Centre Block project due diligence report: Cost report

It is critical to ensure that the cost estimates for the Centre Block project are solid and transparent. Given the complexity and scale of work involved, we used the services of an independent cost consultant, Turner & Townsend, to validate the overall costing methodology and establish the probable cost for the construction. You will find below a Turner & Townsend costing report. 

Table of contents

• Executive summary
• Introduction
  • Background
  • Scope
  • Parliamentary program and building modernization highlights
• Costing methodology and approach
• Design and construction complexities
  • Heritage
  • Structural complexity and building system upgrades
  • Security
  • Designated substances
  • Unforeseen conditions
• Opinion of probable cost
• Net building cost analysis
  • General requirements analysis
  • Contingency analysis
  • Design contingency
  • Construction contingency
  • Escalation analysis
  • Risk
• Conclusion

Executive summary

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.

Introduction

This report has been developed by independent cost, time, and risk experts Turner & Townsend to provide PSPC and Parliament with an Opinion of Probable Cost for the hard construction, including key cost drivers, associated with the restoration and modernization of the Centre Block and the construction of the new Parliament Welcome Centre. The estimates in this report are based on the current scope information contained in the 90% Schematic Design and design modifications made based on feedback from the Royal Architectural Institute of Canada’s Independent Design Review Panel, who has independently reviewed and endorsed the current design.

Benchmarking: accepted standard and best practice

The Royal Institution of Chartered Surveyors (RICS) is the World’s leading professional body for qualifications and standards in land, property and construction.

In 2013, RICS produced a global Guidance Note, first edition, for Cost analysis and benchmarking. This report has been prepared in accordance with RICS principles by professional Quantity Surveyors who are members of the RICS.

Background

The Parliamentary Precinct is a national historic site, and the Centre Block is a classified heritage building. It is one of Canada’s most important national symbols and is the physical representation of Canadian democracy. It is home to the Senate of Canada, the House of Commons, and the Library of Parliament. Built in the Gothic Revival style, the building includes highly decorative architectural elements from stone carvings to ornate plaster ceilings, as well as several ceremonial spaces, including the Chambers of the Senate of Canada and House of Commons, the Peace Tower, Memorial Chamber, Hall of Honour, and Confederation Hall. Parliament Hill draws millions of visitors annually.

PSPC is responsible for the restoration and modernization of the buildings in and around Parliament Hill, preserving these heritage treasures for the use of Parliament and Canadians. These efforts are guided by the Long Term Vision and Plan, a multi-decade strategy that has been in place since 2001 and includes successes such as the recently completed West Block (2018), Senate of Canada Building (2018), Phase I of the Parliament Welcome Centre (2018), and many other key projects, such as the 180 Wellington (2016) and Sir John A Macdonald Building (2015).

With the successful transition of parliamentary operations to the West Block and Senate of Canada Building in 2019, focus has now shifted to the restoration and modernization of the Centre Block. This effort will be the largest heritage rehabilitation undertaken in Canada to date and is one of the largest in the world. To ensure the efficient use of resources and advance the project in a timely manner, PSPC is employing an integrated design and construction plan, whereby the completion of the design is sequenced and being developed concurrently to the commencement of construction. To this end, construction activities that require completion and are not impacted by final design considerations, including demolition and abatement activities in the Centre Block and excavation of the Parliament Welcome Centre, have been launched. This strategy is a prudent project management practice and demonstrates effective stewardship of cost and schedule considerations. Waiting for the 100% completion of the Detailed Design to have fully-substantiated project costs before commencing any construction work would cause significant cost increases, as well as delays to the overall schedule and the completion of the project.

Given the importance of continued parliamentary operations without disruption, the Centre Block had not benefitted from any significant intervention since it was constructed more than one hundred years ago and is in dire need of rehabilitation. Although still majestic, prior to closure the building was very difficult and costly to maintain. Building components and systems were well beyond their expected lifecycle, many as old as the building itself, and were beginning to fail. Stone was damaged by water infiltration and Ottawa’s extreme freeze-thaw cycle. Unseen behind the stone and plaster, water was also corroding structural steel, which further damaged the masonry. Also concealed behind the beautiful heritage finishes are kilometres of rusted out heating pipes, which broke and leaked water causing damage to the heritage fabric. Electrical and communications systems were inadequate and stretched to capacity trying to support modern broadcasting technology that it was never designed or equipped to accommodate.

The building was cold in the winter due to leaking windows and a lack of insulation, and in the summer heat, required window-mounted air conditioning units which are unsightly and costly to operate. Finally, elevators, including the Peace Tower, routinely broke down, and in the last year of operation required daily attention and maintenance.

The Centre Block was constructed at a time when seismic codes did not exist and climate change was not a consideration. Despite serving as Canada’s house, the Centre Block was not designed in a way to welcome all Canadians equally. The Centre Block must be adapted so that it can become earthquake resilient, transform itself from one of the Government of Canada’s worst energy consuming and greenhouse gas emitting assets (per m2 in the Public Services and Procurement Canada (PSPC) portfolio) to a carbon-neutral facility that is accessible for all Canadians.

