Tennis courts removed for NAPA’s expansion

23.17. It is to be noted that Turner Alpha Limited (TAL) had been engaged as project managers for the GCP during 2003 and continued to be so engaged when they were also commissioned to act as project managers for the Brian Lara Stadium from 2004 onwards. Furthermore, when TAL was effectively removed from the BLA project in 2008, they continued work on GCP and remained in place as the project manager throughout 2009. TAL was still in post when the Commissioners visited the GCP on March 25, 2009.

23.18. With regard to cost over-runs, the projected final accounts on the nine projects, PK1- 9, together with an additional PKl0 for the LED screen and PK13 for miscellaneous works, is set out in a spreadsheet attached as Annex 15. In summary, the total of the contract sums as awarded, including estimated figmes in respect of PKl0 ($38,500,000) and PK13 ($10,000,000) together with other adjustments, gives a gross figure of $1,393,164,115, including allowances in the contracts for day works, provisional sums and contingencies. The anticipated project final cost is stated to be $1,527,337,873, amounting to a cost over-run of just under 11 percent. The anticipated cost includes claims accepted on PK1 as summarised above (including an ex gratia payment in respect of steel escalation of over $5,000,000). The anticipated cost also includes the cost of variations in the total amounts, across all projects, of $62,715,308 actual and $24,038,325 further anticipated, total $86,753,633. Part of this cost is represented by day works, provisional sums and contingencies already included in the contract sums. A somewhat larger figure ($99,319,712) is attributed to costs of extension of time. Overall, as assessed by Mr Arun Buch, the cost of the project has not escalated substantially and should be regarded, in terms of cost at least, as a successful project.

23.19. With regard to delay, each component of the project has been subject to very substantial delays such that the completion dates, which ranged from March 2006 in the case of PK1 to August 2007 in the case of PK9, have all been exceeded by more than two years, with the project typically taking more than twice the contractual period. The principal reasons for delay were the following:

(i) Access problems involving PK1 and PK9, eventually resolved by the settlement agreement covering these packages. All other packages were delayed in consequence of the access problems.

(ii) As noted above, the total volume of variations represented something over five percent of the total cost and could not therefore account for a 100 percent time over-run. Variations to the cladding system, however, were decided upon during the course of the project and involved substantial delays in the procurement of materials. These delays were concurrent with access delays.

23.20. It is also to be noted, however, that, in common with other major projects in Trinidad and Tobago undertaken by largely domestic companies, there was a perceived lack of impetus and drive towards timely completion and seemingly a ready acceptance that contractual completion dates were to be seen as targets which could be exceeded with impunity. Indeed, neither on this project nor any other projects in Trinidad and Tobago, was there evidence of liquidated damages or other delay damages being deducted or even threatened. We comment later on this state of affairs, but conclude that this was one of the major elements in allowing the GCP to drift in the way that it has done.

Academy of the Performing Arts (North and South)

23.21. As noted above, this contract was placed with Shanghai Construction Group International (SCG) some months before the design and build contract with SGC for the Prime Minister’s residence. The initial work at NAPA suffered delay and problems involving both public tennis courts and the private Colonial Tennis Club, which occupied part of the land required for the project.

23.22. Mr McCaffrey noted in his first report that the eastern section of the site was occupied by functioning public tennis courts between the start of the project in April 2007 and about March 2008. This resulted in the contractor, Shanghai Construction Group (SCG) being compelled to progress the work from west to east, contrary to the original proposed construction sequence. SGC say that the delay was mitigated down to an eight month critical delay. It appears that an extension of eight months was granted by Mr Calder Hart himself, rather than by Genivar, who were the appointed FIDIC Engineer.

23.23. The details of eventual takeover of the Colonial Tennis Club were set out in a letter to the inquiry dated April 1 2009 from Ms. J S Kelsick, a longstanding member of the club, which was placed on the Commission’s Web site. The matter was well aired in the press at the time and details are contained in the letter and attachments. The Commissioners did not deem it necessary to ask Ms Kelsick to give further oral evidence, and no party so requested. The early planning of the Academy required the removal of the public tennis courts but not the private Colonial Club. It appears there were changes to the layout of the building which resulted in the Colonial Club site being required. Udecott had omitted to give any notice of the change and club members found themselves threatened with forcible eviction by SCG operatives.

Only when club members appealed to the Prime Minister was a meeting arranged with Udecott, who promised to replace the facilities with new courts on King George V Park. The takeover took place in April 2008; but by April 2009 no action had been taken to provide the promised new courts. Udecott responded in Final Submissions which pointed out that several meetings had taken place between the executive chairman and club representatives. A draft note had been submitted to the Ministry of Sport seeking approval for the construction of additional courts and a clubhouse, but no further action has been taken either by Udecott or the ministry.

23.24. At the time of Mr McCaffrey’s investigation, in 2009 the structure of the building was substantially complete and cladding about to commence. Mr. McCaffrey estimated the project at no more than 50 percent complete while Mr Zhang, MD of SCG, estimated 60 percent complete and was projecting completion by September 4, 2009 with final handover mid October 2009.

