Government Operations Committee on Nov. 19th, 2013

[The Chair, NDP, Pierre-Luc Dusseault]

Good afternoon, everyone. This is the committee's fourth meeting. As planned, we will hear from representatives of Public Works and Government Services Canada as part of our study on the renovations and associated costs for the parliamentary precinct renovation project.

We have with us today Joanne Monette, Nancy Chahwan and Ezio DiMillo. We will give them a moment to do their presentation and update us on the parliamentary precinct renovations. Then, as usual, committee members will be free to ask questions. A visit is also planned after the meeting. I'll come back to that a little later.

Without further delay, I'll turn things over to our witnesses. I would like to thank you for being here.

[Nancy Chahwan, Assistant Deputy Minister, Parliamentary Precinct Branch, Department of Public Works and Government Services]

Thank you very much, Mr. Chair.

Good afternoon and thank you for the opportunity to speak with you today on the progress of the long-term vision and plan, or LTVP. We are pleased to be here.

My predecessor appeared before this committee around this time last year to report on the LTVP, and I realize this is a new conversation for a number of us. I will therefore begin with a brief introduction on our responsibilities and the broader LTVP.

The parliamentary precinct branch has two distinct responsibilities. One is to operate and maintain the precinct, which includes 33 crown-owned buildings occupied mainly by Parliament, the Prime Minister's Office, the Privy Council Office, and a number of commercial tenants. Our other responsibility is to carry out a full rehabilitation of the precinct through the implementation of the LTVP.

The level of deterioration of Canada's Parliament Buildings presents operational and health and safety risks to parliamentarians, workers, and the public. In December 2010, the West Block experienced a flood that could have shut down the building immediately and indefinitely had it still been occupied. Thankfully, it had been vacated a mere two weeks prior. In February 2012 a leak in the Centre Block caused the failure of one of only two transformers providing the power to all of Parliament Hill.

The LTVP is addressing these issues, as well as the accommodation needs of Parliament, which have evolved considerably since the buildings were constructed.

The LTVP was initially approved in 2001. The strategy has evolved. Since 2007, it has been based on rolling five-year programs of work, with the main objective to rehabilitate the West, Centre and East Blocks.

These five-year programs of work give the government clarity and increased control. They allow us to respond to evolving priorities and permit us greater accuracy in developing project costs and schedules.

The need to rehabilitate and modernize the Parliament Buildings has been a long-standing consideration, recognized by many as a priority. Independent assessments going back to 1999 consistently conclude that the condition of the buildings is deteriorating, particularly that of Centre Block, which is projected to reach a critical risk of total failure by 2019. This means that major structural, mechanical, or electrical failures could force us to shut down the building. We must also contend with the presence of hazardous materials and the need to comply with modern building codes.

The nature of this work is thus complex and costly due to the age and condition of the buildings and the level of restoration needed. For instance, in many cases this involves removing stones, and then numbering, repairing, and reinstalling them in exactly the same place, as you can see on the slide.

Furthermore the LTVP requires managing a number of interdependent and concurrent projects as illustrated in the work sequencing map on slide three.

Given these complexities, the cost to undertake this work is significant but necessary to ensure a safe and functional work environment for Parliament and the vitality of the precinct for all Canadians.

We take seriously our role as stewards of the investments associated with an undertaking of this scope. This stewardship includes adequate controls and constant efforts to contain costs and identify savings.

About $1.1 billion was invested in the LTVP between 2001 and March 2013, mainly for the relocation of parliamentary functions and administration to support the work on the main Parliament Buildings, and for urgent repairs and planning initiatives.

PWGSC is authorized to expend an additional $1.5 billion between 2013 and 2018 to complete all current projects, including the West Block, and to initiate work on the East Block. This budget will also be used to undertake urgent repairs and toward planning future phases of the LTVP, including the rehabilitation of Centre Block.

Cost estimates evolve over time. This can be attributed to asset deterioration or changes to building codes, security, or client requirements. Having said this, in the delivery of 19 projects since 2006, and in collaboration with the House of Commons administration, PWGSC has been able to contain costs and realize savings amounting to more than $39 million. All major projects are advancing on time and on budget.