As an essential working parliamentary building, Centre Block must be adapted to incorporate modern parliamentary requirements ranging from security to multimedia to broadcasting while respecting and conserving the heritage and ceremonial spaces. As a heritage building with space constraints, not all parliamentary functions can be accommodated within the Centre Block. In particular, prior to its closure, visitor security screening was conducted inside the Centre Block at the base of the Peace Tower with only one scanner. Improved infrastructure is essential to support the demand of the increasing numbers of Canadians and international visitors who visit Parliament Hill. Prior to its closure, approximately 350,000 people took a guided tour on an annual basis. However, approximately three out of every four tour requests could not be accommodated due to the lack of visitor infrastructure.

Ottawa’s seismic zone

The Parliamentary Precinct, and Canada’s iconic Centre Block, falls within the Western Quebec Seismic Zone, which encompasses a vast territory that encloses the Ottawa Valley from Montreal to Temiscaming, as well as the Laurentians and Eastern Ontario. This is the second most active seismic zone in the country, with an earthquake occurring every five days, with an average magnitude less 2.0.

In 2015, the National Building Code of Canada updated seismic standards, including but not limited to guidelines related to the Base isolation approach for engineers. Base isolation minimizes the seismic energy that is transferred from the ground to the building, reducing the level of intervention to reinforce buildings. In the case of the Centre Block, this approach ensures the building will withstand future seismic events while avoiding structural interventions that would damage the valuable existing heritage fabric.

Earthquakes in or near Canada, 1627 to 2020

Visitor experience

Parliament Hill welcomes increasing numbers of Canadians and international visitors annually, with over 350,000 visitors participating in guided tours every year. The new Parliament Welcome Centre offers an improved visitor experience with enhanced tour support capabilities, as well as an alternate visitor experience, which will allow the Library of Parliament to connect approximately double the number of Canadians with Parliament and increase engagement with school groups.

The universally-accessible path of travel provides barrier-free access from the Centennial Flame, to the open and inviting Parliament Welcome Centre, through the newly transformed courtyards, and into the Senate of Canada and House of Commons Chamber Galleries, where visitors can witness and participate in the democratic process.

Scope

After a century of serving Canada and Canadians, the Centre Block needs a complete overhaul, inside and out, to preserve, restore, and modernize a piece of the nation’s history for generations to come. The Centre Block is the largest heritage rehabilitation program in Canadian history, and has been recognized by the Project Management Institute (PMI) as a globally-influential project, ranking first in Canada and seventh overall for North America. Key highlights of the program include:

• Complete replacement and, or repair of failing building components ranging from the windows, roof, masonry, and building systems
• Upgrades to meet modern standards and codes include, but are not limited to, structural, seismic, fire, elevators, stairwells, and washrooms
• Modernizing or adding the necessary infrastructure to support parliamentary operations ranging from updating the Chambers, committee rooms, and offices to support services including food services and media services, to modern Information Technology (IT), broadcasting and multi-media, and physical and, or cyber security

Courtyards: east and west

Centre Block has three open air courtyards that were designed to bring light into the building. These spaces were previously inaccessible and unused, but are now the key to making Canada’s house more accessible to all Canadians. A new glass roof structure, will enclose the courtyards and connect to the existing roof structure meeting a multitude of program objectives.

Sustainability

The significant surface area of the courtyard stone facades are a substantial source of energy loss. Enclosing these courtyards is critical to achieving carbon neutrality and will make the building much more efficient and less costly to maintain because these courtyard’s exterior walls will no longer be exposed to Ottawa’s extreme freeze-thaw cycle that deteriorates masonry over time.

Universal accessibility

After rehabilitation, the courtyards will provide a universally-accessible path of travel from the Parliament Welcome Centre to the Centre Block, including for public tour groups, individuals visiting the Centre Block for business purposes as well as the Chamber Galleries for visiting Canadians.

Functionality

The infill of the courtyards provides much needed additional space for circulation, stairs, and elevators, required by code, avoiding significant and damaging interventions in the heritage fabric of the building. The courtyards also facilitate public access as they are the main interface between the Parliament Welcome Centre and the Centre Block. This elegant interface and point of entry for visitors avoids congesting areas in the heritage building that are critical to the operations of Parliament.

The indicative construction cost for the East and West Courtyards is in the order of $22M each.

The program also includes the construction of an underground Parliament Welcome Centre which will improve the security posture of Parliament by providing a secure visitor screening outside the footprint of the Centre Block, provide parliamentary functions that require proximity to the Centre Block, as well as dramatically improve visitor infrastructure, including improved public tour facilities and an alternate visitor experience to complement the popular tours. Once constructed, this new underground facility will connect the Centre, East, and West Blocks into one integrated parliamentary complex.

With an emphasis on universal accessibility and achieving carbon neutrality, the design approach for both the Centre Block and Parliament Welcome Centre achieves these scope requirements while ensuring that the rehabilitation of the heritage Centre Block and the parliamentary landscape remains at the heart of the project. The parliamentary lawn has been preserved in its traditional form with a focus on maintaining its size and relationship with the Parliament Buildings and other key architectural elements such as the Vaux Wall. The heritage fabric of the Centre Block building has been conserved and protected. Interventions will provide an opportunity to enrich the way Parliamentarians and Canadians interact with the buildings and the site as well as integrate a new contemporary layer of heritage into the Parliamentary Precinct.

