'Rigorous' cost management needed as $5B Centre Block renovation proceeds: AG report

Despite delayed decision-making by parliamentarians, Canada's massive renovation of Parliament Hill's Centre Block is being effectively managed so far, according to a new audit.

However, "rigorous" cost management will be needed as the work proceeds, cautions auditor general Karen Hogan in her performance report on Public Services and Procurement Canada's (PSPC) rehabilitation of the crown jewel of Canadian democracy.

Tabled in Parliament on Monday, Hogan issued her assessment of the work done up until last summer on the effort that is estimated to take until at least 2030-31 and cost between $4.5 billion and $5 billion to complete.

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The ongoing major construction is the most comprehensive update to the building since it was completed in 1927.

"Public Services and Procurement Canada used flexible approaches to effectively manage the planning, design, and early construction phases," Hogan said in a release accompanying the audit.

"Given the size and complexity of this undertaking, a streamlined decision-making process will be required to continue effectively managing the costs and timelines of the rehabilitation program, as construction work accelerates," she said.

In 2021, after more than a decade of planning, PSPC released the final design, scope, and anticipated timelines for completing the project. 

At the time, a third-party assessment found a "high level of confidence" in the federal government's cost and timing estimates, "provided no major functional program changes occur or extreme rates of escalation are not experienced."

Digging into whether PSPC has effectively managed the cost, schedule, and scope, Hogan found that spending has so far been under the approved amounts, and the lead department has plans in place to mitigate the risks of costs increasing, while noting the bulk of the expenditures is still to come.

According to the audit, as of the end of July 2022 PSPS had spent a total of $880.7 million on rehabilitating the Centre Block and expanding the Parliament Welcome Centre.

Offering examples of how delayed decision-making by MPs, senators, the Library of Parliament and the Parliamentary Protective Service (PPS) have impacted what's been called the "most complex heritage rehabilitation ever seen in Canada," the audit pointed to foot-dragging on how to use the east courtyard.

That decision was required by spring 2020, but a final design was not agreed to until March 2022.

Another instance of parliamentary indecision that remains outstanding, Hogan found, is what Centre Block's security requirements will be.

Hogan pointed to these instances as examples of a "fragmented" governance framework, a shortcoming her office first raised attention to in a 2010 audit.

"As the program moves more into the construction phase, where making changes to elements that are built or in the process of being built becomes more difficult, the impact of delayed decisions on costs and timelines will be greater," reads the report.

Speaking to reporters about her audit on Monday afternoon, Hogan said up until now that project has largely been about design and site preparation, but as it becomes a more full-on construction effort any delays could result in increased costs.

"I could give you a great example: if you have ever renovated your kitchen, imagine if you had to not only get consensus of everyone that you live with, but all the neighbours on your street as well before you could pick out the cabinetry," Hogan said. 

• Read more about how Centre Block is being modernized

The assessment of PSPC's work to date also looked into whether the federal department responsible for the project has balanced the need to maintain the heritage integrity of the building, with the requirements of other stakeholders such as MPs and senators, and found that through considerable consultation this has been accomplished.

"This included consultations to understand requirements, such as the number of offices, the size of the lobbies, and the technical requirements of committee rooms," the report reads.

The extensive project includes taking out, restoring, and reinstalling integral historic features of the building, while layering in modern updates, including new multimedia, accessibility, and security features. It has also been promised that the upgrades will transform the largest energy consumer within PSPC’s portfolio of federal buildings, into a carbon-neutral facility.

• History behind scaffolding: Inside the Centre Block renovation 

Hogan's audit commended PSPC for taking a "flexible" approach to keep the project moving along, including during COVID-19 shutdowns and while awaiting input from certain stakeholders, but has offered three recommendations on how to stay on track:

• Conduct a gender-based analysis plus assessment for the Centre Block Rehabilitation Program, to "ensure that the public spaces are inclusive and represent the diversity of all Canada’s peoples."
• Submit progress reports on the renovation to the Speaker of the House and Speaker of the Senate that outlines the foreseen bumps in the road ahead, clear deadlines for upcoming decisions that require parliamentary input, and any needs for adjustments to the initial plan and the impacts of these issues on the cost, scope, and schedule.
• And, make public its long-term vision and plan annual reports within the year so that Canadians can see for themselves how the project is going and what they can expect the reimagined Centre Block to look.

PSPC has agreed to these recommendations, vowing to provide semi-annual updates to Parliament on the project's "emerging risks, significant changes and key decisions required," starting this year.

Public Services and Procurement Minister Helena Jaczek thanked the auditor general for her work, while touting that the renovation project will create more than 70,000 jobs over the course of the project, with more than 90 per cent of the work being completed by small and medium-sized Canadian enterprises.

"While considerable efforts have been made to strengthen governance, some issues do remain," Jaczek said during a scrum with reporters in West Block. "I can tell you we're committed to implementing the auditor general's recommendation to further improve project governance." 

MPs and senators moved out of Centre Block at the end of 2018, and into their new homes of West Block and the Government Conference Centre, respectively. Approximately $3 billion was spent preparing for Centre Block's closure, including the renovations to create the temporary House and Senate.

Hogan took on this performance review because "a significant amount of public funds have been allocated," for it, and "Canadians should know the progress so far and whether the program has been effectively managed."