by KRISTIAN GRAVENOR

Those who have ventured to McGill and Viger over the past three years might have noticed the armies of trucks hauling dirt out of an impressive pit at the foot of Queen Victoria’s statue in the square of the same name.

But the hum of trucks has since been replaced by a buzz throughout the city of the reported $200-million overruns the Caisse de dépôt et placement du Québec has incurred on their upcoming office tower. The building, an ambitious project built in a tricky spot near metro tunnels and the Ville-Marie Tunnel, was initially budgeted at $102-million. Reports leaked to La Presse have now estimated that the project will cost around $300-million.

Some have likened the cost overruns to the legendary Olympic Stadium project, when construction workers - under the dubious guidance of loan shark Dédé Desjardins - would punch in to do their shifts, steal some construction equipment and then spend their day trying to sell the stolen goods. When the bill came in for the Olympic Village, livid authorities appropriated that building and police issued an arrest warrant for its developer.

The Caisse’s cost overruns - along with a loss of $10-billion of its $133-billion asset portfolio - has, according to reports, similarly resulted in the firing of a number of mid- and high-level executives. The provincial pension giant refuses to comment on the issue, citing an upcoming report in the spring.

But others aren’t biting their tongues about the pension fund’s boondoggle. “It’s an amazing cost overrun,” says Phil O’Brien, who as CEO of Devencore, a Montreal-based real estate company, put up the nearby World Trade Centre. “It’s a surprise, as such things don’t usually happen. But there are a million details to make a building, and construction has to be tracked and watched and disciplined.” Sudden booms, says O’Brien, can lead to shortages of equipment and people who want to work in construction. “From carpenters to bricklayers, there’s a lack of these kinds of skills and it’s a shortage that’s going to continue plaguing the building industry.”

O’Brien also cites a major difference in the way public and private developments get built. “Private developments are a lot less expensive because they’re built with a lot more discipline. Government developers try to manage themselves by imposing rules and norms, but they have no real boss. In the private sector, if you don’t get it done, you go bankrupt. In the public sector the pressure isn’t the same.”

Keeping costs down

Others suspect that the costs of the Caisse’s Victoria Square project might have intentionally been underestimated from the start. Government construction culture has, in the past, been accused of promising to bring projects in at impossibly low costs in order to make the project seem more palatable, only to inflate those numbers midway through. “That’s the way the game is played quite often,” says Alex Carrick, an economist and construction analyst at CanaData Construction. “At a certain point there’s no turning back and the thing has to get finished no matter the cost.”

Carrick says the Caisse overruns would make it comparable to other overbudget projects, such as Toronto’s SkyDome, Boston’s Big Dig underground expressway network and various hydro plants, which frequently come in with higher price tags than expected. “Construction is the most highly cyclical industry in the country. You can often have a herd psychology. Everybody wants to build at once and that can lead to massive shortages.” But he says that’s not a likely explanation for the Caisse’s over-the-top bill. “There’s not currently a huge office boom in Montreal.”

Other construction insiders like Claude Asselin, president of Construction C.A.L., simply consider the government poor builders. “The GBS (gros bon sens) isn’t there in the Caisse project. There’s no way that there was a 300 per cent increase in labour and materials. Their project was badly managed and people were probably on the take.”

Cameron Charlebois, assistant director general of Montreal’s Urban and Economic Development Service, speculates that the Caisse project might have been overly ambitious. “It was an extremely complex project to build over the highway around the metro,” he says. “That makes it more expensive. When you start digging in the street, you often find conditions that were unknowable no matter how much expertise you think you’ve got. There’s just so many conditions under ground that you can’t know.” :