The restoration of Canada's Parliament Buildings is governed by a robust accountability regime that includes regular reporting to the minister and Treasury Board Secretariat and a third party review framework covering areas such as contracting and costing.

In addition, all major construction contracts are awarded through a transparent and competitive two-stage process that is overseen and reported on by independent fairness monitors. The first stage is pre-qualification. All firms are invited to demonstrate their interest and submit proposals against mandatory criteria, such as capacity to take on projects of a similar scope and financial ability. The firms that are deemed qualified after this first stage are then invited to submit detailed proposals and are assessed against technical criteria and on the financial merits of their proposal. The successful bidder is chosen on the basis of the best overall technical and financial result.

Furthermore, our work in the precinct is subject to various levels of audit and evaluation, including from the Auditor General and the private sector. PWGSC also has in place a strong integrity framework that demonstrates our commitment to ongoing monitoring of procurement activities with a view to ensure the highest standards of integrity, protect the interests of taxpayers, and reinforce ethical behaviour.

Over the years and in concert with our parliamentary partners, we have yielded some truly remarkable achievements. In addition to realizing substantial time and cost savings already mentioned, I would like to add that in 2010, the Auditor General reported that PWGSC “had in place generally sound project management practices” and “developed a costing estimates methodology that takes into account the risks…”.

Similar conclusions were made in September 2012 when an independent firm concluded sound project management practices, systems and control were in place in all six projects it assessed. Also in 2012, the Auditor General stated that “PWGSC adequately plans for and assesses the benefits, costs and risks of its contractor use.”

More recently, PricewaterhouseCoopers found that all amounts invoiced by the construction manager for the West Block between June 2011 and December 2012 are in accordance with the terms of the contract.

The four projects on slide 7 represent key milestones in the delivery of the LTVP, and demonstrate once more modern-day functionality, timely delivery, and savings for taxpayers.

Work is now focused on initiating the rehabilitation of Centre Block. To do so, interim accommodations must first be secured for the Senate and the House of Commons. To this effect, the Sir John A. Macdonald Building is being rehabilitated to replace the former room 200 in the West Block and provide permanent ceremonial space for the House of Commons. I had the honour of revealing the designs earlier this year to the Honourable Diane Finley.

The project includes constructing an addition to the west of the building with support and loading facilities. Demolition of the existing heritage building is complete and interior fit-up is well under way. The project is half done and on track for completion in 2015, the bicentennial of Sir John A. Macdonald's birth.

The renovation of the Wellington Building is also on track. Demolition and abatement are complete and interior fit-up has begun, to support the House of Commons starting in 2016.

The West Block project, undoubtedly the most complex endeavour to date, is also advancing as planned. Demolition and abatement are substantially complete; masonry rehabilitation has begun.

As you can see on the design boards, the building will house an interim House of Commons chamber in the courtyard. It will also house a number of offices and functions during work on the Centre Block. We look forward to showing you the work under way.

The critical path project is on track for completion in 2017, a fitting contribution to the celebration of Canada's 150th anniversary. PWGSC is working towards clearing Parliament Hill of major construction activities for this momentous occasion.

I would like to share some examples with you on the innovative approach that has allowed us to maximize efficiencies in the delivery of the LTVP.

Until recently. the LTVP provided for West Block and East Block to be rehabilitated first to accommodate people and functions from Centre Block, an approach that included consideration for constructing an interim Senate chamber in the East Block similar to what is being done in the West Block. This approach proved to be technically complex.

As you may be aware, Senate functions, including the chamber, will now be relocated to the Government Conference Centre. Its proximity to the Hill and ability to accept functions from Centre Block, especially the chamber, makes the former train station an ideal fit.

This approach is the most cost-effective solution. It will enable the needed rehabilitation of a 101-year-old heritage building while providing an interim home for the Senate.

The approach will allow the work on Centre Block to advance ahead of 2019. As such, significant costs associated with the original solution and timeline can be avoided. It also reduces the amount of disruption on Parliament Hill at one given time.

As we proceed with urgent masonry work on the East Block, we know that interior building systems can endure to 2030 with regular maintenance.

With a clearly defined approved plan under way for the relocation of functions from the Centre Block, PWGSC is now planning its major rehabilitation. The project is in the early pre-planning stage, which is focused on identifying the scope of work based on the state of the building and clients' requirements. Estimates are in development and will be refined as assumptions are validated and the project moves into implementation.

