A 20-page Technical and Financial Audit Report for the Antigua and Barbuda Department of Marine Services (ADOMS) has confirmed that millions of dollars in cost overruns could have been prevented from the inception.
The report, dated December 2018, was compiled by Ian F. Harris, who owns a construction management firm in St Lucia.
Harris has 40 years of experience in construction in the Eastern Caribbean.
Lack of a finite budget and no construction schedule are among the discrepancies outlined in this report.
The purpose of the auditor’s investigation was to provide a report and opinion of the contractual and financial condition of ADOMS as at December 2018.
Among the oddities identified was that the budget for this project “was totally open ended”, resulting in no control over the expenditure.
In fact, the auditor highlighted that “all of the sub-contractors were on labour only contracts”, with all of the materials being supplied by construction manager Wendell Marshall. The report points out that this is not deemed to be the standard way to carry out a contract, because it places large sums of money and all the expenditures for materials in the control of one party.
For example, in one instance, one supplier in Florida was paid in excess of $9 million.
Marshall also appeared to be employed in an advisory capacity, but also took responsibility for the letting of sub-contractor and supply contracts.
Furthermore, the building was not constructed on a conventional Lump Sum contract. Instead, a system called construction management was adopted. That system calls for the contractor to be part of the construction and development team, is employed at an early stage, and is paid a fee rather than making a profit. The auditor claims it would have been a good system, had it been applied properly.
The auditor also uncovered three budget numbers in the construction manager’s reports: $17.8 million, $18.5 million, and $25 million – neither of which was backed up by any calculations or build up to verify the figures. Additionally, all the budget figures were provided late in the construction.
There was a considerable delay of one year because of changes to the exterior panel system of the building from Alucabond (an expensive up-market system) to glasscrete (a less expensive material).
Early in the construction phase, there was no construction schedule to identify the critical path of construction: foundations and basement, structural frames, roof works, internal finishings and services. It took five months before the structural steel frame arrived on site, another eight months for external claddings to arrive on site, and yet another 13 months for critical work to continue.
The auditor believes that these delays would have contributed to in excess of $5 million in bank charges and interest since the project began in 2013.
At August 2017, insurance of construction costs was valued at $23,978,700 without external works, which caused the exact amount to fall short by $2 million – $25 million.
According to the auditor, the project was run on a “Cost Plus” basis with nobody responsible for cost, except the (government) by having to pay.
The auditor also disclosed that a building like ADOMS should have been completed in 18 months instead of taking more than five years to complete, but by December 2018 the current expenditure for ADOMS stood at $36.5 million with just 60 percent of the work completed.
Meanwhile, the auditor claimed that the construction manager had left the island with a substantial number of records that would have further helped them with their financial audit.
Harris said information to include the original budget, changes to the budget, how the budget was achieved, the tendering process utilized to determine contactors and sub-contractors, and the original construction schedule, had been kept on site by the construction manager who is believed to have left the country with it.
The auditor said, when contacted, Marshall refused to release the files, saying they belonged to him.
The report concluded that the project was poorly managed from inception and the building went horribly wrong during construction
Auditors believe that in the end, when there were severe financial restrictions, Marshall, in an effort to keep the project going, “dug a hole for himself”.
But even with less than a glowing rating, the ultimate responsibility to supervise the finances of public projects lies with the Minister of Finance.
Ideally, construction management would take a collaborative team approach from the outset of the project. This should include the owner’s team – in this case the government – a consultant team, and the construction manager’s team