Parliamentary program and building modernization highlights

The functional requirements of Parliament have evolved with time, the growth of the country, the advancement of technology, and the evolving security environment. PSPC worked in close collaboration with Parliament over the past 18 months to finalize parliamentary functional program requirements and obtain key program decisions to advance the schematic design. The current design is the basis upon which this cost report has been developed. Despite early challenges to find adequate space to modernize the Centre Block, key decisions such as retaining the House of Commons chamber within its existing footprint as well as leveraging previously underutilized space, such as the three courtyards, are enabling the building to be modernized in a cost-effective manner and without significant reductions to parliamentary functions or impacts to the high-heritage and ceremonial spaces.

Hall of Honour infill

Traditional spaces for Parliamentarians to interact informally have been lost within the Centre Block. A newly-created space located above the Hall of Honour provides a unique opportunity to create shared space so that parliamentarians come together, to gather, meet, and work. The concept of shared space reintroduces the original functionality of Pearson & Marchand’s design, which has been lost over time due to space constraints.

The table below provides a high-level overview of the Parliamentary and base building capabilities for the Centre Block and Parliament Welcome Centre post rehabilitation. The comparison highlights the increase in building use efficiencies based on the current schematic design.

Costing methodology and approach

This cost estimate has been developed based upon schematic design drawings at 90% completion, produced by lead Designer Centrus, the Prime Consultant Joint Venture, who are providing architectural and engineering services for the Centre Block and the Parliament Welcome Centre program. The 90% schematic design documents included schematic design drawing sets for architectural, structural, mechanical, electrical, sustainability, accessibility, connectivity, heritage intervention plans, and parliamentary fit-up requirements.

Turner & Townsend has also integrated the revised concept entry sequence from the Parliament Welcome Centre to the Centre Block Courtyard endorsed by the Royal Architectural Institute of Canada’s Independent Design Review Panel, composed of leading Canadian Architects and design professionals.

In addition to Turner & Townsend’s work to establish the cost estimate, the Construction Manager PCL/EllisDon has also conducted independent cost estimates of the 90% schematic design documents, including the measurement of quantities from drawings. For several key heritage areas, allowances have been included within the estimate based on benchmarking information using other buildings within the precinct as a basis. Of note, the design contingency for the Centre Block will be leveraged to fund typical cost increases related to the evolution of the scope including heritage elements, while the construction contingency will address impacts such as the coordination of unknown site conditions.

Once this second independent estimating effort was completed, a side by side comparison of the Construction Manager and Turner & Townsend estimates was conducted. Where there were discrepancies in the data, digital measurement exercises were completed to show any differences in areas and lengths measured and the resulting cost variances. Rates were validated via quotes from trade contractors along with cost data from other projects. Following the comprehensive estimate reconciliation process with the Construction Manager (CM), Turner & Townsend’s estimate for net trade cost (before general requirements, CM fees, contingencies etc.) was within 3% of the CM’s estimate. This small percentage variance is well within the anticipated range, and is exceptional at this level of design completion for such a complex program of work.

To complete the process, an independent internal Quality Assurance and Quality Control review was conducted by senior costing experts and authorities within Turner & Townsend.

Design and construction complexities

Heritage rehabilitations, especially one of this magnitude, are unique, highly complex, and costly undertakings. The Centre Block is both a working parliamentary complex and a public building. To carry out these twin responsibilities into the 21st century and beyond, it requires a wide range of modern interventions that require careful planning and execution while respecting and conserving the building’s highly decorative heritage attributes.

Turner & Townsend has surveyed the industry to identify similar projects that are currently underway or in the planning phase. Projects are unique in their scope and based on the industry scan and the table below, Centre Block is the most complex.

Key Assessment Program Findings

Given the complexity and scale of this project, Public Services and Procurement Canada completed a comprehensive assessment program with the objective of reducing program risk and informing the schematic design and downstream construction strategies. The key Assessment Program Findings are:

Heritage & Architecture

• Comprehensive Building Information Modeling (BIM) for use by the design team
• Foundation of the conservation strategy

Archeology

• Improved archaeologic record of the site
• More than 90,000 artifacts found and catalogued

Environmental

• Basis for a thorough Environmental Effects Evaluation for the project and Environmental Management Plan to support the construction period
• Complete baseline against which to measure sustainability initiatives

Designated Substances

• No exaggerated conditions found in the existing building
• Solid record to manage any residual substances that will remain encapsulated in some building elements
• Enabled development of Designated Substance Strategy

Structural

• Building structural strength is better than anticipated, which will allow optimization of the design intervention

Geotech/Civil

• Confirmed Class A rock formation that will allow optimized foundation and structural design
• Thorough understanding of the state of civil/municipal infrastructure connections serving the building

Mechanical & Electrical

• Confirmed conditions for heating, cooling, and humidity required to maintain heritage fabric during construction
• Limitation for many services
• Confirmation of constraints and requirement for a new M&E distribution strategy

Some of the key challenges and complexities of the program, which are also important cost drivers, are outlined in the sections below.

