability. In relation to the Brian Lara project, the objective is limited to examining Udecott’s procurement practices and methods of operation (TOR issue (viii)) and reporting on the reasons for and the effect of cost over-runs, delays and defective workmanship (issue (vi)). The Commissioners will therefore review the obvious conflict between the evidence of Mr Buch and that of Mr Cytrinowitz with this objective in mind.

Initial Conclusions

16.34. The Brian Lara project was unusual in generating major problems in terms of time, cost and quality: in most projects two or at least one of these three elements will be satisfactorily controlled, at the expense of the other one or two. In terms of time it was, in retrospect, just possible that the stadium could have been completed to comply with the ICC deadline given the commencement date of 2004, allowing effectively three years for planning, design and construction. However, once major changes to the project started to occur, time became at a premium. In particular, the decision to move the stadium to Tarouba in November 2004 was critical, particularly as it gave rise to major earthworks challenges that would not have otherwise been encountered. From this point the remaining period of just over two years was always going to be very tight. The progress of the early packages in 2005 can now be seen to have led to a situation where, by early 2006, the ICC deadline was already unattainable.

16.35. Certainly as the months of 2006 went by with no effective progress on the main elements of the project, the possibility of meeting the deadline became increasingly hopeless and a realistic reassessment from about May 2006 onwards should have led to the conclusion that there was no further point in treating the project as “fast track .” The whole process of negotiation with HKL from September 2006 onwards, even before the announcement by the ICC on September 21, had an element of unreality in that it should have been obvious that there was no chance whatever of the project meeting the ICC deadline. At this stage, if not much earlier, Udecott should have advised GORTT to step back and reappraise the whole project, rather than rushing headlong into a contract which has proven to be nothing short of a disaster. The progress of the work from October 2006 onwards has become a national disgrace.

16.36. Udecott has responded to these matters in Final Submissions. With regard to the award of PK3 and 5-8 it was suggested that Udecott was already committed to the award before the announcement, on September 21 2006, that the stadium would not be used for the World Cup. The Commissioners took issue with this analysis, particularly as Udecott itself found it necessary to inform HKL on October 2 that its proposal “has been accepted”.

However, as already stated, it should have been obvious many weeks or months earlier that there was no realistic chance that HKL could meet the ICC deadline. Udecott accepted that the design was not complete at the date of award but suggested that this was “unexceptional” where part of the design responsibility was left with HKL. This comment misses the point: the incomplete design necessarily meant uncertainty and risk of cost overrun, as events were soon to demonstrate. Udecott further accepted that the “Guaranteed Maximum Price” contract was subject to claims by the contractor (as is the case) which renders the concept of a guaranteed maximum price as meaningless as the promised completion date. Udecott cannot claim to be unaware of these obvious matters.

16.37. Udecott also made a general response that certain matters were not put in cross- examination of witnesses and therefore could not be taken into account. Udecott relied on the Privy Council decision in Mahon v Air New Zealand in which the Rules of Natural Justice are set out. The so-called second rule requires: “that any person represented at the Inquiry who will be adversely affected by the decision to make the finding should not be left in the dark as to the risk of the finding being made and thus deprived of any opportunity to adduce additional material of prohibitive value which, had it been placed before the decision maker, might have deterred him from making the finding even though it cannot be predicted that it would inevitably have had that result.”

Earlier in the same passage it was noted that “the technical rules of evidence applicable to civil or criminal litigation form no part of the rules of natural justice ”.

The Commissioners observe that, in the context of the present Inquiry, where material continued to emerge throughout and indeed after the oral hearings, it was neither practicable nor possible for witnesses to be challenged on every point or to have every contrary argument put to them. Furthermore, the hearing in Mahon was a Royal Commission which was required to make “findings”, while the present Inquiry is charged only with making “recommendations” which have no binding force. And in any event, Udecott was given full opportunity to comment on potential adverse criticism, including the ability to produce new material, which Udecott took up by including such material in its final submission. The Commissioners thus reject the contention that any of the material referred to is not properly before them or that Udecott has not had a full opportunity to respond to it.

16.38. The Commissioners thus conclude that Udecott in its overseeing role must bear a substantial part of the responsibility for what has gone wrong at Brian Lara. We do not suggest that Udecott alone should bear responsibility for the failure of the project. The performance of several other parties contributed to the poor outcome.