Mr. McCaffrey expressed doubt as to whether this was achievable. During Mr McCaffrey’s investigation, SCG was unable to provide a copy of the baseline or original programme. Mr Zhang undertook to provide a fully detailed programme to completion, but no such programme has ever been provided.

During the Commission’s brief meeting on September 7, 2009, sections of the cladding to the main arch structure were seen still to be incomplete. The building was, however, finally opened on November 10, 2009 and used for the Commonwealth Heads of Government Meeting in Port of Spain on November 27-29, 2009. The Commissioners were taken on a brief tour of inspection of the completed building on December 10, 2009.

23.25. With regard to cost issues, no information was provided to Mr McCaffrey or to the Commission regarding actual or intended claims. It was evident in January 2009 that, using SCG’s projected completion dates, that there would be an overall delay of some ten months. It seems very likely if not inevitable that SCG will mount a claim for additional costs in respect of all or part of this ten month period, which is likely to be extended as a result of further delays up to the date of completion of November 2009. In addition to any claims from SCG, Udecott will need to provide for the additional costs of replacement tennis courts as and when these are constructed.

23.26. With regard to the Southern Academy, (SAPA) additional works for the diversion of a sewer line across the site have already been referred to. Mr. McCaffrey reported that SCG intended to submit a request for extension of time of 18 months. As at January 2009, it was estimated that SAPA was currently 15 percent complete and this was consistent with the Commissioners’ own observations during their visit to the site on January 20, 2009. The projected extended completion for SAPA was September 2011. SGC further anticipated that a financial claim would be submitted for an estimated additional US$19 million in addition to the apportioned contract price of $189 million ($630 x 0.30).

International Waterfront Project

23.27. This project, together with the Prime Minister’s residence, is put forward as demonstrating what can be achieved by the proper and informed use of design-build procurement.

23.28. As already noted in Section 15 above, the project was completed to time and budget with less than one percent of tile contract sum being represented by variations. It needs to be stated that such a level of performance is not achieved without careful and active project management at site level, which was provided by Genivar. Mr McCaffrey rightly questioned whether the avoidance of claims from the contractor could be explained by the original price including “so much fat in that price that the need to pursue claims did not arise.” Mr Shenker of Genivar responded, stating that the tile price had been broken down in some detail and compared to other benchmarking data.

This had revealed that the contract did represent value for money, although the data upon which this conclusion was based has not been divulged.

23.29. In addition to positive project management Mr McCaffrey identifies, as a factor in the success of the Waterfront Project, the sound financial standing of Bouygues, which enabled them to act decisively to circumvent difficulties which might have slowed down other contractors.

Chancery Lane Office Complex

23.30. The proposed Chancery Lane Complex was intended to be a major feature in the development of San Fernando. The project included offices, retail outlets, a library and car parking, to be provided under a design-build package. On July 2, 2004 Udecott submitted Requests for Proposals (RFP). The preferred tenderer was Johnson International Ltd. of Turks and Caicos whose initial proposal was submitted on July 30, 2004. The completed Proposal Documentation was submitted on October 22, 2004 and detailed Contractor’s Proposal on May 3, 2005. The Contract was executed on June 8, 2005 incorporating the FIDIC Plant and Design and Build Conditions of Contract (1999) with Particular Conditions amending Clauses 1-20 and additional Clauses 21-28. Johnson’s designers were Design Collaborative Ltd, Architects and Town Planners.

23.31. The preliminary cost estimate for the project in 2004, before proposals were invited and therefore before the design was established, was some $100million. The final cost as estimated in March 2009 was $732million. These figures have given rise to newspaper reports, before the start of the second hearing, suggesting that costs were out of control. While the matter was not dealt with at the oral hearing, Udecott published a paid advertisement giving reasons for the apparent escalation of costs, which were further detailed in a report presented by Arun Buch. Major increases in cost over the original estimate of $100million were accounted for by the following:

(i) the contract price as let to Johnston International Ltd was $296million

(ii) Expansion of the car park cost $65.5million

(iii) Re-location of services cost an additional $1.6million

(iv) Other change orders were costed at $1.4million

(v) Extension of time and other claims by contractor were valued at $48.2million

(vi) Fit-out costs amounted to $127million

(vii) Additional costs of dislocation and re-location of tenants amounted to $10.7million

(viii) Land acquisition, legal and insurance cost were $9.2million

(ix) Owner’s contingency fee was $42.3million

(x) Project management fees (Udecott and Genivar) amounted to $33.7million.

(xi) VAT amounted to $95.5million.

23.32. The adjusted contract sum ($413), including the above matters, represented an increase of some 40 percent over the contract sum, but the major cause of escalation was the car park extension. Apart from this the cost increase was around 17 percent. Mr Buch noted in his report that that base building cost was $813 psf which represented the “best bargain for Udecott particularly given that sub-soil conditions were more difficult than GCP and more like those at Tarouba (where foundation costs escalated to three times). Overall the project cost was $1275 psf compared to nearly $1500 for the GCP and Waterfront.