Heritage

While many building modernizations have heritage elements that must be considered, the level of decorative heritage and architectural elements that are intrinsic to the Centre Block’s building fabric is comprehensive and unprecedented within Canada and is rare globally. The building itself is a work of art with over fifty high-heritage rooms that contain unique and important decorative elements ranging from the Senate and House of Commons Chamber ceilings, to Arthur Crisp’s seventeen murals, to stained and leaded glass windows, to millwork, decorative plaster, and lighting.

Comprehensive assessment, custom design, and careful construction is required to integrate modern elements appropriately into the heritage fabric. As such, the process to modernize the building and conserve its heritage elements takes more time, and there is a cost premium. For example, the integration of new building and structural systems require opening walls that are, themselves, heritage assets. The modernization of the Senate Chamber includes the conservation of its gold leaf and decorative hand stencilled plaster ceiling in situ, while also structurally reinforcing the ceiling.

Not only are heritage rehabilitations more costly, but they are also more difficult to compare because of their uniqueness and the distinct condition of each individual heritage element. For example, the conservation strategies and the resultant costs to conserve the ceilings of the Senate and House of Commons Chambers are very different than for that of the Crisp Murals located in the Centre Block and quite different again for the Norman Rockwell mosaic at the United Nations Headquarters.

Senate Chamber and Galleries

The Senate Chamber, located on the east side of the Centre Block, is where the Queen and the Governor General come to address Parliament and give Royal Assent to bills. The Chamber Galleries provide space for both the public and the media to observe Senate proceedings. The number of Senators does not increase with population growth and is stable at 105.

This high-heritage space will be conserved and modernized to improve the access of Canadians to the democratic process including reconstruction of the Chamber Gallery to provide full universal access as well as the incorporation of modern technology, including broadcasting, within its current footprint. The hard construction cost for the renovation of this functional space is in the order of $60 million.
Source: Senate of Canada website

Structural complexity and building system upgrades

The Centre Block has both a steel structural framework and load-bearing masonry. The building will require structural upgrades to achieve modern code requirements, but a comprehensive seismic upgrade is also required to meet modern building code requirements. Of note, Ottawa is in the second most active seismic zone in Canada.

The seismic approach for the Centre Block will include a base isolation solution to address seismic requirements instead of a traditional seismic structural upgrade. While the technology is proven and used frequently in the Asia-Pacific region as well as on the West coast of North America, this is the first time that this approach will be utilized in the Parliamentary Precinct. Using base isolation technology reduces costs by approximately $200M, but perhaps even more importantly avoids a broad range of structural interventions that would negatively impact the Centre Block’s heritage fabric. Base isolation will also perform better in a seismic event, reducing the potential for damage to the Centre Block during an earthquake.

Structural and seismic upgrades are nonetheless complex and the possibility of additional costs due to unforeseen existing conditions is typically much higher in heritage projects. Moreover, a considerable amount of complex engineered temporary support measures and monitoring are required to ensure the Centre Block and Peace Tower are not impacted during construction. These considerations must be factored into the establishment of an appropriate construction contingency.

In addition to structural and seismic upgrades, modern, purpose-built building systems will need to be integrated into both the Centre Block and the Parliament Welcome Centre. In the Centre Block, this includes the complete removal and replacement of fire protection, mechanical and electrical systems, plumbing, elevators, as well as a new Information Technology (IT) and security backbone. Determining the new distribution of these systems within a building that has significant space restrictions is a complex challenge. Moreover, these new systems must weave seamlessly into the existing heritage fabric of the building. Many of these design elements will be finalized during the design development phase of the program. As a result, an appropriate design contingency has been included in this cost estimate to support the design development process.

How base isolation works

Security

Both the global and domestic security environment has resulted in a continual increase for security infrastructure within the Parliamentary Precinct over time with the core objective to protect Canada’s democratic institutions, the people working there and those visiting. At the same time, the Parliamentary Precinct welcomes millions of visitors a year and many of those visitors come to see the Centre Block and to engage in Canada’s parliamentary democracy. Implementing a security approach that balances the needs of a working legislative building with the openness of Parliament is critical.

Security requirements for the Parliamentary Precinct, including the Centre Block and Parliament Welcome Centre, are established by Parliament and are based upon comprehensive threat risk assessments also developed by Parliament. While significant collaboration and progress has been made with the administrations of the Senate, House of Commons, and Parliamentary Protective Service to advance the security strategy and requirements for the Centre Block and Parliament Welcome Centre, these requirements are still in the process of being finalized and range from structural enhancements to scanning capabilities to surveillance and cyber security. Planning assumptions and benchmarking with previously completed projects within the Parliamentary Precinct have been used to establish a notional allowance for security. The finalization of security requirements as well as any subsequent changes will have a direct impact on program scope and schedule.

