Chatham Capitol Theatre Audit

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MUNICIPALITY OF CHATHAM-KENT

INFRASTRUCTURE AND ENGINEERING SERVICES

INFORMATION REPORT

TO: Mayor and Members of Council

FROM: Leo Denys, P.Eng., General Manager

Infrastructure and Engineering Services

DATE: March 1, 2012

SUBJECT: Capitol Theatre Cost Update and Audit Results

This report is for the information of Council.

BACKGROUND

On October 6, 2008, Council approved proceeding with the reconstruction oTheatre at an anticipated cost of $11.3M.

On September 14, 2009, Council approved an additional $.75M contingency

setting the budget for the final phase of construction at $12.05M.

Council on April 18, 2011 requested an audit of the Capitol Theatre financesJune 6, 2011 meeting approved the format of audit information to be returne

COMMENTS

Audit Results

Deloitte & Touche LLP were retained to audit the municipal financial statemeCapitol Theatre. A copy of the audit report is attached. (Appendix A)

The opinion of the auditor is that the financial statements presents fairly, in


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Capitol Theatre Cost Update and Audit Results

The purpose of this report is to detail for Council the source of expenditures

the final costs. The chart in Appendix B compares the actual costs to budge

To better characterize the overages a number of categories have been brokfurther with their estimated costs. A discussion below covers the major issulead to the project variance.

Discussion of actual costs

Specific Issues

Piles: Budget was over run by $102,000 as a result of the length of pito be increased to achieve required bearing capacity.

Concrete forming and rebar: It was originally anticipated that MTCU sbe able to assist in concrete forming ($50,000), but due to Ministry of requirements they could not be utilized for this work. Additional workrequired on the stairs and ramps in the Rotary Lounge ($20,000), extlip in orchestra pit ($3,500), concrete topping on pre-cast floor panelsand a retaining wall was required at the south receiving door ($5,000)

Electrical fire alarm: There were some items completed in phase one longer met electrical code and needed to be upgraded before the finacould be completed. An additional transformer was required for the rsystem. Opera box lighting needed to be reconfigured adding additio

Plumbing: Phase one repairs to plumbing systems added $46,000 of

replacement of pipe insulation (to prevent condensation) added $21,3 Sprinklers: There were miscellaneous repairs related to Phase 1 cons

totalling $45,000, and the sprinkler heads used in phase one were recoutside the recall time costing $10,000.

Metal stud and drywall: Ceiling tile grid was installed under this accouhold up contractors in the final phases of construction $15,000, infill oproscenium for stage demolition $6,100, miscellaneous bulkheads req$15,000, main auditorium light well $15,000.

Insulation: Was completed under Rene Roy contract and therefore thcontract was not spent.

Construction Management Fee and Insurance Costs: The most signportion of this cost was for the Construction Manager which had a conthe Municipality calling for $27,000/month in construction managemeDue to the construction schedule being extended a significant overag


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General Issues MTCU issues: The Ministry of Training Colleges and Universities (MT

provided a significant contribution to this project in terms of free laboprovision of tools through the Job Creation Program (JCP). Their conthe project was significant. This staff was supplied to and managed bCCTA. However, the plan for their portion of the work may have beeoptimistic considering a number of factors:

o Level of skills - Some of the jobs originally allocated to the JCPbeyond the abilities of the work force; i.e. hanging of doors, cainstallation, cutting openings for windows and doors through cl

brick walls.o Lack of work force - Some of the work force left the project at v

stages when it was uncertain if the MTCU would fund an extenJCP participation in the project. As well the project could not aattract a full complement of staff, resulting in insufficient staff tothe work. There were also administrative issues which delayeextension of MTCU contracts.

o Restriction on working on the same site as contractors - The CManager was responsible for the safety of the job site, but it coinclude the JCP crew which was not under its care and controlwhile contractors were on site the JCP crew needed to be physseparated from the trades. This resulted in reduced efficiency the JCP crew.

o Schedule adherence - Some of the work planned to be compleJCP crew was required before the trades could complete their

order to allow a few of the trades to adhere to their schedule, sjobs planned for the JCP crew needed to be completed by the ceiling tile grid installation, flooring finishes, etc.

Items not covered by contract scopeso Higher than anticipated demolition costs - Were incurred as a r

acceptance of the low demolition bidder not properly bidding thbeing discharged from the site. The actual costs for demolition

higher than reflected in the low bid.o Site safety: The Ministry of Labour would visit the job site and

all openings were protected by railings, site was clean and safit was intended that this type of work could be completed by ththe requirement to keep their work space separate from the traprecluded this from occurring. As a result the Construction Ma


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Phase 1 construction issues: As work on the final phase progressed into the earlier construction a number of issues were found and corre

items included such things as inadequate insulation on chiller piping wcorrected would cause condensation and damage of ceiling tile, electwhich no longer met code, HVAC components, plumbing and light fixtfailed to function and needed to be replaced. These items caused ap$136,000 of unanticipated costs.

Construction Manager versus General Contractor: Prior to the final phconstruction it was decided to use a construction manager rather thancontractor for the project. It was felt that there may be savings with th

construction manager. A general contractor would have been responmany of the out of scope issues and that is why they are typically morthan the construction manager. Although not necessarily less expenscost for the general contractor would be better defined and known at the project.

Volunteer effort: In order to reduce costs, and meet time line commitmsubstantial effort of a volunteer group was implemented.

Owner recommended changes and used allowances: Recognizing thdifficulties on this project some additional changes were made to reduAs an example, two sets of motorized rigging were eliminated saving and the furniture and acoustic panel allowances were not used, reducby $52,000.

HST Implementation: Prior to July 1, 2010 the Municipality was chargall contract services and we reclaimed 100% of the GST. Following timplementation of HST Chatham-Kent was charged 13% HST and cla

11.24%.

CONSULTATION

In the preparation of this report Financial Services assisted in creating and preports of the various accounts.

The architect and prior Project Manager were consulted for some history on of construction.


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FINANCIAL IMPLICATIONS

This report is for the information of Council and a companion report will coverecommendation on the funding mechanism.

Prepared by:

____________________________

Leo Denys, P.Eng.General ManagerInfrastructure and Engineering Services

Attachment(s): Appendix A Audit ReportAppendix B Summary of Contingency Funds

REF: P:\RTC\Infrastructure and Engineering\I & ES\2012\3444 - Capitol ThUpdate and Audit Results.docx


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Documents

Chatham Capitol Theatre Audit