However, Udecott must take responsibility for the overall decisions which led to the setting up of the project and for the clear failure to create a contract structure which properly protected the public interest. Udecott sought to pray in aid the “unique circumstances and pressures” on the Brian Lara project. All projects are unique and all are subject to pressmes, which it is the function of the developer to overcome.

16.39. Quite apart from the overall aspect of timing, it is questionable whether any further contract should have been awarded to HKL in the light of their performmce on the first contract for PK2 (building structure). This had been awarded in March 2006 with a contract period of six months; but after seven months the work was less than 50 percent complete. No reasonable explanation was given for ignoring the performance of HKL up to this point, and the decision to “roll up” PK2 with all the remaining works into the final contract awarded to HKL provided no justification. It may also be noted that the Udecott standard contract terms at the Brian Lara Stadium required that the contractor should himself perform not less than 60 percent of the work directly without sub-contracting.

When HKL was awarded PK3 and 5-8, UDeCOTT allowed this provision to be removed, so that HKL was free to sub-contract the work with no limitation.

16.40. With regard to cost, it seemed clear that the original estimate given in February 2005 in the sum of $272million was unrepresentative of the building which subsequently came to be designed and put out to tender. As noted in Section 23 below, the likely overall costs will have escalated some 2 ? times. Part of this is accounted for by events and circumstances which were not foreseen at the date of the original estimate; however, a major part of the cost escalation must be attributed to the development of the design of the stadium. While this was, from the outset, to be designated as “world class”, the early decision to bring in internationally renowned designers seems to have been taken as an indication that there would be no constraint on the design. The roof design eventually adopted was needlessly costly, inappropriate and should not have been approved. An additional element of excessive cost arose from the needless overdesign of the steel structure in the absence of proper design information. In retrospect there is no good reason why a much more simple and cost effective design could not have been adopted, similar to that used for the existing stadia at Manny Ramjohn, Larry Gomes and Dwight Yorke Stadium at Bacelot, Tobago.

Udecott should have drawn this to the attention of the Government at a time when a review of the design was still feasible.

16.41. As to the quality of the work, this may be seen as giving rise to less serious but nevertheless significant problems, largely concerned with welding and primarily caused the failure to give proper attention to questions of “buildability”. The overdesign of the steel structure gave rise to welding and other detailed constructional issues which should never have been allowed to arise.

16.42. The award of the contracts, the management of those contracts, the payment terms including advanced payments and the conditions guaranteed to the contractor in return for agreement to complete the project at a fixed maximum price demonstrated clearly Udecott’s inability to plan and successfully manage a project of this magnitude and complexity to completion. The faith shown by GORTT in placing this project in the hands of Udecott was misplaced: Udecott was out of its depth.

16.43. In addition to all the foregoing is the question of accountability and potential overpayment of HKL which centres on the unprecedented and excessively favourable conditions which Udecott applied to HKL in terms of advance payment. This has revealed serious shortcomings in Udecott’s system of accounting and recording which still proved resistant to some weeks of detailed investigation by the Acutus Team. There can be no excuse for Udecott’s inability to produce a complete vouched account of all the sums paid and the sums recovered ftom HKL as advance payments. Aside from the issue of accounting, it has not been possible to identify the terms and conditions upon which advance payments were being made. The terms purportedly relied on, as set out in HKL’s quotation of September 14, 2006, are patently ambiguous and uncertain and yet no attempt was made to define the detailed conditions intended to be followed. The apparently uncontrolled system of advance payments to HKL should be properly investigated and a full audit of all such payments and repayments undertaken.

16.44. Finally, throughout the whole period of this Inquiry, work at the stadium site has

proceeded at a snail’s pace, if any progress at all is being made. The question why the contract had not been terminated received no proper response. TAL advised termination at the end of 2007 and that advice was soundly based. Even at this late stage, termination of HKL’s contract and a full review and audit of the whole contract should be carefully considered, along with realistic proposals for the completion of the project. The citizens of Trinidad and Tobago, for whose benefit the project is being undertaken, should at some stage obtain some benefit from it.

PART III: COST OVER-RUN, DELAY AND DEFECTS

17. Introduction: Issue (vi)

17.1. The list of projects examined is set out at para 1.10 above. Part III presents a summary of the evidence on various projects and the conclusions to be drawn as to the reasons for and effects of cost over-runs and delays. In addition to the material presented here, the Cleaver Heights Housing Project forms a separate part of our Terms of Reference and involves contractual and regulatory issues as well cost overruns, delay and defects. Cleaver Heights is examined in more detail in later sections.

