Executive summary: Centre Block project due diligence report: Cost report

The Centre Block is the largest heritage rehabilitation program ever undertaken in Canada. The scale and scope of this project is immense. It has been recognized by the Project Management Institute (PMI) as a globally-influential project, ranking 1st in Canada, and 7th overall for North America. Many other large Canadian and international projects include comparable levels of individual complexity such as the replacement of major mechanical and electrical systems, restoration of heritage features, significant security upgrades, improved accessibility, enhanced energy and environmental performance, seismic retrofitting, and updated audio visual (AV) and information technology (IT) systems. It is not the individual complexities of the Centre Block that sets it apart, but rather it is the cumulative impact of the Centre Block facing all of these complexities that sets it apart on the global stage. Not only does the Centre Block have to address an unparalleled list of complex elements, but they also all must be balanced and integrated in a manner that does not negatively impact the heritage fabric of this iconic structure. Establishing a baseline cost estimate for a project of this magnitude is challenging, given the requirement to assess the key complexities described above based on their own merit and in combination.

The Centre Block Rehabilitation Program will deliver the complete restoration and modernization of the Centre Block to ensure it can support modern parliamentary operations, and welcome increasing numbers of Canadians for another century. In addition to building service upgrades such as new mechanical and electrical systems, IT, and security systems, this modern facility will incorporate leading edge sustainability and accessibility features that are critical to ensuring Canada’s Parliament meets modern codes and standards.

The program also includes the construction of a new, multi-level underground Parliament Welcome Centre. This modern facility will significantly enhance security, accommodate parliamentary functional program requirements that do not fit within the Centre Block footprint, as well as provide an improved experience and engagement opportunities for visitors to Canada’s Parliament. The Parliament Welcome Centre will connect the Centre, East, and West Block buildings into an integrated parliamentary complex that will notably enhance the functionality of Parliament.

In partnership with Parliament, Public Services and Procurement Canada has made significant progress in solidifying the project scope and advancing the design. Design decisions, focused on achieving a balance between meeting parliamentary requirements, cost effectiveness, and the preservation of the building’s heritage fabric, have established a baseline scope for the Centre Block and Parliament Welcome Centre. This baseline scope is critical to defining the cost estimate for this project.

Based on the 90% schematic design document and the updated entry sequence endorsed by the Royal Architectural Institute of Canada’s Independent Design Review Panel, Turner & Townsend has prepared a hard cost (the cost associated to build and oversee the work on site) estimate for the program as follows:

Please refer to section 7 for descriptions of cost elements.

The total hard construction cost estimate is also detailed within this report by the key cost drivers as depicted in the illustrations below:

Centre Block key construction elements

Parliament Welcome Centre key construction elements

A review of comparable projects within Canada’s Parliamentary Precinct and globally indicate that the hard construction cost for the work is on par with Industry. A good benchmark comparison is the recently completed West Block, which involved significantly less heritage scope and therefore much reduced complexity, as well as facing lower universal accessibility and sustainability standards, given that these standards have increased subsequent to the completion of the West Block.

Carrying appropriate contingencies and risk allowances are important cost elements in the successful delivery of large and complex projects. As part of establishing the Opinion of Probable Cost for hard construction, Turner & Townsend has used design and construction contingencies aligned with industry standards for programs of this scale and complexity. In addition, a benchmark comparison with previously completed projects within the Parliamentary Precinct indicate that the combined design & construction contingencies align well when taking into account the relative scale, scope and complexity of the projects.

In addition to the contingencies carried within the hard construction estimate, it is essential for projects of this scale, scope and complexity to carry an appropriate risk envelope to address costs arising from external factors such as new or revised functional requirements and changes in the cost of labour and materials, supply chain disruptions or construction site shut downs. Rather than using a point estimate for the risk envelope, Public Services and Procurement Canada is using a range for a global risk envelope of 15% to 35%. The global risk envelope will be available for both the Parliament Welcome Centre and the Centre Block.

Public Services and Procurement Canada is using a range to bound the global risk envelope in recognition that not all parliamentary functional requirements have been established at this point as well as the difficulty of accurately forecasting construction escalation in the existing pandemic context. The upper range makes accessible the appropriate risk funds to address unknowns that may materialize on a highly complex and lengthy project. The lower end of the range serves as an aspirational target to ensure that controllable risks such as scope changes are appropriately constrained. Turner & Townsend has completed a statistical analysis to determine if the current risk allowance was adequate given the nature of risks that could be experienced on such a large, lengthy and complex program of works. Based on this analysis, Turner & Townsend considers the risk range of 15% to 35% to be appropriate.

In addition, a benchmark comparison with previously completed projects within the Parliamentary Precinct indicate that the global risk envelope aligns well when considering the relative scale, scope, and complexity of the projects.

Turner & Townsend has also reviewed the allowance that Public Services and Procurement Canada is carrying for professional fees (approximately 25%) to cover project management fees, architecture and engineering services and other consultancy services, and it is on par with industry standards and past projects within the Precinct.

Turner & Townsend is of the opinion that the costing information being used by Public Services and Procurement Canada is an accurate reflection of the program’s current scale, scope and complexity. Based on our review of Public Services and Procurement Canada’s global cost estimate, appropriate factors for professional fees and a risk allowance have been added to the Opinion of Probable Cost for construction.

On this basis, Turner & Townsend is confident that a cost estimate range of $4.5B to $5B is appropriate to deliver the Centre Block Rehabilitation Program. The only two caveats to this assessment are major scope changes driven by a significant change in functional requirements or extreme rates of escalation. Such significant external events cannot be fully covered by a risk allowance without undermining the benefit of having a budgetary frame to guide cost sensitive implementation. Turner & Townsend is of the opinion that the cost estimate and budget range utilized by Public Services and Procurement Canada, appropriately evaluates risks and the budget limits established are sufficient to implement the project scope, and project risks that may arise.