Wednesday, February 3, 2010

What's it going to cost? An update.

A few days ago I obtained a copy of the PowerPoint the RDC has been using to brief members of the City Council and other politicos. The key page is below (click to enlarge):

What we learn from this page, taking RDC's statements at face value:

Estimated cost of the project: $36,316,000 [Note 1]
Federal funding (after decreases): $7,932,215
Federal percentage: 21.8 %
Non-federal percentage: 78.2%
Non-federal ratio: 3.68 to 1

Total sunk costs through Phase II: $8,040,000 [Note 2]
...with remaining costs-to-completion of: $28,286,000

Phase III cost: $10,379,000
Total costs through Phase III: $18,419,000 [Note 3]
..with remaining costs-to-completion of: $17,907,000

My notes follow below. Continues...

Note 1: $36.3M is the sum of the construction estimate ($35M, which was reported in the media) and the cost of design ($1.3M). Frankly, I don't know of any project that doesn't get designed before it's built, but the RDC prefers to show them separately. And when the newspapers pick up the $35M and miss the other $1.3M, I'm sure that the RDC is happy to leave well enough alone. $35M sounds smaller. But I prefer to have the whole truth: $36.3M.

It's interesting, however, that the RDC calls all of this design cost "unanticipated." If that's the case, then can we assume that there are some more design costs that were anticipated, and these need to be added on top of $36.3M? As I said, any project I've ever heard of "anticipates" hiring some architects and engineers and getting a design. Or did the RDC think they would get a shovel-ready design from Argentina (on the cheap) and not have to do any more work to complete it?

So I strongly suspect that either there are more design costs not included on this page. Otherwise, I'd have to conclude that the folks at the RDC are rather foolish.

Speaking of Argentina: On another page of their PowerPoint, the RDC reports spending $126 thousand on an International Design Competition. Maybe I should include this too, but it's not very significant.

Note 2: To get total sunk costs through Phase II, I had to add in those pesky "unanticipated" design costs again. With Phases I and II, it comes to $8M, or about 22% of the total project cost.

But here's the odd part: In May, the RDC told the City Council it had already sunk $11M into the project, and that was before the RDC had even received all the bids for Phase III. What's going on? Are there some costs they were including then, but are neglecting to include on this page now?

Once again, I suspect we don't have the whole story. There may be some more costs out there, perhaps as much as $2 million. Possibly these would be design costs that the RDC conveniently omitted mention of because they don't help explain the point of the PowerPoint presentation: Why they are $8.9 million short and 3 years late with the project.

Note 3: I've simply added the bid price for Phase III ($10.4M) to the previous Phase II sunk costs total ($8M) to get $18.4M.

Phase III is the steelwork - the floating docks and the helical ramp. The public won't get to see this work-in-progress; the steel dock will be built somewhere else and then barged in.

At the conclusion of Phase III, the City would have sunk $18.4M into the project, and we'd then be over 50% invested. Thinking out loud: If I were trying to save my project, I'd want to get this Phase III done, pronto, in hopes that nobody would have the stomach to stop the project once it's half done!

This makes it important to figure out where the City actually stands on this Phase III. If we haven't started on Phase III, we're at 22% sunk cost, and to many people it would be reasonable to consider other alternatives. But if the RDC has gone ahead and built and paid for that steel boat dock...well, that's another matter. (We could save money by not building those pods, but we'd still be stuck with a "boat dock to nowhere.")

A couple of weeks ago, someone requested a search of the City records. There is an entry for the winning bidder on Phase III -- but no contract could be found.

This is why I am calling for a project freeze and an independent audit.

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