As we proceed with this very important undertaking, and on behalf of Minister Finley and Deputy Minister Michelle d'Auray, I look forward to continued collaboration with our parliamentary partners.

We are fully committed to leveraging lessons learned from projects like the West Block and Wellington Building, and to taking advantage of new opportunities to create efficiencies for the overall delivery of the LTVP.

At this time, I would be happy to answer your questions.

Thank you.

[The Chair, NDP, Pierre-Luc Dusseault]

Thank you for your very interesting presentation.

We'll start the questions with Mrs. Day.

[Anne-Marie Day, NDP, Charlesbourg—Haute-Saint-Charles, QC]

Thank you, Mr. Chair.

Good afternoon. I would like to thank the witnesses for being here. The committee wanted to hear what you had to say about this.

My first question has to do directly with the file. On page 8, you state that “PricewaterhouseCoopers found that all amounts invoiced by the construction manager for the West Block between June 2011 and December 2012 are in accordance with the terms of the contract.” On page 6, you state that there was an additional $1.5 billion in expenses for 2013 to 2018. It was in accordance until 2012, but the expenditures just increased. What happened?

[Nancy Chahwan]

Thank you for your question, Mrs. Day. It is important to make this clarification.

The PricewaterhouseCoopers audits basically covered the invoice period, which includes a significant sample of invoices from the construction manager for the West Block. We plan to broaden the scope of the audit to our two other major projects, the Wellington Building and the Sir John A. Macdonald Building. We have already started working on that.

I would like to clarify something about the $1.5 billion mentioned on page 6. That amount does not represent an increase in costs. It is simply the amount approved by the Treasury Board for the next phase of the LTVP from 2013 to 2018.

As I explained a little earlier, we now have five-year work programs, and the $1.5 billion represents the value of the work planned for 2013 to 2018.

[Anne-Marie Day, NDP, Charlesbourg—Haute-Saint-Charles, QC]

Renovations to the parliamentary precinct requires a number of specialized trades. It's our history. Similar buildings exist in other Commonwealth countries. Have you compared costs to see if we are on the right track? Does this kind of work cost more here? Does it take longer? Do our different climate conditions cause delays? Are there problems with asbestos, for example?

[Nancy Chahwan]

Thank you for your questions.

I'll start with your question about trades. We do in fact have the opportunity to call on a number of specialized construction trades because Parliament Hill is a very specific and complex site. These realities and this need to rehabilitate historic heritage buildings exist in other countries around the world. We have a number of exchange programs with other countries to share best practices. I can proudly tell you that other countries turn to us to see how we are doing things. And those countries note that our projects are done on time and on budget.

We are working a great deal with the industry to implement apprenticeship programs and to ensure continuity and sufficient access to experts. So far, these elements have not created any issues in delivering our projects.

You are right to speak about asbestos. Obviously, asbestos is found in buildings this old. We have solid asbestos management programs that are compliant with federal and local legislation. We are taking all the precautions necessary to safeguard the health of our employees and workers on the site.

[Anne-Marie Day, NDP, Charlesbourg—Haute-Saint-Charles, QC]

I was elected in 2011, so fairly recently. Construction on the buildings was under way at the time, and it is ongoing. I am aware of the deadlines, and I see that you are on budget and on time.

Are we facing any particular problems, such as stability issues with the ground on Parliament Hill? Aside from asbestos, are there any problems specific to Parliament Hill?

[Nancy Chahwan]

Rehabilitating buildings and heritage buildings of this age comes with some particular challenges. We are doing extensive studies before going ahead with the work to ensure that we know the condition of the building and of the surrounding ground.

I'll turn to my colleague, Ezio DiMillo, who can give you a more precise answer.

[Ezio DiMillo, Acting Director General, Major Crown Projects, Parliamentary Precinct Branch, Department of Public Works and Government Services]

Thank you for the question, Mr. Chair.

We do significant investigations prior to doing any work. Boreholes are taken, and samples are taken. Engineers look at the results of this information to determine rock depth, rock quality, if there are any contaminants, and so on. This is being done all around the West Block. You may have seen trucks doing that type of investigation.

