Hamilton paving contractors and the City staff who manage paving contracts may be in for a rude awakening. A comprehensive report with the prosaic title “Roads Value for Money Audit” has laid bare a litany of shoddy practices that have apparently been going on for some time at Hamilton Public Works, at least up to 2018.
Looking at the city’s $4 Billion roads system Auditor Charles Brown identified numerous issues that are costing the city money, leading to poor workmanship and failing to provide a sustainable plan to keep the city streets and roads in a proper state of repair. The report says the city is only spending about 1 percent of the replacement cost of its pavements each year which is lower than some municipalities. So it is all the more urgent to “institute more efficient processes and innovative strategies that focus on quality, proactive preservation and extending the life of pavements.”
Some of the highlights of the report:
Serious concerns about the procurement process. The report commented, “a number of red flags were noted that signal risks related to market domination (Contractor favouritism), bid suppression, cover bidding and low-bid/low-quality events, and which call for the need for vigilance by management in the tendering and monitoring of contracts. The auditor also found several examples where large procurements were split into smaller projects so the project could be sole sourced within the $150,000 discretionary spending limit of staff “One large procurement was divided into four separate procurements of $149,900 in order to come under the $150,000 roster limit and avoid lengthier procurement alternatives.”
Lack of a process to identify and track infrastructure gaps. Some of the processes in place are not reliable, there is no plan for long term sustainability and too much emphasis on resurfacing with little emphasis on proactive preservation.
Staff are doing a poor job of managing contractor performance. They have accepted “rejectable and borderline quality” in projects. Financial penalties were seldom used and “fines have been relatively insignificant and do not act as a deterrent against low quality.”
Auditor Brown told councillors a possible solution is to implement a contractor rating system,
City Roads receive literally thousands of cuts each year from telephone, cable and gas contractors. The city charges the contractor “degradation fees” to compensate for the long term damage caused but the auditor said there was no system in place to determine if the fees actually covered the cost of the damage.
Pavement designs in Hamilton historically relied on simplified, “off the shelf” design methods not reflective of all parameters of the industry standards. The audit recommended that “that roads management should continue to move away from “boilerplate” design to embrace standards in a systematic way, and develop a design guide, protocols, and training to bring more sophistication to this important function.”
Preventive maintenance, was not being done. Wrote the auditors. “we saw very little evidence of preventive maintenance being applied in any systematic way on urban roads. Rather, preventive treatments are applied only sporadically in the form of crack sealing and surface treatments. This is symptomatic of a reactive system of asset management.”
Councillor Chad Collins expressed concern on this point:
Contractors getting paid without submitting an invoice. The auditor “found that rather than rely on Contractors to submit invoices for payment, City staff were themselves generating progress payment certificates (PPCs) and using that information as the basis for making payments to contractors – without an invoice – in violation of the Construction Act.
Robbing Peter to Pay Paul. Instances were found where budgeted funds from completed projects with unspent/surplus balances were used to pay for unrelated contracts where there was no budget remaining.
Councillor John-Paul Danko expressed concern to hear this was going on
The Bay Observer uncovered similar instances of cost savings on one project being transferred to another project that had gone over budget in the early days of the Hamilton Waterfront Trust. In one instance costs were transferred to a project to increase the amount of money that would be received under a cost sharing agreement with senior governments.
The audit painted a disturbing portrait of a department that already undergone its share of scandal and controversy, dating back to the discovery of time theft and missing asphalt by the road crews, to the ongoing issue to the Red Hill Parkway inquiry. Todays roads audit should serve as a warning to other departments, both within Public Works, where the largest expenditures tend to take, place but across all city departments that a higher level of scrutiny is in place at Hamilton City Hall.