CONTRACTS

Construction bids are closer to estimates, data show

The gap between the city’s cost estimates and what contractors bid to fix sidewalks, sewage pipes and roads dropped to roughly two per cent in 2014, according to new figures compiled by the city released to the public Monday and available for all to see for the first time on its open data website.

Up to 2012, city bureaucrats and councillors relied on “historical figures” to estimate the cost of city contracts it put out to tender in order to gauge whether they were getting a fair price. Testimony from the Charbonneau Commission into corruption in the province’s construction industry suggested those figures were highly elevated because contractors had been colluding for years to inflate prices on city contracts by as much as 30 per cent. Soon after, the city started using construction economists with experience in bidding on contracts to estimate the cost of projects in the same way contractors would.

For the years 2013 and 2014, the city’s infrastructure department studied 131 calls for tender issued in 2013 and 2014 for paving, repairing or replacing sewage and water pipes and fixing sidewalks. In 2013, 52 out of 63 bids, or 83 per cent came within 15 per cent of the city’s estimate, a gap that is considered acceptable. In 2014 the percentage was 82 per cent. Thirteen offers were rejected for being too high over those two years. The number of refused bids dropped by more than 50 per cent in 2014 over 2013, when the construction bidding world was shaken by tougher provincial laws on contract bids and mandatory background checks by the province’s financial authority watchdog.

On average, the gap between city estimates and bids was two per cent.

“This demonstrates to what extent we are bang on when it comes to pricing,” said Lionel Perez, executive committee member responsible for infrastructure, who presented the figures. “We were very encouraged to see that.”

The city also made public on its website the details of “master agreements” it signed on 726 different contracts for the purchase of goods and services like gasoline, chairs, tires or clothing, or for professional services like research grants and accounting. In 2014 that represented 56,847 purchase orders worth $235 million. It’s the first time the city has made such figures public.

Better transparency and public accounting is part of the city’s “war of attrition” on the ever-present threat of corruption, Perez said.

The city also investigated how accurate it was in calculating the amount of contingency funds allowable on a given contract, particularly on underground work that is harder to gauge. In 2014, 82 per cent of contingency funds estimated by the city were used, and there were no cases on the contracts studied where contractors requested more extras than the city had planned for. During the Charbonneau commission, some city officials testified they regularly green-lighted the maximum extra allowance permissible to inflate contractors’ profits, in exchange for bribes.

To view the newly released city data, go to donnees.ville.montreal.qc.ca and search for bilan des estimations or bilan des contigences or ententes-cadres.