Security infrastructure and protection procedures are multi-faceted, campus-focused, and layered. Unlike other areas of the program, the security environment is ever-evolving and security requirements are highly susceptible to change based on both emerging threats and availability of new technological solutions. This type of change was experienced for projects in the Parliamentary Precinct, including the West Block and Senate of Canada Building, as well as on international projects such as the United Nations Headquarters. Changes in building security requirements during construction caused adverse consequences to project cost and schedule.

As a result, the establishment of appropriate design and construction contingency as well as risk allowances is important to try and mitigate this risk, as successfully managed on the West Block and Senate of Canada Building.

Security and the United Nations Headquarters modernization

In 2015, the United States General Accountability Office (GAO) reported the project to modernize and restore the United Nations (UN) headquarters Complex was 3 years behind schedule and $379 million (US) over budget, largely due to enhanced security measures adopted during the project.

During construction, the UN General Assembly approved new security requirements. The enhanced security alone delayed the project by up to one year.
The enhanced security requirements were added to the project in 2011 due to increasing threats the UN faced globally. During the project, the UN, the US Government, and the City of New York identified additional security enhancements not envisioned in the original modernization plan.

Source: United States Government Accountability Office, Report to the Chairman, Committee on Foreign Relations, United States Senate, “United Nations Renovations: Original Scope Reduced and Project Over Budget, but Lessons Learned Could Improve Future Projects,” May 2015

Designated substances

The Assessment Program has enabled the identification of the levels and location of designated substances within the Centre Block. The abatement program, commenced in lower-impact heritage areas where removal is easier, is now approximately 50% complete having removed approximately 4000 metric tonnes of designated substances (largely asbestos) to date. Current findings suggest that the investment in the assessment program has improved accuracy of the design documents, which is resulting in fewer change orders during construction execution. However, demolition and abatement of higher heritage areas within the building is now commencing, which is more labour-intensive and more costly. This work carries an increased possibility of uncovering unforeseen conditions. This potential has been factored into the establishment of the construction contingency should additional abatement be required. The West Block, which did not benefit from a comprehensive assessment program, required a much higher amount of designated substance abatement than originally anticipated and a resultant higher use of contingencies for that portion of work.

Unforeseen conditions

The Centre Block was constructed quickly, in wartime, 100 years ago. Accurate and detailed documentation, including “as-built” drawings that include exact dimensions and conditions of the work completed during the original construction of the building are not available. As cited earlier in this report, Public Services and Procurement Canada has conducted the most comprehensive assessment program undertaken in the Parliamentary Precinct to date to reduce program risk and inform the design process. Although the Assessment Program has greatly informed the design process, unforeseen conditions still represent a significant unknown risk, for which the cost and schedule implications cannot be completely quantified at the outset of the project. As a result, an appropriate amount of construction contingency has been established to address unforeseen conditions. Public Services and Procurement Canada (PSPC) will need to continue to closely monitor changes driven by unforeseen site conditions to mitigate their impact as much as possible.

While Centre Block has not yet experienced many unforeseen site conditions, one such recent example is the rubble foundation at the east side of the Centre Block, which when exposed in support of excavation activities, was found to be in poorer condition than expected. This resulted in the need for additional reinforcement in this area that had to be completed before adjacent excavation activities could commence. This work was funded through construction contingencies provided within the initial allocation of funds to cover planned expenditures to 2021 to 2022.

House of Commons Chamber

The House of Commons Chamber accommodates the elected House of the Canadian Parliament and is located on the west side of the Centre Block building. The high-heritage space supports both ceremonial procedures and core business such as debate and passage of legislation to chart the democratic course of the country.

With a view to protecting heritage, the House of Commons Board of Internal Economy decided not to expand the size of the Chamber and focus modernization efforts on the existing Chamber. To accommodate the growth of Members of Parliament over time, alternate seating arrangements are being investigated.

This high-heritage space will be modernized to improve the access of Canadians to the democratic process including reconstruction of the Chamber Galleries to provide full universal access as well as the incorporation of modern technology, including broadcasting, within its current footprint construction cost for the renovation of this functional space is in the order of $113 million.

Another key aspect is the conservation of high-heritage components such as leaded glass and stained-glass windows, teak and ebony flooring, original heritage light fixtures, decorative woodwork including panelling and doors, Tyndall stone walls and carvings, and decorative plaster and the painted linen ceiling.

Opinion of probable cost

This Opinion of Probable Cost outlines the hard construction costs for both the restoration and modernization of the Centre Block and construction of the Parliament Welcome Centre as per the summary table noted below:

Net building cost analysis

The Net Building Cost of Construction is defined as the expenditures associated with the materials and labour required to deliver the work onsite. For the Centre Block Rehabilitation Program this encompasses a vast number of undertakings, including: masonry rehabilitation, window replacements, excavation and structural foundation and seismic upgrades, heritage conservation (Centre Block only), interior construction and finishes, and a complete upgrade of all building electrical and mechanical systems along with its infrastructure: heating, cooling, ventilation, fire safety, plumbing, electrical, as well as elevators. There is a strong focus on sustainability that will help transform the building into a carbon-neutral facility.