23.33. Arnn Buch commented further that the design-build approach worked very well as Udecott had picked the “right team” which drove the project forward in spite of obstacles, which were solved as they arose. This cost the contractor money but saved time. This was to be compared to GCP where, according to Mr Buch, simpler problems generated extensive paper trails with no or delayed decisions. In Mr Buch’s view the design-build team at Chancery Lane showed the level of integrity and professionalism necessary to achieve a successful outcome.

Financial Complex Tobago

23.34. This was intended to be a modest conversion and upgrade project of an existing two storey office building into a financial complex. The original building, which had been used as a Post Office, was constructed in reinforced concrete and was approximately 30 years old. A geotechnical investigation was carried out in early 2003 which recommended the use of piles for the new building. The professional team appointed comprised Alvin Dawsett as architect, Romain & Associates as structural engineer and Welch Monis & Associates as QS. Udecott was the developer on behalf of the Tobago House of Assembly (THA). Invitations to tender were sent out in February 2004. Heron Lewis Construction, the lowest of eight tenderers, was notified of the contract award on August 24, 2004. The contract commencement date was February 16, 2005 and original completion date May 15, 2006 (15 months). When the Commissioners inspected the building works on February 3, 2009 the current estimated completion date was said to be June 2011.

23.35. The Commissioners, together with lawyers for the parties, attended the site of the works on February 3, 2009, accompanied by Patrick Caesar (Nipdec/Udecott, project manager) with Ivan Daly and Winston Chin Fong (Udecott), Noel Providence (project manager for Heron Lewis Construction) and Reginald De La Rosa (Client’s clerk of works). The Commissioners were informed that for works in Tobago Nipdec and Udecott worked together and on occasions shared staff (Mr Caesar). After viewing the works a “round table” discussion was conducted at which the Commissioners ascertained from those present the history and present circumstances of the project as summarised below.

23.36. The construction works duly commenced in February 2005 with the driving of piles outside the perimeter of the existing building. When a proportion of the piles had been driven it was replied by the contractor that the structural concrete of the existing building appeared to be under-strength. It appears that this was revealed through the reaction of the building to the driving of piles in close proximity. The structural engineer conducted tests on the existing structure and concluded that the building had to be demolished. The design consultants then took the opportunity to redesign the building, adding two additional floors and revising the building design, which was made available to the client, the THA, in November 2005.

23.37. Heron Lewis Construction Limited (Heron) was asked to submit a price for demolition of the existing building. In October 2005 a price of $1,776,840 was quoted which was considered too high, despite further negotiations. A decision was made to tender the demolition work. Following numerous further negotiations by the professional team, Udecott intervened to negotiate a contract with the proposed sub-contractor, Martineau Construction Limited for the demolition of both the old Post Office building and the old bus terminal for the sum of $1,550,000, the demolition to include pile caps. However, the original construction contract remained in being. Heron was accordingly requested to carry out the demolition works using Martineau as sub-contractor, with an additional mobilisation fee of ten percent being paid to Heron. The demolition works were undertaken on this basis and completed in July 2006.

23.38. Between July and October 2006 the consultants undertook revision of the design of the project. The final design involved replacement of the existing building with a new four-storey structure involving a new piling layout.

Piles were procured and arrived on site between December 2007 and March 2008.

After pile testing, piling commenced in April 2008 and was completed in August 2008 with 100 additional piles, added as a result of the pile tests.

The original accepted tender sum was $31,817,102, including VAT. In September 2008 the quantity surveyor submitted a revised cost for the four-storey structure in the sum of $96,101,488. As at January 2009, negotiations on the revised contract price were continuing with Heron, notwithstanding which they had, by that date, driven all the new piles and carried out a substantial proportion of the new pile cap construction. The new building, when completed, will be twice the size of the original project but the cost will be more than three times the original. The project, if completed by June 2011 will be some five years late.

23.39. Plainly a proportion of this delay, and additional cost, is attributable to the changing scope of the works and necessary time taken up with re-negotiation of the contractual arrangements. According to Udecott’s report to the Commission there were additional causes of delay as follows:

(i) Delays in submission of test pile location drawings by structural consultants, which were due in January 2007 and submitted in March 2008;

(ii) Delays in bringing piles to site between June 2007 and March 2008;

(iii) Delays due to repair to pile driving hammer, July to August 2008;

(iv) Delay in submission of construction drawings by consultants, which are still awaited;

(v) Outstanding requests for information and technical queries by contractor, which still await answers ;

(vi) Slow response from consultants;

23.40. Udecott also raised the following matters as issues which are said to have effected the overall efficiency of the project:

(i) Capacity of the architects, who are said to have insufficient staff to accommodate this and other major projects;

(ii) Lack of response from Tobago House of Assembly: Udecott is still awaiting response on various matters;

(iii) Labour shortages in Tobago: the contractor has had to import skilled labour from Trinidad;

(iv) Difficulty in getting approvals from the Division of Infrastructure and Public Utilities (DIPU): Udecott continues to have problems securing necessary approvals for the project. To date the new architectural designs have not been approved because of objection to some aspects by DIPU;

(v) Length of time for submission of revised BOQ from quantity surveyor: the revised BOQ was finally received in April 2008.