17.2. The Commission received little evidence specifically directed towards defective workmanship, save in respect to the Cleaver Heights Housing project, where serious issues are raised. The Commissioners observed standards of workmanship on other housing projects which could be regarded as unacceptable, but we were not told that this had been regarded as an issue. We also observed questionable standards of workmanship on the Scarborough Hospital project. Given that there were mutual notices of termination coupled with major issues of design, delay and additional cost, it is not surprising that defects were not regarded as a separate issue.

17.3. Our general observations of projects in course of construction and after completion led us to conclude that high standards of workmanship were achievable both from foreign and local contractors. However, low-cost projects, such as community housing, were often constructed to somewhat marginal standards, no doubt reflecting the drive to reduce costs. Where poor or marginal workmanship exists, we believe that this reflects primarily on the standards of supervision and monitoring provided, and that given the right conditions, the local construction industry and its workforce is generally possessed of the requisite skills to produce high standard work.

18. Education Facilities Company

18.1. Education Facilities Company Ltd (EFCL) in a separate submission provides a summary of cost over-runs and delays on the seven primary school projects and 13 secondary school projects undertaken to date (tables 2 and 3). They provide a summary chart setting out “Project Implementation Issues” in respect of each of the 20 projects indicating which have been subject to events impacting on time or cost or both (table 4). Tables 2, 3 and 4 are attached at Annex 14. EFCL further state that while there have been cost increases, none is expect to exceed ten percent of the contract sum. The major project implementation issues encountered are the following:

(i) Disruption to Contractor’s schedule because of close proximity of existing schools.

(ii) Design changes during construction.

(iii) Non perfonnance of the Contractors.

(iv) Under-measurement in the Bills of Quantities.

(v) Increase in cost of specialist items such as supply and installation of HVAC generators and elevators.

18.2. With regard to (i), disruption through proximity of an existing school has occurred on five projects where pile driving had to be restricted to outside school hours. EFCL took mitigating measures to reduce the disruptive effect. With regard to (ii), design changes are noted in six projects relating to matters such as redesign of ramp, canopy, foundations and ground beams. Where the design consultant was not the supervising consultant, delay was noted in response to requests for information. Delays were also noted through non-provision of construction drawings. EFCL is now implementing a design-build approach which is expected to mitigate these problems.

18.3. With regard to (iii), delay has been experienced to both local and foreign contractors in mobilisation, particularly with insufficient labour during early phases of construction, also contractors not adhering to work schedules. Late submission of construction details was noted in six contracts and unavailability of labour in eight projects.

With regard to (iv), inconsistencies between Bill of Quantities and drawings was noted in four contracts and omission from the Bill of Quantities in ten contracts. With regard to (v) increase in cost of specialist items was noted in ten contracts, eight of which also suffered from increase in cost of NGC gas pipeline. Other individual causes of delay are noted as lack of alternative accommodation to decant school during construction (three contracts), relocation of buried WASA pipeline (one contract), expansion of sewage treatment plant (two contracts), inadequate provisional sums for temporary classrooms (three contracts), land unavailability (one contract), delays to connect to TTEC and WASA (two contracts) and disruption of works by the local community (one contract).

18.4. Delays and the causes thereof on the 20 contracts extant, can be summarised as follows.

Primary Schools

(i) Icacos Government: Contract period 12 month, delay nine months due to (i) non-approval by W ASA of septic tank waste water system and subsequent provision of aerobic unit; (ii) accompanying delay by design consultant; (iii) further delay by TTEC in the provision of electrical supply; (iv) further three months delay in provision of design and structural drawings for a canopy, omitted from the structural drawings.

(ii) Arima West Government: Contract period 17 months, delay six months due to (i) design consultant needing to increase sizes of steel members; (ii) three months delay in provision of AC drawings by design consultant; (iii) claim for adverse weather still under evaluation.

(iii) Arima New Government: Commencement of project delayed as a result of non-availability of decanting accommodation and need to find a new site.

(iv) Tranquility Governnent: Contract period 20 months, projected delay eight months due to (i) acceptance of connactor’s proposal to substitute alternative steel frame design; (ii) long lead items, such as elevator, not being procured in sufficient time.

(v) St. Mary’s Government: Contract period 14 months, delay six months due to (I) interruptions by locals demanding employment; (ii) discrepancies between steel quantities in BOQ and drawings; (iii) need to re-design sewerage system; (iv) re-design of major retaining walls.