After careful review of the 90% design scope and design refinement endorsed by the Royal Architectural Institute of Canada’s Independent Design Review Panel, Turner & Townsend is of the opinion that the net building cost is sufficient to deliver the scope defined with the following observations:

• The costs associated with the establishment of the construction site are known due to the work already executed
• A comprehensive assessment program is complete and has informed the design, reducing the need to increase further the design and construction contingencies
• Excavation for the Parliament Welcome Centre, a known substantial cost element given the building is entirely subterranean, is well advanced, is progressing well, and is within previous cost forecasts
• Most key directions confirming the project scope have been provided by Parliament except for security, food, and media services. To complete the estimate, assumptions have been taken on these items, and Public Services and Procurement Canada (PSPC) will carry a risk allowance in part to accommodate uncertainty on these elements

General requirements analysis

Of note, PSPC is using a Construction Manager (CM) contract mechanism to deliver the program. The associated costs are reflected in the Cost Breakdown table under general requirements, expenses incurred at the jobsite to facilitate the overall work; construction management fees, costs associated with professional services provided by the contractor to oversee the planning, design and construction of the project; and insurance and bonds costs paid to the Contractor to protect against disruptions or financial loss should the Contractor fail to meet project specifications and objectives. In the case of the Centre Block rehabilitation, this delivery approach is recommended given the complexity of the program, the high level of risk given the heritage nature of the project, and the approach of commencing construction before the detailed design has been finalized. Concurrent construction activities allow PSPC to advance certain areas of the design (for example, excavation) and minimize additional costs related to escalation if the project was procured all at once. The CM model also provides greater flexibility and enables visibility over amounts payable to sub-contractors, reducing potential costs related to trade claims, funded through the insurance and bonds budget bucket.

Contingency analysis

The use of design and construction contingency is an established project management best practice whereby a dedicated amount of funds is added to the base cost estimate early in the project to address expected cost changes as both the design and construction matures. The amount of contingency established for any given project is based upon the project’s complexity and stage of design and is usually a percentage of the Net Building Costs (total construction costs excluding CM fees, insurances, general requirements, contingencies, and escalation).

Accessibility and inclusive design

The Accessible Canada Act (Bill C-81), which received Royal Assent in June 2019, provides the legislative framework to guide the Centre Block’s inclusive design strategy.

PSPC and its partners in Parliament are working together to identify barriers and potential solutions that balance the intersection of heritage preservation and modernization. An Accessibility Advisory Panel composed of members from a number of accessibility organizations (see image below) provides expert advice to the development of the Universal Accessibility Review and Action Plan related to projects for the built environment led by PSPC.

1 in 7 Canadians identify as having a disability and our population is aging and living longer, which means more and more Canadians will be living with disabilities.
Source: Rick Hansen Fondation

Accessibility Advisory Panel

PSPC has established an Accessibility Advisory Panel (AAP) composed of key partners and stakeholders.

Internal partners

• Parliamentary partners
  • Senate
  • House of Commons
  • Library of Parliament
  • Parliamentary Protective Service
• Treasury Board
  • Office of the Deputy Minister of Public Services Accessibility
• PSPC
  • Accessibility Office
• PSPC branches
  • Real Property Services
  • Others
• Other Government Departments:
  • Innovation, Science and Economic Development Canada
  • Statistics Canada

Accessibility Advisory Panel

Provide subject matter expert advice and direction to the development of the Universal Accessibility Review and Action Plan (UARAP) as well as several accessibility related projects for the built environment within the Parliamentary Precinct and Real Property Services.

External partners

• Clients
  • Users
  • Visitors
• Accessibility organizations
  • Canadian National Institute for the Blind (CNIB)
  • Rick Hansen Foundation
  • March of Dimes
  • Canadian Association of the Deaf
  • Spinal Cord Injuries of Canada
  • Canadian Hard of Hearing Association
  • Communication Disabilities Access Canada
  • Environmental Health Association of Quebec
• Other Institutional Bodies
  • National Capital Commission (NCC)
  • Federal Heritage Building Review Office (FHBRO)

Design contingency

As the project progresses and the level of design detail increases, design contingency, costs associated to resolve unforeseen issues from schematic design through to completion of detailed design, is used as required to address the associated cost to complete the current project scope. Examples of this would be costs associated with design coordination between design disciplines prior to tender or design adjustments to fully meet parliamentary requirements or the integration of mechanical and electrical components into the heritage building.

The amount of design contingency carried by PSPC for the Centre Block and Parliament Welcome Centre, 25% and 15% respectively, is appropriate based on the Net Building Cost, and when benchmarked against other similar projects within the Precinct. A higher rate of design contingency for the Centre Block is directly related to its higher level of design complexity. Design contingency will be drawn down as required throughout the design development phase of the program to support design refinement. Typically, the amount of contingency is highest when the level of design detailing is at a conceptual stage (low detail). As the design progresses through schematic design and detailed design, it is expected that the contingency will be used to support scope development (for example, adjustments to structural beam sizes, and, or conduit routing) until the design is fully tendered. As the design progresses, the certainty of costs increases. For Design Development to be successful a robust change control process must be implemented so the contingency spend can be actively managed. Turner & Townsend recommends that the expenditures of design contingency be tracked and reported on a regular basis. This will help to ensure that budget limits are respected and the contingency is drawn down appropriately, in accordance with the Program Execution plan developed for the project.

