Report from the University Landscape Trenches : Financial shoring collapsing, trouble brewing

Received from Rhodes
Mon, 24 Oct 2016 at 9:14 p.m.

Saturday’s ODT had an interesting article about delays on the troubled University of Otago landscaping project. This article is the canary in the University construction goldmine, as there are other even much larger disputes brewing on current University projects that certainly will become a goldmine for the contractors, to the detriment of the University’s financial health.

uoo-landscaping-20160508_135933Hoarding, University of Otago

Mr Mackay said the complications on the landscaping included “replacing old water, sewage and drainage pipes”. What he did not say is that this work was meant to have been done two summers ago, BEFORE the academic year, but due to the project management, it was not. However, this landscaping project is small beer, there are much bigger problems looming.

The University, in their biggest ever project, at the 11th hour, on the “advice” of a contractor, Fletcher Construction, who we understand did not even finally submit a bid, told the University they could save a few hundred thousand on the $100 million project by deleting the need for a cost control schedule…. that would have severely limited what the contractors could charge for changes and extra work. In a monumental display of incompetence, the University stopped production of the schedule – which was already underway and had to be part paid for anyway and put the drawings and specifications out to tender without a schedule. If the drawings were 100% complete and the University wasn’t to change its mind that would be OK, but the Pope is more likely to preach at Canterbury Cathedral than this happening. Of course, the drawings are woefully incomplete, and the arguments and changes have started. Watch out for Someone from the University Property Services division, in about a year, to be in full dissembling mode about the delays, and how, “even though it’s six months late, it’s still on budget”. If that is the case, the budget has massive doses of incompetency cover built into it !

An additional problem that’s about to come home to roost in the University and Otago Polytechnic’s coffers is insistence, by University Property Services, on the use of “Early Contractor Involvement” (ECI). (Someone at University Property Services has never met a new construction euphemism he did not use or a project delay that he could not justify). Both the University and Polytech on recent large projects have engaged in tender processes where there is no fixed sum, because the documents are far from complete, and the current fashion du jour is to have “early contractor involvement” where the builders are paid to be involved in the design phase, to provide “constructability” expertise. Basically the builders make a submission to say what nice people they are, and advise percentage site overhead and profit margins they would build the project for. The rest of the cost, about 85-90%, is just guesswork. (“Provisional Sums”). This process allows the “tender evaluation team” (mainly the Architect and the University) to choose who they want, without regard to price, because the weighting for “non-price attributes” is a lot more than 50% of the total weighting.

On both the University commerce building project, just started by Naylor Love, and the Polytechnic Hostel project (also won by Naylor Love), this was the process. Both projects are around $20 million all up. Significantly, the architect on both projects was Mason & Wales. There were a number of other consultants in the design teams. The politest way to put the next point is that there appeared to be “confusion” about the proposed early contractor involvement process from the team. It was thought, inexplicably, that this wonderful new system of selecting builders without worrying about price meant not only did they get to choose ones with very high margins who wouldn’t cause problems when the inevitable design problems arose, some consultants also thought that they could charge full fees and offload all of the detailing onto the builder…. which of course did not happen. Builders, in the South Island anyway, do not employ armies of CAD operators who can document bespoke large projects. That is what designers are for…. In both cases, the successful Naylor Love bid was hundreds of thousands of dollars more expensive than lower bids. Also in the case of both bids, the University and the Polytech paid a premium of around $500-600,000 to have the “ECI/ constructability” experience of Naylor Love…. only to find that the advice received was NOT what was expected…. the Polytech project has been now costed by Naylor Love and is $1.5-2.0 million over budget, and the “expert” constructability / ECI advice that the Polytech effectively paid $600,000 for is…. wait for it…. to make the building smaller. Hmmm, expensive and brief advice! Best not tell the Humanities students ! The other unsuccessful contractors may well feel aggrieved about how this process played out, as before they were even allowed to provide a proposal they had to prove their capability and experience to do the work, so in theory all tenderers were equally capable, and there was no logical reason for the favouritism to Naylor Love…. but were there other reasons ? There appears no meaningful financial oversight, the project teams seem a law unto themselves, and the suspicion is that both institutions’ funds are being spent in a very free and easy fashion.