(vi) Fanny Village Govemment: Contract period 15 months, projected delay six months due to (i) design consultant unable to issue construction drawings; (ii) relocation of site of new building.

(vii) Cap de Ville Government: No progress: construction being reconsidered due to declining school population.

Secondary Schools

(i) Chaguanas Senior: Contract period 14 months, delay 5.5 months due to (i) delay by Main Contractor in deploying steel fabricator and erection sub-contractor and further delay by these sub- contractors; (ii) projection of poor quality blockwork and plaster; (iii) inadequate labour on site; (iv)under measurement in Bill of Quantities and additional work required.

(ii) Marabella South: Contract period 12 months, delay ten months due to (i) insufficient labour; (ii) delay in mobilisation of piling sub-contractor; (iii) delay in procuring HV AC plant.

(iii) Princes Town East: Contract period: 28 months, projected delay 12 months due to (i) insufficient labour at commencement; (ii) delay in mobilisation of piling work and (iii) protest against excessive noise from work, (iv) redesign of piles to reduce noise; (v) re-design of retaining walls.

(iv) Siparia Secondary: Contract period: 28 months, projected delay six months due to (i) insufficient labour; (ii) delay in mobilisation of piling work; (iii) restrictions due to excessive noise.

(v) Couva West Secondary: Contract period 24 months, projected delay six months due to (i) deficient site management; (ii) insufficient work force; (iii) restrictions due to excessive noise; (iv) change to pile design.

(vi) North Aranguez Secondary: Contract period 24 months, projected delay two months due to (i) insufficient labour at start of project; (ii) restrictions due to excessive noise.

(vii) Barataria North Secondary: Contract period 24 months, projected delay five months due to (i) initial shortage of labour on site; (ii) delayed receipt of drawings; (iii) omission of items from Bill of Quantities.

(viii) Charapichaima West Secondary: Contract period 24 months, projected delay 1.5 months due to (i) late mobilization of labour; (ii) restrictions due to excessive noise of work.

(ix) Five Rivers Secondary: Contract period 24 months, current delay two months due to (i) insufficient labour but (ii) contractor had undertaken to expedite work.

(x) Mount Hope Secondary: Contract period 24 months, projected delay five months due to (i) delays in mobilisation by Contractor; (ii) need to reconstruct reinforced concrete beams and slabs rejected for insufficient cover to reinforcement.

(xi) St. Augustine Secondary: Contract period 27 months, projected delay four months due to (i) failure of design consultant to issue construction drawings.

(xii) St. Joseph’s Secondary: Contract period 24 months, projected delay two months due to (i) inadequate initial mobilisation and insufficient labour.

(xiii) Pleasant Ville Secondary: Contract period 24 months, projected delay three months due to (i) non-provision of temporary accommodation for schools and (ii) unforeseen conditions.

Initial Conclusions

18.5. It needs to be borne in mind that the material in this section is provided exclusively by the Government Agency responsible for commissioning the projects. There was no oral presentation and time and resources did not pelmit further investigation. On some projects, presentations received from contractors and consultants have painted a somewhat different picture from that put forward by the Agency. However, the Commissioners have no such grounds to question material put forward by EFCL.

18.6. Assuming that the EFCL predictions of cost overruns in respect of projects still under

construction are fulfilled, the level of post-contract cost increase can be seen to be relatively modest. This is not unique in the public sector, but nevertheless to be welcomed. While the cost overruns in all cases are relatively modest, it is to be noted that some of the secondary schools are said to have been let to Chinese Contractors because the tenders submitted by local Contractors were substantially in excess of the in-house estimate.

18.7. Delays, conversely, in relative terms, are a much more serious problem than cost overruns, amounting to an average of 25 percent of the Contract period. The causes of time overruns are divided between Employer (Consultant) delays and Contractor delays, although it is to be borne in mind that the definitive causes have yet to be determined or agreed. One notable feature of these contracts is that, while all the primary schools, with the exception of Icacos, have been undertaken by local contractors, the secondary schools number 1,2,3,4, 5, 8, 9 and 10 (8 out of 13) are being undertaken by Chinese Contractors. While the causes of delay in respect of these contracts appear primarily to be the result of late mobilization rather than subsequent construction problems, it has to be concluded overall that there is little if any difference in the performance of Chinese Contractors compared to local contractors.