The Queen’s Centre is tens of millions of dollars over budget a year and a half before the first of its three phases is scheduled to be complete.
Phase One of the centre was supposed to cost $124 million.
The Board of Trustees has so far approved $165 million in expenses.
Now the University’s trying to scale back costs on the rest of the project to bring the price tag closer to the $230 million originally budgeted.
“It’s primarily being caused by just a remarkable level of escalation in the construction industry that’s taken us all by surprise,” said Vice-Principal (Operations and Finance) Andrew Simpson, adding that construction costs have increased by as much as two per cent each month since construction began in August 2006.
“It’s been an unbelievable level and I think everybody in the industry is really struggling as a result of this.”
The University used “value engineering”—trying to substitute cheaper construction materials and techniques—to keep costs down and succeeded in saving more than $20 million, Simpson said, but the project still went over budget.
“That’s the worst situation, when you plan and you manage everything as tightly as we have, to have factors outside of your control dominate like this is extremely frustrating. And I feel particularly bad for [Associate Vice-Principal (Operations)] Ann Browne and her team, who I know have worked incredibly hard and have successfully saved a tremendous amount of money.”
Phase One, which is scheduled to be completed on time in the fall of 2009, includes the School of Kinesiology, competitive and practice gymnasiums, weight rooms, workout rooms, locker rooms, parking and an aquatics centre with some student space.
Right now, Phase Two, which includes an arena and field house, is budgeted to cost $83 million. Phase Three, a new and improved student-life centre, is budgeted to cost $23 million.
It’s too early to tell what construction costs will look like when phases two and three are underway, Simpson said.
“That’s a little hard to ascertain because we can’t say where the industry’s going to head,” he said. “The industry tends to ebb and flow and it’s been extremely discouraging to have been caught on such a bad moment in terms of escalation within the industry.
“If there’s a bit of an economic slowdown within two years, we may find that numbers in the industry are a lot better. It’s very hard to speculate and I think it would be a mistake to do so, though clearly we need to be thinking ahead.”
In a January interview with the Journal, Ann Browne said the project was still on track to cost $230 million in total. Simpson said $230 million is still the goal for the project’s final cost.
“The major avenue we’re exploring is, ‘How can we keep this back within its original overall target?’ That’s got to be our aim right now, as well as continuing to get support where we can, and that’s our focus.”
Simpson said the University’s going to review phases two and three for value engineering and review the designs to see if any planned facilities can be changed or cut back to save money.
Simpson said he’s reluctant to change the planned programming, but given the project’s financial difficulties, it’s an option Queen’s has to examine.
“Our ideal would be to keep phases two and three as close to the original as possible,” he said. “[But] it will be incumbent on us to look, also, at the programming phase.”
Simpson said he’s not sure how the review will work but that will be determined in the next couple of weeks. It will involve students, faculty and staff concerned in the Queen’s Centre’s construction.
“It’s been nearly three years since the original programming work was done, so you know people may have a different perspective,” he said. “It would be, you know, looking at all the facilities we had planned for Phase Two and Three and just say, ‘Well, would there be any changes to those facilities we want to make? Would we still want them? Would we still want them in the same ways as we’d envisioned them?”
Simpson said the review would probably take a few months to complete.
“I don’t want to rush a review, you know, and regret that,” he said. “I think we’ve got a window till later in the fall to realistically do that because we will need to start engaging in, I think, further design work on phases two and three.”
The only programming change underway for Phase One is altering the School of Kinesiology’s exterior design to make it cheaper and more efficient to build.
Simpson said he doesn’t know the maximum cost the Board would ultimately approve for the Queen’s Centre.
“I think it’d be premature to say is there a number the board has in mind. I don’t think they do. Clearly they would like to get the project back on their original budget targets, and we’re going to do our best to see how far we can attain that goal.”
The $230-million project was originally budgeted to be $60 million in debt upon its completion. The cost overrun has now added to that.
“[Anything over the $60 million] will have to come from either debt or, potentially, other sources of funding we can find.”
Simpson said he’s working with the Board’s finance committee on managing the University’s debt. Queen’s is trying to obtain more government funding but Simpson said he’s not optimistic the government will be sympathetic to requests for more money.
“The signs are not as positive as we would like because governments have been reluctant to fund student life and athletics facilities in the past, so I think we’re working uphill against previous government policy,” he said. “I can only speculate that they may not see these facilities as core to [the] academic mission but of course we would know different in terms of the impact they would have on students’ experience in university.”
Simpson said the board hasn’t considered asking students to increase their financial contributions to the Queen’s Centre. The AMS has pledged $25.5 million towards the centre; undergraduate students pay a $71 fee annually, which increases to $141 in 2010-11. The SGPS has pledged to contribute $4.5 million but hasn’t yet started collecting fees from its members.
“We haven’t discussed that at all,” Simpson said. “To be honest, it’s not something that I’ve considered.”
Queen’s Office of Advancement is trying to raise $132 million in Queen’s Centre donations.
For full story please see the March 7 issue of the Journal.
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