Friday, July 16, 2010

Bigger, better and largely empty - UPDATED

After the folks at Pavco completed the gold plated Vancouver Convention Center and kept the budget overruns down to a few hundred million dollars, they rewarded senior executives with bonuses and "incentive pay." That is unlikely to change this year despite the 2010 fiscal year seeing losses before government contributions rise from $16.9 million to $61.1 million.  These folks always do a fine job. And so might you, if you got to write your own targets. For example, instead of only reporting actual usage, they report the percentage that a facility was used compared to a target number.  So, if you target ten days use and sell five days, that's 50% utilization.

Sean Holman adds interesting information to the mix with his Public Eye article titled Maple Story. It discusses the compensation for the Convention Center General Manager position. 
When Barbara Maple left that job in April 2008, she was making $130,500 per year. By comparison, her successor Ken Cretney - the former general manager of the Marriott Pinnacle Downtown Hotel - is making $205,400 a year, as well as having received a $100,000 incentive payment in fiscal 2009/10. That pushed the total value of his compensation package up to $335,347.
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Original article published July 9, 2010:

Premier-in-waiting Gordon Campbell - and many voters - wanted an anchor chain hung around the NDP's collective neck in 2001. Campbell would have ensured that three tarnished aluminum ferry icons were made fast to the links. With delays, cost overruns and break-in difficulties, the high speed catamarans were political hot potatoes drawing negative attention to the NDP government.

Glen Clark's government intended the catamarans to serve needs of BC Ferry Services and stimulate the marine construction trade in BC. Instead, they became symbols of misdirected and incompetent public enterprise. Feeling the heat and already suffering at the polls, Clark's successor Ujjal Dosanjh removed the vessels from the fleet and offered them for sale. That played into the hands of a cynical political movement willing to burn hundreds of millions to snap shut the trap into which their opposition had stepped. Gordon Campbell and his handlers were people prepared to poison the community well for political advantage.

Indeed, the ferry construction project was a disaster owned largely by the NDP government of Glen Clark. Ujjal Dosanjh's cabinet offered the ships for sale, a decision based on expert advice. They expected to realize more benefit from a sale than the next favored option, which involved modifications to reduce speed and improve fuel efficiency so the ships could be assigned to Langdale runs and supplemental service on the Nanaimo route. Consultants predicted that a sale would take two years.

However, the new Liberal government didn't want to sell the vessels on the international market or to modify them and put them into service. This was one disaster from which they didn't want citizens making a recovery. Leaving the ships idly displayed on the Vancouver waterfront as sharp reminders served a political purpose worth more than any alternatives. For that, Liberals needed cooperation of the Washington Marine Group who controlled berthing facilities in North Vancouver, a place with great visibility, especially compared to BC Ferries' own Deas Docks in Richmond.

Instead of allowing the sale process to run the recommended course, the Liberals sold the aluminum catamarans to Washington Marine, completing the sale little more than a year after the Wright report that counseled patience. WMG, owned by Montana based multi-billionaire Dennis Washington, paid under $20 million, less than the ships' scrap value. Naturally, the Washington family are large contributors to the BC Liberals. WMG sold the ships to the giant Abu Dhabi Mar Group for service in the Persian Gulf between the United Arab Emirates and Quatar.

Had he been advising Premier Clark, Sir Humphrey Appleby would have said the original fast ferry plan was courageous. Every ex post facto expert review concluded that while its execution was inept, the initial program itself was ill conceived. This is from the report by Fred R. Wright, FCA:
“Construction of the fast ferries started before the scope, schedule and budget for the ships was firmly established. Indeed, these critical elements of ship construction were not managed in a disciplined way throughout the project. It seems self evident, at least in hindsight, that first-rate project management techniques that mitigate risk are essential on any project of this magnitude.

“Additionally, the principles of project management are most needed, and most valuable, at the 
genesis of a project. A clear recognition of how scope, budget and schedule interrelate, together with appropriately precise estimates of these three elements, are essential to sorting out potentially successful projects from superficially attractive ideas that have little potential for practical success.

“Proven project management practices [should] be used on all significant capital projects.”
Perhaps readers are wondering where we are going with this old story. I think it is important because it demonstrates how little politicians remember from days in the wilderness, once they enter plush lounges of power and sit in swivel chairs behind the desks.

I've written here before about my former admiration for Finance Minister Colin Hansen. When he was Liberal opposition critic of the ferry services, he spoke about the need for transparency, accountability, consultation and systematic risk analysis. He talked extensively about the NDP failure to complete a comprehensive Business Plan before beginning ferry construction.

The 2001 Wright Report reminded the Liberals about these almost universal principles, including those shown above. So what happened when the Convention Centre budget spiraled out of control, growing massively from under $500 million to almost $1 billion, a growth even greater than the entire fast ferry program cost.