Design contingency is not intended to cover new items of work and, or additional scope to be added to the program. Any new scope element would be funded externally, either from the risk allowance if the change is required to meet an existing identified functional requirement or from the external partner who wishes to incorporate the changes for newly-identified functionality.

Centre Block’s iconic Peace Tower

At almost 100 meters tall, the iconic Peace Tower forms the centrepiece of Canadian democracy. At the heart of the Peace Tower, the Carillon houses fifty-three bells ranging in size from 10,090 kilograms to 4.5 kilograms, dedicated in remembrance to the sacrifices and service of Canadians in the First World War.

Modernization of this important Canadian symbol includes base isolation and significant structural enhancements to meet modern code requirements. The masonry will be rejuvenated; as well the sculptures and carved stones will be carefully inspected and restored by the Dominion Sculptor.

As part of the broader Universal Accessibility strategy, there will now be a direct, universally-accessible path of travel from the Centennial Flame to the Peace Tower’s Ceremonial Entrance, Memorial Chamber and Observation Deck, which will remain a key visitor platform for those visiting Parliament.

Construction contingency

In general, construction contingency is money allocated to cover additional or unexpected works during the construction phase of a project. This protects the project from any unexpected problems or issues and prevents cost overruns. Construction contingency will be drawn down to support works on site as and when any unforeseen issues arise. Examples of construction drawdowns for Centre Block could include costs associated to repair poorer than anticipated structural steel that is located behind the existing masonry façade or costs associated with relocating cabling and wiring when found to conflict with other elements within the wall. Other examples of construction contingency usage are scope clarifications during construction, costs associated to schedule prolongation or acceleration or costs associated to abnormal weather conditions.

The amount of construction contingency carried by PSPC for the Centre Block and Parliament Welcome Centre is 20% and 10% respectively and is appropriate based on the Net Building Cost, and when benchmarked against other similar projects within the Precinct. For construction contingency management to be successful, a robust change control process must be implemented so the contingency spend can be actively managed. Similar to management of the design contingency, Turner & Townsend recommends that the expenditures of construction contingency be tracked and reported on a regular basis. This will help to ensure that budget limits are respected and the contingency is drawn down appropriately, in accordance with the Program Execution plan developed for the project. Like design contingency, construction contingency does not cover costs associated for new scope.

From a construction contingency perspective, 20% for the Centre Block and 10% for the Parliament Welcome Centre is reasonable when benchmarked against other comparable projects within the Precinct. The lower construction contingency compared to the design contingency is appropriate given PSPC’s implementation of the Design-Assist strategy of engaging directly with Trade Contractors during the design phase of the project to inform the design process with the intent of avoiding costly downstream changes and reducing costly design clarification during construction. Based on this, the levels of construction contingency are appropriately established, to reflect this collaborative design process. Further, the construction contingency for the Parliament Welcome Centre is significantly lower in comparison to the Centre Block due to the nature of the new build construction with considerably less complexity on a relative scale. Again, based on relative complexity levels, the Parliament Welcome Centre is slightly lower than the average within the Precinct and the Centre Block is higher than the average, but is well aligned with the West Block, for example, based on the increased scale and heritage complexity of the building.

Sustainability

A priority for the Centre Block Rehabilitation Program is to demonstrate leadership in sustainability. The Centre Block will be transformed from one of PSPC’s worst performing and highest greenhouse gas emitting assets to a carbon neutral facility. Energy consumption will be reduced by over 75% and water consumption by over 50%.

A holistic design approach has been taken to achieve best value for Canadians, with goals of demonstrating exceptional leadership in sustainability in a heritage context, achieving carbon neutrality, and attaining a high level of energy efficiency. These actions require a combination of integrated building and design decisions, sustainable site planning, innovative technology choices, and behavioural changes supporting health and well-being.

The Centre Block Rehabilitation Program has developed an all-encompassing vision that aligns with many existing Government strategies.

Holistic Vision of the Centre Block Rehabilitation Program

Escalation analysis

Escalation refers to fluctuations in the cost or price of specific goods or services in a given economy over a period of time. Cost increases usually occur because of market forces and reflect increases in the cost of labour, materials, and equipment that are required for the project to be delivered. Some causes may be specific to individual construction trades only (for example, ironworkers) or materials ( for example, cement or lumber prices). Alternatively, some markets, such as Ottawa at present, experience increases in escalation due to the execution of multiple large complex projects, all competing for the same materials and labour. Currently, because of impacts to the world economy linked to COVID-19, escalation is challenging to predict, and escalation rates are currently high. The expectation on the Centre Block Rehabilitation Program is that over time, escalation rates will normalize. The program allowances have been calculated based on inflation indices by region and industry, published by the Conference Board of Canada. Turner & Townsend supports the escalation rates included within the hard cost estimates included within this report and endorse the use of the risk allowance to accommodate unknown fluctuations within the market. Any increases of escalation above and beyond this will necessarily be funded from the risk allowance. A risk allowance for these types of potential events is prudent, as there is typically a level of uncertainty related to the construction industry escalation rates, making it challenging to accurately forecast the future cost of labour and materials included within the hard construction cost.