[ends]

Related Posts and Comments:
18.7.16 Misero-mercenary at U of O
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25.9.15 University calling Property Services
28.3.15 University of Otago landscaping
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Posted by Elizabeth Kerr

This post is offered in the public interest.

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6 Comments

Filed under Architecture, Business, Construction, Design, Dunedin, Economics, Finance, Media, New Zealand, Otago Polytechnic, People, Pet projects, Politics, Project management, Property, Public interest, Resource management, Site, Travesty, University of Otago

6 responses to “Report from the University Landscape Trenches : Financial shoring collapsing, trouble brewing

  1. Elizabeth

    Smartphone images 8 May 2016

    uoo-landscaping-20160508_133705uoo-landscaping-20160508_134701

    A worse case of streamside strip-concreting posed as ‘landscaping’ for retainment would be hard to come across. Clodsville. Love the off-the-shelf safety handrails – pure class, so well integrated. 101 Landscape Design #Fail

    Read: This University is uptight and not Creative.

  2. Elizabeth

    Smartphone images 8 May 2016

    uoo-landscaping-20160508_133705uoo-landscaping-20160508_134701

    A worse case of streamside strip-concreting posed as ‘landscaping’ for retainment would be hard to come across. Clodsville. Love the off-the-shelf stainless safety handrails – pure class, so well integrated. 101 Landscape design #Fail

    Read: This University is not Creative.

  3. Elizabeth

    Note the spin…. we already know the university is completely out of (cost) control on procurement and project management. Yawn.
    They might want to think about forced resignations at executive and governance level anytime soon.s

    —-

    Mon, 14 Nov 2016
    ODT: Uni seeks loan to cover building costs
    The University of Otago is resorting to borrowing money as ongoing construction projects threaten to deplete cash reserves, the latest budget shows. The institution plans to spend $215 million on infrastructure, up almost $110 million on 2016, the 2017 budget, tabled at a council meeting last week, revealed. Cont/

  4. Elizabeth

    You have to think at some point the ‘international’ reputation of the University of Otago might be undermined some…. Weak ability to effect campus infrastructure through a well researched business case is not dissimilar to the hopelessness of the university’s current management of construction projects and their run-away budgets.

    Who (NAMES). Is. Responsible. For. This. God. Awful. Mess.

    Mon, 23 Jan 2017
    ODT: Overdue, $6m over budget
    The University of Otago’s $28 million data network upgrade is running years behind schedule and millions of dollars over budget. Its “future state network” project was launched in 2013 with the expectation high-speed fibre and wireless internet would be rolled out across the campus by the end of last year and cost $22 million. Cont/

    █ University aimed to have 238 buildings connected to the new Wi-Fi system by the end of 2015 … as of today only 60 buildings had been connected.

    ****

    Tue, 24 Jan 2017
    Campus access upgrade advances
    Work on the proposed $5million to $7million upgrade of the safety and accessibility of Dunedin’s campus area has moved to the next step as the council asks staff to look at funding options. That report will be made to the council next year. The upgrade, which will include improving streets surrounding the University of Otago and Otago Polytechnic, establish the area as a destination and link the area with cycleways, was supported by all councillors. Cont/

    █ Cost split between project partners, Dunedin City Council, University of Otago and Otago Polytechnic, yet to be determined.

  5. Hype O'Thermia

    Otago University is doing a Delta.
    Real estate, buying up pubs then finding “something” they can use them for, building student accommodation, building & buying and landscraping the bottom of the design barrel, refurbishing – actually this most recent case makes more sense than most since it’s a tiresome fact that as soon as you have to install anything behind the gib board you find non-compliance to today’s standards.
    Delta suddenly discovered (!!!) Aurora had been treating its work money like play money and the work hadn’t been done.
    One day OU’s Graderships will notice that students lured here by brochures showing lawns, trees, stream and old stone buildings, and waxing laddish about student lifestyle, ain’t such good value for money when the courses available have been cut back to only the most heavily subscribed. Mainstream only, high-productivity staff like hyline chickens, bred for maximum conversion of money to course passes, in a bums on seats environment.

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