It turns out that the convention centre got built, like the ferries, without any comprehensive examination of underlying business assumptions. My own analysis may sound familiar:
  • Critical elements of construction were not managed in a disciplined way throughout the project. It seems self evident, at least in hindsight, that first-rate project management techniques that mitigate risk and are essential on any project of this magnitude were not employed.
  • Additionally, the principles of project management most needed, and most valuable, at the genesis of a project were disregarded. A clear recognition of how scope, budget and schedule interrelate, together with appropriately precise estimates of these three elements, are essential to sorting out potentially successful projects from superficially attractive ideas that have little potential for practical success.
  • Proven project management practices should have been used on this and other significant capital projects.”
That explains the almost $500 million cost overrun and also the failure to evaluate the changing market for North American convention facilities. Without doubt, the Vancouver Convention Centre is gorgeous. It is bigger and better but largely empty.



Here is the centre's bumf:
With our expansion complete, we’ve tripled our size to cover 1.1 million square feet (or four city blocks) for a combined total of 466,500 square feet of pre-function, meeting, exhibition, and ballroom space. The Vancouver Convention Centre now offers the ability to hold multiple simultaneous events, each with their own separate access and function spaces.
Built over land and water, with floor-to-ceiling glass throughout that treats guests to phenomenal harbour and mountain views, our new West Building is a masterpiece of design, inspiration and sustainability. Our commitment to green technology can be found in every corner: the “living roof,” seawater heating and cooling, on-site water treatment and even fish habitat built into the foundation.
All well and good. Sounds great but where are the customers?  Here is a calendar showing the convention centre's availability. Days in red show the times that no events are scheduled and announced. Rather than hosting simultaneous events, they appear to be occupying the most costly empty space in Canada. Listings are from the Events Schedule published by the Convention Centre July 9, 2010.


Red marks days with no booking.
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11 comments:

  1. Norm, though the Aluminum Cats Project wasn't implemented well - at least all that "lost" money or a major portion of it, was "lost" into the BC economy and provided taxable income that then supported education and health services in BC rather than in Germany.

    Also, I agree with you that the Liberals indeed cut off "our" noses to spite the NDP in the way they had them displayed and sold them even cheaper than they could have been sold for.

    I think another problem with the Cats was where they were deployed. I think they were
    inappropriate for routes that were adjacent to private beach front property (most likely owned by LIEberal supporters, your average working stiff in East Van not affected by ferry wakes) where even their high speed became a liability rather than an advantage.

    As a former resident of Haida Gwaii, back in the day when we were served by the Northland Prince (a standard frieghter - that loaded vehicles with a crane and could land at ANY basic dock and load and offload vehicles and goods) I felt that the Islanders were extremely poorly served by Admiral Hahn after the sinking of the Northland Prince.

    Why couldn't they have provided service via freighter in the meantime? I also couldn't help but wonder how the fast cats would have performed on the Prince Rupert - Massett run, as in my day that was an eight to twelve hour passage, depending on the tides, weather etc. I also know for a FACT that any wake would have been absolutely no problem in the Hecate Strait, or along the Dixon Entrance once the ferry was off the North Beach of Graham Island.

    The benefits to a potential BC shipbuilding industry, the training and experience gained also mitigate some errors in business acumen with the Fast Cats, especially compared to sending all that money to Germany and Ottawa for boats that also seem far from perfect from everything I hear.

    The LIEberals as you suggest, definitely used the mistakes made with the catamarans to "showboat" (excuse the pun) at the expense of the citizens of BC and once in power have made the planners of the project look like genious business wizards with their ongoing smorgasborg of projects gone sideways and over budget with no accountability.

    What is it with these right wing ideologues that makes them want to give away everything in public hands no matter how senseless it is in sheer economic terms, just because it doesn't fit their ideology? And why do the unwashed keep buying into it? Harper's effort to unload Canada's Nuclear Energy business is so similar to the theft of BC Rail and makes absolutely no sense - just like the Avro Arrow - who are these politicians working for? definitely not us.....

    Then recently New Brunswick attempted to give their Hydro to Quebec, but at least there the public was apparently a little less asleep at the wheel.

    And what is with the changling, Jean Charest's new incarnation as a virtual lobbyist for the icky gooey Tar Sands? I'm looking forward to his explanation in thirty minutes or so on "The House" on CBC.

    ReplyDelete
  2. Norm, I don't know what happened on The House this morning. I listened to it and didn't hear Charest even mention the Tar Sands.

    It was a special edition with a guest host (replacing the vacationing regular host) focused on Quebec. Earlier this morning on the CBC during a promo/news combo, they had what I thought was an excerpt of Charest denying he had said in Europe that the Tar Sands had to pull up there socks and practically promoting them now and attesting to the fact that he had never said otherwise.

    I may have briefly dozed off, with the heat and all - but as I say I didn't hear Charest mention it at all - it was all about what a liar the leader of the PQ was (according to Charest) and whether or not Charest was interested in returning to Federal Politics.

    Maybe I'm losing it, or maybe the CBC is - they also keep telling me what a "constitutional scholar" and "public servant" that corporate lawyer and and seven figure earning corporate director the new GG designate is supposed to be. Am I listening to an alternate CBC from outer space or what.

    Accepting over 1 Million in a year from a company like CGI is hardly sacrifice in the public interest, at least not in my little town.