Risk

In addition to design and construction contingencies, the use of a risk allowance, at the program level, to address a range of items from changing scope to difficult to forecast factors such as escalation is a project management best practice. Turner & Townsend has completed a statistical analysis to determine if the current risk allowance was adequate, given the current known risks on the program (escalation, scope changes, etc.). The results of the analysis determined that the risk allowance being carried by PSPC (between 15% to 35%) is adequate based upon the following factors, including but not limited to: incomplete scope as a result of outstanding key decisions; construction for both the Centre Block and Parliament Welcome Centre, while progressing on track, is in the early stages of execution; escalation is difficult to predict typically and is exacerbated by the pandemic; and the overall, magnitude and complexity of the program is significant. Furthermore, the use of Design-Assist, employing direct engagement with trade contractors during the design phase of the project will help to reduce the risks of site instructions and design adjustments during the subsequent construction phase.

Considering the aforementioned factors, Turner & Townsend is of the opinion that PSPC is carrying an appropriate risk envelope for the nature of this project and is consistent with other projects within the Parliamentary Precinct including the West Block and Senate of Canada Building which carried a risk reserve of approximately 25% and 15%, respectively. Based on industry standards, the level of maturity and complexity of the program, and benchmarking analysis, Turner & Townsend endorses the risk range carried by PSPC. Of note, Turner & Townsend strongly recommends continued efforts with PSPC to follow a robust risk management framework to ensure the risk allowances are efficiently and effectively managed and that all risk dollars are allocated and tracked appropriately throughout the duration of the program as per industry best practice standards.

Conclusion

Turner & Townsend has undertaken a comprehensive review and analysis of the costs to ensure accuracy for the costing methodology and value for money. The cost is driven by the essential work required to meet building codes, ensure the health and safety of Parliament, and restore the built heritage of the space, as well as to modernize the building to meet Parliament’s functional requirements. Turner & Townsend is confident that the hard construction cost estimate presented within this report is within a 10% to 15% level of accuracy, meaning the program has a high level of confidence to be delivered within the current budget, including the established contingencies and risk allowance, provided no major functional program changes occur or extreme rates of escalation are not experienced.

Benchmarking comparison of contingencies and risk reserve identified for the Centre Block with the West Block and Senate of Canada Building illustrates alignment.

Contingency and Risk allowance are adequate based upon the current understanding of the program but would be insufficient to absorb significant changes in scope, such as a major security event.

Following a comprehensive reconciliation process with the Construction Manager’s (CM) parallel estimate, Turner & Townsend’s estimate for net trade cost (before general requirements, CM fees, contingencies etc) was within 3% of the CM’s estimate. For a project of this size and complexity, this percentage variance is well within the anticipated range, and is exceptional given the current level of design completion. Since both estimates were completed utilizing different estimating methodologies this is a solid indicator that the costs are reflective of the current design.

It is our opinion that the program is carrying appropriate design (Centre Block 25%, PWC 15%) and construction (Centre Block 20%, PWC 10%) contingencies, which align with industry standards and are in accordance with benchmarked projects within the Parliamentary Precinct (25% to 35% combined design & construction). The contingencies presented are also appropriate and in line with the Association for the Advancement of cost Engineering International (AACEi) standards. In addition, Turner & Townsend supports the escalation values presented within this report based on the current industry indices available and the risk envelope set aside to accommodate future fluctuations of the market. Moreover, Turner & Townsend endorses the risk allowance that Public Services and Procurement Canada (PSPC) is carrying (ranging from 15% to 35%) based on our experience on projects of similar scale and complexity. This upper range makes accessible the appropriate risk funds to address unknowns that may materialize on a highly-complex and lengthy project, as well as providing the lower range as an aspirational target to ensure that controllable risks such as scope changes are appropriately constrained.

The cost estimate and budget range utilized ($4.5 billion to $5 billion) by PSPC reflects contingencies and risks to sufficiently implement the current project scope. To ensure proper stewardship of the estimate, Turner & Townsend strongly recommends continued efforts with PSPC, the Design Team and the CM to build a robust change control process to enable the contingencies to be efficiently and effectively managed and that all contingencies are monitored and regularly reported on during the design development (ensure no design “creeps” occur such as major program changes) and construction phases (ensure site investigations are in place and well documented tender documents) and adjusted accordingly if required. In alignment with the proper management of contingencies, Turner & Townsend also strongly encourages PSPC to follow a robust risk management framework to ensure the risk allowances are efficiently and effectively managed and that all risk dollars are allocated and tracked appropriately throughout the duration of the program as per industry best practice standards.

Turner & Townsend is confident that the total construction cost is accurate, including that contingencies and escalation will be sufficient to deliver the program based on the current known scope. Furthermore, Turner & Townsend confirms the risk range PSPC is carrying is appropriate providing no major scope changes or significant unforeseen events occur, such as extreme rates of escalation.