At this point, we haven't discovered anything out of the ordinary. Of course, when we're doing the rock excavation, it will require rock anchors, but this is normal, and they are used in most construction projects that do rock excavation.

[The Chair, NDP, Pierre-Luc Dusseault]

Mr. Trottier, you have the floor for five minutes.

[Bernard Trottier, Conservative, Etobicoke—Lakeshore, ON]

Thank you, Mr. Chair.

Ms. Chahwan, you said in your presentation that $1.1 billion was invested between 2001 and 2013. For the period from 2013 to 2018, $1.5 billion is expected. What are the initial estimates of costs related to all these projects after 2018?

[Nancy Chahwan]

Thank you very much, Mr. Trottier.

Mr. Chair, there is no set cost for the long term vision and plan. In 2001, we established a 25-year vision. We quickly realized that this approach included challenges regarding cost predictability. Starting in 2007, the government approved a realignment of the strategy. Now, the approach favours five-year plans, which allow us to have a better predictability of the costs and deadlines, and enables us to better track the progress of these projects. It is difficult for me to provide a cost estimate after 2018 at this point.

[Bernard Trottier, Conservative, Etobicoke—Lakeshore, ON]

After 2018, the main project will surely be the renovation of Centre Block. What other projects are planned for 2018 and subsequent years?

[Nancy Chahwan]

You're quite right, Mr. Trottier. The project is basically to proceed with the renovation of Centre Block, which is in itself extremely complex. In fact, we are not going to proceed the same way as we did for West Block, where we were literally able to empty all the rooms and practically rebuild the whole thing from the inside out. We have to ensure that all the artwork, for example, is preserved.

The feasibility studies, planning and steps, point by point, for Centre Block should take several years. When the building is ready to be used again, we will follow the sequence and ensure Parliament's duties are repatriated and, then, we'll ensure that optimal use is made of the spaces we have renovated on Wellington Street, in particular.

[Bernard Trottier, Conservative, Etobicoke—Lakeshore, ON]

When do we foresee Centre Block resuming its parliamentary functions?

[Nancy Chahwan]

Mr. Chair, the verb “foresee” is really appropriate, given that we are still in the pre-planning stage. We expect work to start in 2018, as I mentioned in my opening remarks. We are unsure about exactly how long the work will take, but we expect it to take at least 10 years.

[Bernard Trottier, Conservative, Etobicoke—Lakeshore, ON]

That's a rather extensive range of projects. Is there a way to review the plans so that they can be completed sooner? We're talking about 30 years or even more, aren't we? Could the development be done quicker so that the new precinct is ready sooner?

[Nancy Chahwan]

Thank you for giving me the opportunity to answer this question.

Mr. Chair, so far, PWGSC has adopted very innovative approaches in order to realize projects. Since the long term vision and plan program for the parliamentary precinct was adopted, we have been able to speed up the process and reduce time frames for a number of our projects. I can tell you about West Block, for example. It has taken three years less than expected, simply because we sped up the rehabilitation of committee rooms at 1 Wellington Street, where the Canadian Museum of Contemporary Photography used to be, and because we used a new approach for hiring people from the private sector. We are now using an approach based on construction management.

This construction manager approach in itself allowed us to gain another year. We have several other projects that I can give as examples. They will show that we were able to achieve significant savings in time, which of course translates into savings in dollars.

[Bernard Trottier, Conservative, Etobicoke—Lakeshore, ON]

Is the work being done in front of the Supreme Court part of this group of projects?

[Nancy Chahwan]

No. The work being done there is not part of the long term vision and plan for the parliamentary precinct.

[Bernard Trottier, Conservative, Etobicoke—Lakeshore, ON]

Right.

There will also be more connections between the various buildings. Is that part of these projects?

[Nancy Chahwan]

There will, especially on the Hill, particularly with the new visitors welcome centre, which will be underground. A number of phases will correspond to each building. I'm not sure I fully understood the question.

[Bernard Trottier, Conservative, Etobicoke—Lakeshore, ON]

Okay.

Thank you, Mr. Chair.

[The Chair, NDP, Pierre-Luc Dusseault]

Mr. Blanchette, you have five minutes.