    We seem to live in a BC and Canada where the pressc/media just makes up stuff, where politicians change parties at will and parties themselves change their names whenever convenient and the names themselves are as meaningful as made up gibberish or the language in Clockwork Orange. Liberal in BC means Conservative/Socred/Alliance - in Ottawa it means the Big Business Party to the slight left of the Canadian Taliban Right Wing Big Business Party and the BC NDP, who knows if they stand for anything at all other than cushy jobs for about 40 of themselves.

    ReplyDelete
  3. Maybe it's a side issue but CGI says the "Y2K Bug" enabled it to grow steadily and profitably. To me that reeks of influence peddlers experienced at feeding in the public trough. Their director David L. Johnston, also President of Waterloo U. sounds perfectly suited for the wine and cheese parties of Rideau Hall.

    Get set for more changes at the CBC. They are coming and will accelerate if Harper ever gains a majority, although with Ignatieff, he may already have it. Remember when Bush the lesser tried to remake PBS?

    ReplyDelete
  4. November is slowly but surely, approaching and should start to make the BC Liberal MLA's more than a little nervous.

    I would not be at all surprised to see that Campbell will be one of the first to topple under the Recall Legislation - quickly followed by Hansen, Bond, Coleman and a few others - some dozen or more. All of them richly deserve the accolade to their efforts.

    Wish I could say more and remain polite over the duplicity and downright dishonesty and corruption of the Liberal MLA's.

    Thanks

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  5. Get set for more changes at the CBC. They are coming and will accelerate ...

    I'm intrigued, please tell me more.

    ReplyDelete
  6. 'What is it with these right wing ideologues that makes them want to give away everything in public hands no matter how senseless it is in sheer economic terms, just because it doesn't fit their ideology? And why do the unwashed keep buying into it?'

    ...so asks Koot above. A great question it is to.

    The collective corporate power over our democratic governments of today is staggering. In fact to big to fail is rather frightening to me, as we are beginning to see how much power they have over what we thought was government for the people. Witness what is happening in Australia. A new leadership installed with great secrecy and no democracy whatsoever. Newspapers in collusion with corporate forces keeping debate to a minimum, as we see here in BC. If Australia were an example of what can be done, we may just see the same modus operandi happen in other governments that decide to try to install democracy over corporate control.
    Unless the working class wake up and realize that giving all the power to corporations and letting them run wild over rules and regulations and absolve themselves from any taxes and social responsibility will only result in hardship for themselves, then we are doomed to repeat history again. It all starts in the division of classes, rich and poor and corporatists will never act out of the goodness of their little hearts to make things fair and better for all.

    Perhaps Canadians just don't have the courage to realize that democracy really does not exist in our parliaments.

    islandcynic

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  7. islandcynic

    We are waking up and we need to shake the neighbours and wake them up too. I do my part, my neighbours may think I'm a bit paranoid, but they are beginning to see that all is not right here. There is much work to do here.

    We might be of help to the citizens of Ontario right now, before McGuinty manages to clear all ministry emails.

    I have noticed the changes at CBC. It breaks my heart to not trust them too.

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  8. Thanks Norman.....Great stuff

    Cheers

    ReplyDelete
  9. Why compare apples to oranges when you have a perfect opportunity to compare apples to apples when it comes to Clark's fast ferries and Campbell's c-class fiascos. Campbell still refers to the fast ferries and no one challenges him on his c-class disasters which I hear he is secretly trying to sell. Guess his cronies aren't interested in losing propositions.

    As for the vancouver convention centre, it was a known fact that convention centre business had not increased since 2000 and our 'other' convention centre was still not being fully booked. It was built strictly for Campbell to run it into the ground, (not much help needed for that), and then give it away to his cronies, corporates and organized crime. 2010 grossly underbooked, 2011 so grossly underbooked that it becomes obvious that the year Campbell plans to give it away would be 2011 but even sooner if he finally gets it that he is gone....or is he, if James doesn't go and take Moe with her. If James does manage to get elected, without an agenda, for doing nothing except ride on the coat tails of the HST volunteers' hard work it won't take the corrupt MSM long to turn the ever stupid electorate back to the extreme right, same BS, different name.

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  10. Before I was born, my parents listened to CBC radio for news of the war. I had 3 brothers and a sister, in the armed services, so, the WW11 news was very important to my family. I was born in, 1943, I grew up with the CBC as well. My older siblings, listened to, the Shadow, Maggie and Jigs, the Green Hornet, and such. So, I too, am very sad over the CBC. I see, no more Constitution. Our Civil Rights and Liberties, have been taken away from the people. Democracy and Freedom is ignored, and, non existent. BC is a morass of corruption and greed. Citizens, know corruption exists, among governing officials. However, Campbell, went far too overboard, and now, it is biting him in the butt, and has destroyed this province, and the people in it.

    ReplyDelete
  11. @jaydee

    We have compared apples to apples as well. Read through the old articles about BC Ferries:

    http://northerninsights.blogspot.com/search/label/BC%20Ferries

    There is a common thread, which is that Campbell and his associates will do anything and say anything to enable the looting of this province.

    ReplyDelete

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