Delcan lifecycle cost scenario supressed

Sam Williams, November 19, 2010

The City's Engineering Department suppressed information provided to it by Delcan about the lifecycle costs for the Johnson Street Bridge.

In preparing data for a presentation to Victoria City councillors in April 2009, Delcan Corp provided the City of Victoria's Mike Lai with 4 lifecycle cost analyses. The analyses showed the least expensive path forward would be to seismically retrofit the bridge, repair it and then do continuous maintenance and repairs as needed into the future.

Lai chose not to present that option to councillors and instead presented the most expensive option, which was to seismically retrofit the bridge, repair it and then replace it in 40 years.

Delcan played a role in this obfuscation of the facts. They also provided Lai with lifecycle scenarios that did not include the City-stipulated discount rate, which had the effect of making replacement look less expensive than it would have if normal construction estimation methods had been applied.

On April 14, 2009 Delcan's Mark Mulvihill, in an email to Mike Lai, wrote, "Based on our discussion this morning Hugh [Delcan's Hugh Hawk] has further updated the information on lifecycle costs. It is shown in the attached spreadsheet...The numbers change when you discount versus when you don't."

Lai adopted the  updated numbers without the discount rate applied, telling councillors that the rate had been dropped for the sake of "simplification."

When councillor Geoff Young was asked about this by Focus, he said, "I certainly would not have given any credibility to an analysis that did not discount future costs and simply added up a stream of costs out to some arbitrary date, giving a future bridge replacement cost the same weight as if it were incurred tomorrow. I am surprised they would even present such an analysis."

The lifecycle cost scenarios developed by Delcan, before the discount rate was dropped, can be viewed by downloading the pdf from the link below.

Delcan Lifecycle cost scenarios.pdf1.25 MB